Week 4 - Corporations Power PDF

Preview

Summary

Lecture Notes...

Description

Week 4: The Corporations Power Part 1  

Section 51(20) Allows parliament to make laws for Foreign corporations, and trading or financial corporations formed within the limits of the commonwealth. It is a non-purposive power concerned more with a type of entity.

Does this power extend to the formation of incorporation? o New South Wales v Commonwealth (1990) 169 CLR 482 o Power does not extend to incorporation Early Approach – Huddart, Parker & Co Pty Ltd v Moorehead (1909) 8 CLR 330 



The Court held that the Corporations power did not enable the Parliament to make a valid law controlling the intra-State trading operations of foreign, trading or financial corporations. In giving their reasons, each member of the Court held that the corporations power does not confer on the Commonwealth Parliament power to create corporations. Overturned: Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468, 484 o The Commonwealth could make laws under s 51(xx) controlling the trading activities of a trading corporation. - Rejection of doctrine of reserved powers meant that the decision in Huddart Parker could not stand. - Barwick CJ: Held that the interpretation of this section would be done on a case by-case basis – the decision decided no more than was required by the case. However, a law dealing with agreements or practices restrictive of a s 51(cross-examination) corporation’s trading activity was within s 51(xx)

Which Corporations are Covered by section 51(20)? Three types: Foreign, trading and Financial – These three are covered by the Corporations Power. Foreign Corporation is: Any corporation formed outside the limits of the Commonwealth as seen in New South Wales v Commonwealth (Incorporation Case) (1990) 169 CLR 482, 4978. Activities Test or Purpose Test is used to identify Trading and Financial corporations. ‘Trading’ is taken to view its current meaning R v Federal Court of Australia; Ex Parte WA National Football League (‘Adamson’s Case’) (1979) 143 CLR 190 Issue: Was a football club a trading corporation? Yes – Majority focused on the activities (test used) of the club Mason J – Looked to gate receipts; distribution of income; sources of income; size of revenue. Also used the purpose test to ascertain that the club’s purpose was mainly financial gain.

Ee also State Superannuation Board of Victoria v Trade Practices Commission (1982) 150 CLR 282: Financial activities must form a substantial proportion of total activities, even if other more extensive non-financial (non-trading) activities also take place (Gibbs CJ and Wilson J dissenting considered the activity must be ‘the predominant and characteristic’ activity) Commonwealth v Tasmania (Tasmanian Dam Case) (1983) 158 CLR 1 The Hydro-Electric Commission was a government-controlled corporation created by the Hydro-Electric Commission Act 1944. It planned to build a dam on the Franklin river system in Tasmania in order to generate electricity that would be sold to consumers. Held: The connection of the corporation with the government of a state does not take it outside the power; it is not, in any event, a servant of the Crown while it has a significant policy-making role, and engages in large scale construction, it can still be a trading corporation. Case focusing on activities test, not purpose, the test has facilitated a broad application of the corporation’s power. Inactive Corporations Issue – how to apply the ‘current activities’ test to a company that is yet to engage in any activities, or is dormant? ― E.g. a shelf companies. High Court has accepted that where the corporation has no activities, a purpose (ie proposed activities) test has a role: Fencott v Muller (1983) 152 CLR 570)

Week 4: The Corporations Power Part 2 Industrial Relations Power - Section 51(35): The Parliament shall subject to this constitution have power to make laws for the peace, order and good government of the Commonwealth with respect to: Conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one state. Three views develop on the scope of the power: 1)Narrow view: limited to the regulation of trading activities of trading corporations. 2) Intermediate view: extends to activities of trading corporations engaged in for the purposes of trade. 3) Broad view: it can be used to regulate the activities of a trading corporation in any respect whatsoever. Provided a corporation has the characteristics that brings it within s 51(xx), any aspect or activity of that corporation can be regulated by the Commonwealth. Strickland v Rocla Concrete Pipes A wider view which overrules the approach in Huddart Parker - Core of the corporation’s power extends to regulation and control of the trading activities of trading corporations. Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169 Facts: Trade Practices Act 1974 (Cth) prohibited the actor’s union from preventing theatre agents from supplying Fontana (Corporation) with labour. Not a law directly on the subject of trade activities, but protecting a trading corporation by regulating strike actions (boycott). Tasmanian Dams case (1983) Extends to activities of trading corporations engaged in for the purposes of trade. World Heritage Properties Conservation Act 1983 (Cth): -

Section 7 - declare a property is a property to which s 10 applies if it is being or is likely to be damaged or destroyed Section 10(1) – ‘foreign’ and ‘trading’ corporations as corporations within meaning of s 51(xx) Section 10(2) - prohibited, without the consent of the minister, a ‘foreign corporation’, a corporation ‘incorporated in a Territory’ and ‘a trading corporation formed within the limits of the Commonwealth’ from engaging in e.g. drilling, deforesting

Legal Issue: Whether section 10 was a valid use of Section 51(20). Held: ― Power extends to laws that regulate a trading corporation with regard to: -

Activities undertaken for the purpose of its trading activities. Activities done preliminary to, or preparatory to, later trading activities

Modern Position: Work Choices Case Facts: -

Workplace Relations Amendment (Work Choices) Act 2005 (Cth) – restructured workplace relations for ‘constitutional corporations. (Affecting some 85% of workers.)

-

Previously, Cth legislation relied largely on the conciliation and arbitration power (s 51(35). The Amending Act relied largely on the corporation’s power (s 51(xx)).

-

Sections 5 and 6 defining employee and employer. Section 6 – employer means ‘a constitutional corporation’.

-

Part VI of the previous Act – prevention and settlement of interstate industrial disputes by the AIRC; repealed. New Parts 7 and 10 dealt with employee- employer relations (e.g. remuneration, leave) ― Explicit aim: to create a national workplace relations system based on the corporation’s power ([45]).

-

Five states, two unions (with support of Tas and Territories) bring action seeking declaration the Act is invalid.

Legal Issues: -

Is a law require certain employee minimum entitlements in respect of section 51(20) corporations a ‘law with respect to such corporations’? Could section 51(20) of the Constitution power be used to refashion the legislative regime that had previously depended on section 51 (35) ‘the conciliation and arbitration power’?

Decision: -

Upheld validity of the legislation Endorsed statement in Re Pacific Coal Pty Ltd:  “the regulation of the activities, functions, relationships and the business of a corporation described in that sub-section, the creation of rights, and privileges belonging to such a corporation, the imposition of obligations on it and, in respect of those matters, to the regulation of the conduct of those through whom it acts, its employees and shareholders and, also, the regulation of those whose conduct is or is capable of affecting its activities, functions, relationships or business.”

Characterisation Issue Two different tests: Distinctive Character Test and Object of Command Test

Distinctive Character Test: ‘the fact that the corporation is a foreign, trading or financial corporation should be significant in the way in which the law relates to it’ if the law is to be valid.’ – Test not preferred Object of Command: A constitutional corporation is ‘an “object of command” [of a law], permitting or prohibiting a trading or financial corporation from engaging in conduct or forming relationships’ – Provided it falls within trading or financial – it could be regulated. This is the preferred test. -

The corporation’s power is a ‘persons power’ (104). ‘[T]he power is to make laws with respect to particular juristic persons.’ Power “also extends to the persons by and through whom they carry out those functions and activities and with whom they enter into those relationships” - this extends to industrial rights and obligations

Summary The Commonwealth’s power with respect to trading, financial and foreign corporations extends to: -

the regulation of the activities, functions, relationships and the business of a corporation the creation of rights, and privileges belonging to a corporation the imposition of obligations on a corporation. the regulation of the conduct of those through whom a corporation acts, its employees and shareholders the regulation of those whose conduct is or is capable of affecting its activities, functions, relationships or business....