Opinion Number. 1635


inconsistency with royal charter of incorporation
royal charter incorporating bank: banking power: power of commonwealth to enact legislation inconsistent with provisions contained in charter: power to abrogate royal prerogative

Key Legislation

CHARTERED COMPANIES ACT 1837 (U.K.) (7 Will. IV & 1 Vict. c. 73): Constitution ss 51(xiii), 74: Crimes Act 1914: Justices Act 1928 (Vic) s 187: Colonial Laws Validity Act 1865 (U.K.) (28 & 29 Vict. c. 63) ss 2, 3

The Commonwealth Statistician

The Commonwealth Statistician has forwarded for my advice the following memorandum:

The following message was received from the Secretary to the Commonwealth Bank this morning:

Governor suggests if not already done immediate steps should be taken by the Treasury to obtain advice from the Solicitor-General as to whether Commonwealth legislation on banking will over-ride the provisions of any royal charter or over (sic) authority under which any bank operates at present. If not what steps can be taken to insure that Commonwealth legislation will prevail.

I shall be glad if you will examine this matter, as suggested, and let me have a reply at your convenience. The message does not indicate in what respects any Commonwealth legislation may interfere with the charters of the banks, but I understand that numerous objections have been raised from time to time on this score.

No concrete facts upon which to base an opinion have been supplied to me, nor have I been given an opportunity of perusing the charter in question.

Moreover, the points of alleged inconsistency may prove upon examination not to be inconsistent at all. For example, the fact that Commonwealth legislation imposes obligations additional to (as distinct from in lieu of) obligations arising under the charter would not normally involve any inconsistency.

My advice must not, therefore, be taken as referring to more than the broad question whether Commonwealth legislation relating to banking etc., if inconsistent with a royal charter under which a bank operates, would prevail over the inconsistent terms of that charter.

The memorandum also refers to ‘any other authority under which the bank operates’ but I refrain from commenting on that phrase in the absence of any indication as to the nature of the other authority referred to.

Broadly speaking, the prerogative power to incorporate by royal charter is unconnected with Statutory authority, but in certain respects the prerogative power has been supplanted by Statute, e.g. 7 Wil. IV and 1 Vict. c. 73. This supplementary legislation relates particularly to conferring the privileges of incorporation by Letters Patent without an actual charter of incorporation. Certain extensions are, however, made to the power to incorporate by charter as, for example, the power to limit the period of incorporation. Without having perused the charter in question I must assume, as is probably the case, that the charter is a purely prerogative document and not issued under the authority of the legislation which supplements that prerogative power. Otherwise, different considerations might arise.

The King’s prerogative cannot be restricted or qualified save by express words or by necessary intendment (British Coal Corporation v. The King, (1935) A.C. 500 at p. 519; earlier cases had even required express words–re Will of Wi Matua (1908) A.C. 448 at p. 449). No question of restricting or qualifying the prerogative here arises, however; i.e. the prerogative to incorporate companies. The question is one of subjection to the law relating to banking after incorporation.

Section 51 of the Commonwealth Constitution empowers the Commonwealth Parliament to legislate, subject to the Constitution, for the peace order and good government of the Commonwealth with respect to:

xiii. Banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money.

In my opinion, so long as the power which the Parliament exercises is restricted to that contained in section 51(xiii), the exercise of that power can no more be hampered by an exercise of the royal prerogative to incorporate than could the exercise of a similar power by the Imperial Parliament itself, for within its prescribed limits the Commonwealth power is as great as that which the Imperial Parliament in the plenitude of its power possessed and was able to bestow. (Hodge v. The Queen, (1883) 9 App. Cas. 117).

So far as a Statute of the United Kingdom is concerned it is well established that where the Statute deals with a subject matter which was formerly within the prerogative, the rights and duties relating to that subject matter depend upon the Statute and not upon the prerogative (Attorney-General v. De Keyser’s Royal Hotel (1920) A.C. 508). This proposition was specifically applied by Latham, C.J. in holding that a coinage offence committed in Victoria was an offence against the Commonwealth Crimes Act and not excluded from the jurisdiction of the Court of General Sessions, Melbourne, as being an offence against the King’s prerogative within the meaning of section 187 of the Justices Act 1928 (Victoria). R. v. Bradley, (54 C.L.R. 12).

Section 3 of the Colonial Laws Validity Act is also, I think, applicable. That section reads:

3. No Colonial Law shall be or be deemed to have been void or inoperative on the Ground of Repugnancy to the Law of England, unless the same shall be repugnant to the Provisions of some such Act of Parliament, Order, or Regulation as aforesaid.

‘Order or regulation as aforesaid’ refers to the expression in section 2 ‘order or regulation made under authority of such Act of Parliament, or having in the colony the force and effect of such Act’. From its very nature the prerogative is not such an Act, order or regulation. It is part of the common law, and the validity of inconsistent Commonwealth legislation is, in my opinion, expressly preserved by section 3.

The matter of the exercise of the Royal Prerogative is referred to in the third paragraph of section 74 of the Commonwealth Constitution, which reads as follows:

Except as provided in this section, this Constitution shall not impair any right which the Queen may be pleased to exercise by virtue of Her Royal prerogative to grant special leave of appeal from the High Court to Her Majesty in Council. The Parliament may make laws limiting the matters in which such leave may be asked, but proposed laws containing any such limitation shall be reserved by the Governor-General for Her Majesty’s pleasure.

In connection with this provision it is pointed out by the Privy Council in the Coal Corporation case ((1935) A.C. 500 at p. 523) that ‘the truer view may well be that the express limitation inserted in the Act of 1900 was so inserted because the general powers conferred on the Commonwealth by that Act would have included the abrogation of the prerogative appeal if the specific limitation had not been expressed’.

I think this dictum supports my view that the express power of the Commonwealth to legislate for banking is not limited by provisions relating to the operation of banks which may be included in a prerogative charter incorporating a bank.

[Vol 31, p. 401]