Module 6 Trade and Commerce(s51(i)) and Corporations (s51(xx)) Bede Harris

The trade and commerce power Section 51 (i) Legislative powers of the Parliament The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: (i) trade and commerce with other countries, and among the States;

Other provisions in respect of trade and commerce s.92 ...trade, commerce and intercourse among the States ... shall be absolutely free. s.98 The power of the Parliament to make laws with respect to trade and commerce extends to navigation and shipping, and to railways the property of any State.

Incidental aspect of the trade and commerce power Broad interpretation of the power- W & A McArthur Ltd v Queensland (1920) 28 CLR 530 at 547: All the commercial arrangements of which transportation is the direct and necessary result form part of "trade and commerce." The mutual communings, the negotiations, verbal and by correspondence, the bargain, the transport and the delivery are all, but not exclusively, parts of that class of relations between mankind which the world calls "trade and commerce”.

Incidental aspect of the trade and commerce power Bank of New South Wales v Commonwealth (1948) 76 CLR 1 at 381 It covers intangibles as well as the movement of goods and persons. The supply of gas and the transmission of electric current may be considered only an obvious extension of the movement of physical goods. But it covers communication. The telegraph, the telephone, the wireless may be the means employed. It includes broadcasting and, no doubt, it will take in television. In principle there is no reason to exclude visual signals…

Incidental aspect of the trade and commerce power Huddart Parker Ltd v Commonwealth(1931) 44 CLR 492 The High Court found that although the legislation did not regulate trade and commerce itself, it was on a matter connected with interstate and overseas trade and commerce and was, thus, intra vires s 51(i)

Incidental aspect of the trade and commerce power Airlines of NSW Pty Ltd v NSW (No.2)(1965) 113 CLR 54 Reaffirmed the principle found in Australian National Airways Ltd v Commonwealth (1945) 71 CLR 29 that the trade and commerce power enables the Commonwealth not only to regulate commercial activity, but also to engage in such activity itself.

The geographical requirement Trade and commerce extends to those commercial transactions, dealings, and exchanges between people, encompassing either tangible or intangible goods and services: Bank of New South Wales v Commonwealth (1948) 76 CLR 1. HC Sleigh Ltd v South Australia (1977) 136 CLR 475

The regulation of production O’Sullivan v Noarlunga Meat Ltd (1954) 92 CLR 565 The High Court held that the Commonwealth legislation was valid on the grounds that, although the action took place wholly within the State, it was covered by the implied incidental power to s 51(i)

The corporations power Section 51 (xx) Legislative powers of the Parliament   The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: (xx)  foreign corporations, and trading or financial corporations formed within the limits of the commonwealth.

Trading corporation - a corporation incorporated within the limits of the Commonwealth and undertaking trading activities which constitute a sufficiently significant proportion of its overall activities: R v Federal Court of Australia: ex parte Western Australian National Football League(“Adamson's Case”) (1979) 143 CLR 190

Financial corporation a corporation that engages in financial activities or is intended to do so: State Superannuation Board of Victoria v Trade Practices Commission (1982) 150 CLR 282.  financial activities need not be the predominant or characteristic activity of the corporation may be a financial corporation even though it has not engaged in any financial activities

Foreign corporation - a body corporate registered overseas is a corporation for the purposes of s 51 (xx).

The purpose test involves looking at the purpose for which the corporation was formed. The purpose test was introduced in R v Trade Practices Tribunal; Ex parte St George County Council (1974) 130 CLR 533 

The activities test The activities test involves looking at what a corporation actually does.  established in the case of R v Federal Court of Australia: ex parte Western Australian National Football League (“Adamson's Case”) (1979) 143 CLR 190  majority held that the St George Council case was incorrectly decided

Financial activities different to trading activities as they involve only money and the generation/loss of money (including the borrowing, lending or investment of money) whereas trading is concerned with goods and services. State Superannuation Board v Trade Practices Commission (1982) 150 CLR 282 

Incorporation Section 51 (xx) cannot be used to make laws for the actual process of incorporation. New South Wales v Commonwealth (Incorporation case) (1990) 169 CLR 482 - the words in s 51(xx) ‘trading and financial corporations formed within the limits of the Commonwealth’ must be read in the past tense.

All activities done or to corporations Trading and financial activities of corporations – broad interpretation of s 51 (xx) Strickland v Rocla Concrete Pipes (“Concrete Pipes Case”) (1971) 124 CLR 468: High Court upheld the validity of the Trade Practices Act 1965 (Cth) providing that all trading activities of a trading corporation could be regulated using s 51(xx)

Activities preparatory to trading and financial activities Commonwealth v Tasmania (“Tasmanian Dam Case”) (1983) 158 CLR - not only the trading or financial activities of a trading or financial corporation could be regulated using s 51(xx) but also the activities that were only preparatory to trading or financial activities. Specifically in the Tasmanian Dam Case the construction of a dam that would subsequently be used to sell electricity. 

Activities of human agents of corporations R v Australian Industrial Court; Ex parte CLM Holdings Pty Ltd (1977) 136 CLR 235: s 51(xx) incidental power includes power to regulate the conduct of human agents of corporation such as directors therefore could be relied upon to validity insert provisions in the Crimes Act 1914 (Cth)

Actions done by others which affect corporations Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169 The High Court unanimously found that a law made under s51(xx) can be directed towards the activities of a specific natural person, as long as that law is protecting a trading corporation.

Actions done by others which affect corporations Re Dingjan; Ex parte Wagner (1995) 183 CLR 323- the court held that where a corporation has a contract with A, and A has a contract with B (neither A or B being corporations), the corporations power does not extend to regulating the relationship between A and B, which is one step removed from the corporation itself, even if that relationship has an economic effect on the corporation. The relationship was not a matter which was ‘with respect to’ the corporation.

Actions done by others which affect corporations NSW v Commonwealth; Western Australia v Commonwealth [2006] HCA 52 (2006) 231 ALR 1 (The Workchoices Case)- majority dismissed challenges to the validity of the Work Choices legislation and took a broad approach to s 51 (xx) stating that it allowed the Commonwealth to make laws relating to the activities, functions, relationships and business of a corporation; the rights, privileges and obligations of a corporation; the conduct of a corporations agents, employees and shareholders and, also, the regulation of those whose conduct is (or is capable of) affecting the activities, functions, relationships or business of a corporation.

No regulation of State banking or insurance - Restriction of the corporations power Bank of New South Wales v Commonwealth (Bank Nationalisation Case) (1948) 76 CLR 1: due to the s 51(xiii) banking power containing an express denial of the power to legislate on State banking the Commonwealth could not rely on the financial corporations aspect of s 51(xx) in seeking to nationalise banks owned by State Governments.

The trade and commerce power compared with the corporations power Corporations far more useful in regulating the economy Trade & commerce used extensively until the 1970’s but became less important following the decision in Strickland v Rocla Concrete Pipes (“Concrete Pipes Case”) (1971) 124 CLR 468. Trade & commerce limited – restricted to interstate and overseas trade and commerce Corporations broad- used to regulate activities conducted by corporations even if they operate wholly within a State

Combination of trade and commerce power and the corporations power When combined the two powers enable the Commonwealth to regulate: All activities conducted by trading and financial corporations, and Trade and commerce conducted by sole traders and partners interstate or overseas. Commonwealth cannot regulate activities by sole traders and partners conducted wholly in the confines of a State