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High Court of Australia Transcripts |
Last Updated: 9 May 2006
IN THE HIGH COURT OF AUSTRALIA
Office of the
Registry
Sydney No S592 of 2005
B e t w e e n -
STATE OF NEW SOUTH WALES
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Perth No P66 of 2005
B e t w e e n -
STATE OF WESTERN AUSTRALIA
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Adelaide No A3 of 2006
B e t w e e n -
STATE OF SOUTH AUSTRALIA
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Brisbane No B5 of 2006
B e t w e e n -
STATE OF QUEENSLAND
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Brisbane No B6 of 2006
B e t w e e n -
AUSTRALIAN WORKERS UNION
First Plaintiff
AUSTRALIAN WORKERS UNION OF EMPLOYEES QUEENSLAND
Second Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Sydney No S50 of 2006
B e t w e e n -
UNIONS NSW AND QUEENSLAND COUNCIL OF UNIONS
First Plaintiffs
PUBLIC SERVICE ASSOCIATION AND PROFESSIONAL OFFICERS’ ASSOCIATION AMALGAMATED UNION OF NEW SOUTH WALES AND NEW SOUTH WALES LOCAL GOVERNMENT, CLERICAL, ADMINISTRATIVE, ENERGY, AIRLINES & UTILITIES UNION AND ELECTRICAL TRADES UNION OF AUSTRALIA, NEW SOUTH WALES BRANCH AND NATIONAL UNION OF WORKERS, NEW SOUTH WALES BRANCH AND NEW SOUTH WALES TEACHERS FEDERATION AND QUEENSLAND TEACHERS UNION OF EMPLOYEES AND COMMUNICATIONS, ELECTRICAL, ELECTRONIC, ENERGY, INFORMATION, POSTAL, PLUMBING AND ALLIED SERVICES UNION – QUEENSLAND BRANCH (CEPU ELECTRICAL DIVISION)
Second Plaintiffs
and
COMMONWEALTH OF AUSTRALIA
Defendant
Office of the Registry
Melbourne No M21 of 2006
B e t w e e n -
STATE OF VICTORIA
Plaintiff
and
COMMONWEALTH OF AUSTRALIA
Defendant
GLEESON CJ
GUMMOW J
KIRBY J
HAYNE
J
CALLINAN J
HEYDON J
CRENNAN
J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 9 MAY 2006, AT 10. 19 AM
(Continued from 8/5/06)
Copyright in the High Court of Australia
__________________
GLEESON CJ: Yes, Mr Solicitor for South Australia.
MR KOURAKIS: May it please the Court, I hope to be
able to deal relatively quickly with the transitional provisions before just
returning briefly
to summarise the State’s submissions on the corporations
power. Could I take your Honours to volume 2 of the Act,
page 1006.
Schedule 6 deals with employees and employers who do not
fall within the definitions in sections 5 and 6, it deals with persons
who
are not federal employees and employers. It relies for its support exclusively
on 51(xxxv), the arbitration power. Can I take
your Honours first to
clause 1(2) and the object which is in paragraph (c). The Commission
must perform its functions in a way that
further the objects.
Subparagraph (c), the object there is that:
the Commission’s functions and powers . . . are exercised so that wages and other monetary entitlements are not inconsistent with wage-setting decisions of the AFPC –
The AFPC
is of course the instrumentality of the Commonwealth Executive setting wages for
federal employers and employees. The words
“not inconsistent” are,
in my submission, a transparent fudge. They mean “must be consistent
with”. That
is as close to a legislative command to the Commission as one
could get and, as I have said, section 8 requires the Commission to
act in
a way, under the 51(xxxv) power, consistent with that objective.
Can I next take your Honours to clause 4(1). The pre-reform awards are continued as transitional awards pursuant to that section. The fact that the awards continue by way of statutory extension has important consequences in that their validity, that is, the validity of 4(1), the statutory extension, can only be supported insofar as the Commission retains a power to vary in accordance with its discretion, and I will come to the authorities for that proposition a little later. I next take your Honours to clause 7(3) first. That simply makes it - - -
KIRBY J: Now, just answer this. That is an apparent statutory provision in the schedule which attaches to the award. Where does it draw the constitutional life? Is it by the definition of “employers” or - - -
MR KOURAKIS: No, 51(xxxv).
KIRBY J: But how can the Parliament extend something which had its origin in an independent arbitrator?
MR KOURAKIS:
That was decided by the Waterside Workers’ Case but only on the
basis that it could extend the life of it for the period during which it
operates. That was confirmed in CFMEU but, importantly, subject to this
qualification and that is that the Commission retains the power to vary in
accordance with its
own discretion and that is the matter that I will come to
later. Your Honours, clause 7(3) makes it clear that “the Commission
must not make any new awards”, that is, its arbitral functions are limited
to variations of the awards given statutory extension.
Clause 8(1) is the
clause I referred to earlier which requires:
The Commission must perform its functions under this Schedule in a way that further the objects of this Schedule -
that is, in a way
that ensures consistency with the determinations of the AFPC. That result is
further supported and strengthened
by subparagraphs (b) and (c) which
require the Commission to set its terms and conditions in a way that does not
disadvantage, relatively,
employees and employers under the conciliation system
with those under the AFPC direct regulation system. The net effect of those
provisions, clause 8 in particular, with the reference back to the objects in
(b) and (c) is to tie the hands of the Commission to
making an award that
applies the determinations of the AFPC.
Your Honours, clauses 28 and 29 further tie the hands of the Commission. Firstly, can I take your Honours to clause 28(2). There it is provided:
The Commission must not vary a preserved transitional award term.
Those terms can be found defined in clause 22(3).
KIRBY J: Justice Gaudron, Justice McHugh and I disagreed with the decision in CFMEU but I thought the majority had said that there has to be retained that element of the independent arbitrator’s power which included the power to vary.
MR KOURAKIS: Justice Callinan accepted that. I have not found an express reference to that in the decisions of the other members of the majority - - -
KIRBY J: That being inherent in the constitutional notion of arbitration.
MR KOURAKIS: Yes.
KIRBY J: Now, how does clause 28 stand against that principle?
MR KOURAKIS: In my submission, it does not, that is, it is inconsistent with the principle and in particular - - -
KIRBY J: But, is that solved by the Commission, that is to say the Industrial Relations Commission drawing on the corporations power? Is that said to be the basis on which - - -
MR KOURAKIS: No.
KIRBY J: It is wholly under the arbitration power?
MR KOURAKIS: Yes. Your Honours, I will take your Honours to a passage - - -
KIRBY J: This is what you have always got to keep your eye on in this Court. One step leads to another and then the other, as it were, is the thing that you have to keep your eye on.
MR KOURAKIS: Your Honour, the Commission not having any power to vary or preserve the transitional award term - - -
KIRBY J: Why have the Commission?
MR KOURAKIS: Well, it is my submission that this schedule is a transparent attempt to bind the Commission to the implementation of the AFPC terms. As to 28(2) it is not within the power of the Parliament to extend by statute award terms without leaving the Commission with a discretion to vary them. Clause 28(2) removes that with respect to those terms, and those terms are terms as to long service leave, superannuation and some others.
Can I take your Honours to clause 29(1)? Your Honours, the Commission cannot make a new award. It can only vary an award and even that power to vary is limited to varying an award “to provide minimum safety net entitlements” about certain matters. When it moves to vary an award to so provide, for the submissions I have already made, the schedule impermissibly limits the discretion of the Commission to awarding those terms that are consistent with AFPC determinations. But within clause 29(1) is yet a further limit and the word “limited” of course is expressly used.
The Commission’s power is limited to providing minimum
safety net entitlements. That term is not defined, but its meaning
is evident
from its use in section 3 of the principal Act. If I can your Honours
to page 1 of volume 1 and there the objects commence,
but can I take
then your Honours to paragraph (g). It is an object of the Act:
that awards provide minimum safety net entitlements for award-reliant employees which are consistent with Australian Fair Pay Commission decisions and which avoid creating disincentives to bargain at the workplace level –
So the effect of that meaning of “minimum safety net entitlements” transposed into clause 29 is that the Commission can only vary an award insofar as it provides for terms and conditions that are not a disincentive to workplace bargaining.
Now, your Honours, in varying an award a Commission might in its discretion decide that such a variation is appropriate and adapted to the original award. It might, of course, decide very differently and decide that an appropriate adaptation of the original award is not to simply provide a minimum condition that is not a disincentive. It might provide that the terms and conditions should be closer to that which reflect the real value of the work done. That is a question of basic approach that the Commission should have the discretion to decide upon.
Schedule 6 requires the Commission to adopt one approach, that is, minimum safety net entitlements only, allowing workers and employers to negotiate for anything above that, and secondly, in determining just what the precise level of that minimum safety net should be, the Commission’s decision must be consistent with the determinations of the AFPC.
KIRBY J: Can I ask you, you will remember that some point was made by Justice Callinan that is made in the written submissions concerning the fact that nowhere in the principal objects of the Act is reference made to the focus on corporations or addressing national concerns about corporations. Do we have the Minister’s second reading speech and the explanatory memorandum to the Bill?
MR KOURAKIS: Your Honour, I think it might be before your Honours but I cannot take your Honour to it now.
KIRBY J: If I could have that insofar as it deals with the question of the objects of the Act
MR KOURAKIS: Certainly, if your Honour pleases. Can I take your Honours to a decision of this Court in R v Kelly [1953] HCA 96; 89 CLR 461, first to page 474, from about halfway down the page your Honours will see the passage commencing, “It is true”.
KIRBY J: Which page?
MR KOURAKIS: Page 474. From halfway down that page, “It is true”, to about two-thirds of the way down the page your Honours will see the basis on which Chief Justice Dixon put the power to vary an award, that is, as incidental to the conciliation and arbitration power, and accordingly variations could not go constitutionally beyond what is appropriate to the general purpose of the settlement. In my submission, Schedule 6 directs variations to quite a different purpose, that is, consistency with the AFPC decisions.
At page 475, in the first full paragraph a few lines down, again the purpose of the variations that are allowed is explained by the Chief Justice. They are variations “calculated to adjust the settlement made by the award to existing conditions”.
HAYNE J: At 474 his Honour is focusing, is he not, on the limits set by the dispute?
MR KOURAKIS: Your Honour, in my submission, he puts that as a particular instance of the general proposition that the variation must be appropriate and adapted to the award that was made, and plainly that is an outer limit, but the purpose of the variation is to maintain the settlement, and it follows from that, in my submission, that the well-known and accepted principle that one cannot travel beyond the ambit follows from that.
In an earlier decision of Justice Dixon, as he then was, in R v The Commonwealth Court of Conciliation and Arbitration [1935] HCA 24; 53 CLR 113 makes that even clearer, in my submission. If I can take your Honours to page 140, to an observation of Justice Dixon on a slightly different point before coming to the appropriate and adapted point. The first full paragraph in 140 is an explanation of the basis of the decision in Waterside Workers’. It was argued by Justice Dixon as counsel. The decision in that case was that the Parliament could enact the life of an award by a statute.
GUMMOW J: Is this a dissenting judgment?
MR KOURAKIS: It is
there, yes, but, in my submission, not on a basis that at all denies this
proposition. The question was whether a variation
to an award that had been
made in 1924 could be made after all the events of the Depression and still be
considered to be appropriate
and adapted to the original award. His Honour
Justice Dixon and two other members of the Court thought that it could not.
The majority
thought that it could still be described as a variation, but that
is simply a question of an assessment of the awards in those cases.
The passage
at 140 about the Waterside Workers’ Case is, in my submission, good
and what his Honour there said was that the life of an award can be
extended:
so long as the court of Conciliation and Arbitration was left at liberty to give any contrary direction it saw fit.
Your Honour Justice Kirby in CFMEU in paragraph 258 referred to that particular passage and, in my submission, correctly observed that his Honour Justice Dixon was emphasising the importance for the decision in Waterside Workers’ of the Commission having been left with that discretion. This issue, of course, did not arise generally in CFMEU because the discretion had been left with the Commission in that case.
But, your Honours, from about halfway down 141 and certainly
up until the conclusion on 142, his Honour Justice Dixon’s view
of the place that the power to vary has within the incidental power and
accordingly the limitation on it that it be appropriate and
adapted is clear.
He concludes at 142 by saying that as to this particular variation:
Under colour of removing from the award thereafter continued in force by legislative enactment unfairness or unjustness of operation, the Court cannot resume the function of determining all over again what industrial relations should subsist -
He saw the exercise there as not being
appropriate and adapted.
GUMMOW J: What do you say about paragraph 583 of the Commonwealth’s submissions? They say you misconstrue the Act, so you are flogging a straw man.
MR KOURAKIS: No, if your Honour pleases, the Commonwealth’s submissions proceed by focusing and addressing only the provision that says the Commission must have regard to AFPC decisions, ignoring completely the provisions that require it to be consistent with it, limit its power to vary only insofar as it provides a minimum safety net entitlement.
KIRBY J: Your argument is that that is incompatible with the constitutional notion of an arbitration. A point is reached where, if the arbitrator does not have the freedom to make the decision which arbitration suggests, then he is not an arbitrator; he is a functionary of the Executive Government or of the legislation.
MR KOURAKIS: Your Honour, the combined effect of the provisions that I have taken your Honours to are as close to a direct legislative command as one could get.
KIRBY J: All of this began in the 1904 Act by the problem of awards expiring and then the interim period of carrying them over – well, Parliament could do that. Then there was the problem of the employer being liquidated and Parliament attended to that and said, “The Court said you could do that”. Step by step, more and more happens, but in the end you snap the connection with the arbitration power, and that is where the Court divided in the CFMEU Case.
MR KOURAKIS: But, your Honour, in that case the Parliament picked and chose between award conditions that were to be given continued operation, and that was upheld. My submission is not inconsistent with that. In the CFMEU Case the Commission at all times maintained its discretion. No provision interfered with that. My attack here is on the limitation on the Commission’s discretion. The question of discretion was addressed by the minority more than the majority precisely because it did not arise on the majority’s consideration. But can I take your Honours in CFMEU (2000) 203 CLR 346 at 403 where his Honour Justice McHugh sets out passages from Chief Justice Barwick and Justice Windeyer in the R v Commonwealth Conciliation and Arbitration Commission; Ex parte Amalgamated Engineering Union - - -
GUMMOW J: This is a dissenting judgment.
MR KOURAKIS: Yes, but it is simply convenient –
I could take your Honours to the authority itself which is on the list, but
it is convenient
because it sets out the passages which the Commonwealth
accepts. The Commonwealth accepts the authority of that case.
Chief Justice
Barwick in that passage said:
“[T]he Parliament could not have seized upon one method of determining a wage in settlement of a dispute as to wages and have directed the Commission to follow that method and none other.
That is precisely what the
schedule has done. Justice Windeyer:
“I think that it would be beyond the power of the Commonwealth Parliament to insist that the Commission must determine and declare a basic wage.
Your Honours might remember the history with respect to basic wages but it was simply a method and approach to determining an award condition. In itself it did not result in a pay level at or a wage at this level or that level. It was simply an approach to wage determination. His Honour Justice Windeyer was in no doubt that directing the Commission to adopt one approach instead of another would interfere with the discretion. At paragraph 179 is Justice McHugh’s conclusion with which your Honours Justice Kirby and Justice Callinan concurred and, with respect, it is, in my submission, completely uncontroversial.
Your Honours, can I make these concluding submissions on the corporations power. If trading and financial corporations is thought simply to mean commercial corporations in some general or universal sense, then it remains South Australia’s submission that 51(xx) is limited to laws with respect to commercial corporations if they be that as such, as commercial corporations, and the approach described by Justice Stephen in Koowarta to another person power is equally applicable. If treating trading and financial corporations as commercial corporations can stand with that approach, the “as such approach”, then the State does not contend against it. It would result in a significant limitation on the Commonwealth’s power.
There are some difficulties about that gloss, if it can be called that. Your Honours, the word “financial” was included clearly because the drafters wanted to ensure that particular activities, taking deposits from the public and investing them in land, were within the Commonwealth’s sphere of regulation. The approach clearly creates tensions with the decisions in Adamson and State Superannuation Board. An approach in this case that undermined those cases, given that no one has sought to overrule them, in our submission, should not be taken. There are at least difficulties with it.
But most importantly, if the term is to be used as “commercial corporation”, or “corporations”, the Court would have to develop some calculus which allowed one to say or allowed one to balance the trading and financial activities against the purpose to which the income so generated was used so that one could make a judgment about what is a commercial corporation or not. That calculus would necessarily be difficult. It is the difficulty which, in my submission, led to the rejection of the minority position in St George County Council. How do you balance up the fact that a municipal corporation has governmental regulations with the fact that it engages in some trading and finance?
Furthermore, there are clear and, in my submission, sound legal policy reasons for regulating the trading and financial activities of all trading and financial corporations even if they have another character, that is, there are sound legal policy reasons for the trading and financial activities to be regulated on what might be called a level playing field.
Your Honours, I make a brief submission as to the Murphyores question. In my submission, the fact that that form of regulation is plainly valid does not avoid the need to clearly define the ambit of the power because although the Murphyores form of regulation is fine, insofar as it applies directly to corporations, in many areas including with this law, the question of regulating the activities of others that affect constitutional corporations must be addressed. In this case, workers are prohibited from striking. Workers are denied access to State tribunals. Those sorts of consequences, those sorts of laws, cannot be supported on a Murphyores basis and therefore Murphyores is no reason to simply ignore or proceed without clearly defining the limits on the power.
Your Honours, finally South Australia’s submissions take as the ratio of the Tasmanian Dam Case that the power is limited to the conduct of corporations for the purposes of their trading and financial activities precisely because in that way the power is limited to trading and financial corporations as such, therefore, the Commonwealth – and this is the reason that we on the alternative submission say the Commonwealth may be able to regulate employment of persons engaged for the purpose of the trading and financial activities or incidentally to that. Regulating other employees, however, is clearly beyond the power.
The South Australian submission attaches importance to the text and the term “trading and financial corporation” and it addresses the mischief to which 51(xx) was plainly directed, and that is that trading and financial activities of corporations can cause damage precisely because of the nature of their corporate structure. South Australia’s construction then limits and stops the power there. It does not allow it to extend further to the non-trading and financial activities of those corporations.
Your Honours, there ought not be any real difficulty in Commonwealth regulation if that limit is adopted. The Commonwealth can limit its legislation to those corporations that are engaged wholly in trade and finance, are only trading in financial corporations and do not have another capacity, or at least in the case of industrial relations regulate those trading and financial corporations that employ only workers who are engaged in the trading and financial activities.
Even if the
Commonwealth wished to go further, it would not be at all new to Australian
workplaces to have different workers within
the same workforce regulated by
different schemes. That is a well-known phenomenon that Australian industries
become accustomed
to by operation of the conciliation and arbitration power.
Indeed, one can only observe that
in this Act the Commonwealth has placed a
primary operation upon individual workplace agreements negotiated between an
employer and
individual employees. For those reasons, the difficulties in
regulation should not be overstated. If the Court pleases.
GLEESON
CJ: Thank you. Mr Solicitor for Tasmania.
MR BALE:
May it please the Court. The agreed time allocation for State and Territory
submissions has expired and so I will be very brief.
I adopt the submissions of
the learned Solicitor-General of Queensland in relation to section 51(xx)
and, combining them with our
written submission, seek only to add this. Ever
since the judgments of Justice Kitto in Fairfax and of
Chief Justice Barwick in Strickland a heavy preponderance of
opinion in this Court has been that for a law to be with respect to a particular
subject matter requires
that there be a substantial connection between the law
and the subject matter. The real debate seems to have centred around
identifying
criteria for establishing what constitutes “substantial”
in this context.
In our submission, there is much to be said for the urging of Chief Justice Barwick in Strickland at page 490 and 491 to abandon the search for any such criteria as the constitutional formula is, as he said, sufficient in itself. In other words, the existence or otherwise of a sufficiently substantial connection is simply a matter of judgment.
The subject matter of section 51(xx) is corporations of specific types and so would sustain company laws directed at characteristics of those types of corporation or laws with respect to trade practices, but not laws about employment generally or workers compensation laws because they are altogether different subject matters. We submit that in this case good judgment would determine that a law expressed to be for and directed solely towards workplace relations is a law with respect to that subject matter and not a law with respect to constitutional corporations, although it may command them, just as a law which prohibited, for example, the possession or cultivation of cannabis by the same classes of persons to whom the law presently under consideration is directed would not sensibly be understood, in our submission, as a law with respect to constitutional corporations, although equally it might command them. Those are our submissions, may it please the Court.
GLEESON CJ: Thank you, Mr Solicitor. Mr Solicitor for the Northern Territory, representing the Australian Capital Territory also.
MR PAULING: The joint submissions of the Attorneys-General for the Northern Territory and the Australian Capital Territory are confined to issues of reading down and severance and we rely upon those written submissions and adopt those of the AWU. Unless and until the provisions of the Act which are invalid are identified, a submission on severance and reading down must necessarily be hypothetical. The Commonwealth’s submissions are to the same effect at paragraph 698. However, there seems no doubt that if the invalidity of a particular provision fundamentally affects the intended operation of the Act, neither section 15A of the Acts Interpretation Act nor section 14 of the challenge Act could be employed to fashion a legislative scheme to operate in a way the Parliament did not intend. That is for the reasons given, we say, by Chief Justice Latham in Pidoto v Victoria [1943] HCA 37; 68 CLR 87 at 110 and 111, and in Strickland v Rocla Concrete Pipes 124 CLR 468 by Chief Justice Barwick at 498 point 4 and Justice Menzies at 506. We refer to our written submissions at paragraph 14 which detail those matters.
GUMMOW J: What would you say, to get a little bit specific, as to section 16(4)?
MR PAULING: I did not bring the Act up to the podium, your Honour, because I - - -
GUMMOW J: You will recall that it is said that there are various troubles with the width of 16(1).
MR PAULING: Yes.
GUMMOW J: I assume that is right. Then it is said you cannot really read them down, then it might be said at least the Commonwealth has the bolthole of 16(4), then it might be said 16(4) itself is too wide. Could that be read down in some way?
MR PAULING: No, we do not believe so, your Honour. Western Australia has made submissions specifically related to this issue and saying that if the effect of the Act is to exclude the operation of the State or Territory law but not replace its legal vacuum, for example, in relation to unfair contracts, then that would be much too wide and unauthorised. The effect of it would be that you cannot sort of read it down in any sensible way to conform to the power.
GUMMOW J: Take 1.4 of the regulations that we were taken to.
MR PAULING: Yes, that was relating to the Industrial Relations Act (NSW).
GUMMOW J: Yes. It seems to be talking about that State Act insofar as it applies to employers and employees in a constitutional sense.
MR PAULING: Yes.
GUMMOW J: Could 1.4 be supported by 16(4)?
MR PAULING: It appears to be, your Honour, but whether it is effective to be supported by 16(4) is another issue.
GUMMOW J: That is what I am trying to find out.
KIRBY J: As I understand the written submissions, the suggestion is that in such a major attempted change of industrial relations law, if it falls in respect of constitutional corporations, then for the Court to do a blue pencil job and to say that in respect of Territories would in effect be a major rewriting of the legislation and involve the Court in a legislative and not a judicial function.
MR PAULING: That is precisely why I rely on what Chief Justice Latham said in Pidoto and as affirmed in the Industrial Relations Act Case.
KIRBY J: But as against that, my impression sitting here for more than 10 years is that the Court does try to save that which can be saved and there is a lot of dicta that says you should attempt to save the saveable and the Federal Parliament does have after all – I hesitate to use the plenary – but a very large and less restricted power in respect of legislation in the Territories, so that if all else fell why would one not, as it were, do a blue pencil operation, and say, well, if all else fails the Federal Parliament can have its will in its Territories?
MR PAULING: Because the Act would then fail utterly to achieve its purpose for a national industrial relations reform.
KIRBY J: But it would secure the purpose in that matter where indisputably the Federal Parliament has ultimate legislative power?
MR PAULING: That would not have achieved what the Parliament set out to achieve.
KIRBY J: It would be different but it would be as much as the Federal Parliament could constitutionally achieve on this hypothesis?
MR PAULING: That is why until those provisions which are validly supported and those which are not are identified it is difficult. I mean, in our written submissions we say it is not for the Court to choose the woof and warp and weave another cloth.
KIRBY J: I understand that. It is just a matter of judgment in the end in each case, but there was one thing I did not understand in your written submissions. You have a heading “No reading down of Act if s 122 not engaged”. Now, are you propounding some proposition that section 122 is not engaged for some constitutional reason, that once you devolve self-government on a Territory you cannot retrieve it? Is there something that you are saying there that I do not understand?
MR PAULING: No, I think it is taking the submission too wide, your Honour.
KIRBY J: Why would section 122 not be engaged, at least in respect of those provisions of the Act which say it shall apply to employment in Territories?
MR PAULING: Because we are relying, your Honour, there on nexus. If the nexus with the territory power is so insubstantial as to not connect it in the sense in which it was dealt with in Berwick v Gray then we say it does not engage 122.
KIRBY J: Is there not some general provision that says the Act applies in the Territories?
MR PAULING: Yes, your Honour, in the - - -
KIRBY J: Why would that not engage the territories power? Just remind me of that section? It is in the early part of the Act. It is section 16, is it not?
MR PAULING: It is in the definition of “employee”, your Honour.
KIRBY J: Yes, section 16(1)(a).
MR PAULING: Well, no, 6(1)(f), your Honour. It talks about an entity and so on. The submission made, not by us but by Queensland, your Honour, goes to the question of sufficiency of nexus. I mean, that is a direct command in respect of persons employed by anybody in a Territory, bearing in mind the use of the term “entity”, but the submission we intended to make is that if all that was left was that this Act would apply in accordance with 6(1)(f) then we would say that the Court should not seek to uphold it only on that basis and in that limited form.
KIRBY J: I understand that, that is the sort of severance-type argument?
MR PAULING: Yes.
KIRBY J: I understand that fully. I just do not understand not reading down if section 122 is not engaged. Why would it not be engaged, at least on the face of the legislative extension of the Act to the Territories?
MR PAULING: It is simply, in paragraph 34 of our submissions, a nexus argument, your Honour.
KIRBY J: It does not have your usual pellucid clarity. It seems to be very sophisticated and subtle, so much that it has missed me, and I do want to understand it because at least one possibility in this case is that the territory power being, as it is, separate, different, differently expressed, power for the territories and conventionally unrestricted, then whatever else, if anything fails, the territory power is always there.
MR PAULING: Yes. The connection to the territory power, your Honours, was picked up in Queensland’s written submissions at paragraph 81 and following and we have picked up on that only in respect of reading down, so that in the allocation of tasks we were not asked to address the territories power directly. If it is necessary to clarify it with a short note, your Honour, I am happy to do so.
Can I simply conclude by saying that Hughes’ Case is put against us as a case in which the reading down occurred based on the facts, not upon some criteria to be found in the Act that allowed for some sort of rational reading down. Hughes was a different case altogether, bearing in mind the narrowness of the questions, most of which were unnecessary to be answered, as to whether or not that particular indictment in respect of that particular person was constitutionally supported. It plainly was by 51(i) and 51(xxix). But that is not this case.
If the support of 51(xx) was denied by the Court, then the whole Act would have to go. One simply could not, out of the ruins, reconstruct or construct something that the Parliament did not intend. The Commonwealth intends to address the question of appropriate severance orally – see paragraph 699.3 of their submissions – and in those circumstances it would be better to deal with that question in reply, if necessary, not that I would be seeking to reply but others would. If it please the Court, those are our submissions.
GLEESON CJ:
Thank you, Mr Solicitor. Yes, Mr Jackson.
MR JACKSON:
Your Honours, there are several specific aspects on which we seek to
make oral submissions. May I indicate what they are. The first
concerns
Schedule 1. The second concerns the regulation-making power and, in
particular, the provisions based on prohibited content
in section 356. The
third concerns the validity of sections 496 to 499, that is, the steps
which may be taken in relation to industrial
action. Your Honours, I want
to mention also the fourth, which is Part 8A which prohibited the making of
some redundancy payments.
Also, your Honours, whilst the arguments to
which I have referred, or at least the first three of them, do not turn
particularly
on the ambit of the power in general terms, I wish to make some
submissions in conclusion upon what we contend is the ambit of the
power.
Your Honours, may I move to Schedule 1. That is the aspect referred to in our written submissions. Perhaps if I could just give a reference, your Honours, at paragraphs 222 through to 262. Your Honours, the provisions of Schedule 1 have been indicated in outline by Mr Hutley in his submissions. It contains the provisions for registration of associations as organisations and it deals in very great detail with their internal activities and their control once registered.
Your Honours, I will not go through the provisions one by one. One can see that immediately by looking at even the table of contents of the schedule and the provisions of it treat them essentially in much the same way and, indeed, with very similar provisions to those seen in the companies legislation.
Your Honours, I should also say initially that the provisions of Schedule 1 in very large measure are in the same form as they were when made in the exercise of the power under section 51(xxxv), but there is a difference. The difference is that a different head of power is now invoked. Your Honours, a feature to which we would draw attention before going in a little more detail to the argument on this point is that the application of the words “with respect to” in the opening part of section 51 will vary depending upon the placitum which is invoked.
Your Honours, the particular point I want to make about that is that laws with respect to “conciliation and arbitration for the prevention and settlement of industrial disputes”, et cetera, in section 51(xxxv) may well be able to regulate in detail the affairs of the associations which may be permitted to participate in that process, and your Honours were referred yesterday to a passage from Bowen [1980] HCA 42; 144 CLR 462, Chief Justice Gibbs.
Your Honours, the rationale of course is that the nature of conciliation and arbitration is that it involves parties – “parties” in the plural – but laws with respect to section 51(xx) corporations are laws with respect to, in terms of the constitutional description, one party, and the degree of connection with all parties which may exist in the case of conciliation and arbitration does not exist when it comes to regulating the affairs – and perhaps if I could call them the internal affairs, not that I want to be particularly definitive in saying that – but regulating the affairs, not of the corporation the subject of the power, but of other persons who may have dealings with it.
Your Honours, may I also say in relation to the words
“with respect to” in section 51, that they do require relevance
of the legislation to the head of power. It is not sufficient that there be
some connection, no matter how remote. Could I give
your Honours three
references in that regard. One is to the general statement by
Chief Justice Dixon and Justices McTiernan, Webb
and Kitto in
Grannall v Marrickville Margarine Pty Ltd [1955] HCA 6; (1955) 93 CLR 55 at
77. Your Honours will see in the paragraph commencing at the top of the
page and about the sixth line on the page, after referring
to “with
respect to”, their Honours say:
The words “with respect to” ought never be neglected in considering the extent of a legislative power conferred by s. 51 or s. 52.
Could I pause there to say, your Honours,
they were drawing a distinction between section 51 powers and the
prohibition in section
92 and saying “with respect to” enlarged
the situation beyond the ambit of the prohibition. But what they go on to say
is in the next sentence:
For what they require is a relevance to or connection with the subject assigned to the Commonwealth Parliament –
That is the first
passage, your Honours. The second is an observation of Justice Toohey
in Re Dingjan [1995] HCA 16; (1995) 183 CLR 323 at 352. Your Honours
will see that at the first new paragraph on that page – and I will
not read out the first two sentences
– his Honour adopted the passage
that I have just referred to from Grannall v Marrickville Margarine, the
requirement there be “a relevance to or connection with the
subject”. Also, your Honours, to the same effect, your
Honour
Justice Kirby in Re Pacific Coal (2000) 203 CLR 346 at 439
[273]. Your Honours will see in that paragraph a reference to an
“ample power to make laws” and then two sentences
further
on:
It is sufficient that the law in question has an appropriate relevance to, or connection with, the subject specified.
Now,
your Honours will see that – if I can invite your Honours
to remain with that case for just a moment because I am coming
back to it in
just a second – in our submission, “relevance” in this
sense, accepting breadth, is not just a matter
of saying this affects
corporations. Questions of substance and degree are involved and that is made
clear from a passage in that
same case of your Honours Justices Gummow
and Hayne at page 411. I wanted to refer to paragraphs 202 and 203
and your Honours in
paragraph 203, in particular, said:
The criterion of validity of the law in question is the sufficiency of its connection with the head of legislative power.
If I could refer also, your Honours – and I will not take your Honours to them – to the passages referred to in the passages in Leask v The Commonwealth which are there referred to in footnote (172). Your Honours, the point of all that is that there is a question of sufficiency in the connection. The mere fact of some connection is not, if I can use the word again, sufficient.
What was said by your Honours Justices Gummow and Hayne in that case reflects, in our submission, what was said in Melbourne Corporation [1947] HCA 26; (1947) 74 CLR 31 at 79, namely, accepting that there is a connection with the head of power, if the connection is “so insubstantial, tenuous or distant” that the law – I am sorry, your Honours, I am putting that badly. What I am seeking to say is that if there is a connection with the head of power, the law will yet not be valid if the connection is “so insubstantial, tenuous or distant” that it is not proper to regard the law as one being with respect to that head of power.
KIRBY J: Given that the corporations power is a persons power, why would one view the regulation of the employment of employees as tenuous or distant from a law with respect to the corporation?
MR JACKSON: Your Honour, for the moment I accept that proposition. I say for the moment, and I will deal with it later, but accepting that proposition, I would not say that the employment of persons is itself tenuous, et cetera.
The last thing I wanted to say, your Honours, before I come to Schedule 1 itself and our argument in relation to it more specifically is this – and I say this in response to an observation in the Commonwealth’s submissions – that although one sees the Melbourne Corporation statement often used, it is one that is expressed “so insubstantial, tenuous or distant”, but the cases to which I have referred earlier and the way in which your Honours Justice Gummow and Hayne put it in Pacific Coal indicate the test is not simply a negative one. It is a question of saying, “Is there a sufficient connection?” It is positive. One can do it in two ways, but it is the same thing put on one side or on the other.
Your Honours, the need for there to be a sufficiency of connection is, in our submission, particularly relevant to Schedule 1. In that respect, your Honours, the decisions suggest that the law must do more than simply direct its attention to the class of persons and, your Honours, a real and substantial connection, in our submission, is not achieved merely by the law directing its attention to a class of persons.
Could I give your Honours four references in that regard, three of which your Honours have had already. One is Chief Justice Barwick in Strickland 124 CLR 468 at 490 to 491. The second is Cunliffe [1994] HCA 44; 182 CLR 272 at 316, 334 and 358. The third is the Bank Case [1948] HCA 7; 76 CLR 1 at 186. Could I come to the fourth, your Honours, and that is Allders International Pty Limited v The Commonwealth [1996] HCA 58; (1996) 186 CLR 630. Now, your Honours, may I say before going to the passages in it, that Allders was a case dealing with section 52, not section 51, but the section 51 cases were relied on as showing the ambit of the expression “with respect to” in both those provisions.
Your Honours, if one looks at the circumstances of the case, what it was was a case where a stamp duty imposed on an instrument relating to a dealing was on a Commonwealth place. The question was whether the State law could be valid because it was the subject one within section 52 and thereby subject to the exclusive power of the Commonwealth, and it was held that it was. In looking at the issue the question was if the Commonwealth had made such a law would it be a law with respect to the place and the issue was one which was to be resolved. It was said that it would not be because the tax was one on an instrument but not on the land or in respect to land.
Your Honours will see that at the bottom of
page 676, after referring in the earlier part of the last paragraph to
the apposite test,
the “constitutional characterisation”, as said at
the bottom of the page, or:
A moment’s reflection will therefore show why the principle that stamp duty is a tax on instruments cannot foreclose the constitutional characterisation required by a provision such as s 52(i).
Your Honours will see an initial discussion with respect to
it at the top of page 677 and then at the bottom of that page, it is
said:
Whatever its character for stamp purposes, the Stamps Act concerns a part of the place acquired by the Commonwealth for public purposes. The connection is not “tenuous or distant”. It is direct, practical and real. Therefore, for other purposes, the Stamps Act is a law with respect to . . . a Commonwealth place. It affects the place in a real and tangible way.
At page 658, going back, your Honours will see at the
bottom of page 658 there is a reference by Justice Toohey to the
passage:
retains its value as to the approach to be taken. It accords with the approach to s 51 taken by the majority in Re Dingjan; Ex parte Wagner.
Your Honours will see then after the quotation from the Bank
of New South Wales Case his Honour went on to say:
It follows that merely because a State law purports to have some operation relevant to a Commonwealth place does not constitute it a law with respect to that place.
Then he refers to the sufficiency of connection required, also, at the bottom of page 638 going over to the top of 639 to the same effect.
Your Honours, could I turn then to the first aspect of the two arguments we seek to present in relation to Schedule 1? As can be seen, the submissions I wish to make are ones in this regard which are directed to the bases upon which the Commonwealth seeks to maintain the validity of that provision. Now, the arguments which the Commonwealth seeks to advance can be summarised, it seems to us, in this way. First, it is said that Schedule 1 by section 5(1) that the Parliament believes that the existence of the system of registration and accountability will enhance relations between relevant employers and employees and reduce the adverse affects of industrial disputation.
Secondly, it said the Parliament elsewhere confers a range of functions and powers on organisations that are registered under the Act. Your Honours will see those set out in detail in paragraphs 532 to 534 of the Commonwealth’s submissions.
The third basis is that relying on the assertion that it has the power to directly regulate the relation between employers as defined and their employees, those heads of power are said also to extend to designing a scheme to regulate and control voluntary organisations formed by employers and employees for the purposes of advising them and representing them in relation to industrial matters.
Finally, the fourth thing, because corporations may be required from time to time to negotiate or otherwise engage in industrial or other business with such entities, the Commonwealth is said to be empowered to legislate as to their registration, conduct, internal affairs and accountability of those entities.
Your Honours, those arguments, in our submission, to speak generally for a moment, should not, we would submit, be accepted. They should not be accepted because to pose them in that way diverts attention from the true issue, namely, whether Schedule 1 meets the description of a law with respect to corporations. The provisions of Schedule 1, in our submission, do not satisfy that test. Rather, they are laws which seek to control tightly and regulate voluntary associations of persons not because of any real or substantial connection of those persons with the corporations but simply because the Act seeks to confer a particular set of powers and obligations on such associations or because corporations may choose or be required to engage in industrial business with such employee associations.
Your Honours, the argument on behalf of the Commonwealth suggests, in essence, that an Act can extend the reach of its own constitutional support by itself conferring powers and obligations on unconnected entities and thereby drawing those entities within the scope of the underpinning power. In the case of section 51(xxv), one can understand that the nature of the power there was one that extended to the creation and regulation of such associations.
One can understand, for example, in relation to, say, section 51(i) that where the nature of the power is a power with respect to trade and commerce, then, as Murphyores shows, it is of the nature of trade and commerce with other countries and amongst the States that a polity can say this type of trade will not take place. This type of trade will only take place with particular persons or classes of persons, or, this type of trade will only take place on certain conditions and laws relating to trade and commerce are laws which for centuries have been used to regulate relationships and promote activities both within and outside the jurisdiction of the body in question.
GUMMOW J: And involving the creation of a statutory creature like the Shipping Commission.
MR JACKSON: Yes, quite, your Honour, Australian Shipping Commission v O’Reilly, yes. Your Honours, that was dealt with, I think, in the Martime Union Case in the last couple of years. But, one does need to bear in mind that if industrial associations are not themselves created by the Act - they are bodies created by their members for a range of industrial, perhaps non-industrial, reasons and what the Act seeks to do is to, in effect, reach out to control the internal structure and the affairs of an entity not itself a constitutional corporation and which does itself engage in any of the activities described in the head of power. Your Honours, the connection between the law and the association is, in our submission, simply not sufficiently substantial. I would refer, in that regard, without taking your Honours to it, to the observations made by, for example, Justice McHugh in Dingjan [1995] HCA 16; 183 CLR 323 at 370.
KIRBY J: First of all, may I get a factual matter clear. Is your client created as an unincorporated association which then registers as an industrial organisation of employees under the Act?
MR JACKSON: There are two plaintiffs, your Honour. The first of them, the federal body, is one which was and remains registered under the Act.
KIRBY J: Is that what gives it corporate life, its registration under the Act?
MR JACKSON: Yes, your Honour.
KIRBY J: And the other body is the State counterpart, is it?
MR JACKSON: State body.
KIRBY J: Of which State?
MR JACKSON: Yes, it is a State body incorporated under the State Act, yes.
KIRBY J: Is that of a particular State or is it of a number of States?
MR JACKSON: Queensland.
KIRBY J: So that having been created in that way for the purposes of arbitration and conciliation, as you say, why is it not competent to the Federal Parliament to make laws regulating it under some other head of power?
MR JACKSON: Your Honour, the answer would have to be that it is competent, your Honour. It just is a question does the relevant power cover it?
KIRBY J: And your clients, are neither of them engaged in any trading activities – many unions do engage in various trading activities?
MR JACKSON: Your Honour, I do not think I can answer that on the material before the Court but I am not really so concerned about the position of ourselves at the moment. We would be affected no doubt by the provisions of the legislation, but may I say I am speaking about the validity of the provisions overall, and of Schedule 1, and what we say about them – and it may be the result if we are right – that the whole of Schedule 1 would go including registration, but that being so, what we are seeking to say is that the result is if Schedule 1 goes, there would be a significant difference made to the Act and a significant number of holes in the cheese.
KIRBY J: I understand the point you make vis-à-vis your client but may your client not be in a difficult situation that if, for example, the legislation is upheld under the corporations power then perhaps the Act merely gives your client the opportunity to register to become a party to the industrial regime which that Act then establishes and your client may want to take the option, otherwise be left out of the cold of the new era.
MR JACKSON: Your Honour, could I say in relation to that, the position would seem to be that we are at the moment – the first plaintiff, I should say, is a body which is subject to the new era, subject to what happens in this case. Now, if the result were that the Act was set aside as being invalid then we would still be there subject to the old regime.
If the Act is set aside in part and the result were that Schedule 1 went but the remainder of the Act remained, you would have a situation where all the provisions relating to organisations or the activities or anything concerning organisations would have no operation so far as that was concerned, because so far as organisations were concerned whether that would result in complete invalidity is no doubt a debatable question, but as your Honour said, it might leave us in the cold but it may be that the result would be the Act would be unable to work as a practical matter.
GUMMOW J: The interrelation between the Queensland and the Federal registration system was discussed in McJannet 184 CLR 620.
MR JACKSON: Yes, I recall that well, your Honour, yes.
KIRBY J: And not only there?
MR JACKSON: No, your Honour, but McJannet was a major case in relation to the particular bodies.
GUMMOW J: And the Queensland legislation?
MR JACKSON: Yes. Your Honours, could I just say, if a commercial firm or partnership was expected to do business with a corporation then in the ordinary course of events it would be surprising if the ambit of the power to make laws with respect to corporations enabled the internal affairs of that body to be governed to the extent contemplated by Schedule 1. Your Honours, in our submission, it is not sufficient to attract the head of power for the Parliament to grant permissive powers to an entity that may have dealings with the corporation in order to establish the law dealing with the complete activities and the constitution of the body as one with respect to the corporation.
We would submit it is more remote from any real or substantial connection with corporations to seek to control the structure and internal affairs of the industrial associations involved on the basis or the mere basis that they are worthy of receiving the powers and privileges accorded to them as is asserted in the Commonwealth’s submissions at paragraph 548. Your Honours, we would submit that in reality there is no relevant distinction between the justification asserted by the Commonwealth for the constitutional support of Schedule 1, on the one hand, and on the other hand, the justification claimed for the law held to be invalid by the majority in Re Dingjan.
Your Honours, perhaps I could just say two other things in relation to what is submitted by the Commonwealth. One matter that was said by the Commonwealth at paragraphs 560 to 563 is that you are not required to become an organisation. If you want to have the benefits of the provision then you would have to become one but you are not required to, it is a matter of choice. We would submit that is not relevant to whether the schedule is a law with respect to corporations. If it purports to have established a scheme which does not otherwise have a requisite connection with constitutional corporations or another head of power then what does it matter, in our submission, whether participation is voluntary or compulsory?
HAYNE J: Does it not then depend upon the nature of the advantages, benefits and detriments, et cetera which attend registration or follow from registration?
MR JACKSON: It may, your Honour. I accept that, but may I say in relation to that that this is where the difficulty comes about in two respects. One is that if one looks to see – and, your Honour, every bit that can be squeezed from the lemon has been put in the paragraphs to which I referred in the Commonwealth’s submissions, but if one goes to those one by one, what one sees is that there are degrees of remoteness. There are degrees of remoteness. What I would simply seek to say in relation to it, your Honours, is that it seems apparent from the various provisions of Schedule 1 that Schedule 1 is intended to operate in toto, in effect, or not at all. I am not speaking for the moment about section 14 or reading down, but it seems that it is intended to operate in toto or not at all.
What I mean by that is that the provisions of Schedule 1, and I will come to some of them in a moment, require that the body, which is the organisation, is to be one which is to be always conducted, in effect, with the very lengthy provisions of Schedule 1 and, in our submission, if that cannot be attained and some of those provisions themselves are ones which on any basis go too far, and many of them in our submission do, then it does not matter that some of the provisions might have more relevance than others. It really all stands together, we would submit.
Your Honours, I was going to refer back to what I have said in connection with the second argument a little more, but may I come to that in a moment. The next point we would seek to make in relation to the Commonwealth’s submissions is this, that at paragraph 568 the Commonwealth submits that the object of Schedule 1 is to ensure the existence of industrial organisations with permanent legal status who are able to participate in the workplace relations system and who conduct their affairs in a democratic, efficient and accountable manner.
Well, your Honours, one is talking about a law with respect to corporations of a particular kind. The object that is referred to in the paragraph to which I have just referred is, in our submission, sufficiently remote from that power itself as not to be within it. Your Honours, could we say there is no relevant comparison with the former system discussed in Williams v Hursey. The registration and accountability of organisations under that legislation was an integral part of the conciliation and arbitration system.
Could we also say – and it is the last thing I want to say about this aspect – that we would submit it is not apt to compare the primary head of power that the Commonwealth relies on in relation to Schedule 1 with legislation enacted in relation to native title and dealing with native title land and waters. The bodies corporate referred to in the Commonwealth’s submissions at paragraph 570 were created for the purpose of wholly native title which is itself the subject of the relevant of head of power.
The second aspect of our attack on Schedule 1 arises from the composition of the organisations contemplated by the Act. The point which we seek to make is that the agglomeration of the classes of persons who may be members of registered organisations is such that the provisions of the law dealing with registered organisations are not laws with respect to section 51 corporations. Your Honours, I will explain that in a moment, if I may.
The starting point is section 19(1) of Schedule 1. It provides the criteria for registration of non-enterprise associations. Your Honours, I am going to deal really with employee associations. What I say would apply essentially to the others as well. Your Honours will see from section 19(1) that the Commission is obliged to grant the application for registration of an association if the various criteria - - -
GUMMOW J: Well, you have to pick up section 18, have you not?
MR JACKSON: Your Honour, the Commission is obliged to grant an application for registration of an association if those criteria are satisfied. The first criterion is that in section 19(1)(a) and your Honours will see there that it is that section 19(1)(a) takes one back to section 18 – the provision your Honour was referring to a moment ago - sections 18A and 18B. Now, that is that the association must be a federally registrable association of relevantly employees.
Your Honours, if I could
return for a moment to section 19(1). Your Honours will see the
requirements of section 19(1)(c) and 19(1)(d)
in the case of the two
associations as to minimum membership. Your Honours were taken to those by
Mr Hutley. Now, the permitted
constitution of an association is important
for present purposes and, your Honours, that can be seen from
section 18B and section
18B(2) which says relevantly that:
A person is a federal system employee if the person is –
and your Honours will see the various criteria set out in
paragraphs (a) through to (e). Now, your Honours, by
section 18B(1):
An association of employees is federally registrable if:
. . .
(b) the majority of its members are federal system employees –
as defined by subsection (2). The definition of that term in subsection (2) means that the persons who are federal system employees may have nothing to do with constitutional corporations or, to put it more broadly, with the power under section 51(xx).
Your Honours,
the result of putting together all the persons who are employees in the various
paragraphs of section 18B(2) is that
you arrive at the persons who may
constitute an organisation, but the organisation you have arrived at is one
where the membership
of it may bear only the slightest relationship to
employment by a constitutional corporation. The situation can be exacerbated by
the numbers provision of section 19(1)(d), that is:
the association has at least 50 members who are employees –
Now, your Honours, of course, the
fact that an organisation is so constituted has no ultimate relevance unless one
considers its role
in relation to a substantive provision. Whenever one looks
at a substantive provision of the Act – and, your Honours, we
would
refer to the list of them that I have given before – one asks
why, in relation to such organisations, it is a law with respect
to a
section 51(xx) corporation, or any of them, that it is dealing
with – and I use the term generically to describe the various
operations of the Act – a body, the permitted composition of which
has so little relationship to the corporation.
Your Honours, I am not sure I have made myself clear in saying that, but the point I am seeking to make is this. The Act provides for various actions or interactions in which registered organisations are involved. Registered organisations are bodies which have a permitted composition which, by virtue of the provisions to which I have referred, may have the remotest connection with constitutional corporations. The composition of them may be significantly removed from that. But, your Honours, what one does have is a situation where the dealings referred to in the substantive provisions of the Act are dealings that a constitutional corporation has with a body which has a permitted composition which is of agglomerate, if I can use that, nature. Now, your Honours, what we would say is that that is something where the relationship between the power and the legislation is effectively quite remote and, in our submission, insufficient.
HAYNE J: Can I understand two aspects of that point and do so by reference to something the Commonwealth says in its submission. If you have that, it may be of assistance. If you go to page 138, demurrer book 886, paragraph 570, particularly the first sentence of paragraph 570, which seems to be the point with which your present arguments are dealing: the Commonwealth contention that “power to regulate employer-employee relationships”, et cetera.
MR JACKSON: Yes, your Honour.
HAYNE J: There seem to me to be a number of answers the Commonwealth seeks to make to it, but two of them are (1) registration is voluntary, (2) any apparent disconformity between who will make up registered organisations and constitutional corporations is, if you like, solved in a self-executing way because employers will deal only with organisations that are of relevance to their particular employment relationships. Now, at the moment the argument you make seems to me to come to the point of saying there is disconformity. Where do you go from that in meeting the two further points that seem to be swirling around in the Commonwealth’s submission?
MR JACKSON: Well, swirling around, your Honour, is correct, in our submission, without finding a home really. Your Honours, what we would say is this - - -
HAYNE J: I am looking for your home, Mr Jackson.
MR JACKSON: I will try it, your Honour. I will try to open the door – front or back, I am not sure. May I say this. If one looks at the first sentence of paragraph 570, then it may well be that the Commonwealth does have power to require or permit there to be organisations with which employers have to or may deal. Now, your Honour, accepting that proposition for the moment, one then has a situation where one has to look at what the law actually does which seeks to implement that. The point we would seek to make is that the law which is seeking to effectuate that is a law which must depend for its validity upon it being a law within section 51(xx) or incidental to the execution of such a law.
Now, one then asks, “What are the bodies which satisfy that test?”, and one has to look to see first what the legislation says about them. The legislation says about them that they are bodies the composition of which is first of all potentially diluted by the 50 per cent requirement, if I can put it that way. The second thing is that the composition of them is diluted by the fact that the persons who may be members of it may fall into a significant number of categories and, your Honours, in relation to that, very few of the people who are members may have anything to do with the corporation.
Now, it is one thing to say you do not have to create such a body – and this is the point I was seeking to make before. It is difficult, we would submit, to see any difference between a situation where one is compelled to do something or one is authorised to do something if there is an absence of alternatives. It is all right to say you do not have to be in it, but if the only way of being in it or the only persons who may be in it are persons whose relationship is potentially remote, then, in our submission, the law-making power is one which is not being properly exercised. That is the first thing.
The second thing, your Honours, in relation to the so-called practicality of the matter, is that once a body is created then the body is the one – a body is prima facie the one that we will be dealing with. There are provisions in Schedule 1 which require – and I will give your Honours a reference in a moment – that in effect only one body would be dealing in a particular area.
The point I am seeking to make about that, your Honours, is there is no guarantee at all that the body with which an employer will have to deal, if that body is to be involved at all, will be a body which itself has much relationship to its employees. The practicality of it, your Honour, it is an easy thing to say but it is not something that really should be used to sustain the validity of those provisions. Your Honours, I do not know that I can say more in response to that than that.
I was going to go, your Honours, to
say that the Commonwealth’s position is not, we would submit, assisted by
the in effect
reading down provisions – or perhaps reading up – of
section 18D. Could I deal with section 18D(3) and (4).
Your Honours
will see that section 18D(3) – this is a kind
of an offering method of legislation. It says:
If the Parliament would not have sufficient legislative power to provide for the registration of an association of employees if a particular class of person mentioned in paragraphs 18B(2)(a) to (e) –
I will come back to that, your Honours –
were included when working out whether the majority of its members are federal system employees, subsection 18B(2) applies as if it did not include a reference to that class of employees.
If your Honours go back for a moment to 18B(2), you will
see that it contains these classes, a person:
(a) employed by a constitutional corporation; or
(b) employed in an enterprise that:
(i) operates principally within or from a Territory; or
(ii) is engaged principally in trade or commerce . . .
(iii) is engaged principally in trade or commerce among the States; or
. . .
(v) is engaged principally in the supply of postal, telegraphic, telephonic or other like services; or
(vi) is engaged principally in banking . . .
(vii) is engaged principally in insurance . . .
(c) employed in public sector employment; or
(d) employed in Victoria . . .
(e) an independent contractor who, if he or she were an employee performing work of the kind which he or she usually performs as an independent contractor, would be an employee who could be characterised in one or more of the ways mentioned in paragraphs (a) to (d).
Your Honours, the way in which 18D(3) is expressed to work is that it provides that if there were not sufficient legislative power to include a class then section 18B(2) applies as if it did not include a reference to that class of employees. That addresses a rather different problem, namely, as we would submit, that the words of a provision of 18B(2) or a provision of 18B(2) itself may go too far.
The first case is indicated by, for example, the use of “principally” “or from” in section 18B(2)(b)(i). There may be an argument at some point about whether either of those requirements goes too far in relation to the territories power. The other, your Honours, that I said the – one was the use of too many words or too tenuous a connection. The other is the inclusion of an inappropriate class that might, for example, deal with paragraph (e), the independent contractor provision.
Your Honours, the way in which
18D(3) operates does not, in our submission, deal with the difficulty here.
Here, the problem, your
Honours, is not really with the ingredients of the
cake, as it were, but rather with the nature of the cake resulting from the
ingredients.
Nor, in our submission, if I could turn to section 18D(4),
does it assist. It says:
If the Parliament would only have sufficient legislative power to provide for the registration of a particular association of employees if the membership of the association were entirely made up of one or more of the following –
and your Honours will see the
list there referred to. Then, despite section 18D(1), it is not federally
registrable unless it is,
to put it shortly, made up in that way.
Your Honours, again the same issue arises because it refers in
section 18D(4)(a) to all
federal system
employees.
Your Honours, could we say that the legislation in this respect is analogous to – and I do not put it higher than that – the provisions held invalid in Strickland 124 CLR 468. Can I go to that case for a moment, your Honours. Your Honours, the provisions there in question are at pages 481 to 482. Could I refer, in particular, to section 35 and then at page 483 – I do not think your Honours need to go to the detail of section 35, but if I could go to section 7 which is at page 483. Your Honours will see that the way in which the provision was framed was to refer to a number of potential heads of power. The particular ones, to put it shortly, were 7(1)(a) and also 7(2) – trade and commerce and then corporations.
Now, your Honours, what was said by
Chief Justice Barwick at page 491, in the passage commencing at
the bottom of the page, was that
he referred to the third question and the most
difficult. He said had the Parliament made – your Honours, I
will not read
it out, but if one goes to about the seventh line on
page 492, he went on to say:
That question, in turn, resolves itself into two questions, (i) can what the Parliament has enacted be so construed as to disclose such a law? (ii) did the Parliament intend such a law?
What was held in the case,
to put it shortly, was that even if one treated the law as being a law expressed
as being of general application
but limited in the ways in section 7(1)(a),
take the example, and 7(2), that one could not read the provision overall as a
provision
which should be construed distributively. Your Honours will see
that at page 495. It is a passage that goes from about point 2
on
that page through, really, to page 498. To the same effect, your Honours,
Justice Menzies at pages 502 to 503 and 505, and Justice
Windeyer
at pages 512 to 513. Justice Owen agreed with the Chief Justice
and Justice Menzies and - - -
KIRBY J: One gets a bit of a feeling that this is a breath of an earlier bygone age. I mean, the corporations power has been looked at many times or several times since.
MR JACKSON: Your Honour, the particular point, I think, is not one of the ambit of the power itself as such, but rather a question of what happens when you put a number of ingredients together. Could I just give the last reference before answering your Honour further, and that is Justice Walsh at page 518 through to page 521.
GUMMOW J: Now, a lesson of Strickland was learned when the Trade Practices Act was framed.
MR JACKSON: Quite, your Honour, yes, and what I was going to say was that one can see if one looks, I think, at section 6 of the Trade Practices Act that what was done in it was to make a provision saying this is the Act, first of all, and then the second operation of the Act is, this is the Act amended in these ways and so on. Each of them related to - - -
GUMMOW J: So looking at section 35 that you just took us to on 481, the lesson learned was to say you do not say “the parties to which”, you fix on a corporation, and so section 52 talks about corporations not doing things. Then you have a section up the front that says, notionally, read it all again as if it said people using the telephone will not do this and so on - - -
MR JACKSON: Yes, we have referred to that, I think, your Honour, in our written submissions, albeit shortly.
GUMMOW J: This falls short of the trade practices solution, this present Act?
MR JACKSON: Yes, it does, your Honour, and one sees indeed that it is a case where – and again, this has a resemblance to Dingjan. It is a case where there seems to be, by the insertion of section 18D, a way in which it is said it should be read down, but the way in which it is read down would not answer the particular question. So the particular issue – and, your Honours, even if one goes - - -
GUMMOW J: What is that particular issue?
MR JACKSON: What one has, your Honour, in section 18D – if I could deal with that first - is that it says if any of these should not be in then cut it out. What we say is that what it does not deal with is that even if it is applied what you have arrived at is an association which is then registered as an organisation, but the classes of persons who may be members of that association and qualify for it, thus giving it the ability to be registered, are such that the relationship of that body, when any provision of the Act in which a registered organisation is dealt with, there is no sufficient relationship to a corporation.
GUMMOW J: The particular corporation?
MR JACKSON: No, I am sorry, there is no particular identified relationship to a section 51 corporation. All that you have is in any circumstance in which a provision of the Act deals with the participation of a registered organisation then the registered organisation is such – and I use the word perhaps inaccurately – an agglomerate or potential collection of persons whose relationship to the corporation may be non-existent or existent that one cannot really judge, and in those circumstances, the law which invites or requires or allows the participation of the organisation is one which itself cannot be described as a law with respect to a section 51(xx) corporation.
HAYNE J: That is to say the ultimate point of the submission is a submission about the validity of those parts of the Act which provide for intersection with organisations?
MR JACKSON: Yes, your Honour.
HAYNE J: And that those aspects of the law are, you say, not laws with respect to corporations; that is, a law using organisations formed as they are is not a law with respect to corporations.
MR JACKSON: That is so, your Honour, yes.
HAYNE J: And that requires then, does it not, particular attention to the particular provisions which use organisations or intersect with organisations.
MR JACKSON: I am sorry, your Honour, may I just say one thing about it. The consequence of the acceptance of the argument may be that in some cases the provision has a more limited operation. In some cases it may be that it has no valid operation or simply no operation; there is nothing on which it can operate because there are no such organisations.
HAYNE J: But is the extension of the argument that it is beyond power to make a law either requiring or permitting constitutional corporations to conduct industrial negotiations only with, in effect, the industrial equivalent of the licensed migration agent, an actual person?
MR JACKSON: No, it is not, your Honour. It does not go as far as that. This argument assumes the correctness of the view that, I think as the first sentence of paragraph 570 of our learned friend’s submissions, namely that organisations can be established, but it would require, because one is talking about a law with respect to the corporations, it requires a much greater connection with the corporation – I am sorry, it requires that there be a much greater perceived connection with the corporation in the construction of the organisation than is in relation to the conciliation and arbitration power.
GUMMOW J: What is the corporation you are speaking of?
MR JACKSON: Well, your Honour, I am speaking of the corporation as employer used in the various substantive provisions of the Act.
GUMMOW J: There might be no employees of the particular corporation who are members of an organisation - - -
MR JACKSON: Yes, quite.
GUMMOW J: - - - which is in dispute, for good reasons, with that corporation. You say that is too remote?
MR JACKSON: Too remote, your Honour, yes, too remote. That is why, your Honour, to make the underlying assumption – I do not mean this in any way offensively – that it is possible just to transfer, in effect, to lift the provisions from the section 51(xxxv) power to section 51(xx) is incorrect, because you have lost half of the body.
HAYNE J: Do we find in the written submissions at any convenient point a collection of the provisions where there is intersection with organisations?
MR JACKSON: Your Honour, that is what I was seeking to say before. Our learned friends actually in their submissions – I referred unkindly to them squeezing the pips of the lemons, but your Honours will see them referred to in paragraphs 532 through to I think 534 at pages 126 through to 130.
Your Honours, could I conclude on the Schedule 1 issue by saying that we have set out in our written submissions, commencing relevantly at page 556, paragraph 55(b), some submissions concerning the criteria referred to in the passage from Grain Pool of Western Australia 202 CLR 479 at 492 [16], the provision stating how section 51 powers are to be utterly considered, interpreted.
I wanted to refer very briefly, if I may, to two aspects that we have referred to in our written submissions. The first concerns the expression commonly used “with all the generality which the words used admit”. Your Honours, what we say about that is that the actual meaning of that phrase is really what was said by Justice O’Connor in Jumbunna and is quoted by Justice Mason in the Tasmanian Dam Case 158 CLR 1 at 128.
KIRBY J: At the end of the well-known passage he says you use it with all the ambit that the words connote but not if the context or any other factor suggests otherwise.
MR JACKSON: Yes, that is so, your Honour. I will not read it out. Your Honours will see it at page 128 of that case. The second thing, your Honours, in relation to that expression is that the term “with all the generality”, et cetera, refers to the words actually used in the relevant placitum of section 51. One does not convert those words into something larger simply by recitation of the phase “with all the generality”, et cetera. Your Honours, there is no principle – and we refer to this in paragraph 69 of our written submissions – that whenever the ambit of a Commonwealth legislative power is called into question any ambiguity is to be resolved in favour of the Commonwealth.
Your Honours, could I just say something also about the dual or multiple characterisation test. Your Honours, a law which does not have a sufficiently substantial connection with a head of power is not elevated into one which does have such a connection simply because it is also a law with respect to a topic not within Commonwealth legislative power. The point we are seeking to make, your Honours, is that of course laws will often be capable of being characterised in more than one way and it is sufficient, we would accept, if one of the characterisations is as a law with respect to a subject of Commonwealth power. But that does not bear on the way in which the sufficiency of determining whether the law is within power is worked out. Your Honours, a conflation of the various concepts, in our submission, can lead to an expansion of the power.
Your Honours, may I move to the second issue. This is the one dealt with in our written submissions page 48, paragraphs 170 to 184. It concerns a number of provisions of the Act to which I might mention. They are section 356, which is the one I will address particularly, also Schedule 2, clause 5, Schedule 8, clause 55 and Schedule 4 of the amending Act, item 2(1).
Your Honours, may I deal with
section - your Honours will see those numbers again, if one is looking
for them, at paragraph 633 of
the Commonwealth’s submissions. May I
deal with section 356 which is the prohibited content provision and may I
come to -
as is apparent from section 358 of volume 1, it is
provided that:
A term of a workplace agreement is void to the extent that it contains prohibited content.
Now, that turns, of course, on the concept of prohibited
content, as do the other operative provisions of Subdivision B of
Division
7 and, your Honours, they are these. By
section 363(1):
If the Employment Advocate is satisfied that a term of the workplace agreement contains prohibited content, the Employment Advocate must vary the agreement so as to remove that content.
Sections 359 through to 362, section 363(2) to (4) and
section 364 all deal with procedural and consequential matters. One then
has
section 365 which provides in subsection (1) that:
A person contravenes this subsection if:
(a) the person seeks to include a term:
(i) in a workplace agreement . . .
(ii) in a variation to a workplace agreement in the course of negotiations for the variation; and
(b) that term contains prohibited content –
and there is a requirement for recklessness also. Then
section 366 deals with reckless misrepresentations as to whether a term for
workplace agreement contains prohibited content. Now, your Honours, what
is clear, of course, from the terms of those provisions
is that each turns on
the meaning of “prohibited content”. So too we mention in passing
does section 436 of the Act.
Your Honours, the meaning of
“prohibited content” is found in a combination of section 321
and 356. Section 321 simply
directs one to section 356 and
section 356 provides simply that:
The regulations may specify matters that are prohibited content for the purposes of this Act -
and nothing more. The terms of the provisions so far referred
to give no guide to the possible content of prohibited content. Now,
the
general regulation-making power - perhaps I could just say one thing first.
Section 356 says the regulations may specify matters,
et cetera. One
goes then to the general regulation-making power. It is found in
section 846. Your Honours will see the relevant
part of it appears to
be 846(1)(a) allowing the Governor-General to:
make regulations, not inconsistent with this Act, prescribing all matters:
(a) required or permitted by this Act to be prescribed –
Section 356 would seem to fall into that category.
Of course, as the opening words of section 846 say, any such regulations must not be inconsistent with the Act, and no doubt inconsistency can arise directly or indirectly. It is a little difficult to see how there could be any direct inconsistency in relation to prohibited content unless perhaps it be that a regulation specified as prohibited content something that was required content. But leaving that aside, so far as any indirect inconsistency is concerned, the regulations no doubt have to be consistent with the Act.
I have said those last two things, your Honours, because the Commonwealth’s submissions at paragraph 652 rely on decisions such as Shanahan v Scott [1957] HCA 4; (1957) 96 CLR 245 at 250, if I could take your Honours there for a moment, to say that the necessary or convenient provision of section 846(1)(b) – not (a) – only permits regulations for the purpose of carrying the primary Act into effect, and your Honours will see the reference at the top of page 250 to the end of the first new paragraph.
GUMMOW J: Your complaint is, looking at paragraph 653, one is not given a clue as to the purpose for which the power has been created.
MR JACKSON: That is so, your Honour, yes.
GUMMOW J: It is naked.
MR JACKSON: Your Honours, that is what I was going to say, is that if one tries to find from the Act what is to be prohibited content, the statement of the principal object in section 3 of the Act is very broadly expressed and whilst one might feel - - -
KIRBY J: So broadly as to include reference to corporation, as Justice Callinan pointed out.
MR JACKSON: As not to include, yes. Your Honours, one might feel a feeling of warmth come through when reading it but, having said that, the situation which emerges is that it is expressed in the very broadest terms.
CALLINAN J: You would expect at least some window dressing, Mr Jackson, would you not, or an appropriate reference?
MR JACKSON: Your Honour, of course. But, your Honours, nor does Part 8 of the Act, in which these provisions are found, itself contain any object. Some of the parts of the Act do. There are no objects set out in Part 8. One just comes down, as we say in our written submissions, paragraph 177, to a position where, try as one may, all one can say in the end is that prohibited content is whatever the Governor-General in Council chooses to prescribe as being prohibited content.
Your Honours, no matter how one tries to finesse it, the ambit is not further identified. Your Honours, that gives rise to two related questions. One is whether such a provision can be described as a law for the purposes of section 51, and that is really to just simply say in another way what is the other half of the question: is it a law with respect to a section 51 head of power?
Your Honours, as is apparent from
paragraph 178 of our written submissions, we accept that the power to make
laws under section 51
includes a power to make laws which confer delegated
legislative power on the Executive Government. That has been decided for many
years since at least Victorian Stevedoring in 1931. We accept too,
your Honours, that delegated legislative power may be widely expressed.
May I give your Honours a reference
in that regard to what was said
relatively recently in Plaintiff S157/2002 v The Commonwealth (2003)
211 CLR 476 at 512 [102]. Your Honours will see in that
paragraph, the fifth line:
It is well settled that the structure of the Constitution does not preclude the Parliament from authorising in wide and general terms subordinate legislation under any of the heads of its legislative power. Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan may be cited for that proposition.
If I could invite your Honours to remain in that case for
just a moment, what we would submit is that in the end the subject matter
of the
law must be capable of relation to a head of power. In that regard, may I take
your Honours to the remainder of paragraph
102, where it was
said:
The provisions canvassed by the Commonwealth would appear to lack that hallmark of the exercise of legislative power identified by Latham CJ in The Commonwealth v. Grunseit, namely, the determination of “the content of a law as a rule of conduct or a declaration as to power, right or duty”. Moreover, there would be delineated by the Parliament no factual requirements to connect any given state of affairs with the constitutional head of power. Nor could it be for a court exercising the judicial power of the Commonwealth to supply this connection in deciding litigation said to arise under that law. That would involve the court in the rewriting of the statute, the function of the Parliament, not a Ch III court.
Now, your Honours, in our submission, one sees notions to
that effect in Victorian Stevedoring [1931] HCA 34; (1931) 46 CLR 73. May I
take your Honours to the passage at page 101 in the reasons for
judgment of Justice Dixon. At page 101 your Honours will
see in
the second line he refers to his opinion in Roche v Kronheimer and then
said about 10 lines down that page:
This does not mean that a law confiding authority to the Executive will be valid, however extensive or vague the subject matter may be, if it does not fall outside the boundaries of Federal power. There may be such a width or such an uncertainty of the subject matter to be handed over that the enactment attempting it is not a law with respect to any particular head or heads of legislative power.
Now, your Honours, in the same case Justice Evatt at
page 119 said – and your Honours will see he made an
assumption in the
penultimate paragraph on the page about a form of regulations,
and then said in the last paragraph:
I think that in ordinary circumstances a law in the terms described would be held to be beyond the competence of the Commonwealth Parliament . . . it must be possible to predicate of every law passed by the Parliament that it is a law with respect to one or other of the specific subject matters mentioned in secs. 51 or 52 of the Constitution.
Your Honours, the passage – and I will not read it out – goes through page 120 through to page 121, about the bottom of that page.
Could I just pause to say, your Honours, that whilst the specific issue that I am dealing with now was not itself referred to, the pages to which I have referred appear to have been referred to approvingly or, at the very least, without adverse qualification by the Privy Council in Boilermakers’ Case [1957] HCA 12; 95 CLR 529 at 545 to 546. I will not take your Honours to them. They do not go beyond that. Your Honours, could I just say that we would refer also to the passages from Wishart v Fraser and the Communist Party Case that we have set out in our written submissions in paragraph 181.
Relationship to a head of power may readily enough be seen where very broadly expressed regulation-making powers are conferred in relation to, say, trade and commerce because, as I submitted earlier, it is of the essence of trade and commerce that trade of particular kinds may be prohibited, permitted, either absolutely or conditionally, and, again, the same is true of the taxation power, although there are some limitations. The nature of the power in section 51(xx) does not, in our submission, provide any such guidance.
Your Honours, if I could turn for a moment to the Commonwealth’s submissions at paragraph 644 and following. They advance a number of propositions. First it is said at paragraph 644 that the regulation in question in Victorian Stevedoring was a very broadly expressed provision. So, too, it was, but it made apparent the possible ambit of the regulations and it was a section 51(i) case. Secondly, there is a reference to Permanent Trustee Australia v Commissioner of State Revenue 220 CLR 388 and a reference at page 420 to page 421. Your Honours, that case was not concerned with an attack based on lack of identifiable subject matter.
The third thing is there is a reference to Capital Duplicators
[1992] HCA 51; 177 CLR 248 referred to in paragraph 650 of the
Commonwealth’s submissions. That case was concerned with the territories
power, not powers
under section 51. That is why it was a case concerned
with the abdication of power argument. Your Honours will see that at
page 265 at about point
8. Could I just say, your Honours, in
relation to the passage from Capital Duplicators relied on by our learned
friends, that is actually a passage from the judgment of what is perhaps not the
minority but equally not
the majority. The principal reasons seem to have been
those of Justices Brennan, Deane and Toohey. At page 283 at about
point 4
your Honours will see that their Honours there
said:
The question is not whether the Parliament has abdicated its legislative powers: it cannot abdicate and it has not abdicated its powers under s. 122 of the Constitution. Nor is the problem whether Parliament could delegate its legislative powers: it can, but it has not done so.
Your Honours will see that those joint
reasons – I am referring to the abdication part of it,
your Honours – appear to
have been agreed in by
Justice Gaudron at page 284 at about point 6.
KIRBY J: That injunction against not abdicating legislative power is frequently expressed, but I do not remember it being very often applied in recent years.
MR JACKSON: No, your Honour, it is not - - -
KIRBY J: Maybe that is a feature of the complexity of legislation nowadays and of the social matters that it has to regulate.
MR JACKSON: Could I just say, your Honour, that it really derives from a slightly different milieu. The milieu from which it derives concerns subordinate legislatures or legislatures that were created by another and then given self-governing powers. It also arises in the case of legislatures which are not legislatures of limited subject matter powers, as in the case of the Commonwealth.
One sees in Cobb & Co v Kropp, for example, which related to the powers of Queensland, a question was whether the conferral on the Commissioner of Transport, or something of that nature, of the power to fix registration fees or transport fees was an abdication of power. It was held it was not because Parliament could always take it back. So one is not really concerned with abdication of power but a question whether the law has made something which is a law relating to a particular head of power.
If one goes back to page 280 at the top of
the page, one sees the way in which the issue is expressed by
Justices Brennan, Deane
and Toohey. It is said:
Although the legislative power of the Commonwealth is confided to the Parliament by s. 1 of the Constitution, it has been an accepted doctrine, at least since Victorian Stevedoring, that the separation of powers does not restrain the power of the Parliament to make a law “conferring upon the Executive a power to legislate –
and then one notes
the remaining words, your Honours –
upon some matter contained within one of the subjects of the legislative power of the Parliament”.
Could I refer also to page 282
about point 5, the paragraph commencing there “on a subject within
the exclusive power of the
Parliament”.
Your Honours, the propositions which are set out in our learned friends’ submissions at pages 652 to 653 really have little to do with this case, we would submit. Here one knows what the regulation is to do. It is to provide prohibited content, but the Act provides no guidance at all as to its content. Nor is the case one where any regulation, as distinct from the regulation-making power, would be the thing that was invalid. Here there is no identifiable subject matter at all. Your Honours, could I say a couple of things finally in relation to this aspect of the matter.
KIRBY J: Would it not be a reasonable inference that the prohibited content was that which the Act has dealt with in specific terms.
MR JACKSON: Your Honour, there is no particular reason to take that view because it may include that, if one can identify what that is. There would seem to be no particular reason for saying that prohibited content was what is provided for by the regulations if it is already prohibited by the statute, and there is no limitation of that nature or of any other nature contained in section 356; none at all. It is a provision, your Honour, which in the end one comes back to saying, as I submitted earlier, the best one can say about it is that prohibited content is whatever they choose to prohibit. Your Honours, could I refer to some specific matters in our learned friend’s submissions, paragraphs 655 to 660. The first of them concerns what is in paragraphs 655 and 656 which deals with Justice Evatt in the Victorian Stevedoring Case [1931] HCA 34; 46 CLR 73. Could I go to page 120 of that case.
KIRBY J: What is the point being dealt with here?
MR JACKSON: Your Honour, the point being dealt with, as your Honours will see, it is a comment that our learned friend’s submissions make at paragraph 655 to 656 about what Justice Evatt said in Victorian Stevedoring. What they say was in effect that ordinarily, as you will see the emphasised passage – a regulation-making power will retain the character of the law with respect to the subject matter dealt with in the statute. But could I just say these things about it. One needs also to look at what Justice Evatt said in paragraphs 2, 5, 6 and 7 of his reasons for judgment at pages 120 to 121.
The important part of paragraph 5 is that it assumes that there is a scheme contained in the statute itself to which some reference can be made to provide the subject matter of the regulations and that that was intended – because what he intended appears from what he said at the bottom of page 123 and the top of page 124 in the way in which he dealt with section 3 of the Act there in question. There is no such criterion here.
Your Honours, our learned friends refer in paragraphs 657 to 660 to the passage I referred to earlier from the joint reasons in Plaintiff S157. Could we just say in relation to what they say about it that if one goes to the actual passage to which I referred earlier which is in 211 CLR at 502 to 503, what is important to note is that your Honours referred to the absence of any factual statement which would connect any given state of affairs with the constitutional power.
Your Honours, one sees in the present case the Commonwealth is really reduced in this case to saying what appears in paragraphs 659 and 660, namely, that the power to make regulations of the kind in question is tied to the heads of power that support Part 8. Well, we would accept that, but, your Honours, what that is then said to mean is that because an employer as defined will be a party to the workplace agreement, that is enough. Well, that really does not deal with the question of the need for something in the Act to say what the regulations identifying the matter which is prohibited content are to deal with.
Your Honours, may I deal
with the third aspect we want to deal with and that concerns the coercive
provisions of Part 9 of the Act and those provisions are to be seen in
sections 496 to 499. We deal with this aspect in our written submissions
at around
paragraph 118. Your Honours will see and your Honours have been
taken to these provisions already on a number of occasions. May
I endeavour to
say what I wanted to say about them very shortly? If one goes to
section 496(1) it provides that:
If it appears to the Commission that industrial action by an employee or employees, or by an employer, that is not, or would not be, protected action:
(a) is happening; or
(b) is threatened, impending or probable; or
(c) is being organised;
the Commission must make an order that the industrial action stop, not occur and not be organised.
Now, your Honours, as is apparent from
our written submission - we analyse the provisions in our written
submissions at paragraphs
119 and following. Your Honours will see that
set out through to paragraph 124.
The particular feature on which
the provisions turn is the meaning of “industrial action”, a term
defined by section
420. Your Honours will see that
section 420(1) provides for any action which falls into a number of
categories which we have endeavoured
to spell out in our written submissions in
paragraph 124. That:
conduct is capable of constituting industrial action even if the conduct relates only to part only of the duties that employees –
section 420(2)(a) and it may include “a course of conduct”, 420(2)(b). Now, your Honours, the point we would seek to make about this provision is set out in our written submissions at paragraph 127 where we say if one asks the core question, are they provisions with respect to section 51(xx) corporations, we would submit it is not possible to discern any feature of them which gives them that character apart from paragraph (a) of the definition of “employer” and the resulting definition of “employee”.
Your Honours, there were three features to which we point as illustrating the lack of a relevant relationship between the corporations powers and section 496(1). One concerns the range of persons who may apply – that is in our written submissions at paragraph 128 – and the fact that effect on a corporation is treated as not having relevance. Your Honours, the Commonwealth’s submissions as to the first of those things, in paragraph 399, say that the range of persons on whom standing is conferred is irrelevant to an assessment of the connection between the law and section 51(xx).
Your Honours, that argument, if it be correct, would have the consequence that the provisions could draw no support, of course, as well, the identification of a range of persons entitled to apply for the order. What it means, your Honours, is that it could not claim that section 496(1) was a law with respect to corporations because of the connections to corporations set out in subsection (4).
Your Honours, if one takes the case where the industrial action has no effect on an employer corporation at all, why is a claim by another person, whether affected directly or indirectly, not analogous to that held invalid in Dingjan? Our learned friends at paragraph 396 contend that by definition industrial action must adversely affect the employer in question. That assertion has to be viewed in context. The width of the definition of “industrial action” means that there may be a range of conduct which falls within the definition but which has no or no real or substantial effect on the employer. Your Honours, I am not sure if I have exhausted the time that I - - -
GLEESON CJ: How long do you think you will need to complete your submissions?
MR JACKSON: Your Honour, I think I will be 20 minutes.
GLEESON CJ: We will resume at 2.00 pm.
MR JACKSON: Thank you, your Honour. I did not mean to abbreviate the hearing now.
GLEESON CJ: No. Why do we not adjourn now then? We will resume at 2.00 pm.
AT 12.43 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.04 PM:
GLEESON CJ: Yes, Mr Jackson.
MR JACKSON: Your Honours, may I conclude on this issue by saying just these things. The width of the definition of “industrial action” in section 420 means that there may be a range of conduct which falls within the definition but which has no or no real or substantial effect on the employer. The Commonwealth in its written submissions in paragraph 399 asserts that the sufficiency of the connection between section 496(1) and section 51(xx) is supplied by the fact that an employer, as defined, is involved in the relevant industrial action and involved, that is, without there necessarily being any substantial effect on the employer.
Your Honours, if Parliament were able to legislate on every aspect in which a corporation was “involved” the range of field of activities over which the Commonwealth could legislate would be nearly limitless. Your Honours, otherwise, we rely on our written submissions in relation to this matter.
May I say briefly something about the former Part VIIIA. I do not want to go into the detail of it but may I just indicate why the matter is of continuing relevance. We have given your Honours just the relevant part – Part VIIIA – in two pages from the Act, your Honours. May I take a moment just to explain what it is. It is not now in the Act but it was in force during the period from 14 December 2005 until 27 March 2006. As your Honours can see from the editor’s note under the heading to the part, it was originally numbered Part VIAAA but was then renumbered as Part VIIIA. Notwithstanding its repeal, the provisions of Schedule 8 to the Act mean that it has a continuing effect.
The continuing effect arises from the
fact that section 167, the only provision of the Part, contains
subsection (2) which says that:
If an eligible instrument –
defined in subsection (1) –
would, apart from this section have the effect –
there referred to, then:
the eligible instrument does not have that effect.
Your Honours, the significance of the provision
is that if it is valid, it meant that at the time in March 2006 when the new Act
came into force the provision of the State Act or instrument was not in force at
the relevant time, the consequence being that the
provision could not be
continued in operation as a preserved agreement. We summarise that in our
written submissions at paragraph
268 to 271; otherwise we refer to our
written submissions on that issue.
Your Honours, the last matter on which I wish to address some oral submissions concerns the ambit of the power contained in section 51(xx). There are, of course, difficulties in endeavouring to define the limits and in a sense the subject of the power conferred by that provision but, in our submission, there are some indications that there are some limits. May I deal with that first. In that regard, it is necessary, we would submit, to read the provisions of the Constitution, more particularly section 51, as a whole.
In that connection, one sees in section 51(i) that intrastate trade is excluded as a subject matter. One sees in section 51(xiii) and (xiv) that banking and insurance are dealt with as separate subject matters. They are matters to which, one might have thought, section 51(xx) might possibly otherwise have included. Section 51(xxxv) provides for limited but specific powers for dealing with “industrial disputes extending beyond the limits of any one State”. The selection of one method of preventing and settling industrial disputes and the fact that it is limited to those extending beyond the limits of any one State, suggests that, with a qualification to which I will come in just a moment, other powers should not be given an interpretation going beyond that.
The qualification I make, your Honours, is similar to that which is applied in the case of the guarantee of just terms, section 51(xxxi), namely, that the nature of other powers may compel a different conclusion. One such power is section 51(i). At the time of Federation the regulation of employment conditions of, for example, seamen engaged in trade of that kind was recognised as a possible aspect of that power.
Your Honours, I do not think I need to take your Honours to the detail of the case but could I just refer your Honours to paragraphs 36 and 37 of Re Maritime Union; Ex parte CSL Pacific (2003) 214 CLR 397 at 413 where there is some short historical discussion. So, too, your Honours, with the defence power, but it is not necessarily so in relation to section 51(xx). It is a possible view but not necessarily so. The point we seek to make so far, if I could put it this way, is that there are no particular indications in section 51(xx) that a wider view should be taken.
Could I pause at that point to say that your Honour Justice Callinan in The Minister v B [2004] HCA 20; (2004) 219 CLR 365 at 438 [213] referred to the desirability of reading the various powers in the Constitution together and, your Honours, whilst views may differ – and views may differ amongst members of the Court perhaps – as to the extent to which considerations of that kind should be applied, there is no doubt, in our submission, that it is appropriate to read particular powers and their ambit in the light of the existence of other powers, particularly those limited, albeit limited, but specific way with a particular subject matter.
Your Honours, could I come then to ask, what is the test that should be applied? In our submission, your Honours, the power extends to - - -
KIRBY J: Are you going on to say how one reconciles (xx) with (xxxv), because I have a question on that issue.
MR JACKSON: Well, your Honour, what I was going to say was this, that one has in the Constitution in section 51(xxxv), if I can perhaps use the expression again, a specific but limited power given in relation to “the prevention”, which is a wide term, not quite as much used as perhaps it might have been, “and settlement of industrial disputes” having another quality, “extending beyond the limits of any one State”. Prime facie, our submission is that leads to the conclusion that that is the area of industrial disputation, industrial regulation that is left to the Commonwealth.
I say prime facie because that takes one to the qualification that I adverted to and, as I submitted earlier, it is a qualification similar to that to be applied in relation to section 51(xxxi) just terms. What that is is that the nature of a particular power may be such that that inference should not be drawn because of the existence of that power and I refer - - -
KIRBY J: In your written submissions you point out that the defence power has been interpreted in wartime to permit, in a sense, the bypassing of the (xxxv) power and you also mention the employees of the Commonwealth as persons whose industrial conditions can be regulated. There is a third category, I think, and that is those matters which under the former law were dealt with under the external affairs power.
MR JACKSON: It is a possibility, yes.
KIRBY J: What I would like to know is how one can, as it were, accommodate those three particulars with the view that section 51(xxxv) is to be read as providing a subject matter of federal legislative power that leads to the reading down of 51(xx). I can imagine with the defence power that you could say that is because the very essence and nature of the defence power is to respond to defence crises and therefore it grows and recedes, but how does one use that for the other two categories that have been exceptions and have been upheld by this Court as exceptions to the federal regulation of industrial matters?
MR JACKSON: May I say this. First, your Honour, if I might put in a sense a qualification to what your Honour put to me, because the last words of the proposition as your Honour first put it to me were that would involve reading down section 51(xx). What we would say is it involves reading what section 51(xx) has to say, identifying what it has to say. But the point we would seek to make is this, your Honour. The existence of section 51(xxxv) indicates what, in a sense, prima facie is the extent of the parliamentary power to deal with industrial matters. May I put it in that way, to put it shortly?
CALLINAN J: Could I just add this – I do not mean to interrupt – which we now know, having regard to the jurisprudence of this Court, recognising paper disputes is an extremely expansive power and one which might in some circumstances be more expansive even than what is contended for under the corporations power so far as industrial disputes are concerned.
MR JACKSON: Bearing in mind particularly, your Honour, the use of the word “prevention”.
CALLINAN J: Exactly.
KIRBY J: But the only thing is it has to enlist an arbitrator or conciliator. It cannot be done directly.
MR JACKSON: Quite. Your Honour, I accept that. The point I am seeking to make about it, your Honour, is this, that one has given by 51(xxxv) a power. It could have been broader, it could have been narrower. It could have been extended to all disputes whether they be intrastate or interstate but the power that was given was one that was specific but to a degree limited. The fact that a subject matter is given there as a subject of legislation - it could have been given in broader terms but selected in rather narrower ones – does indicate, in our submission, that prima facie the power that is conferred is the power dealing with the broad subject matter that it is in a sense part of.
That, of course, is subject to contrary indications. One sees contrary indications as, your Honours, and I think I am repeating myself in saying this, as one does also with section 51(xxxi). One sees contrary indications by the nature of some of the powers. Take defence. One would think that the nature of the defence power is such that it calls for the ability to bring people into government service, put them out of government service and to regulate the conditions upon which the economy can operate so that there is money to pay for war.
CALLINAN J: Mr Jackson, on one view it contemplates, the defence power, a continuing state of martial law because it contemplates control of the defence forces to execute and maintain the laws of the Commonwealth.
MR JACKSON: Yes.
CALLINAN J: So we could, in theory, be in a perpetual state of martial law. You would not need the AFP, the Australian Federal Police, you would call out the army as happened - - -
KIRBY J: I do not think this should be encouraged.
CALLINAN J: No, and I am not encouraging it but really it is a counsel for not reading all of the Constitution with all of the generality that the words can bear.
MR JACKSON: Your Honour, there is a temptation to assent entirely to everything your Honour said but may I perhaps say this, that - - -
CALLINAN J: I know there are other people here, Mr Jackson.
KIRBY J: Justice Callinan is beginning to lose me on his argument.
MR JACKSON: Your Honours, just coming back to what Justice Kirby was saying, when one comes to – and I said the nature of the power. I referred to defence. If you go to trade and commerce with other countries, at the time of Federation it was recognised that the subject of trade and commerce with other countries might indeed – I think it was only two years later that the United States Supreme Court after some vacillation said it included the power to regulate terms and conditions. That was certainly a view in Australia well before Federation.
Your Honours, when one comes to the taxation power, there is no doubt that the taxation power is something that is not just used and never has been just used to raise money. Of course it is in large measure but the taxation power, or the power to tax, is one that has been used to encourage or discourage conduct of particular kinds. There are obvious simple examples. But the existence of tariffs reflects the ability to encourage or discourage particular types of conduct. Your Honours, it may well be too that external affairs is an area where the nature of it, as now understood, can result in laws having the effect of dealing otherwise than in a section 51(xxxv) way of doing things but, your Honours - - -
KIRBY J: It is that phrase “as now understood” that is a bit of worry, though, you see, because you could say the same thing about the corporations power.
MR JACKSON: Your Honour, I am not suggesting that the decisions have done other than develop. If one looks at the major cases on 51(xxix), what one sees is the Goya Henry Cases which, in effect, took the view that was confirmed by Koowarta v Bjelke-Petersen, and then one had earlier than that the Seas and Submerged Lands Case saying, effectively, that anything off the outside is part of external affairs. But it is not as if there has been a change; there has just been a development in that regard.
The point I am seeking to make though, your Honours, is that the presence of section 51(xxxv) does have the result that unless the nature of the other power in section 51 so suggests, prima facie one would not take the view that it extends to similar matters. That is an approach to be taken, we would submit, when looking at section 51(xx). There is not anything particularly in section 51(xx) that suggests it deals with, or should be treated as dealing with, the subject of employment.
If I could just endeavour to say what we seek to say it does. We submit, your Honours, that the power extends to legislation dealing with the trading and business activities of trading and financial corporations, that is, with their dealings in those areas. We accept that it may extend to legislation regulating the constitution of such companies. The Incorporation Case 169 CLR 482 decided only that there was not power to incorporate companies.
Your Honours, there is no reason, in our submission, to extend the ambit of the power – and I appreciate that to call it extending the power involves some element of a view about it – beyond the matters referred to in it, that is, to the trading and financial activities of the companies that are referred to in it. I will come to foreign corporations in just a moment, if I may. Your Honours, once one goes beyond that, it is very difficult to find a point at which to stop. It is very difficult indeed, your Honour, and it is unlikely, in our submission, that the power under section 51(xx) is one which is to be an all-embracing one or a dominant one.
Your Honour Justice Kirby referred yesterday, I think, to economic effects saying something, broadly speaking, to the effect that economists would regard this as a curious matter in a way, that one would leave out of account in a law with relation to those corporations the economic effect of employment. Well, your Honours, I say two things about that. The economic views, of course, can change from time to time and various views exist at any times. If one looks purely at the comments of the work of the late J.K. Galbraith in very recent times, one can go from guru to voodoo, as it were, in a very short space of time. But, your Honours, in the end the issue is one which is for courts, not economists, to decide.
Could I say something finally, your Honours, about foreign corporations. It is more likely, in our submission, that the power would extend to their business activities although – that is to the trading activities of trading corporations, the business or commercial – or financial activities of financial corporations and to the business activities of foreign corporations.
GLEESON CJ: Why is not employment a business activity?
MR JACKSON: Well, your Honour, when I say business activity, what I am referring to is the trading or the financial activity.
GLEESON CJ: Why would you distinguish between contracts that a corporation enters into with its customers and contracts that it enters into with its employees?
MR JACKSON: Well, your Honour, because if one took the case of a trading corporation, a contract with an employee is not trading.
GLEESON CJ: The question is whether it is business.
MR JACKSON: Your Honour, I am sorry. I think I used business activity when I should have said trading or financial activity.
KIRBY J: That is one answer. Another answer may be because (xxxv) deals with the matters of contracts with employees to the extent that there is a specific power on that subject and within its language it deals with that and the corporations power remains to expand and be available for other contracts with customers and with other corporations and so on, but when you get to the matter of industrial disputation and employment, you are stuck with the limited power that the Parliament was given in 51(xxxv).
MR JACKSON: Your Honour, that is why we say the presence of 51(xxxv) does bear on the ambit of the other powers.
GLEESON CJ: I made a note of your submission as saying that the power extends to legislation dealing with the trading and business activities of constitutional corporations.
MR JACKSON: Yes, I am sorry, your Honour.
GLEESON CJ: Do you want to alter that?
MR JACKSON: I put that inaccurately, your Honour. What I would seek to say is that it deals with the trading activities of trading corporations and with the financial activities of financial corporations.
GUMMOW J: What, deals with laws with respect to those things?
MR JACKSON: Yes.
GUMMOW J: Why is not the employment of workers so that it can carry on its trade something with respect to its trade?
MR JACKSON: Well, your Honour, because it is not itself trade and - - -
GUMMOW J: That is right. The words are “with respect to”.
MR JACKSON: Of course, your Honour, but what one is looking at is what is the relationship between the two? Now, no doubt one can see an economic relationship, but if the subject of the power is the trading activity or the financial activity, then, in our submission, the dealings with the – I do not wish to use - - -
GUMMOW J: It is an artificial person.
MR JACKSON: Of course, your Honour. Yes, of course, it is.
GUMMOW J: Not just a matter of economics, it is a matter of law really.
MR JACKSON: Well, your Honour, it is a matter of law that has to act by the persons who are its officers or who are its servants or its agents. But in saying those things, your Honour, what the provision looks at is the activity and says with respect to that activity as distinct from with respect to the employment of - I appreciate, your Honour, that there are differences of view on the matter, but I do not know that I can take our submission further.
GLEESON CJ: If it covers the trading activities of trading corporations and the financial activities of financial corporations, what activities of foreign corporations does it cover?
MR JACKSON: Could I say two things about that, your Honour. Firstly, the collection of terms – foreign, trading or financial – suggests that the activities of foreign corporations that are involved are ones that are of a similar kind, namely, trading or financial, a similar kind to those of the other corporations, those formed within the Commonwealth. However, your Honours, it is a possible view – and I will not say the second view – that it refers to any activity of a foreign corporation.
GLEESON CJ: Does it cover the financial activities of trading corporations?
MR JACKSON: Your Honour, so far as they would be trading. Now, there would be definitional questions at the edge of all these things, but the answer may be no. Your Honours, we otherwise rely on our written submissions.
KIRBY J: Mr Jackson, I have just one last question. You dealt in those last submissions with a matter which I raised with Mr Walker on the first day and which is of concern and interest to me, and the Solicitor for Victoria also dealt with it, but I do not think anywhere in the written submissions that I have found is any differential treatment given to what the consequences would be to the validity of the actual provisions of the Act if the view were taken that section 51(xx) was affected by the provisions of section 51(xxxv). In other words, if that were the only flaw in the 51(xx) argument, given the language of prevention, settlement, industrial dispute beyond the limits of a State, what effect that would have on the validity of the particular provisions in the Act which are complained of.
MR JACKSON: May we give your Honour a note on that?
KIRBY J: Yes, if you and perhaps – I do not know whether the Solicitor for Victoria would be willing to provide some assistance, but that is a matter that interests and concerns me and I would like to think about it with the assistance of a note.
MR JACKSON: Yes. May we give your Honours and our learned friends a note on the matter in the near future?
GLEESON CJ: Thank you, Mr Jackson. Mr Solicitor for the Commonwealth.
MR BENNETT: Your Honours, first may I formally adopt all my written submissions. There are some areas I will not be covering orally and I would not wish to be assumed to be making any concession in relation to those areas, so I do formally adopt the whole of the written submissions. Secondly, my learned friend, Mr Tracey, will deal with the regulation-making power and the transitional provisions and my learned friend, Mr Burmester, will deal with sections 16, 17 and 117, which in general terms are the sections dealing with the effects on State laws and State tribunals.
I hand up to your Honours a bundle of a table of contents to my oral submissions so your Honours will be able to see how progress is being made and your Honours will no doubt be pleased to see that I am already up to 1.3.
The matters I propose to cover, as your Honours will see from this document, are first the primary State arguments on the corporations power, and there are five which I propose to deal with. The first is the internal management theory. The second is the reading down because of section 51(xxxv). The third is the distinctive character theory that the law must relate to the trading aspects or the trading corporation aspects of the bodies it controls. The fourth is the suggestion primarily made by my learned friend, the Solicitor for Tasmania, that the need for discrimination referred to in the cases is not satisfied by clauses which select a range of constitutional powers. Our simple answer to that is three letters, three letters which interestingly appear nowhere in the detailed written or oral submissions of my learned friend, the Solicitor for Tasmania. Those letters are CLM. The CLM Case is a complete answer to the whole of my friend’s submission, which is inconsistent with the whole principle of that case, and that is the end of it, so that will be a fairly short submission.
KIRBY J: Like the omission of a reference to corporations in the objects of the Act.
MR BENNETT: Your Honour, there is a reason for that which I will explain when I come to it.
KIRBY J: I am sure. We are waiting with bated breath.
MR BENNETT: Yes. The fifth is the South Australian argument, which is very similar to the distinctive character theory, that one is concerned only with employees of the trading corporations. The third area will be the general considerations in relation to the tests we lay down – we suggest are laid down. They are mainly historical. The first is the question your Honour Justice Kirby asked about the change in importance of powers from time to time and the significance of that. The second is the question your Honour Justice Callinan asked about referenda. The third is the matter which has been raised by a number of your Honours, particularly your Honours the Chief Justice, Justices Gummow and Hayne, on the historical material about corporations. The fourth is the Convention Debates themselves, and the fifth is the earlier uses of the corporations power in relation to industrial matters.
I will then come to the tests which we propound: the object of command test, the business activities and relationships tests and the Dingjan situation about indirect substantial effect. Then there are a number of miscellaneous matters which I will deal with briefly, although in relation to all of these I will rely primarily on the written submissions. They are Schedule 1 – and I will deal very briefly indeed with rights of entry and freedom of association and I will say a little bit about severance. That is the order in which I propose to address.
Having completed section 1, I come to 2.1, the internal management theory. This theory has only as far as we have been - - -
KIRBY J: Should you not start with what you propound as the true meaning of section 51(xx)?
MR BENNETT: Well, I was going to come to that in the - - -
KIRBY J: I mean, essentially that takes you down to 2.3. That is your concept, is it not?
MR BENNETT: No.
KIRBY J: It is the eo nomine concept.
MR BENNETT: No, 2.1 to 2.5 are all my learned friend’s arguments which I am now proceeding to rebut. The positive case we put is in section 4 and I will come to it then.
KIRBY J: Yes, it is 4.1. It is enough that it is the object of the statutory provision.
MR BENNETT: That is the primary submission.
KIRBY J: That is Justice Murphy’s view.
MR BENNETT: Yes, your Honour, but we go further than that.
KIRBY J: Further than Justice Murphy.
MR BENNETT: We say there are alternative bases and that is one basis and that supports a very large part of the Act. But, your Honours, returning to the internal management theory, this is a theory which so far as our researches have gone, since Federation has only been propounded twice, once by Justice Isaacs in his dissent in Huddart, Parker and once by my learned friend, Mr Walker, in this Court. Apart from that it does not seem to have occurred to anyone or been dealt with by anyone. There is a passing reference to it in one sentence in Professor Zines’ book but it is not put as propounding the theory, it is put as a possible matter.
KIRBY J: Do not be too disdainful of this. After all, the decision in the Boilermakers Case in 1956 had had a few hints, but down it came. Sometimes when logic is pressed you are forced to look again at how you have construed provisions in the past. That is the history of the Court.
MR BENNETT: Your Honour, I propose to demonstrate that there is no logic in this theory. Justice Isaacs was influenced by the reserve powers doctrine. He seems to have related the internal management theory to the absence of a power to incorporate. My learned friend, Mr Walker, bases it squarely on what he describes as a natural and logical conclusion from the absence of a power to incorporate and he gets there, ironically, by the interposition of another past participle, this time used as a noun, and that is the word “given”.
GLEESON CJ: There may be some ellipsis involved here but Justice Isaacs’ theory was the opposite of an internal management theory, was it not? Was not Justice Isaacs’ theory that matters of internal management did not fall within paragraph (xx).
MR BENNETT: That is what I understand my learned friend to be putting, your Honour.
GLEESON CJ: Yes. To call Justice Isaacs’ theory an internal management theory is perhaps a little confusing. It was an external relations theory, as I understand it.
MR BENNETT: Yes.
GLEESON CJ: It is page 395, I think, of Huddart, Parker v Moorehead, the words in italics where he describes his theory.
MR BENNETT: Yes. It is an “other than internal management” theory, I suppose.
GLEESON CJ: I had half assumed that he was rather at pains to assure foreign corporations that this power did not extend to enabling the Federal Parliament to regulate the internal management of foreign corporations.
MR BENNETT: I am going to come to that, your Honour.
GUMMOW J: In particular, British banks and insurance companies.
GLEESON CJ: Yes.
MR BENNETT: Yes.
GUMMOW J: Do not forget that at the time he was writing sections 58, 59 and 60 of the Constitution were there, “disallowance” and “reservation”, and it was by no means clear that they were dead letters.
MR BENNETT: Yes, I understand that.
HAYNE J: The matters were matters of particular legal ferment at the time following the decision in Risdon Iron and Locomotive Works v Furness [1905] 1 KB 304. Hohfeld, in America, as Justice Gummow was good enough to point out to me, wrote a series of four articles in the Columbia Law Review in volumes 9 and 10 devoted to analysing the way in which the law intersected, particularly with foreign corporations and their obligations and it made a number of points, not least of them being the artificiality of the corporation leads to certain consequences, but also that the internal/external division which we may see in Huddart, Parker was a matter for debate amongst legal scholars at the time.
MR BENNETT: Yes, your Honour, there is no doubt of that and we address that and deal with that. Your Honour Justice Gummow asked whether E. Hilton Young left any other footprint beyond the article.
GUMMOW J: Yes.
MR BENNETT: He wrote a book entitled Foreign Companies and Other Corporations in 1912 and that book, despite its title, is in fact an analysis of the private international law problems affecting the status of foreign corporations. There were, of course, two theories. One was that a corporation could only have existence in the place that incorporated it and the other more broad one. It is interesting that the modern approach is more flexible. There are provisions in English legislation which say that a foreign company is not deemed to cease to reside in the United Kingdom merely because it ceases to exist.
GUMMOW J: That is to overcome the Russian banks.
MR BENNETT: It was the Russian banks, yes. Its fiscal nothingness was said by Lord Justice Megarry to abide eternally in the United Kingdom. The point is that it was something that was extensively discussed and it was very largely the basis of the power granted to the Federal Council of Australasia and the draft power in the early drafts of the Constitution which referred to the status of foreign corporations and corporations incorporated in other colonies and so on.
As your Honour has pointed out, there were cases about the problems a Victorian company would have doing anything in Western Australia, but what that discussion ignores is that there was a dramatic change when Mr Isaacs, as he then was, caused the draft to be amended and the amendment removed the word “status” and took out the limitation in the early draft of the power to the private international law issue, if I may so describe it. That may have been what started people thinking about it, but by the time one had that amendment made, it ceased to have any relevance at all to the scope of the power. So while it is interesting historically, we submit it does not get one very far.
May I go back to what New South Wales describes as the natural and logical conclusion that it draws from the inability to incorporate a corporation. That inability flows from the Incorporation Case which, though it was mentioned in some of the earlier cases, as early as Huddart, Parker, but it flows from the use of the word “form”. It flows from nothing more than a literalistic, we would say, interpretation of a past participle.
Now, this is not the occasion to challenge that case. We
may do that one day, but it is not necessary in this case and leave would
probably be refused on the basis that it is completely unnecessary. It is not
necessary because there is no logical way, we would
submit, in which one can
draw the massive conclusion drawn by Justice Isaacs and by my learned
friend from that proposition. That,
what is described by New South Wales as a
logical progression, goes something like this. The section refers to:
trading or financial corporations formed within the limits of the Commonwealth -
Because of the past participle, that means companies that are already in existence. It means there is no power actually to form them.
KIRBY J: So far so good.
MR BENNETT: So far so good. The next step then is to say one has to look at the given – this is where my learned friend’s second participle comes in – of what has been formed, and that includes the whole internal nature of the company, therefore the formation in some way taints, as if it was a poisonous substance, the entire internal management in existence of the company, so all that is familiar to the Commonwealth, and then the next conclusion, which is even more extreme, is to say of course employing employees is something that is very internal because employees can bind a corporation by their Acts, it is liable for their torts and so on, therefore, the Commonwealth cannot legislate on anything to do with employees.
Now, your Honours, I could almost say, well, I have now dealt with that argument having put it in that form. No one could accept that. It just has no logic, no basis and there is nothing in legal reasoning which gives any sense at all to an argument in that form. If the Commonwealth is unable to deal with the incorporation of companies because of the word “formed” and it can only deal with companies that have been formed, why does one limit the way in which it can deal with companies that have been formed.
Let me put the extreme case contrary to our position. Let us take amendments of memorandum and articles of association. Obviously that relates in various ways to matters concerned with the formation of a company, but if one legislates about the amendment of memorandum and articles of association one is legislating about a company that has been formed, so why cannot one deal with it? There is simply no reason for the assumption which is made. It is not a natural and logical conclusion. It is a simple non sequitur.
GUMMOW J: I am not sure about that in this sense. Justice Isaacs fixed upon “foreign”, did he not?
MR BENNETT: Yes.
GUMMOW J: And then said one does not, in the municipal law, interfere with internal matters relating to a foreign corporation. That used to be other colonies – other Australian colonies, and you would translate that generally into this genus which is now 51(xx).
MR BENNETT: Your Honour, one could wind up foreign companies within the jurisdiction.
HAYNE J: As unregistered companies?
MR BENNETT: Yes.
HAYNE J: Unregistered.
MR BENNETT: Yes. The Commonwealth could no doubt have required foreign companies to have Australian directors or to have an Australian board or to have an agent of a particular type at an office in Sydney.
HAYNE J: Could it provide that the corporators of a foreign corporation, whatever may be the law of the place of incorporation, shall be liable without limitation on contracts made by the corporation within the jurisdiction?
MR BENNETT: Yes, your Honour.
HAYNE J: It is that case which Hohfeld looks at particularly in 10 Columbia Law Review.
MR BENNETT: Your Honour, there may have been in that example some public international law problems with it, let alone some private international law problems - - -
HAYNE J: Well, if as some writers of the time did, you root the relevant principles in comity of nations, that may take you down one path, but if the question is one about legislative capacity that may, it may not, raise separate issues.
MR BENNETT: But certainly one would not assume, your Honour, that one could not deal at all with the internal management, at least in Australia, of a foreign corporation, such as the requirements of a local board, whether Australian directors, or a requirement that one issue a certain number of shares in Australia so that profits return in Australia.
GUMMOW J: And, for example, who they could employ and on what terms.
MR BENNETT: Precisely, your Honour. There would be no reason not to. So the analogy with foreign corporations does not, we would respectfully submit, assist this argument. The theory also produces some fairly irrational consequences. We know that one of the main things the founders were concerned with was the damage suffered by trusting investors who invested money in corporations which collapsed in the 1890s. But surely shareholders are internal.
I know my learned friend, Mr Walker, was asked a question about dividends. He said they are external because you are paying money away from the corporation. The logic which says that paying money to an employee is not external, that paying it to a shareholder is, is one which is a little hard to justify and which really flies in the face of the whole theory of company law. If anything is internal to a company, it must be its shareholders who - indeed your Honours may recall in the old days, the page which had the subscriber’s signature on it of the memorandum and articles said in the small print, “We, the undersigned, being desirous of turning ourselves into a corporation”. That was the sort of language that was used. The corporators and by extension the shareholders are as internal as one can get. Yet, if my learned friend were right, there would be no capacity for the Commonwealth to deal with the very mischief which it was setting out to deal with on the way the case is put against us.
GLEESON CJ: There is a judgment somewhere of Justice Windeyer in which he says that the company ordinarily means the corporators assembled in general meeting. Perhaps one of your junior counsel could turn up that reference for us.
MR BENNETT: Yes. There are a number of cases dealing with the issue of when all the shareholders present at the one place can override the board or even override provisions of the articles. There is a case with a name like “Vodafone”. It is not “Vodafone”, but it is - - -
HAYNE J: Duomatic – are you thinking of the Duomatic - - -
MR BENNETT: Yes, your Honour, it is like Vodafone.
HAYNE J: I am not sure that the Duomatic principle is quite as you state it, but there we are.
MR BENNETT: Yes, the Duomatic principle. That simply emphasises that it is the shareholders who are the company. Of course, for some purposes other people are the company. An employee may bind the company or render the company liable for his or her torts, as may an independent contractor in some cases, as may a barrister or solicitor writing on behalf of the company or an outside agent. Nothing in particular turns on that. Director’s duties are normally owed to shareholders but once one gets close to insolvency they start being owed to creditors as well. That does not make creditors internal for this purpose - it may for other purposes. In our respectful submission, the theory is one which has nothing to support it and it should be firmly and positively rejected. It is interesting that that aspect of the judgment of Justice Isaacs has never, so far as we are aware, been cited with approval in this Court at all.
The second of the theories put against us is what I describe as the reading down theory. My learned friends go out of their way to describe that differently. They use phrases like reading the provision, reading the section as a whole, reading the Constitution as a whole, taking into account other grants of power and so on. But despite those euphemisms, what the submission is doing in all the forms in which it has been presented to the Court is saying the corporations power must be read down because of the presence and terms of the conciliation and arbitration power, and the euphemisms are not going to avoid what is being put.
GLEESON CJ: Well, I think you may be running together two distinct arguments, both of which you need to address. One manifestation of this argument is that because of the presence of paragraph (xxxv) some narrower meaning of paragraph (xx) ought to be given to avoid collision with paragraph (xxxv). A rather different argument is that paragraph (xx) ought to be read so as to exclude a capacity to make laws with respect to industrial relations or, perhaps more narrowly, prevention and settlement of industrial disputes. But they are two rather different arguments I think.
MR BENNETT: Yes, and the second leads to an argument which says that placitum (xxxv) has two exceptions or qualifications, rather like placita (xiii) and (xiv), and therefore those must be applied to other powers.
GLEESON CJ: Yes, the second argument is that there is in paragraph (xxxv) a prohibition which must be given effect in the application of paragraph (xx).
MR BENNETT: Yes. Well, your Honour, there is a number of levels at which one can deal with these arguments. It would produce some very surprising consequences for a number of powers. One obvious example is to take the useful forensic power over lighthouses, lightships, beacons and buoys. Suppose there was an industrial dispute affecting only lighthouse keepers in New South Wales. Is it seriously suggested that under the lighthouses power there would be some restriction because of placitum (xxxv) and how that was dealt with?
KIRBY J: Well, if you are dealing with the prevention or settlement of their dispute, I think that is suggested; it is very much suggested.
MR BENNETT: Well, your Honour, we simply submit it would be surprising.
KIRBY J: I do not see why. I mean, it is a bit like section 51(xxxi), that if you have an express provision which is subject to a condition, then you can just walk a team of camels through the Constitution if you can just ignore the express provision and thereby bypass the restriction. That has been held in 51(xxxi) as doctrine. Why does it not apply in the case of section 51(xxxv)?
MR BENNETT: Well, 51(xxxi) is a unique power in that it relates only to things done under other powers. It has no independent operation except in relation to other powers. So it is dealing with the acquisition of property for the purposes of the Commonwealth’s other powers, and its terms reflect that. Now, if one did not have 51(xxxi), clearly acquisition of property would be implied in virtually every other power – maybe not weights and measures but certainly lighthouses.
KIRBY J: Lighthouses, yes.
MR BENNETT: So it would reduce 51(xxxi) to meaninglessness if one were to say one can acquire property under every other power and one does not need to worry about just terms. That is the first characteristic of section 51(xxxi) which makes it very different to the other powers. The other powers where this has occurred in are the exclusions of State banks and State insurance in placita (xiii) and (xiv), but there, of course, one has an express exclusion. One also has the situation, as is pointed out in the cases, that all banks are companies, or virtually all banks, and all State banks certainly are, and therefore if it were not for the banking power, it would be possible to regulate banks, including State banks, under the corporations power and it would make nonsense of the exclusion because there would be no field left - - -
KIRBY J: Yes, but we all know that the terms of section 51(xxxv) historically and arguably on their face were designed to put a brake on the federal regulation of industrial matters and it was to the effect peculiar and special to Australian constitutional law that the Federal Parliament could deal with these matters, but only through the independent arbitrator.
MR BENNETT: Well, your Honour, we would put it a little differently. We would submit that when one looks at the development of 51(xxxv), what it was doing was giving the new entity the power to use a particular modern form of dispute resolution in relation to Australia-wide disputes. That was the scope of the power. It was not a power to deal with the prevention and settlement of industrial disputes but (a) only by conciliation and arbitration (b) only if they extend beyond the limits of one State. That was not what was said at all. What was said was - - -
KIRBY J: On one view it was (c) and (d) only in interstate disputes, otherwise the Federal Parliament should keep out.
MR BENNETT: Your Honour, the other way of looking at it is to say that the power that was being conferred was to deal with a problem the States could not deal with: interstate disputes. The other power simply was not being given. It was not taken away from something. The founders did not say, “We want to have a power to deal with the law school subject of industrial law or even, to use my learned friend’s phrases, the prevention and settlement of industrial disputes. Now, what qualifications do we want to impose?” That was not the way it was done.
What was done was to say, “Here is this wonderful new method which we have seen working in some places”, and the delegates who opposed it were delegates who did not like conciliation and arbitration in industrial disputes, “Now, we want to give the Commonwealth power to deal with something which the States cannot deal with, namely, interstate industrial disputes”, and it is a power in its own right given in that way. That is not similar to a power which starts with a general proposition, a very general power, and then subtracts something from it. It is just not what this power did.
KIRBY J: It sounds rather similar on one reading because we know that thereafter there were three attempts to expand the power and they failed. We know from the Convention Debates that there were delegates who were quite suspicious about giving this power and it was a very close run thing. I think it only passed by two votes.
MR BENNETT: I do know that that greatly affects its interpretation today, your Honour, but in relation to referenda - - -
KIRBY J: We spent an awful lot of time during this hearing examining what was the intention in 1900. I am simply playing along with the game.
MR BENNETT: Yes. Your Honour, I will say something about that later and I also will deal with the question of referenda because I have some specific submissions about why they should not be taken into account. So the first matter to note then is that 51(xxxv) is not a power which contains exclusions or exceptions.
We have given your Honours in our submissions in paragraphs 334 and following a large number of imaginative arguments which might be put up on the basis of my learned friend’s argument which would have the same sort of logic, that the words “throughout the Commonwealth” and “the service and execution of process power” mean that the external affairs power cannot extend to service of process overseas. That would clearly be nonsense. We have given a list of others which we submit illustrate why the principle has been stated so often in this Court that one does not read a power down by reference to other powers.
It is not a refusal to look at the document as a whole; it is a simple necessity when one has a list of separate powers which may have some areas of intersection that one accepts the intersections and does not read down. That is different to the principle applied in cases involving such matters as State banking where there is a specific exclusion.
GLEESON CJ: Is there any more obvious example than section 51(i)?
MR BENNETT: That is one of the clearest, your Honour. Section 51(i) clearly intersects with many other powers, including corporations and conciliation and arbitration.
GLEESON CJ: It is not easy to how the corporations power could sustain the Trade Practices Act if the limitations contained in section 51(i) were treated as an implied prohibition.
MR BENNETT: That is another example, your Honour. If my learned friends were to succeed on this argument, no doubt that would be the next one. Of course one does not apply an in terrorem approach to interpreting the Constitution, but I use those examples not in that way, I use them to indicate that one simply cannot read down powers by reference to other powers, except for the reason I have given in relation to section 51(xxxi) and for the reasons I have given in relation to placita (xiii) and (xiv), where there are good reasons for reading down. If one goes to the cases, one sees - - -
KIRBY J: At least arguably, there is a good reason in 51(xxxv) because it is a shackled power, it is a limited power and it is a rather unusual limitation that is imposed on, and it has been over the century a very inconvenient limitation, but it is the one that is there and it has required an independent decision-maker interposed and that has been quite important socially, apart from economically, in Australia as interposing a fair deal, and that has been part of the history of the Federation. One can rail against it and complain against it, but if you can use 51(xx) it just may as well not be there. Why have we had all those debates over 100 years about 51(xxxv)?
MR BENNETT: It is not that it might as well not be there, your Honour. For a large part of the history of Federation the majority of business was not done by corporations.
KIRBY J: I think that is a bit unpersuasive.
CALLINAN J: How do we know that anyway? I mean, it is a fact. You would need to look at statistics. You cannot make that statement, Mr Solicitor.
KIRBY J: Look at the litigants in our Court. They have all been corporations right from the word go.
MR BENNETT: Well, certainly less so in 1901 than in - - -
KIRBY J: I am talking about arbitration cases. I am talking about industrial cases.
MR BENNETT: One knows that one of the great social changes since 1901 is the growing economic importance of the corporation. I do not need statistics to make that proposition.
CALLINAN J: Taxation driven, a lot of it.
MR BENNETT: Yes, a lot of it is but certainly not all of it. It is driven by limited liability, by the growth of stock exchanges and investment and matters of that sort, and by taxation. Those factors have all been factors that have led to it, but that does not make it a power that would swamp, in the way that the corporations power would swamp, the banking power and State banking if it were permitted to do so.
KIRBY J: But if your eo nomine theory, if you could just it in the Act and regulate any employment matter of the corporation, (a) you never needed 51(xxxv), you never needed all that jurisprudence of 100 years, and (b) you can regulate every aspect of corporations – private schools, private hospitals, all building operations and trading corporations, financial corporations in every aspect. If you are talking about “swamping” – and that is your word – you are swamping and that is what makes you stop and think, is that really consistent with reading the provision subject to this Constitution, which is what we are commanded to do by section 51.
CALLINAN J: And if I could just add, you would not have needed to invent the legal fiction of paper disputes either.
MR BENNETT: No, you would not, but you might have because in the early years of Federation a great deal of employment was not by corporations. The shearers’ strike of the 1890s is perhaps the clearest example. One doubts that there were too many corporate farmers then - - -
CALLINAN J: Just be careful of that. A lot of the big grazing corporations were owned by English investment companies. You just cannot make those far-reaching statements unless you go to the actual details and the history. Goldsbrough Mort and companies like that were very significant before 1900, and a lot of English corporations.
MR BENNETT: Yes, they were, your Honour.
CALLINAN J: And banks. Banks directly owned grazing properties, foreign banks. Grazing was the biggest industry in the country, but by no means confined to natural persons as employers and owners.
MR BENNETT: I did not suggest it was confined, your Honour, but - - -
CALLINAN J: Or, indeed, I do not know whether they were even in the majority.
MR BENNETT: Your Honour, I do not either, but the proposition I am putting is that there were sufficient individual employers in 1901 to give real scope to section 51(xxxv) without the ability for the corporations power to intrude. That is the point I am making.
CALLINAN J: You were stating much broader factual propositions than that a short time ago and it was only in relation to those that I felt obliged to point out that the contrary was the case.
MR BENNETT: So it is not the same sort of swamping that one would have - - -
KIRBY J: It is swamping, but it is a different type of swamping.
MR BENNETT: Your Honour, it is what one might call accidental - - -
KIRBY J: This is precision swamping.
MR BENNETT: - - - external circumstances having the effect that one power becomes more important and one less important. That could always happen. It could happen with the defence power in wartime which may dominate all other powers during wartime. One could imagine a pandemic in which the quarantine - - -
KIRBY J: But that is for the survival of the nation. That is consistent with reading the power “subject to this Constitution”. That is to save the nation, whereas here we have to read it “subject to this Constitution”, which includes all the other powers in 51, but it also includes the federal nature of our country with its historical and also liberty protecting aspects, that we divide great power up under our Constitution. It is a very important protection of our liberties.
MR BENNETT: And nothing which I am saying disputes that.
CALLINAN J: For myself, Mr Solicitor, I am really unpersuaded by references to the defence power. Nothing waxes and wanes more than the defence power. We got so many cases on the national security regulations in this Court between 1939 and about 1948 that say that, that it does not matter. It is not a comparable power.
MR BENNETT: There are other powers that may wax and wane. The bankruptcy powers no doubt are of greater significance in a depression.
CALLINAN J: Yes, but the breadth of them does not wax, as it did with the defence power.
MR BENNETT: The number of people it applies to may, your Honour.
CALLINAN J: Of course.
MR BENNETT: And the same would apply to the quarantine power in time of a pandemic. There are many powers which may for one reason or another because of some historical development become particularly significant, but that does not mean that one says there must be some limitation, because if we allow the power to be read in accordance with its natural meaning, it will extend far more widely into areas covered by the powers than - - -
CALLINAN J: It can be limited. It can be limited and it can be affected and what it is affected by is the nature and extent of the crisis. Even in relation to section 92 in the Bank Case the Privy Council said there may be some national situation in which prohibition can amount to regulation. But what we are looking at is times of great national crisis. We are not talking about times of the kind with which it may be inferred the Parliament intended to deal from the stated objects of this Act. There is no suggestion of crisis there, and it would not be apt at any rate in relation to this power probably.
MR BENNETT: But one can think of other examples, your Honour, which are perhaps easier examples. Suppose there developed in Australia an international banking industry of the type which has developed in Switzerland which became so pervasive that it became Australia’s major international and domestic activity. That would not require any lessening of the banking power because it was becoming too significant, an economic development of that type.
Similarly, if transportation, if the effect of air transportation – and perhaps transportation of the type applied in Star Trek where one could move instantly from one city to another – became so great that interstate trade and international trade became of far greater preponderant importance and intrastate trade comparatively insignificant, that would not require any reworking of the trade and commerce power. Things can change, and the effect of change may well be to make one power more or less important. Growth of air traffic may make the lighthouses power less important, and the growth of radar and other devices on ships. But that, in my respectful submission, simply does not answer the issue.
May I just show your Honours what the cases have said on this proposition because there has been a fairly universal approach on it. The starting point is probably Pidoto v Victoria [1943] HCA 37; (1943) 68 CLR 87.
KIRBY J: This is the defence power, is it not?
MR BENNETT: Yes, your Honour, it is but some of the
remarks are more general than that. Your Honour sees that Victoria was
putting the same
argument then that it puts today, over 60 years ago. At
page 101 in the judgment of the Chief Justice this passage appears:
The first objection to the Regulations submitted by the State of Victoria is based upon s. 51 (xxxv.) . . . It is contended that this provision implies a negative–that it means, not only that the Commonwealth Parliament shall have power to legislate in relation to the industrial disputes there defined and in the manner there prescribed, but also that the Commonwealth Parliament shall not have power to deal with any other industrial matter –
ie, not extending beyond one State
-
or with any industrial dispute in any other manner -
ie,
not by conciliation and arbitration –
In my opinion this argument cannot be supported. Section 51 (xxxv.) is a positive provision conferring a specific power. The particular terms in which this power is conferred are not, in my opinion, so expressed as to be capable of being so construed as to impose a limitation upon other powers positively conferred. Further, if s. 51 (xxxv.) were construed so as to prevent the Parliament from dealing with industrial matters except under that specific provision, similar reasoning would lead to the conclusion that the Commonwealth Parliament could not (under any legislative power) provide for the use of conciliation and arbitration in relation to any other matter than inter-State industrial disputes. It must, I think, be conceded, for example, that the Commonwealth Parliament can, in legislating with respect to the public service of the Commonwealth (Constitution, s 52 (ii.)), provide for conciliation and arbitration in relation to matters such as wages, conditions and hours, whether or not any dispute about those matters is industrial, and whether or not it extends beyond the limits of any one State.
My example about lighthouses is in the same category. In my
respectful submission, that proposition is clearly correct. One sees
it also in
Russell v Russell where the marriage power was not read down by reference
to what appears in the matrimonial causes power about custody and guardianship
of children.
CALLINAN J: Mr Solicitor, on this you might find it interesting to see what Dr Evatt said in 1946 in moving the Bill the second time for the referendum to give the Commonwealth power to legislate with respect to terms and conditions of employment in industry, but not so as to authorise any form of industrial conscription. Dr Evatt deplored the shrinking of the defence power to its normal peacetime scope and said that the amendment was designed to enable the Commonwealth to legislate directly or indirectly the terms and conditions of employment like the States can. Dr Evatt, a former member of this Court, great constitutional lawyer – you cannot just dismiss that. I know you are going to address the different, separate argument on the referenda but those views, both of the power and the need for an amendment and with respect to the defence power in peacetime cannot just be dismissed out of hand.
MR BENNETT: Your Honour, I will come to referenda in a few - - -
CALLINAN J: Have a look at these speeches, the second reading speeches, too. They are very instructive.
MR BENNETT: Yes. Now, the other matter to note, of course, is that in the Industrial Relations Case the use of the external affairs power was not cut down by reference to section 51(xxxv) and that is of course a much more recent decision where very much the same sort of argument was - - -
KIRBY J: The argument Mr Jackson put to explain these you will remember was that certain powers of their very nature such as the defence power, such as the power of the Federal Government to employ its own employees and such as the external affairs power are of their very nature of an amplitude which is not apt for the 51(xx) power. What do you say about that?
MR BENNETT: Well, your Honour, one can read through the list of powers and one can – I will not do this – imagine in relation to almost every power, except perhaps weights and measures, a circumstance in which that power may require regulation of an industrial kind notwithstanding section 51(xxxv) and the corporations power is no different in that respect, whether one is talking about railways or the - - -
KIRBY J: One difference may be, and this is the, as it were, adverse side effect of being a power relating to persons that they are not to an activity, not to an ambit of activity which can expand or contract but to an identified person.
MR BENNETT: Well, your Honour, I could give - - -
KIRBY J: That person either exists or does not exist.
MR BENNETT: One could cite the aliens power. One could legislate in relation to the employment of aliens in unacceptable conditions under the aliens power. If people of a particular race were being oppressed by employers, for example, in the sugar fields in the early part of the century, one could legislate under section 51(xxvi) in relation to that and in relation to dealing with industrial matters there. They are both person powers, of course, like the corporations power. But it is hard to – virtually every power is a power where there could be situations intersecting with section 51(xxxv) and we simply call in aid what was said in Pidoto that the true things described as limitations or qualifications by my learned friends are simply not in that category. They are parts of the positive feature of the power unlike the special situation in relation to 51(xxxi) and the express exceptions in 51(xiii) and (xiv).
GUMMOW J: The express exceptions in 51(xiii) and (xiv) are, as Justice Higgins pointed out in the Engineers’ Case, really designed to protect the States in what otherwise would be the Engineers’ Case doctrine.
MR BENNETT: Yes.
GUMMOW J: They are protective of the States. That is what they are there for.
KIRBY J: Well, there is no doubt that section 51(xxxv) was protective of the States. It was intended to keep the Federal Parliament out of anything but interstate disputes.
GUMMOW J: The Engineers’ Case decided the contrary.
MR BENNETT: In my submission, it was not, your Honour. It was designed to confer upon the Federal Government the power to deal with a particular problem, namely interstate industrial disputes, and it did just not deal at all with the question of intrastate industrial disputes, positively or negatively.
KIRBY J: Yes, but you have not answered my question of why we spent 100 years in this Court dealing with the elaboration of section 51(xxxv) when there was always section 51(xxx)? It could always have been done comprehensively, on your theory of the Constitution, under that section without the shackles of (xxxv).
MR BENNETT: It could have been done probably without the same overall effect that it would have today at an earlier stage when there was more employment - - -
KIRBY J: It could have been done from year one on your theory.
MR BENNETT: It could, your Honour, but from year one it would not have affected the same proportion of employment relationships in Australia that it would affect today.
GUMMOW J: There are elephants in the room, in the Commonwealth’s room, whenever the corporations power is mentioned. One elephant we referred to earlier this afternoon which was the British banks and insurance companies which Sir Isaac Isaacs, I am sure, had in mind, and a later elephant in the room was nationalisation, use of the corporations power to bring about nationalisation.
MR BENNETT: Yes.
KIRBY J: The elephant of Realpolitik is straying across the course of this case.
MR BENNETT: There was also an elephant killer in section 92, your Honour.
GUMMOW J: Exactly, exactly.
CALLINAN J: Depending upon what meaning you give the section – give to the corporations power.
MR BENNETT: Yes. In a sense, the same question that your Honour puts to me about corporations being an elephant lurking in the Commonwealth room could be applied to external affairs.
GUMMOW J: Exactly.
MR BENNETT: No doubt in the early years of Federation there was less scope for treaties on matters of social concern than there is today, although there was certainly a growth of a movement in that direction. But until Koowarta v Bjelke-Petersen, the full force of those possibilities was not appreciated and it was ultimately developed in cases like Tasmanian Dam and the Industrial Relations Case.
KIRBY J: I take the force of that point, but that therefore requires us to consider whether or not section 51(xx) has over time, and with the wisdom and knowledge and experience and the problems that we have to deal with today, expanded in its content and deals with a larger ambit than was thought at the time of Federation. I can understand that. But that still leaves the question within section 51 as to whether, insofar as it is used to attempt to deal with matters which, putting it generally, are industrial relations matters, which appears to be the focus of this legislation, it has to do it within the shackled power of 51(xxxv).
MR BENNETT: Well, your Honour, we do not put it as a shackled power. Indeed, as we have said in our submissions, if one were putting it as a shackled power, one might say it was a power about conciliation and arbitration which had as one of its limits its application in the industrial arena so that the Industrial Arbitration Act might be invalid under the external affairs power as an attempt to use arbitration in an area outside the industrial law. It is all a matter of how one reads the power. One simply cannot read section 51(xxxv) as saying “the prevention and settlement of industrial disputes” but subject to the following two qualifications, (a) and (b), which is the way my learned friends read it. That, we would submit, is simply not what it says, nor the way it emerged.
KIRBY J: If you are moving on past the section 51(xxxv) point.
MR BENNETT: Yes, I was, your Honour.
KIRBY J: You will have heard me ask Mr Jackson for a note on the consequences if that is a correct reading of the Constitution. If you would care to respond to that, that would be helpful.
MR BENNETT: Yes, certainly, your Honour, we will. The third of the five arguments my learned friends have put to the Court is what we have called the distinctive character theory. This can be put and is put in a number of different ways. One is that the law to be a valid law under placitum (xx) must relate to the trading aspect, financial aspect or foreignness aspect of a corporation. A second is it must relate to the character of being a corporation. The third is it must relate to the character of being a trading corporation, the character of being a financial corporation or the character of being a foreign corporation. That treats each of the phrases as a composite phrase or hendiadys, as some of the cases describe it.
Now, the first thing that can be said about those submissions is that the view has never been accepted by a majority in any case. It has been put in judgments by Chief Justice Gibbs and by Justices Dawson and Wilson in various places. There is a lengthy debate in the submissions about where other particular Judges stand in relation to the controversy but we submit that it is only those three who have totally adopted it. I will come back to some particular passages which demonstrate that in relation, particularly, to Justice Brennan, who seems to be the main Judge to have excited disagreement at the Bar table over - - -
HAYNE J: It is an argument that takes as its premise that what is a trading or financial corporation is identified by reference to its activities. What do you say about that proposition?
MR BENNETT: Your Honour, it is a recently developed proposition, of course, in the Western Australian Football League Case. We accept that decision that the character is determined in that way, but we submit, having said that, once the body is identified, the power extends to it.
HAYNE J: But it is only by this understanding of the expression that bodies like municipal corporations, universities, non-profit organisations and the like fall within the ambit of the power, is that right?
MR BENNETT: Your Honour, we would submit that the debates rather indicate that many of those bodies would have fallen within the power. I will come to that when I get to that part of the argument. The Companies’ Act 1896 (Vic) had specific provisions about charities and not for profit companies and so on - - -
HAYNE J: Setting them apart from the commercial entities.
MR BENNETT: In certain respects they were set apart.
HAYNE J: As had Sir George Jessel in 15 Ch D.
MR BENNETT: Yes. I will come to that area, your Honour, in relation to that.
HAYNE J: Yes.
MR BENNETT: The starting point is this, that while my learned friends tend to minimise the significance of this being a person power, the importance of that is this, that if it is a person power and not a purposive power, ex hypothesi, purpose is irrelevant.
HAYNE J: But that is a distinction that again elides this question of activities. You distinguish between persons and purposes. The argument against you is that notions of activity are an important element in identifying the subject matter of the power.
MR BENNETT: Having identified it, one then can deal with all aspects of those persons. There are two separate steps. There is identifying the person and then saying what one may do in relation to that person. The mere fact that in order to identify the person one needs to find characteristic X does not mean that in looking at what one can do in relation to the person one is limited in the same way.
GLEESON CJ: The idea underlying the argument which was expressed, I think, by Justice Higgins in Huddart, Parker v Moorehead is that this is a power to deal with trading corporations as such or financial corporations as such, and that expression “as such” no doubt prompts the question, “What do you mean by that?”, and the formulae developed by Chief Justice Gibbs and Justice Dawson I would understand to be their way of answering that question, but it is a development of that basic idea, is it not?
MR BENNETT: Yes. A large part of the judgment of Justice Higgins seems to be based on the assumption that a law has only a single character and one cannot have dual characterisation.
GLEESON CJ: That is a different point, I think.
HAYNE J: This is at the logically prior point of identifying the subject of the power.
MR BENNETT: Yes, but we still separate identifying the subject and saying what one can do when one has identified it. There is a line of cases of which your Honours are well aware, which includes Barger, Fairfax, Osborne, Breckler, the second Fringe Benefits Case, where the Court has again and again said, or at least certainly come to the firm position at the end, despite some hiccups in the middle, that once one has a power, and it is not a purpose power, one’s use of it is not confined to the achievement of objectives included in that power.
The example given by Justice Menzies in Fairfax is perhaps the clearest example, where he discusses what he describes as a punitive tax on dealing in heroin designed for the purpose of stamping out the trade in heroin, and he says that would not be a law with relation to taxation; it would be a law about the suppression of heroin. That example is criticised in the later cases and said not to be correct. The modern view is that Barger is dead and that one is free in relation to general powers to legislate with a purpose outside the power, such as using the corporations power in the Dam Case to prevent environmental damage or using - - -
GLEESON CJ: Or using the taxation power to promote the Australian Film Industry?
MR BENNETT: Yes, or using the taxation power to control the superannuation industry, as was discussed in Breckler and in Fairfax, or, as in Barger itself, having a tax which has an objective of controlling behaviour, or most clearly in Murphyores where under the trade and commerce power one prohibits the export of material mined at a mine which the Commonwealth for environmental reasons thinks ought to be closed, but which the State concerned thinks ought to be allowed to operate.
Now, all those examples, we would submit, are examples which demonstrate that one does not read a power in this way. One does not say this is corporations power so you cannot use it for creating industrial legislation.
GLEESON CJ: But that approach, this distinctive character theory, is the way Justice Gaudron read the aliens power.
MR BENNETT: Yes, it is, and she was alone in doing so, your Honour, and her reading of it in Chu Kheng Lim, which is the case where that view was expressed, was largely based on a number of considerations associated with human rights and civil liberties and maters of that sort but, in our respectful submission, it is not a method of constitutional interpretation which has prevailed.
KIRBY J: We have never quite had a case like this one where your theory of the Constitution is that the Commonwealth can regulate anything that is addressed to a corporation by name and where we are required to face squarely the fact that corporations are now so many, so pervasive, so important, so everywhere, that it is like saying the Commonwealth can make laws with respect to persons. It is a huge power that intrudes into every aspect of the nation’s affairs and it carries a very large potential to effectively undo the Federation, and that is what makes you pause. The fact that it has not been done before or the people have not thought of it before, they have not reasoned it before or said it before, is really beside the point. We are now required to face it.
MR BENNETT: Your Honour, it is no different to the movement which began in Koowarta v Bjelke-Petersen of using the external affairs power to control matters that would always - - -
KIRBY J: It is very different, very different. I know about external affairs and it covers a lot of things, but it does not cover every nook and cranny of this nation as corporate activities do.
MR BENNETT: Your Honour, it is not every nook – it covers most - - -
KIRBY J: It is. You go out on the streets and you will see the vans. They are all corporate vans, they are corporate employees, corporate schools, corporate housing, corporate education, hospitals. It is an enormous power that you are postulating and it is what makes you – if you value Federation, and we are taught to value Federation in our constitutional doctrine, if you value it, you then have to stop and ask, “Is this subject to this Constitution?”
MR BENNETT: Well, your Honour, the trade and commerce power, once one has, as one has now, very great ease of movement over great distances, has meant that the interstate and international trade and commerce have become of increasing importance and intrastate trade and commerce of decreasing importance. There are very few aspects of trade and commerce today which have no interstate or international aspect. That simply is a result of the developments in society, and this is no different.
KIRBY J: It is really because, as I said, it is as if you said the Federal Parliament shall have the power to make laws with respect to (i) persons. Now, this happens to be a legal fiction person, but it is every person who is a corporation and in your theory of it, every aspect of that person, every activity of that person – and I have to say to you that that is why I think that citing these cases when they were not really faced with this issue squarely is not all that helpful.
MR BENNETT: In my respectful submission, one does not interpret the Constitution on the basis that because of changing factual circumstances a power having a particular meaning should not have that meaning because it would be more pervasive than it was in 1901.
KIRBY J: Well, I agree with that, but I remind you again that the power is “subject to this Constitution” which is the other powers and the structure and content of the constitutional document as a whole.
MR BENNETT: One could go through the exercise of looking at State legislation by the index to State Acts and see how many the Commonwealth would be able to affect or have inconsistent legislation with because of the corporations power. One would probably find not a large number.
CALLINAN J: I do not know about that. Again, it seems to me to be a very broad statement and I would need chapter and verse on it, and I doubt it. I seriously doubt it.
KIRBY J: Take criminal law. Every criminal offence that involves or relates to a corporation could just be moved, if it has not already been moved, into the federal sphere. Take schools, the private schools. They are now a significant component of our country. Take hospitals.
MR BENNETT: One could be cynical, your Honour, and say - - -
CALLINAN J: State environmental legislation. A lot of companies would be carrying out works that would attract the ire of environmentalists, I would think. We know that happens within the State.
MR BENNETT: Most aspects of the criminal law would have little to do with corporations. Some would.
CALLINAN J: It does not seem to me, with all due respect, Mr Solicitor, that you advance anywhere by saying a lot more people will or will not be affected by certain legislation today. That is not the way to construe the Constitution. I just think that is a waste of time, with all due respect. What you are probably saying is that diffusion of power is inconvenient and nobody likes to share power, but that is what the Constitution makes provision for. It is no doubt quite inefficient, it is very frustrating, but you have to face the fact that the Constitution contemplates a division of power, albeit not reserved powers left to the States but certainly residual powers.
MR BENNETT: Yes, but, your Honour, that division of power is not a quantitative one and one does not alter the Constitution, or its construction, merely because events in the course of history make one power more important and another power less important.
CALLINAN J: I agree entirely with that.
MR BENNETT: That is what is being put, your Honour, to me. What is being put to me - - -
CALLINAN J: I do not know why it is being put. I do not think anybody has said anything to the contrary, have they?
MR BENNETT: Well, what I understand is being put to me, your Honour, is that because there are now more corporations than there were in 1901 the power is wider than it was in 1901 and that upsets the federal balance and therefore we should not read it in the way that we would otherwise read it. That is what is being put to me.
CALLINAN J: That is not what I understand the submission to be.
MR BENNETT: Well, your Honour, it is - - -
KIRBY J: It is a matter that concerns me.
MR BENNETT: And it was that to which I was directing my remarks, your Honour.
KIRBY J: It is your eo nomine theory. That is why one is then looking into the words “financial”, “trading”, “foreign”, “corporation” and trying to see are there internal checks, either in the paragraph or in section 51 or in the structure, that put some check on this otherwise enormous power to deal with a corporation as a corporation in every aspect of its activity and life except its formation.
MR BENNETT: Your Honour, one of the aspects of it, one of the problems with the submission, is that virtually everything a trading corporation does relates either to its trading activities or to its corporateness. South Australia has given some extreme examples of cases where that may not be so. If a charitable organisation engages in trading activities and runs a soup kitchen, the soup kitchen is not a trading operation. There are a few extreme examples like that that one can take and I will deal with those when I get to South Australia’s submission.
But leaving those aside, in general, most things that a trading corporation does will relate to its trading activities unless one take the very narrow view that was taken by Chief Justice Gibbs in the Tasmanian Dam Case where he said that excavating a dam was not part of the trading activities of the hydro-electric corporation although it is for the purpose of collecting water which will generate electricity which will be sold. Leaving aside that very narrow view of trading, virtually everything falls into that category.
GLEESON CJ: One thing that has been said by everybody except Justice Murphy is that the fact that a law mentions or affects corporations is not conclusive of the question whether it is a law with respect to corporations because there is an issue of characterisation that has to be addressed. You find that most clearly expressed, for example, by Chief Justice Barwick in the Concrete Pipes Case.
MR BENNETT: Yes. You find it as I have said in the judgments of Chief Justice Gibbs and Justices Dawson and Wilson.
GLEESON CJ: And Deane? Justice Deane said that exactly and I think Justice Mason said it.
MR BENNETT: What they have said is that it may not necessarily be the case that every law that addresses its command to a corporation is sufficient, but they have not - - -
GLEESON CJ: What I am interested in is what was it – what type of consideration was prompting that reservation on their part?
MR BENNETT: It is a form of originalism almost – it is saying one wants to limit the power in some way to something behind it.
GLEESON CJ: Is a law that says nobody may smoke in a restaurant owned by a trading corporation a law with respect to trading corporations?
MR BENNETT: Yes, your Honour. That is for a number of reasons which I will come to. That is for the Dingjan reason. One would have to ask the extent to which the prohibition was a restriction or amplification of the corporation’s rights, privileges and duties and one would have to ask if it is addressed to people who are removed from the corporation, one would have to ask whether it has a substantial effect – a substantial, detrimental or beneficial effect on the corporation. One would have to ask those questions in relation to that.
HAYNE J: One would also have to ask the question, would one not, about these dicta found in the cases about whether they are anything more than judicial caveats, namely, I do not have to decide this. Do not take what I have decided as necessarily going this far, I have not decided that. Or are they going further and saying there really is a limit there – I do not need to articulate it. Now, there is a radical distinction between the two forms of statement and it would be necessary to look with great care at each of the sets of reasons to see exactly what the Justice concerned was saying.
MR BENNETT: We have in our submissions isolated most of the statements of this type and have shown that many of them are in the category your Honour Justice Hayne refers to.
HAYNE J: Because the root conception that seems to be in play in considering this question of whether particular constructions of 51(xx) have particular effects on the nature of the Federation, the root conception is that articulated by Justice Dixon in Melbourne Corporation 74 CLR particularly at 82, the notion of the separate integers of the Federation separately existing as elements of government. His Honour was at pains to point out that the framers do not appear to have considered that power forms part of the conception of a government, that is to say, the powers the particular integers have is not the essence. It is the existence of separate integers as government separately organised. Now, that is a root conception I can understand, but it seems to be being carried further than that and it is with that further carriage that I think you have to deal.
MR BENNETT: Yes. Well, your Honour, in my submission, one simply does not carry it that much further.
HAYNE J: That is hardly dealing with it, Mr Solicitor, to simply barely say, no, it does not.
MR BENNETT: Well, your Honour, may I just make good the submission of equating the proposition that it has to relate to trading or to its corporateness a little bit further. In one sense, of course, the example about smoking is an easy one because the restaurant is no doubt a business being carried on by the company. It is part of its trading activities and there is a direct effect no doubt in relation to that. But let me leave that - - -
KIRBY J: But, you see, the question was whether or not it is truly characterised and a court reserves to itself the power to say, looking at it we say it is not truly a law with respect to corporations. It is truly a law with respect to smoking and health, whereas you deny that. You say if the corporation is the subject of the command, end of question.
MR BENNETT: Well, we would say there is multiple characterisation in that example.
KIRBY J: That is your submission and that is how this Act is framed.
MR BENNETT: Yes.
KIRBY J: If the corporation is the subject of the command, no further debate, whereas the question you were asked was, is there not still a province of the Court to look at the statute – look at this statute, for example, look at the objects and say this is not really a statute with respect to corporations. This is a statute with respect to industrial relations.
MR BENNETT: Well, your Honour, that is what was - - -
KIRBY J: You deny that because you say if the corporation is the subject of the command, end of debate.
MR BENNETT: And I deny it, your Honour, because of the Murphyores debate - - -
GUMMOW J: You say it is both.
MR BENNETT: - - - and the line of cases following Murphyores, that a law in relation to trade and commerce may be purely there for the purpose of protecting the environment, but that does not stop it being a law about trade and commerce.
KIRBY J: This is not duplicity we are talking about. We are talking about whether or not – you see, the words you cannot get away from are in the Constitution, “a law with respect to”, and that has to be determined by a court and ultimately this Court and therefore ultimately the question is for us to look at the statute and say, is this a law with respect to corporations?
MR BENNETT: Well, your Honour, we say that is not what one ultimately does because that assumes that there is a single characterisation and - - -
KIRBY J: No, it does not. It can be one of the characterisations.
MR BENNETT: Your Honour, if it is put that way, we submit, yes, one has to ask what the connection is and we will come to - - -
KIRBY J: You start behind for the fact that you never even included corporations in the long title, the short title or the objects and I am still to see what the Minister said and what the memorandum said.
MR BENNETT: Your Honour, if the Murphyores prohibition had been done purely by legislation it is unlikely that the legislation would have mentioned the trade and commerce power. What was being done was to protect Fraser Island, nothing more and nothing less, and it was an environmental law and no doubt it would have said that in its objects clause. That would not have made it invalid. Trade and commerce was the peg and a legitimate peg in that case.
CALLINAN J: Authority of this Court but for myself I think it a most unpersuasive one. I know it is an authority of this Court but the notion that you set out to protect Fraser Island, all of your objectives and aims are entirely environmental and you kick a constitutional goal by accident. Really, I think decisions like that are serious problems in the real world for the Court.
MR BENNETT: The Superannuation Cases is the other very clear example, your Honour, where the taxation power is used to regulate the entire superannuation industry. That has been upheld again and again. The rejection in the second Fringe Benefits Tax Case of the example given by Justice Menzies about the punitive tax on heroin is another example. The motive with which a particular power is exercised does not matter unless it is a purposive power and if it is not a purposive power one is just not concerned with that.
CALLINAN J: Why are not all the constitutional powers purposive powers?
MR BENNETT: Because, your Honour, some deal with a particular subject matter and some deal with – they have been construed in the courts - - -
CALLINAN J: For the purpose of regulating various aspects of life. That is the purpose. All of them are purposive powers in that sense, for the purpose of regulating lighthouses or weights and measures or banking.
MR BENNETT: Your Honour, if one says for the purpose of regulating a subject matter - - -
CALLINAN J: Regulating or controlling.
MR BENNETT: - - - then the distinction ceases to exist but the Court has drawn again and again the distinction between person powers like the aliens power and so on, and purposive powers.
CALLINAN J: But the aliens power is ultimately for the purpose of dealing with aliens. It is still a purposive power in that sense.
MR BENNETT: One can use anything which is a subject matter or person power for any purpose. For example, one might be able in war time, even under the lighthouses power, not the defence power, to use lighthouses to try and blind people who are steering enemy ships.
CALLINAN J: But does that not mean that every power is, in at least one sense, a purposive power, and you were making some distinction or you were saying that the powers are not purposive, but, ultimately, they are all purposive.
MR BENNETT: Your Honour, purposive in the sense that it is for the purpose of regulating the particular thing but when one says a purposive power one means a power which is only given for the purpose of achieving a particular objective, that being the further objective, not the nearer objective.
CALLINAN J: Take aliens for the purpose of repelling, controlling or deporting aliens.
MR BENNETT: It is more than that, your Honour. The power extends to the control of aliens while they are here and in all sorts of respects. It would extend to laws dealing with aliens owning land or owning shares in companies, matters of that sort. It would deal - - -
CALLINAN J: They said controlling aliens in all their activities.
MR BENNETT: Yes, but that is to be distinguished from a purposive power like defence where the purpose is the defence of Australia, and it is not laws – it is a grammatical distinction perhaps, but it has an effect in relation to the way powers are construed, and this Court has said that on a number of occasions.
KIRBY J: Are churches constitutional corporations in Australia?
MR BENNETT: Your Honour, that is not a question to which one can give a yes/no answer.
KIRBY J: But there is the Roman Catholic Property Trust and things of that kind, and I assume they are statutory corporations?
GLEESON CJ: The Roman Catholic Church Trust Property Act (NSW) deals with that issue.
MR BENNETT: Yes. Some are incorporated by particular statutes, some are incorporated under general statutes. For example, in the Church of the New Faith v Commissioner of Pay-roll Tax, the Church of Scientology there was incorporated under the Associations Incorporation Act (SA).
KIRBY J: So it would undoubtedly be a constitutional corporation?
MR BENNETT: It would depend what it did, your Honour.
CALLINAN J: The Church of England in New South Wales sold a lot of Glebe lands - probably a trading activity.
KIRBY J: It sounds as though they do a bit of trading, too.
MR BENNETT: Yes. There is a recent case, your Honour, called Fasold in which there was a man who had a theory that a particular natural protuberance on Mount Ararat was Noah’s Ark.
KIRBY J: Do not worry. I am worried about the big churches.
MR BENNETT: Yes, but the question there is relevant to this, your Honour, because what was held by the Federal Court was that the mere fact that there were minor activities engaged in of selling particular objects and charging for lectures and tapes and so on did not mean that his activities were in trade and commerce.
KIRBY J: That does not answer my question.
MR BENNETT: No, but in most cases, your Honours – and it would depend on the activities of the particular body – many of the churches would have a body which engages in the activities which are closer to trading activities and the activities which are purely religious; others might not. One would have to look at the structure of the particular religious organisation and see how it was done.
CALLINAN J: I think they nearly all do some trading now. If you go to the St John’s Anglican Cathedral in Brisbane, there is a church shop. You can buy all sorts of things. That is a trading activity.
KIRBY J: It sounds as though the churches or some of their associated bodies might fall into your power.
GLEESON CJ: There would not be any doubt about that, I would have thought.
MR BENNETT: Many of them would, your Honour.
KIRBY J: And archbishops have been corporations, though whether they have been trading in the past and trading now is perhaps a matter on which believers might have different views.
MR BENNETT: Well, there is another question - - -
GUMMOW J: They have to be subject to section 116 so - - -
KIRBY J: Well, that is a toothless tiger.
CALLINAN J: Yes, but section 116 is very limited because it would not, I would not have thought, protect the churches.
KIRBY J: Perhaps we can return to that at a later stage. It is just something I thought I would ask.
MR BENNETT:
Yes. I was making the point about the width of the matters which relate either
to trading or to corporate character and it is
worth referring to the statement
in the judgment of Justice Brennan in Re Dingjan
[1995] HCA 16; 183 CLR 323. This is a passage which has given rise to extensive
debate in the written submissions, but the true explanation of this passage
demonstrates the point I wish to make about the distinctive character theory.
On page 337 of the report, after the quotation from
Justice Kitto in
Fairfax, his Honour says this:
In that case, Gibbs CJ postulated as a test of validity that the constitutional character of a corporation “should be significant in the way in which the law relates to it”. That test was accepted by Dawson J in the Tasmanian Dam Case.
Then comes the sentence my learned friends all emphasise out of
all proportion. He says:
Though I see no error in this approach, it leaves much to judicial impression from case to case.
But then he explains why he sees no error in the approach,
although it is different from his own. He says:
If the constitutional character be “significant” to the relationship with the law, it must be because the character of the corporation is the factor which attracts the operation of the law. If that be so, I perceive no distinction between that test and a test of discriminatory operation.
That is the test that we propound.
I prefer to state the test as one of discrimination, for that test admits of an objective ascertainment –
Now, let me just illustrate the point that his Honour is making by reference to foreign corporations. Now, we heard yesterday the example of a law addressed to foreign corporations concerned with foreign takeovers and prohibiting a foreign corporation from taking over an Australian company. Let us assume that my learned friend’s test is to be applied and is correct. Now, what is it about that prohibition which the company being foreign is relevant to? One asks that question and we answer it by saying the fact that the legislature has chosen to prohibit a foreign corporation from engaging in that form of activity.
One can test it this way. Compare that with the example which your Honour the Chief Justice put to my learned friend, the Solicitor for New South Wales, a few days ago, the example of a foreign corporation shall not employ Australian labour in sweatshop conditions. Now, if one looks at that law, or a foreign corporation shall give three weeks annual leave, or whatever, if one looks at one of those laws and one says, “What is it about being foreign which makes it relevant to apply that law to the corporation?” and the answer is exactly the same: legislature has taken the view that if a body is a foreign corporation it ought not to engage in certain activities in Australia or to engage in them under controlled conditions.
That is what Justice Brennan means when he says the two tests produce the same result because asking, “What is it about the foreignness which makes that law within power?”, the answer is legislature has chosen that as the discrimen which determines who is subject to the law because the legislature has decided in the one case the foreign corporations should not take over foreign companies without consent, in the other case that foreign corporations should not do nasty things to Australian workers.
GLEESON CJ: Is it enough for the legislature to say, “We are doing it because we can”?
MR BENNETT: Your Honour, yes. Presumably, legislatures are answerable to the electorate. That is the sole source of control in this area. This Court controls legislatures where they step beyond the bounds of the Constitution, but from the constitutional point of view the legislature does not have to have a motive or a policy which this Court considers desirable or undesirable. That is for the electorate.
GLEESON CJ: Can the legislature say, “We would like to prohibit everybody from smoking in all restaurants. We cannot do that, but we can prohibit people from smoking in restaurants owned by foreign corporations and trading and financial corporations and we will have achieved something for the peace, order and good government of Australia, we think, if we do that”?
MR BENNETT: Yes, your Honour. As I will show when I get to my next submission, it can have a CLM section which says, “This also applies to restaurants that happen to be situated in lighthouses, to restaurants which are owned by foreign or trading or financial corporations, to restaurants owned by aliens and restaurants in territories”. It can have a list of the powers so as to achieve the maximum reach for its legislation and each part of that is a valid law under the particular power concerned. That drafting technique has been approved by this Court on a number of occasions. I will take your Honours to the cases.
It matters not that what the legislature is interested in is not lighthouses and corporations and aliens, but smoking. That does not matter. It is entitled to have regard to the limits of its constitutional powers and to legislate so far as it can within the limits of those powers, except that, where it is dealing with a purposive power, it has to have a purpose related to that power. But that does not apply where one is dealing with a subject matter or person power.
So the passage in which Justice Brennan explains away his views on the test suggested by Justices Gibbs, Dawson and, elsewhere, Wilson is, in my respectful submission, valuable in showing that, particularly where one has a phrase like “trading corporation” which is very wide, there is very little difference between the limitation that is suggested that it must relate to its trading or its being a corporation and so on and the other aspects.
Now, I am reminded, your Honour, that my learned friend, the Solicitor for Victoria, needs to make an application to the Court, so if that is a convenient time.
GLEESON CJ: Very
well, yes. Solicitor-General for Victoria.
MS TATE:
Your Honours, before the close of play may I formally seek leave to amend
Victoria’s statement of claim in the terms set
out in the proposed further
amended statement of claim, copies of which have been furnished to
your Honours.
GLEESON CJ: Does this go beyond what we discussed the other day?
MS TATE: It does not go beyond that, your Honour.
MR BENNETT: That is consented to, your Honour.
GLEESON CJ: Yes, you have that leave.
MS TATE: Your Honours, might I also indicate that we will prepare a note on the matters raised by Justice Kirby with Mr Jackson this afternoon. May it please your Honours.
GLEESON CJ: Is that a convenient time?
MR BENNETT: Yes, your Honour.
GLEESON
CJ: Then we will adjourn until 10.15 tomorrow.
AT 4.15
PM THE MATTERS WERE ADJOURNED
UNTIL WEDNESDAY, 10 MAY
2006
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