JOINT OPINION OF J.B. TAIT, P.D. PHILLIPS, G. GOWANS AND C.I. MENHENNITT RELATING TO APPROACH TO BE TAKEN BY COMMONWEALTH IN APPLICATION FOR LEAVE TO APPEAL TO PRIVY COUNCIL FROM DECISION OF HIGH COURT IN BANK OF NSW v COMMONWEALTH (1948): CONSIDERATION OF GROUNDS ON WHICH APPEAL TO PRIVY COUNCIL SHOULD BE TAKEN: WHETHER APPEAL SHOULD BE CONFINED TO ISSUE OF INVALIDITY OF s 46 OF BANKING ACT 1947 FOR INFRINGING s 92 OF CONSTITUTION: WHETHER BANKING ACT 1947 SHOULD BE AMENDED PRIOR TO APPLICATION FOR LEAVE TO APPEAL: WHETHER BANKING ACT 1947 SHOULD BE AMENDED TO PROVIDE FOR CONCURRENT JURISDICTION OF HIGH COURT AND COURT OF CLAIMS: WHETHER CERTIFICATE SHOULD BE SOUGHT FROM HIGH COURT UNDER s 74 OF CONSTITUTION: WHETHER DECISION INVOLVES ‘A DECISION OF THE HIGH COURT UPON ANY QUESTION … AS TO THE LIMITS INTER SE OF THE CONSTITUTIONAL POWERS OF THE COMMONWEALTH AND THOSE OF ANY STATE OR STATES’: MEANING OF ‘DECISION OF THE HIGH COURT UPON ANY QUESTION’ IN s 74 OF CONSTITUTION: SCOPE OF BANKING POWER: ACQUISITION OF PROPERTY ON JUST TERMS: SEVERABILITY
CONSTITUTION ss 51(xiii), (xxxi), 74, 75(iii), 92: BANKING ACT 1947 ss 6, 13–21, 23, 46, Part 4, Div 4
RE BANKING CASE JUDGMENTS
MEMORANDUM OF ADVICE
(1) Counsel in consultation have considered carefully the effects of the Reasons of Judgment of the Justices of the High Court1 and in the light of these reasons set out the following advice as to the most appropriate steps with regard to an application for leave to appeal to the Privy Council.2
(2) The essence of the general plan considered to be most advantageous is to confine the application for leave to appeal to the Privy Council to the decision of the majority of the Court (Rich, Starke, Dixon & Williams JJ.) holding Section 46 to be invalid upon the ground that it is inconsistent with Section 92. This general plan involves certain broad conclusions, namely:
(a) Abandoning certain portions of the Act as invalidated by the High Court;
(b) Amending certain portions of the Act to assist in obtaining special leave to appeal from the Privy Council;
(c) Leaving the validity of certain portions of the Act to be determined in the light of the complicated variations in the reasons of the Members of the Court.
(3) The essential feature of this plan is the avoidance of any application to the High Court for a certificate under Section 74 upon any aspect of the matters canvassed in the argument of this case.
(4) The decisions not to apply for a Certificate results in the Broad conclusions (a) and (b) above stated. We state hereafter our detailed views upon possible certificate applications. Broadly however we are of the opinion that certificate applications in the High Court should not be made because a failure to obtain any or all the certificates sought (which failure we cannot but regard as a distinct possibility) might well have a prejudicial effect upon the success of proceedings in the Privy Council both in the matter of the special leave application and on the hearing of the appeal. Further and in general the simplification of the plan itself has, we think, very distinct advantages.
APPEAL ON PROHIBITION
(5) In our opinion an application should be made to the Privy Council for leave to appeal against the decision of the Court on the question of validity of Section 46 and upon this question alone. In view of the general plan to avoid an approach to the High Court for a certificate we do not think it necessary or desirable to express a final opinion on the question whether the decision of the High Court on the question of the validity of Section 46 considered in relation to Section 92 is a matter within Section 74 of the Constitution.
(6) It may be contended by the Respondents before the Privy Council that an appeal on this matter alone is incompetent without a certificate from the High Court.
(7) This contention by the Banks may be based on three grounds—
(a) Though the authorities favour the right of the Privy Council to grant leave to appeal without a certificate from the High Court on what may be described as a ‘Section 92 decision’, we do not think that this matter is unarguable by the Respondents or entirely concluded. In the light of our general plan however there appears to us no real choice but to face this argument in the Privy Council, defeat it if possible, and if unsuccessful seek a certificate thereafter in preference to the course of applying for a certificate before approaching the Privy Council on the basis of utmost caution. In view of our opinion as to the inadvisability of applying for a certificate in respect of other matters we think that it would be inconsistent and unpractical to apply for a certificate on the Section 92 matter alone.
(b) Apart from invalidity by reason of Section 92 there is a second ground upon which the Respondents may contend that a certificate is required. Section 46 was attacked as involving an infringement of State rights and consequently directly raising a question as to limits inter se. This contention was rejected by four justices. It may be urged, however, that the controversy was raised and the decision invalidating Section 46 is therefore a decision on a question involving this inter se matter, even though the Section was not invalidated on this ground. The reasons we have stated above point even more strongly to our abstaining from making an application for a certificate in connection with this ground and choosing to contest the contention in the Privy Council.
(c) Thirdly it may be contended that the claim of the Plaintiff Banks that Section 46 was invalid as outside Banking power also raised an inter se question, though this claim obtained the support of two justices only. The reasoning against this contention would be similar to that set out in reference to the question of undue interference with State rights.
(8) Though we do not suggest that the adverse contention upon this matter (namely, that a certificate would be required to permit an appeal on Section 46) is by any means unarguable we are prepared to consider the prospects of successfully opposing these contentions sufficient to justify the course proposed.
(9) In our opinion the decision of four of the members of the Court, holding s. 46 invalid as being contrary to s. 92 of the Constitution, is erroneous and should be reversed by the Privy Council.
(10) We set aside for the moment a consideration of the possibility of a refusal by the Privy Council of special leave to appeal upon this matter of s. 46 alone in view of the decision of the High Court invalidating other important portions of the Act. The reasons for anticipating the granting of such leave appear more clearly after a discussion of other details.
(11) If we are correct in our view that s. 46 should not be held invalid by reason of s. 92 of the Constitution, there is no other substantial reason in the judgments of the members of the Court for considering this section invalid. Only two justices condemned this Section as being outside the banking power. Of the remaining four, two expressly affirmed the Section as within power, and the other two expressed views which, in our opinion, make it unmistakable that they also considered this Section within the banking power. The same considerations apply to the attack upon the validity of this Section as being an improper infringement of State rights.
(12) In the light of the foregoing general plan, and upon the assumption of an application for leave to appeal against the decision invalidating s. 46, we now proceed to consider the situation in respect of other portions of the Act arising from the judgments of the members of the Court and to set out our advice as to the course to be pursued in connection with these remaining portions.
ACQUISITION OF ASSETS
(13) The most important single portion remaining is that contained in Part IV Div. 4 of the Act, concerned with the acquisition of the assets of the banks. This part has been held invalid by all members of the Court, with the exception of McTiernan J. The grounds for invalidating this portion may shortly be stated as follows:
(a) The acquisition of assets is not upon just terms as required by the Constitution, because the provisions for ascertaining compensation in the Court of Claims are invalid as being contrary to s. 75(iii) of the Constitution since these provisions exclude the original jurisdiction of the High Court. (We refer hereafter to this ground of invalidity of the acquisition provisions as ‘the s. 75(iii) ground’).
(b) The acquisition is also held invalid because connected inseverably with provisions for the novation of the liabilities of the private banks (or a private bank) to the Commonwealth Bank, and the provisions for novation are held, in the manner hereinafter appearing, by some members of the Court to be outside the banking and acquisition power.
(c) The validity of the acquisition of assets provisions is also rendered doubtful by the opinions of some justices based upon the contention of the Commonwealth that the Act properly construed provides that in assessing compensation liabilities should be deducted from assets to ascertain the amount payable.
(14) In addition to the three grounds above mentioned, in respect of each of which three justices concurred, there are two other grounds upon which adverse decisions by less than three justices are to be found:
(d) Two justices (Rich and Williams JJ.) held the acquisition provisions invalid as contrary to s. 92 of the Constitution and as contrary to the rights of the States to raise overdrafts under the Financial Agreement.
(e) One justice (Latham C.J.) invalidates the acquisition of assets because of the presence of s. 23, making provision with regard to assessing taxation in the case of a voluntary agreement of sale by a bank to the Commonwealth Bank.
(15) Apart from the foregoing, the Court was equally divided as to the validity of the provision for acquisition of assets by reason of the absence of any express provision providing for the payment of interest on compensation awarded up to the date of payment. Since the Chief Justice did not invalidate the provisions on this ground his opinion, being concurred in by two others, prevails.
(16) In our opinion the invalidation of the acquisition provisions on ‘the s. 75(iii) ground’ should be met by an amendment of the Act to avoid the exclusive jurisdiction of the Court of Claims. We have stated before our opinion as to the desirability of simplifying the issue before the Privy Council. We think it not unarguable that the invalidation of the acquisition provisions on this ground may involve an inter se question requiring a certificate from the High Court. We have previously stated our view that any such application should be avoided. It is true that if this matter is held not to be one requiring a certificate, application for leave could be made direct to the Privy Council. Even if the application for leave were successful, the issues would be complicated by its addition to the appeal before the Privy Council. It is possible that it might not be treated as a proper matter for granting leave to appeal, especially as four members of the High Court are adverse to the Commonwealth. If leave were not granted on this ground the Privy Council might decide to refuse leave altogether on the ground that the decision on the s. 92 point would be inconclusive since the invalidation of the acquisition provisions would remain. Moreover, and perhaps most important of all, the psychological effect of disclosing an intention to safeguard beyond any doubt the just terms of the acquisition provisions appears to us to be a valuable dialectical asset both in obtaining leave and in arguing successfully for the validity of s. 46. The general view of the Government has, we understand, always been to ensure the fullest possible compensation legitimately payable. The reinforcement of the main characteristic of this policy by restoring the concurrent jurisdiction of the High Court appears to us to be valuable assistance in the proceedings before the Privy Council, even if the considerations will not be strictly relevant.
(17) The foregoing advice is tendered in the light of the general plan outlined at the beginning of this memorandum and the reasons stated in connexion with s. 75(iii) are those which have appealed to us in connexion with the general plan. It is necessary for us to add further views upon the assumption that this plan does not commend itself to those concerned. It then becomes necessary to consider:
(a) Whether an appeal can be carried to the Privy Council upon the ‘s. 75(iii) ground’ without a certificate; and
(b) The prospect of success upon such an appeal.
EXCLUSION OF HIGH COURT: JUST TERMS
(18) In our opinion ‘the Section 75(iii) ground’ does not raise an inter se matter requiring a certificate. The determination of this matter is not without difficulty. The words of Section 74 of the Constitution refer to ‘a decision upon a question’ as to the limits inter se of the constitutional powers etc. etc. It is not possible from the decisions of the High Court to determine with precision the meaning to be attached to the expression ‘question’. It is clear from the decided cases that the ‘decision’ referred to in Section 74 is not the formal judgment or order of the Court but the substantive adjudication of the tribunal upon the controversy presented to it. Difficulty arises in determining the precise extent or meaning of the idea involved in the ‘controversy’ referred to. In concrete terms in the present case the controversy may be considered as being the final and ultimate validity of the acquisition provisions of the Act or the immediate validity of the provisions for the exclusive jurisdiction of the Court of Claims. If the true view is that the ‘question’ mentioned in Section 74 is the actual validity of the acquisition provisions, then the decision denying validity to the exclusive jurisdiction of the Court of Claims will be in our view be a certificate matter. The assumed invalid exclusive jurisdiction of Court of Claims would not be itself the question but a reason for the answer to the question. It would be necessary to obtain a certificate to appeal against the decision on the question as we have defined it.
(19) Though the matter is not free from difficulty, we are disposed to the view that ‘question’ which is either within or outside Section 74 of the Constitution in relation to the matters here being discussed is not as to the ultimate validity of the acquisition provisions but as to the immediate validity of the provisions creating the exclusive jurisdiction of the Court of Claims. But if this matter so isolated be considered, we are of the opinion that it is not a matter involving the constitutional limits of the powers of the Commonwealth and the States but merely a matter of the power of the Commonwealth Parliament as limited by the provisions of the Judiciary Chapter of the Constitution. On this view then of the true meaning of the word ‘question’ in Section 74, we would be of the opinion that a Certificate would not be required to permit an appeal to the Privy Council on this aspect of the judgments.
(20) This conclusion is certainly consistent with, and perhaps is supported by, the prevailing view as expressed in the Privy Council that a question of the validity of Commonwealth legislation in the light of Section 92 is not a matter requiring a certificate under Section 74. Whilst this support is available it is to be noted, however, that the problem of the application of Section 74 to a decision upon validity of a Commonwealth Act under Section 92 depends ultimately upon the true connotation of the word ‘question’ in Section 74 which we have discussed above. If the ‘question’ is as to the validity of the Commonwealth Act and the consequential effect on State legislative power then such a decision would require a certificate under Section 74.
(21) We have considerably more doubt whether the appeal on this matter, if leave is granted by the Privy Council, would succeed. The prospect appears to depend upon whether the Privy Council prefers the argument based upon American legal and constitutional history as outlined in the judgment of Dixon J., or the narrower argument upon pure legal construction expressed in the judgment of Latham C.J. In the short time at our disposal we have not had an opportunity of considering critically the authorities and material canvassed by Dixon J. or forming any definite opinion as to the true value of his conclusions. Under the circumstances we do not think we can express at present any opinion which would be of value beyond the indication of the very substantial doubt we entertain at present as to the success of this appeal.
(22) So long as doubts exist as to the possibility of reversing the adverse decision of four justices upon the Section 75(iii) ground, the advisability of amendment is reinforced by the impossibility, in our opinion, of ‘reading down’ the provisions for the exclusive jurisdiction of the Court of Claims so as to admit within the Act as it stands at present a concurrent jurisdiction of the High Court. Indeed the process would not be one of ‘reading down’ invalid provisions so as to bring them within a more limited (and valid) operation but actually extending the scope and operation as to the statute to embrace a new and unexpressed subject matter in order to achieve validity. Under these circumstances the provisions for the exclusive jurisdiction of the Court of Claims must remain a possible source of total invalidity of all the acquisition provisions for both assets and shares so long as they remain in the Act and also possibly a fatal obstacle to success on appeal.
(23) We would add to the foregoing a reiteration of our opinion that amendment of the Act rather than an attempt to appeal against the decision on Section 75(iii) is to be preferred in accordance with the general plan at the beginning of this memorandum.
NOVATION OF LIABILITIES
(24) The acquisition provisions, as we have stated before, were invalidated also by some members of the Court because they were inseverably connected with the provisions for the novation of liabilities. In our opinion this matter should neither be made the subject of appeal nor amendment. At present three members of the Court have decided adversely to the Government on this matter. Latham C.J. and McTiernan J. are favourable to the Government on this matter. Dixon J. has expressed no view. It is clear that the validity of the provisions for novation would require a certificate for appeal to the Privy Council and therefore involve an application to the High Court. We think there are substantial reasons for anticipating that a certificate would be refused by the High Court. It is not necessary to canvass all of these. It is however sufficient to point out that the High Court might take the view that one Justice (Dixon J.) has not expressed his opinion on the matter; that if he expressed his opinion in the same way as the Chief Justice and McTiernan J. there would be a statutory majority in favour of the Government (and of course if he expressed his opinion in the other way, there would be a majority of four against the Government); and might well take the view that the issue was not upon a fundamental constitutional problem but one of detailed statutory procedure; and in such circumstances a certificate should not be granted. We should add in this connection that we do not think the novation provisions to be severable.
(25) It is necessary to consider whether in the absence of a certificate on this matter the Government would suffer any disadvantage in applying for leave to appeal in respect of the decision upon Section 46. Though there is some risk that the application might be refused because of the invalidity of the acquisition provisions in the view of three justices because of the novation of liabilities sections now being discussed, nevertheless we are of the view that the Privy Council would not decline to grant leave to appeal for this reason because of the absence of complete expression of judicial opinions by all members and the conflict in those expressed upon this particular matter as at present available in the judgments of the Court.
(26) It is by no means easy to determine with what readiness the Privy Council may seize upon arguments addressed to it to refuse leave in connection with the matter of Section 92 for reasons which may never be expressed. This matter will present to the Privy Council great conflict of judicial opinion and difficulty in itself but the adjudication upon it will directly involve the Privy Council itself in handling issues of intense political conflict and marked public feeling. These considerations might lead to the acceptance of the contention that leave should be refused because the acquisition provisions remain invalid in the view of the three justices, which we have been discussing, and that a decision on Section 92 would not be conclusive of the case. After full consideration, however, we are of the opinion that this risk should be taken and the application for leave to appeal to the Privy Council should be confined to Section 46 matters.
(27) The risk to which we have referred is in our opinion made much greater if an application to the High Court for a certificate on this matter is contemplated. We have set out above some of the reasons for anticipating the possibility of an adverse decision on such an application. In our view, however, if the applications have been made and refused, so that the Privy Council had before it what amounts to a definite indication from the High Court of its determination to keep this particular matter for decision in Australia, the inclination of the Privy Council to refuse leave to appeal on Section 46, on the ground that a decision on such an appeal would be a partial solution of the real controversy, the whole of which was largely excluded from the Privy Council would, in our opinion, be a very strong one. We do not go as far as to say that the Privy Council could not be induced to entertain the partial appeal on the Section 92 matter considering the history of litigation on this section in the past and particularly previous judgments of the Pricy Council. If, however, we are right in supposing that there may be tendencies inducing the Privy Council to stand aloof from this litigation, the risk of these tendencies becoming actually operative would, in our opinion, substantially increase after an unsuccessful certificate application by the Government.
(28) In concluding this aspect of this particular matter of the provisions as to novation of liabilities, we would point out that if the course we advise were to be followed and leave to appeal on the Section 46 decision is given by the Privy Council there would be nothing to prevent the Government thereafter applying to the High Court for a certificate on the question we have just been discussing (novation of liabilities) and adding that to the subject matter of the appeal as to which, by hypothesis, the Privy Council would already have granted leave. We are not to be taken as suggesting at present that this course would necessarily be either desirable or practical but we point out that it is a possibility and as such provides some further support for the course we have been proposing.
(29) We are advising upon the basis that the existing statutory provisions for novation of liabilities should be treated as not conclusively invalidated by the judgments of the members of the Court and that procedure should be based upon this view. In this matter five justices have pronounced opinions upon an issue raised before the Court and a Majority of them have decided adversely to the validity of the provisions for novation and in consequence adversely to the validity of the provisions for acquisition. This might provide the basis for a contention hereafter that the issue of the validity of the novation provisions (and in consequence acquisition) had been finally and conclusively determined against the Government. We do not agree with this contention, but if it were to be accepted such an adverse decision would be curable by amendment. In any case in our opinion an amendment of the Act which struck out the provision for acquisition of liabilities would actually assist in carrying out the plan to simplify the subject matter of appeal before the Privy Council and at the same time would relieve the Government from possible danger which may be concealed in the inconclusive judgments on this subject matter to which we have referred. We think it possible that the elimination of these provisions for novation of liabilities by amendment might create certain substantial inconveniences and possible delays in the actual final consummation of the nationalisation of banking. On the other hand we cannot see that the elimination of such provisions would really prevent the plan being carried out. Doubtless one result of the elimination would be in the case of any one bank to cause customers upon the acquisition of assets of that bank by the Commonwealth Bank to transfer their accounts to some remaining private bank and not to the Commonwealth Bank. This, however, would be a delaying procedure not finally destructive of the nationalisation plan. On the other hand it would doubtless cause the increase of the amount of compensation payable in the case of some individual banks though ultimately resulting in the acquisition of the last remaining bank or banks with a very large number of depositors who had previously transferred their accounts from previously acquired banks. In the final result the total compensation payable would not be greater than that now contemplated but probably practical considerations have to be taken into account in connection with such theoretical acquisition. We have mentioned these matters because from the point of view of Counsel selecting the most advantageous procedure in litigation, we would have preferred an amendment of the Act to strike out the provisions for novation of liabilities in order to free our hands in connection with the single appealable project which is the essence of the plan proposed.
(30) We have given careful consideration to the question as to whether the declared invalid provisions for the novation of liabilities could be severed from the other provisions as to the acquisition of assets. We have indicated certain aspects of this matter which would arise if the severance were to take place by actual amendment of the Statute. We are of the opinion that no Court would hold the provisions severable whilst existing in one Act despite the presence of Section 6 in the Statute. The enormous difference in the total amount of compensation payable if the novation of liabilities be struck out and the spectacular difference in the actual manner of acquiring banking businesses without the compulsory transfer of depositors’ credit accounts presents a very strong argument against severability. We do not think that any practical course can be pursued which involves reliance upon establishing in the Privy council a contention so much open to attack as the contention of severability in this matter would be.
(31) With regard to the contention of the Government that the Act contemplates the deduction of liabilities from the assets in the assessment of compensation and the variation of judicial views both as to the question of construction on this point and as to the resulting validity or invalidity of the provisions, we do not find necessary to say more than—
(a) As this is a matter of just terms we are of the opinion it would require a certificate.
(b) We think a certificate might well be refused and such refusal, as in other cases, would prejudice proceedings in the Privy Council.
(c) We think the existing state of judicial opinions on this matter does not present any substantial obstacle in the way of the Privy Council granting leave to appeal on Section 46, since Latham C.J.’s view is clearly obiter and it may not be the actual basis of the decision of Rich and Williams JJ.
For these reasons therefore we add nothing further to our previous note drawing attention to the existence of difference judicial views in connection with this subject.3
(32) With regard to the point previously mentioned that one Justice (Latham C.J.) held the acquisition provisions invalid because of the presence of Section 23, we are of the opinion that the amending Act hitherto advised should contain the repeal of this Section substantially for the reasons which we have set out with regard to the repeal of the provisions establishing the exclusive jurisdiction of the Court of Claims. So far as we know such a repeal would affect only one judicial vote in the High Court on one aspect and therefore could not be shown to make more conclusive of the whole case the issue of the validity of Section 46 and hence would not in this sense directly facilitate the application for special leave before the Privy Council. At the same time we attach considerable importance to the psychological effect of such a repeal upon the minds of the Privy Council, providing as it does general encouragement of the idea that the Government is at pains to meet every criticism, however fanciful, suggesting that it is avoiding the fullest and fairest possible compensation. Moreover, it is to be noted that whilst only the Chief Justice relies upon this point expressly to invalidate the acquisition provisions, none of the other justices expressly affirm the validity which the Chief Justice denies on this particular matter, so that it cannot be definitely asserted that in any future proceedings or applications adverse opinions might not be reached by those judges who hitherto have been silent upon this point.
INTEREST ON COMPENSATION
(33) With regard to the absence of provisions for interest upon compensation payable, we have pointed out that there is no statutory majority of the Court adverse to the Government on this matter. For this reason we do not find it essential to advise amendment as we do not think that this aspect of the case could provide any barrier to the obtaining of special leave in the Privy Council. We are disinclined to propose any amendments which will raise substantial issues or appear to be other than clarifications of procedure or technical formalities rendered necessary by the proposals now being considered. We hold the view that additions could easily be included in an amendment of the Act to make clear that interest is payable upon compensation money. In fact this view was put forward by the Attorney-General in argument before the High Court as being the actual intention of Parliament. An amendment to express this intention would therefore merely confirm the Government’s express view of legislative policy. Moreover, such an amendment would provide yet another additional factor confirming the Privy Council in the conviction we desire to inculcate that the Government has no wish to escape from the fullest and fairest compensation. At the same time we do not desire to press a recommendation on this matter which might in any way prejudice our recommendation that other amendments of a technical and formal character could be carried out. We appreciate the possibility that numerous amendments may have disadvantages which the Government desires to avoid and we would not wish the additional proposal for amendment on this matter to supply any influence leading to the rejection of proposals for amendment altogether. We attach much more importance to the amendment in connection with Section 75(iii).
SECTION 92 AND ACQUISITION
(34) We have not mentioned in connection with the acquisition of assets provisions any question of appeal or argument in relation to Section 92. It does not appear to us possible to raise this issue as an appealable matter in this case. It is true that two justices decided this matter adversely to the Government and two justices favourably to the Government and of the remaining two, one (Dixon J.) makes passing reference of a disquieting nature from the Government point of view, and one makes no direct reference. In these circumstances it cannot be said that there is a decision upon the question adverse to the Government which can be made the subject of appeal from a practical point of view. However, we do not attach any significance to this question. If leave to appeal on Section 46 is granted and the appeal decided favourably to the Government, it is difficult to conceive that the reasons of the Privy Council for holding Section 46 to be not obnoxious to Section 92 will not at the same time establish that the provisions for the acquisition of assets are also not obnoxious to this Section. For these reasons we do not think any real problem exists as to the relation between Section 92 and the provisions for the acquisition of assets.
(35) The above observations in Paras. 13 to 34 are applicable to the provisions of Sections 59 and 60, which are associated with the acquisition of assets.
ACQUISITION OF SHARES
(36) It is now necessary to consider the judgments of the members of the Court upon the provisions of Section 13 dealing with the acquisition of shares and, as associated therewith, Sections 14, 15, 16 and 21, in relation to the general plan we have outlined as the basis of this memorandum. Three justices (Rich, Dixon & Williams JJ.) decided that the acquisition of shares is outside the legislative powers of the Commonwealth Parliament as the acquisition is not for a ‘Commonwealth purpose’. However, a fourth justice (Starke J.) held the provisions for the acquisition of shares invalid because of the inseverable connection of these provisions with Division 3 of Part IV (Management and Directors) which all justices held invalid. Four justices would also hold the acquisition of shares not upon just terms (‘the Section 75(iii) ground’). The opinions of the absence of provisions for interest on compensation apply on the question of shares. However, it would probably be unsafe to assume, even if the objections to Just terms were cured and the management provisions excluded, that a statutory majority could definitely be assumed to exist in favour of upholding the power to acquire shares. Whatever be the true solution of the problems, it is clear that the question of the existence of the power to enact provisions for the acquisition of shares raises an inter se question. We are strongly of the opinion that prior to the grant of special leave no attempt should be made to initiate an appeal to the Privy Council on this matter because the attempt would involve application for a certificate and the risks arising therefrom which we have mentioned before. The position therefore must be left as follows: either the acquisition of shares will be held outside of power and bank nationalization must proceed on some other basis than share acquisition, or (just terms having been provided and the management provisions having been modified or excluded) share acquisition may be held within power. We do not think that these considerations arise for discussion at the present time or that direct steps can be made to render more definite a decision as to power to enact share acquisition.
(37) In stating that we consider that these matters do not arise at the present time, we are to be taken as also indicating that we do not think the application for special leave will in any sense be prejudiced by the existing judgments on the provisions relating to the acquisition of shares. In view of the clearly severable nature of the provisions as to shares from acquisition of assets and prohibition of banking it cannot be supposed that the Privy Council could treat the absence of any appeal on this matter as a relevant consideration in refusing leave in connection with Section 46, or decide that a decision upon section 46 would not be substantially a determination of the essence of the case.
(38) The foregoing considerations in connection with share acquisition should be treated as applicable to the related Sections (ss. 14, 15, 16 and 21) we have cited above.
(39) Consideration should now be given to Sections 17, 18, 19 and 20. All members of the Court decided that these Sections were invalid. We are of the opinion that a decision on this question involves an inter se matter, whether the reason for invalidity be found in the absence of power or be found in the supposition that these sections constitute an acquisition of property not upon just terms. We do not repeat our previous views as to the inadvisability of applying for a certificate. Moreover, we would have very serious doubts of success on the appeal in regard to this matter. There is moreover an even more weighty consideration. Persistence in endeavouring to validate the management provisions in their present form would be far to destroy the impression we desire to create, that there should be no suspicion of the fairness of the Government in acquiring property. Without considering in detail all the possible issues which might arise if an appeal were undertaken on this matter, we think the clear course is to abandon all attempt to validate these provisions for the present and to concentrate on the main task of obtaining a favourable decision in a form which will enable a substantial part of bank nationalization to proceed. In our view a successful appeal on Section 92, together with the amendments we have proposed, would result in validating the provisions for the acquisition of assets and (arguably) the provisions for the acquisition of shares. We think that hereafter consideration might be given to amending legislation connected with the problem of management but that such considerations should be unrelated to the existing litigation of any appeal and should only be attempted after the substantial basis of bank nationalization has been established by the appropriate tribunals.
(40) Further we would propose that the management provisions should be repealed as part of the Amending Act herein proposed. This step is not actually required by the course proposed in Para. 39 above, though it would be consistent therewith. It is dictated by the desire to be in a position, after a successful appeal in the Privy Council upon Section 46, to contend that the Share acquisition provisions are valid. Latham C.J. and McTiernan J. would clearly be prepared to uphold the share acquisition provisions in the absence of the provisions as to management. Rich & Williams JJ. would be of the appropriate view. It is barely possible that Dixon J. might veer from his present position and uphold the share acquisition provisions when disembarrassed from the management provisions. The same view may be true of Starke J. At all events the repeal of these provisions may assist the Government, would reinforce the claim to be desirous of providing just terms, and might possibly secure the ultimate validation of the share acquisition provision after a successful appeal. Clearly this repeal cannot, in view of the unanimous condemnation of these Sections involve any disadvantage.
(41) It is, of course, implicit in this proposal to abandon the management provisions that we consider absence of any appeal from the existing adverse decision would not be prejudicial to our plan of seeking leave to appeal in respect of S. 46 or our winning the appeal if leave be granted. If some statutory provisions relating to management are thought to be essential from the practical administrative point of view we think that these could more conveniently be introduced by re-framed legislation in the future than any mere amendment of the existing provisions.
(42) It is desirable to add one important general consideration as to the nature of the plan proposed, viewed as a tactical manoeuvre. It has been assumed in this advice that upon an application for special leave confined to the one point of the validity of Section 46 in relation to Section 92 of the Constitution the Privy Council will entertain consideration of the fact of the amendments of the Act as a reason for granting leave to appeal on a matter which apart from the amendments would not be determinative of the whole substance of the appeal. No doubt it will be urged by the Respondents that they desire to contest the validity of the amendments in the High Court and that any hearing in the Privy Council should at least await the hearing and decision of that case. This no doubt is a consideration not without substance. But, the alternatives to amendment and thereafter application for special leave in the Privy Council must be either—
(a) Application for a certificate as to the decisions on the question of just terms and the Section 75(iii) point with the possibility of refusal and thereafter the contention by the Respondents before the Privy Council as to the inconclusive nature of a decision on Section 46 noted above.
(b) Definite conclusion that the Section 75(iii) point is not involved in ‘just terms’, so as to be a certificate matter, followed by an application for special leave to appeal on this matter with the possible consequential risk of loss of the appeal, or even refusal of special leave.
Though we cannot feel certain that the existence of amendments will have the complete effect upon the Privy Council in the application for special leave which we hope for on the whole the proper choice between the three possible courses outlined does appear clear to us. If the disposition of the Privy Council is to grant leave to appeal on the Section 46—Section 92 issue alone (whether conclusively determinative to the case or not), it is not conceivable that their lordships would be deterred from this course by the fact of the Act having been amended in the very limited way suggested. If the disposition of the Privy Council is the opposite of that stated above, amendment cannot prejudice and may remedy the situation. The only certain remedy against such a disposition of the Privy Council would be the obtaining of a certificate. We think reliance upon a favourable decision in the High Court to be the least attractive risk of all those facing the Government.
(43) It may be useful to set out the proposed plan in a summary form so that the interrolation of the parts may be readily seen or the modification or abandonment of any particular part may be viewed in relation to the remaining parts of the whole.
(a) Apply for leave to appeal solely on the question of the validity of Section 46 in relation to Section 92.
(b) Before application for leave amend the Act to provide for concurrent jurisdiction of High Court and Court of Claims.
(c) Before application for leave amend the Act to repeal provisions of Section 23 as to Taxation.
(d) Abandon any attempt at present to obtain validation of management provisions and repeal the existing sections 17–20.
(e) Leave possible validation of acquisition of shares provisions to be determined hereafter, when just terms have been provided and management provisions eliminated.
(f) Attempt to obtain substantial judicial approval of the main provisions for bank nationalization within short period from Privy Council even though further possibilities of litigation cannot be eliminated on some matters.
(g) Refrain from certificate application(s) prior to grant of special leave in Privy Council.
1Bank of NSW v The Commonwealth  HCA 7;(1948) 76 CLR 1.
2 Decision of the Privy Council on appeal: Commonwealth v Bank of NSW  UKPCHCA 1, (1949) 79 CLR 497 (PC).
3 Opinion not found.