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Constitutional Law
Topic 8 Corporations Power

1
Corporations Power
• Power conferred under s 51(xx) to make laws
“with respect to foreign corporations, and
trading or financial corporations formed
within the limits of the Commonwealth”
• Historically the power has sought to preserve
the reserved state powers doctrine.
• However, incremental developments in the
head of power now give it a broad scope.
2
Huddert Parker vMoorehead
• Griffith CJ: Commonwealth could prohibit a
trading or financial corporation formed within
the Commonwealth from entering into any
field of operation, but could not control
certain operations reserved to the States.
• Isaacs J: stated that s 51(xx) only applies
corporations already formed, not to new
corporations created after federation.
3
Huddert Parker vMoorehead
• Isaacs J: favoured a broad reading of s51(xx)
but attempted to put limits a list of domestic
corporations: scholastic, religious, and other
types of corporations.
• Isaacs J: Cth should not be able to regulate
internal management of corporations but only
dealings between corporations and other
persons.
4
Strickland v Rocla Concrete Pipes (1971)
• Keith Edgar William Strickland brought charges
against RoclaConcrete Pipes Limited and others
for offences against s43 of the Trade Practices Act
1965-1969 (Cth).
• Strickland argued that Rocla contravened s42 of
the act by not providing copies of the agreements
to the then Trade Practice Commission.
• The defendant, Rocla, argued that the Trade
Practices Act did not apply to it as a constitution
under s 51(xx).
5
Concrete Pipes case
• Barwick CJ: Overruled Huddart Parker and
displaced by the Engineers Case (p
795;[485][488] of case).
• Trade Practices law could be regulated by a
grant of power in s 51(xx). However, wording
has to be framed carefully to apply the power
to trade practices law [490].

6
Concrete Pipescase
• Barwick CJ and Menzies J judgments reject the
notion that the corporations power should
have boundaries or limits [490][511].
• However, the power should be dealt with on a
case by case approach [490-491].
• Barwick CJ put some limitations down, stating
that the power allowed for regulating and
controlling trading and financial corporations
[489-490].
7
R v Trade Practices Tribunal; Ex parte
St George County Council
• Issue was whether the St George Council was
a “trading corporation” under s 51(xx).
• Introduces the “Purposes test” which isto
determine the purposes for which the
corporation was set up for.
• Activities test is raised but not adopted by the
concurring majority of judges.

8
St George County Council case
• Menzies, Gibbs and McTiernan JJ in separate
concurring judgments held that it was not a
trading corporation as its original purpose was
to provide the essential service of local
government (p796 of text).
• Barwick CJ and Stephen J, dissenting,
preferred the activities test and held that the
Council was a trading corporation because of
its substantial trading (p 796 text).
9
Adamson’s Case (1979)
• Brian Ronald Adamson alleged breach of the
Trade Practices Act 1974 Cths 45(2) following the
WA League’s failure to release him from his
existing contract, on the basis that he not be
restricted from supplying his services.
• Issue was whether the WA Football League and
its clubs were sporting organisations or trading
corporations under s 51(xx).
• WA League argued that they were not a
corporation under s 51(xx).
10
Adamson’s Case – Activities test
• Adamsonscase established the activities test
which is used to determine applicability of s
51(xx) (p 797).
• Mason J [235]-[236] (with Barwick CJ, Murphy
and Jacobs JJ agreeing): that trade was the main
activity and the sport was part of the main
activity of making money.
• Stephen J (dissenting): Any trading activities
undertaken by the football league were not
sufficient to make them "trading corporations" so
as to fall within the scope of s 51(xx).
11
Adamson’s Case- other issues
• Case raised in obiter whether trading or financial
activities needed to dominant or only substantial
part of the corporation.
• Trading activities of the club and league were the
dominant activities of the corporations. Issue of
dominant or substantial did not need to be
addresses.
• Mason J [234]: “whether a corporation is a
trading corporation is a matter of fact and
degree.”
12
Re Ku-ring-Gai Co-operative Building
Society (No 12) Ltd
• The applicants, Ku-ring-gai, sought declaratory relief,
under the Trade Practices Act 1974,in respect of loans
issued as part of their operations, that they did not
breach exclusive dealing provisions in s 47 of the TPA.
• The applicants were co-operative terminating building
societies incorporated under the Co-operation Act,
1923 (NSW). The object of each was the raising of a
fund so as to make loans to its members.
• Issues included whether the societies were “financial
corporations under s 51(xx).

13
Ku-ring-Gai case
• Deane J [642](p 800): Kuringai Building society
were held to be within definition of financial
corporations based on their financing
activities using the activities test.
• Applicant were formed to carry on a business
of dealing in finance and in fact carried on
such a business, and accordingly, were
financial corporations within the meaning of
the phrase as used in s 51 (xx).
14
State Superannuation Board of
Victoria v Trade Practices Commission
(1982)
• Issue of whether the State Superannuation
Board of Victoria was captured by s 51(xx).
• Mason, Murphy and Deane JJ [305](p 800):
Financial activities engaged in to provide
superannuation made the Superannuation
Board a financial corporation.
• Trading and financial activities are not
mutually exclusive and can coexist.
15
Fencottv Muller (1983)p 801
• Oakland Nominees Pty Ltd had not current
activities. It was formed to facilitate a
conveyancing transaction.
• Majority: Purposes test is still applicable
where there are no activities have been
engaged in.
• Referred to the corporation’s articles to
establish its purpose and future activities.
16
Actors Equity v Fontana (1982)
• The corporations power s 51(xx) could be used
to restrict actions by picketers that caused
harm to a corporation.
• The Court found that the provision was
relevant as it was respect to activities with
corporations.
• Gibbs CJ: A relatively narrow view of the scope
of s 51(xx) as applicable to corporate activities
directly related to constitutional corporations.
17
Commonwealth v Tasmania
(Tasmanian Dams Case) (1983)
• Issues included whether the World Heritage
(Property Conservation) Act was valid under s
51(xx) and (xxix); and
• Whether the Hydroelectric commission set up
under the act was a trading corporation.
• The Commission’s connexion with the state
government of Tasmania was also brought
into question.
18
Commonwealth v Tasmania
(Tasmanian Dams Case) (1983)
• Mason J: St George and original purpose test
rejected. HEC and Tas link did not affect
validity of s51(xx) to affect the HEC.
• Launceston case cited noting independent
nature of the HEC.
• Policy role of the HEC to protect heritage.
• Mason J [156]: Commission would sell
electrical power on a very large scale and
therefore a trading corporation.
19
Commonwealth v Tasmania
(Tasmanian Dams Case) (1983)
• (p 803) Trading activities of the Commission
were less prominent that in St George.
• Superannuation case pointed out that trading
activities need not be dominant activities.
• Gibbs CJ dissenting: HEC true character was a
governmental or public body precluded it
from being a trading corporation under
51(xx).
20
Re Dingjan; Ex parte Wagner (1995)
• Industrial Relations Act 1988 (Cth) sought to
enliven the Corporations power.
• The corporations power was held to not be
able to regulate the activities of the
corporation in so far as they related to parties
one removed from the corporation.

21
New South Wales v Commonwealth
(Workchoices Case) (2006)
• Majority: s 51(xx) extends at very least to the
business functions and activities of
constitutional corporations and business
relationships; and
• The power extends to the persons by and
through whom the corporations carry out
those functions and activities and with whom
they enter into business relationships.
22
Workchoices(cont.)
• Majority [114]: cited Re Pacific Coal Pty Ltd
case, Gaudron J: “s 51(xx) extends to activities,
functions, relationship and the business of a
corporation, the creation of rights and
privileges of the corporation… and regulation
of the conduct of employees and shareholders
and other persons who can affect activities.”

23
Workchoices(cont.)
• Majority [103]: refer to general principles of
interpretation (Grain Poole).
• Distinctive character test not adopted by
majority (p 816).
• Kirby J (dissenting): raised the issue that the
states governmental law making power would
be diminished if s 51(xx) was broadly applied

24

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Constitutional Law - Corporations power

  • 1. Constitutional Law Topic 8 Corporations Power 1
  • 2. Corporations Power • Power conferred under s 51(xx) to make laws “with respect to foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth” • Historically the power has sought to preserve the reserved state powers doctrine. • However, incremental developments in the head of power now give it a broad scope. 2
  • 3. Huddert Parker vMoorehead • Griffith CJ: Commonwealth could prohibit a trading or financial corporation formed within the Commonwealth from entering into any field of operation, but could not control certain operations reserved to the States. • Isaacs J: stated that s 51(xx) only applies corporations already formed, not to new corporations created after federation. 3
  • 4. Huddert Parker vMoorehead • Isaacs J: favoured a broad reading of s51(xx) but attempted to put limits a list of domestic corporations: scholastic, religious, and other types of corporations. • Isaacs J: Cth should not be able to regulate internal management of corporations but only dealings between corporations and other persons. 4
  • 5. Strickland v Rocla Concrete Pipes (1971) • Keith Edgar William Strickland brought charges against RoclaConcrete Pipes Limited and others for offences against s43 of the Trade Practices Act 1965-1969 (Cth). • Strickland argued that Rocla contravened s42 of the act by not providing copies of the agreements to the then Trade Practice Commission. • The defendant, Rocla, argued that the Trade Practices Act did not apply to it as a constitution under s 51(xx). 5
  • 6. Concrete Pipes case • Barwick CJ: Overruled Huddart Parker and displaced by the Engineers Case (p 795;[485][488] of case). • Trade Practices law could be regulated by a grant of power in s 51(xx). However, wording has to be framed carefully to apply the power to trade practices law [490]. 6
  • 7. Concrete Pipescase • Barwick CJ and Menzies J judgments reject the notion that the corporations power should have boundaries or limits [490][511]. • However, the power should be dealt with on a case by case approach [490-491]. • Barwick CJ put some limitations down, stating that the power allowed for regulating and controlling trading and financial corporations [489-490]. 7
  • 8. R v Trade Practices Tribunal; Ex parte St George County Council • Issue was whether the St George Council was a “trading corporation” under s 51(xx). • Introduces the “Purposes test” which isto determine the purposes for which the corporation was set up for. • Activities test is raised but not adopted by the concurring majority of judges. 8
  • 9. St George County Council case • Menzies, Gibbs and McTiernan JJ in separate concurring judgments held that it was not a trading corporation as its original purpose was to provide the essential service of local government (p796 of text). • Barwick CJ and Stephen J, dissenting, preferred the activities test and held that the Council was a trading corporation because of its substantial trading (p 796 text). 9
  • 10. Adamson’s Case (1979) • Brian Ronald Adamson alleged breach of the Trade Practices Act 1974 Cths 45(2) following the WA League’s failure to release him from his existing contract, on the basis that he not be restricted from supplying his services. • Issue was whether the WA Football League and its clubs were sporting organisations or trading corporations under s 51(xx). • WA League argued that they were not a corporation under s 51(xx). 10
  • 11. Adamson’s Case – Activities test • Adamsonscase established the activities test which is used to determine applicability of s 51(xx) (p 797). • Mason J [235]-[236] (with Barwick CJ, Murphy and Jacobs JJ agreeing): that trade was the main activity and the sport was part of the main activity of making money. • Stephen J (dissenting): Any trading activities undertaken by the football league were not sufficient to make them "trading corporations" so as to fall within the scope of s 51(xx). 11
  • 12. Adamson’s Case- other issues • Case raised in obiter whether trading or financial activities needed to dominant or only substantial part of the corporation. • Trading activities of the club and league were the dominant activities of the corporations. Issue of dominant or substantial did not need to be addresses. • Mason J [234]: “whether a corporation is a trading corporation is a matter of fact and degree.” 12
  • 13. Re Ku-ring-Gai Co-operative Building Society (No 12) Ltd • The applicants, Ku-ring-gai, sought declaratory relief, under the Trade Practices Act 1974,in respect of loans issued as part of their operations, that they did not breach exclusive dealing provisions in s 47 of the TPA. • The applicants were co-operative terminating building societies incorporated under the Co-operation Act, 1923 (NSW). The object of each was the raising of a fund so as to make loans to its members. • Issues included whether the societies were “financial corporations under s 51(xx). 13
  • 14. Ku-ring-Gai case • Deane J [642](p 800): Kuringai Building society were held to be within definition of financial corporations based on their financing activities using the activities test. • Applicant were formed to carry on a business of dealing in finance and in fact carried on such a business, and accordingly, were financial corporations within the meaning of the phrase as used in s 51 (xx). 14
  • 15. State Superannuation Board of Victoria v Trade Practices Commission (1982) • Issue of whether the State Superannuation Board of Victoria was captured by s 51(xx). • Mason, Murphy and Deane JJ [305](p 800): Financial activities engaged in to provide superannuation made the Superannuation Board a financial corporation. • Trading and financial activities are not mutually exclusive and can coexist. 15
  • 16. Fencottv Muller (1983)p 801 • Oakland Nominees Pty Ltd had not current activities. It was formed to facilitate a conveyancing transaction. • Majority: Purposes test is still applicable where there are no activities have been engaged in. • Referred to the corporation’s articles to establish its purpose and future activities. 16
  • 17. Actors Equity v Fontana (1982) • The corporations power s 51(xx) could be used to restrict actions by picketers that caused harm to a corporation. • The Court found that the provision was relevant as it was respect to activities with corporations. • Gibbs CJ: A relatively narrow view of the scope of s 51(xx) as applicable to corporate activities directly related to constitutional corporations. 17
  • 18. Commonwealth v Tasmania (Tasmanian Dams Case) (1983) • Issues included whether the World Heritage (Property Conservation) Act was valid under s 51(xx) and (xxix); and • Whether the Hydroelectric commission set up under the act was a trading corporation. • The Commission’s connexion with the state government of Tasmania was also brought into question. 18
  • 19. Commonwealth v Tasmania (Tasmanian Dams Case) (1983) • Mason J: St George and original purpose test rejected. HEC and Tas link did not affect validity of s51(xx) to affect the HEC. • Launceston case cited noting independent nature of the HEC. • Policy role of the HEC to protect heritage. • Mason J [156]: Commission would sell electrical power on a very large scale and therefore a trading corporation. 19
  • 20. Commonwealth v Tasmania (Tasmanian Dams Case) (1983) • (p 803) Trading activities of the Commission were less prominent that in St George. • Superannuation case pointed out that trading activities need not be dominant activities. • Gibbs CJ dissenting: HEC true character was a governmental or public body precluded it from being a trading corporation under 51(xx). 20
  • 21. Re Dingjan; Ex parte Wagner (1995) • Industrial Relations Act 1988 (Cth) sought to enliven the Corporations power. • The corporations power was held to not be able to regulate the activities of the corporation in so far as they related to parties one removed from the corporation. 21
  • 22. New South Wales v Commonwealth (Workchoices Case) (2006) • Majority: s 51(xx) extends at very least to the business functions and activities of constitutional corporations and business relationships; and • The power extends to the persons by and through whom the corporations carry out those functions and activities and with whom they enter into business relationships. 22
  • 23. Workchoices(cont.) • Majority [114]: cited Re Pacific Coal Pty Ltd case, Gaudron J: “s 51(xx) extends to activities, functions, relationship and the business of a corporation, the creation of rights and privileges of the corporation… and regulation of the conduct of employees and shareholders and other persons who can affect activities.” 23
  • 24. Workchoices(cont.) • Majority [103]: refer to general principles of interpretation (Grain Poole). • Distinctive character test not adopted by majority (p 816). • Kirby J (dissenting): raised the issue that the states governmental law making power would be diminished if s 51(xx) was broadly applied 24