Opinion Number. 1846



Key Legislation

CONSTITUTION ss 51(xiii), 74, 92: BANKING ACT 1947 s 46: JUDICIARY ACT 1903 ss 23(1), 38A, 40A


We have been supplied with copies of the transcript of the proceedings before the Privy Council1 on an application by the Commonwealth of Australia and Others for Special Leave to Appeal against part of the Order of the High Court of Australia dated the 11th August, 1948.2 There is also included in our brief a copy of the Order in Council dated 26th November, 1948; which so far as material is in the following terms:

(1)  That leave to enter and prosecute their Appeals against an Order of the High Court of Australia dated the 11th day of August, 1948, is so far as such Order declares that Section 46 of the Banking Act, 1947, is invalid, and grant an injunction on the basis of that declaration, be granted to the petitioners upon the footing that the hearing of the appeals (a) it shall be reserved to the respondents to raise as a preliminary point the plea that the Appeal does not lie without a Certificate of The High Court of Australia and (b) if this preliminary point shall be decided against the respondents they shall be at liberty to raise all such Constitutional points as they think fit.

We have been instructed that at the hearing of the Appeals the appellants desire to submit the following arguments:

(1) That there is no decision of invalidity on any point other than Section 92 which is not an inter se point and, consequently, a decision favourable to the appellants would not involve any disturbance of a High Court decision on an inter se point.

(2) That Section 74 does not operate on the form of the Order of the High Court but on its ‘decision’, that is the resolution of a question of law and the question of law the answer to which resulted in the Order is whether Section 46 infringed Section 92.

(3) If, as the appellants submitted, there is a favourable decision of the High Court on power, no inter se question arises, as an answer favourable to the appellants would automatically reverse the Order on the High Court’s own reasoning on the inter se point.

(4) If there is no decision of the High Court on power, the Privy Council need not review the inter se points because it could either take the view that the respondents had not succeeded below on these claims or remit the case to the High Court with its findings on the Section 92 point.

An analysis of the Order made by the Privy Council granting Special Leave to Appeal reveals the following points:

(1) That there is a decision of the High Court on a question relating to Section 92 adverse to the appellants. Consequentially to this, but subject to what we say hereafter, it follows that the respondents would not be at liberty to argue that there is no decision on the question relating to section 92 against the appellants.

(2) Leave is granted to Appeal on the question stated in (1) above.

(3) Liberty is reserved to the respondents to argue, on the hearing of the Appeal, that a Certificate of the High Court of Australia must first be obtained. This would presumably be on the basis submitted by Counsel for the respondents, on hearing of the application for Special Leave, that in this case it is impossible to argue any question of the bearing of Section 92 without also considering and determining an inter se question.

(4) If the respondents fail on (3) above, they are to be at liberty to raise any Constitutional point that they think fit.

We shall deal with each of these points separately, the numbering of the paragraphs of our consideration corresponding with that of the numbering of the points set out above.

(1)  In our opinion, the Order affirms the views of the majority of the High Court in Baxter v. The Commissioners of Taxation (New South Wales), (4 C.L.R. 1087), that Section 74 of the Constitution on its true construction when it refers to a decision on a ‘question’ means the decision of the Court on a point of construction or law, notwithstanding that this question is not apparent on the face of the formal Order subsequently drawn up. We think, however, that the decision, as so understood, must be an express decision and must be by at least a majority of the Justices who sat on the hearing of the case. The view of the four Justices in Baxter’s Case, has recently been expounded and applied by Latham C.J., with whom McTiernan J. agreed, in Field Peas Marketing Board (Tasmania) and Another v. Clements and Marshall Proprietary Limited 76 C.L.R. 414. Latham C.J., at page 416 said:

There is a distinction between the decision upon a question in a case and a decision, judgment, decree, order or sentence in the case itself: see Baxter v. Commissioners of Taxation (N.S.W.) (1907) 4 C.L.R. 1087, at pp. 1116, 1151). In that case it was held that ‘a decision of the High Court upon any question’ as to limits inter se of constitutional powers of Commonwealth and State meant, not the judgment in the case ((1907) 4 C.L.R. at p. 1116) but, as Isaacs J. said, ‘what the Court decides to be the law with regard to the question; what it holds to be the proper answer to that question’

Some help on the proper construction of Section 74 is to be obtained from the decisions of the High Court upon sections 38A and 40A of the Judiciary Act 1903–1947. The wording of the latter sections is clearly based upon the wording of Section 74 and the views of the High Court upon the one set of sections must reflect the views of that Court upon the other. We note for reference hereunder a number of the cases in which these matters have been dealt with, and here only extract from The Commonwealth v. Kreglinger & Fernau Ltd. and Bardsley (37 C.L.R. 393, per Knox C.J., Gaven Duffy and Powers JJ. at pp. 400–401) the following citation (which should be read with the knowledge that Cussen J. had made orders dismissing the actions with costs—see at p. 395):

On the hearing of the appeal counsel for the present appellants contended that the Full Court had no jurisdiction to entertain the appeal because the jurisdiction exercised by Cussen J. was Federal jurisdiction conferred by sec. 39 of the Commonwealth Judiciary Act 1903–1920, and sub-sec. 2(a) of that section provided that the only right of appeal was to the High Court, the decision of the trial Judge being a decision of the Supreme Court within the meaning of that sub-section. It was not denied that Cussen J. in entertaining and deciding the cause was exercising federal jurisdiction with which the Supreme Court was invested by sec. 39(2) of the Judiciary Act, but it was said that sec. 39(2)(a) did not operate to take away the right of appeal to the Full Court from his decision for the following reasons, namely: (1) that on its true construction the sub-section did not apply to the judgment pronounced on the trial of the action; (2) that if the sub-section did so apply it was rendered ineffective by the operation of the Colonial Laws Validity Act, and (3) that the sub-section was beyond the legislative competence of the Commonwealth Parliament.

The Full Court rejected the first and second of these contentions and it therefore became necessary, in order to determine whether the appeal was competent to decide whether sec. 39(2)(a) was a valid exercise of the legislative power of the Commonwealth. In other words, the question whether the enactment was valid was a question ‘arising’ within the meaning of that word as used in secs. 38A and 40A of the Judiciary Act. It follows that, if that question was one as to the limits inter se of the constitutional powers of the Commonwealth and those of a State, the Supreme Court had no jurisdiction to decide it and that on the question arising the duty of that Court was to proceed no further in the cause, which was by force of sec. 40A of the Judiciary Act removed into this Court. The validity of secs. 38A and 40A is established by the decision of this Court in Pirrie v. McFarlane (1925) 36 C.L.R. 170). We entertain no doubt that the question which thus arose for decision was a question as to the limits inter se of the constitutional powers of the Commonwealth and those of the State of Victoria. The question was whether the Commonwealth enactment or the Supreme Court Act of Victoria should prevail, the former, on the construction adopted by the Full Court, denying the right of appeal from Cussen J. to the Full Court which was conferred by the Supreme Court Act. The one enactment was an exercise of the constitutional legislative power of the Commonwealth, the other an exercise of the constitutional legislative power of the State of Victoria. If authority be needed for the proposition that the question whether the Federal enactment was valid was a question as to the limits inter se of the constitutional powers of the commonwealth and those of a State, it will be found in the opinion of the Judicial Committee in Jones v. Commonwealth Court of Conciliation and Arbitration ((1917) A.C. 528; 24 C.L.R. 396) and in the decision of this Court in Pirrie v. McFarlane.

Another illustration of the distinction between ‘a decision upon a question’ and a judgment or order is shown by the actual course of proceedings and the order of the Court in The Commonwealth v. Colonial Combing Spinning and Weaving Co. Ltd (31 C.L.R. 421). In that case Starke J., said at p. 456:

This case was heard before my brother Isaacs, who found certain facts, and reserved for the consideration of the Full Court the question, what judgment should be entered upon the facts so found? The Chief Justice and I, when at the Bar, had been counsel for opposite parties in this litigation, and would, in the ordinary course, have taken no part in the decision of this case. But during its discussion before the Full Court, some questions affecting the constitutional powers of the Commonwealth arose, and it was doubtful if a decision of the case could be arrived at unless those questions were determined. The Judiciary Act 1912 (No. 31 of 1912), sec. 3, and the amending Act of 1920 (No. 38 of 1920), sec. 2, provide: ‘A Full Court consisting of less than all the Justices shall not give a decision on a question affecting the constitutional powers of the Commonwealth, unless at least three Justices concur in the decision.’ The Chief Justice and I thought that we could not, with due regard to our duty, decline the responsibility of adjudicating upon such questions if they actually called for decision, but we made it clear that we should take no further part in the case.

Reference may also be made to New South Wales v. The Commonwealth (No. 2) (46 C.L.R. 235 at p. 259) in which Gavan Duffy C.J. Rich, Starke and Dixon JJ., said:

In the present case the issue between the parties raised important constitutional questions, and immediate answers to those questions were necessary in order to determine whether the revenues of the State may be intercepted by the Commonwealth, and applied in satisfaction of a liability which the State has undoubtedly assumed and which, the defendants allege, it has failed to discharge. The Commonwealth was already exercising the power which it claims to possess; the State was actually resisting the exercise of the power. This issue is by its very nature one which cannot be allowed to remain in uncertainty but requires an immediate and a final decision, and we consider that by the Constitution the responsibility of deciding it once for all has been cast upon this Court.

The other cases to which reference may be made are:

Pirrie v. McFarlane 36 C.L.R. 170 at pp. 174–5.

R v. Maryborough Licensing Court 27 C.L.R. 249.

In re Judiciary & Navigating Acts 29 C.L.R. 257.

Amalgamated Society of Engineers v. The Adelaide Steamship Company (No. 2) 29 C.L.R. 406.

Ex parte Walsh & Johnson 37 C.L.R. 36.

Ex parte Nelson (No. 2) 42 C.L.R. 258.

New South Wales v. The Commonwealth (No. 2) 46 C.L.R. 235.

Joyce v. Australasian United Steam Navigation Co Ltd. 62 C.L.R. 160.

Australian National Airways Pty. Ltd. v. The Commonwealth (No. 2) 71 C.L.R. 115.

Ex parte de Mestre Re Chisholm 44 S.R. 55.

Ex parte King; R. v. University of Sydney 44 S.R. 19.

Ex parte Drummond R. v. University of Sydney 67 C.L.R. 95.

Another approach to the matter may be made by a consideration, in so far as it is permissible, of the various drafts of the Bill which became the Constitution. The various drafts of Sec. 74 are set out in Stafford & Wheeler, Practice of the Privy Council (1901), at pp. 550–551. It is to be noticed that the first amendment proposed to Clause 74 in the committee stages provided not only for the certification of appeals by the Executive Governments but also that otherwise inter se questions were only ‘capable of final decision’ by the High Court. Both of these matters were eliminated in the second proposal for amendment and the second proposal became the enactment. The first proposal would have borne the construction for which the respondents have contended. The intention, however, was clearly to overcome the difficulty suggested and this is most clearly stated in the House by Mr. R.B. Haldane (as he then was).

In the first place it has been said that there was there an objectionable provision in regard to the introduction of the Executive Governments into matters of judicial concern. I do not wonder that that proposal raised a storm of hostile criticism in Australia. But there is another point, and it is in regard to the expression ‘final decision’. It was pointed out that this clause applied not only to public controversies between Governments, but that it applied also to private litigation, and that if the clause passed, a private litigant might find himself in this position; he had fought his case and been unsuccessful, and his opponent had taken him to the Privy Council or he had taken his opponent there. There somebody raises the contention that there is a question of the limits, inter se, of the legislative powers of the two Governments and the validity of the Colonial Act may be questioned. In such a case the Privy Council would have been bound to say, under the wording of that clause, ‘We cannot listen to you, for we are precluded from hearing the case, and we are bound to send it to the High Court.’ That was felt to be a clause which was altogether intolerable, and it has been made the subject of severe criticism. Now that obnoxious expressions ‘final decision’ has been got rid of, I am glad to say, and now we are face to face with a new clause which has appeared on the Paper for the first time today.

The only Justice of the High Court who expressly and solely decided the invalidity of Section 46 of the Banking Act, because of repugnancy to section 92, was Mr. Justice Dixon. Their Honors Justices Starke, Rich and Williams, were prepared to and did hold section 46 to be invalid because of its repugnancy to Section 92 as well as on other grounds. It may be argued that because Justices Starke, Rich and Williams referred to the Section 92 point as an additional ground of invalidity, that it does not form the basis of their decision and that consequently there is no decision on a question by the High Court from which appellants can appeal. However, in our opinion, the better view is that the grounds expressed by these Justices are to be considered as alternative grounds, each ground being equally part of, and essential to his determination of invalidity: Compare 42 L.Q.R. 289, 296; 53 L.Q.R. 464–5; Goodhart Essays in Jurisprudence and the Common Law, p. 23, (Chapter entitled ‘Determining the ratio decidendi in the Case’); Ratio Decidendi and Obiter Dictum—Sawer & Paton 63 L.Q.R. 461 at 470.

Notwithstanding the Order already made by the Privy Council, it is, in our opinion, clear that the Privy Council on the hearing of the Appeal could entertain a motion by the respondents to revoke or vary the Order in Council dated the 26th November, 1948. We point this out because it is always possible that the respondents might seek to do this on the ground that there is not any decision on a question with respect to Section 92 against the respondents. We think the views we have expressed in the preceding paragraph as to the meaning of ‘question’ provide a sufficient answer to this, and to the authority we have already cited we add a reference to London Street Tramways Co. v. London County Council (1898 A.C. 375).

Assuming that the matter is debated again in the manner we visualise as possible, we are of the opinion that a further argument that could be submitted by the appellants is that there is still sufficient power remaining in the Crown as part of its prerogative to grant leave to entertain the petition of a subject in relation to a point of law which does not involve a complete and final decision in any appeal. The Act of 1833 and the Orders in Council only deal respectively with the composition of the Board and the manner of regulating appeals, and we are of opinion that none of these matters, nor does any other Statute of which we are aware, affect the right of the Crown to entertain as part of its prerogative the petition of an appellant to set right the decision of the High Court on the ‘question’ relating to Section 92: see Encyclopaedia of Laws of England, 1st edn., vol. 10, p. 452.

(2)  This calls for no special comment.

(3)  It has been contended by the respondents that a majority (actual or statutory) has decided the question of power in their favour. The appellants have contended that a majority has decided this question in their favour. In our view there is no actual decision of the Court on this question.

Section 23(1) of the Judiciary Act, 1903–1947 is in the following terms:

23. (1). A Full Court consisting of less than all the Justices shall not give a decision on a question affecting the constitutional powers of the Commonwealth, unless at least three Justices concur in the Decision.

This section operates only when the Justices are divided in Opinion as to the decision to be given on any question. This section may refer either to a division of opinion on the grounds of invalidity or to a division of opinion on the part of any particular enactment which is to be declared invalid. We are of opinion that the latter is the class of case to which the section refers. In the present case there was no even division of opinion among the Justices of the High Court on the decision to be given as to the validity of Section 46. Consequently, neither the petitioners nor the respondents can call Section 23(1) in aid for the purpose of determining whether there is a decision as to the extent of the Banking power. Two Justices decided that Section 46 was within that power, namely the Chief Justice and McTiernan J. Two Justices expressly took a contrary view, namely Rich and Williams JJ. Of the remaining Justices, Starke J. at p. 302 expressed views indicating that the Banking power would justify Section 46, but he did not make these views the basis of any of his decisions. Dixon J. rejected the plaintiff’s submissions as to the meaning of the power and stated his own view in a general but not precise manner. However, the parts of the Act which he declared to be invalid, were invalid, in his opinion because as to some parts they failed to provide just terms and as to another part, viz. Section 46, it conflicted with Section 92 of the Constitution. At pp. 329–330 of the report Dixon J. said:

Of the foregoing considerations the last is more material to the justification of the provisions of the Act under s.51(xiii) of the Constitution; but for my part, it is not upon that paragraph that my decision depends. Speaking generally, however, they are considerations which must in different ways affect the question of the constitutionality of this or that provision of the Act.

The attack upon the validity of the Act is supported by contentions which are of two descriptions. Some of them are so fundamental, that if sound, they would annihilate the Act independently of its detailed structure. Others depend upon the manner in which the Act is constructed, and some of these involve a question of the operation of s. 6, which declares an intention that the provisions of the Act shall be separable. I have formed the conclusion, for various reasons the greater number of which may be thought to be of a second description, that certain cardinal provisions of the Act cannot be upheld as valid, namely s.13(3) and (4), ss. 17–19, s 24, ss.39 and 40, ss. 42–44 and s. 46(4)–(8). The source of their invalidity lies in s. 51(xxxi) or s. 92) of the Constitution. I shall set out with some fullness the reasoning by which I have been led to adopt this conclusion, and I shall explain the consequences upon some other provisions. The result of my opinion is the failure of the more essential parts of the Act, as distinguished from incidental or subsidiary provisions. In these circumstances any expression of my opinion on the many contentions raised which do not enter into the grounds of the conclusion I have just stated can form no part of my ratio decidendi.

Therefore, in our opinion, no party is in a position to apply for or obtain a certificate from the High Court in relation to the inter se question.

It is to be noted that before the enactment of the Judiciary Act in 1903, and even after enactment of that Act and prior to the amendment in 1907 there was nothing to prevent an inter se question being the subject of a decision of the Supreme Court of any State and thereafter the subject of an appeal direct from that State Supreme Court to the Privy Council. This, of course, actually occurred in Webb v. Outtrim ((1907) A.C. 81). That the Judiciary Act was amended after the decision in Webb v. Outtrim is, we think, beside the point, the real point being that on its true construction the Constitution itself without any restrictions by any other law, did envisage inter se questions coming before the Privy Council direct from State Courts and being the subject of determination by the Privy Council (Cf. Stafford & Wheeler ubi supra). We think that this circumstance strongly supports the view that the Privy Council is not in all circumstances debarred from considering an inter se question. The true view we think is that the only limitation on the power of the Privy Council in this connection is that in a particular appeal it may not adjudicate upon an inter se question which is the subject of a decision of the High Court in that case.

On another view, and assuming the arguments submitted by Sir Cyril Radcliffe K.C. and Mr. Barwick K.C. to be correct, the Privy Council may, as a matter of discretion, not wish to adjudicate upon an inter se question. It could then, we think, be suggested to the committee that the case should be remitted to the High Court with an expression of the Privy Council views on the true construction of Section 92 and with a direction to the High Court that that Court should proceed to come to a determination in accordance with the law as declared by the Privy Council.

For the reasons we have stated we answer the questions submitted as follows:

(1)  Yes.

(2)  Yes.

(3)  Yes, but subject to our view that there is no decision of the Court on power.

(4)  Yes.

1Commonwealth v Bank of NSW [1949] UKPCHCA 1;(1949) 79 CLR 497 (PC).

2Bank of NSW v The Commonwealth [1948] HCA 7;(1948) 76 CLR 1.