ic Reid v R aid [1929] HCA 41 | Case summary

ic Reid v R aid [1929] HCA 41 | Case summary | Zoe

Court with powers which are not judicial in the ordinary sense, but which are essential to the carrying on of the business of the 'Court. The mode adopted by sec. 18 of the Bankruptcy Act was effective. If the substance of what was done under this section is considered, it comes within R. v. Burah (1), Hodge v. The Queen (2) and Powell v. Apollo Candle Co. (3), and the provision as to delegation in sec. 18 of the Bankruptcy Act is good. Sec. 18 is good either as an exercise of the powers conferred by sec. 51 (xvit.) and (XXXIx.) of the Constitution, or it is good under the powers conferred by sec. 77 (t1.). Under the powers conferred by sec. 51 (xvu.) and chapter IIL. of the Constitution the Federal Parliament could confer Judicial or administrative powers on the Bankruptcy Court. Sec. 18 is merely conditional legislation, and the Governor-General may be left to determine which of the State Courts may be invested with jurisdiction. The power given to "make laws . . . investing any Court of a State with Federal jurisdiction " in sec. 77 (111.) of the Constitution is the power to make laws directly investing, &c. In this case Parliament has legislated leaving it to the Governor- General to choose the Courts (Nott Bros. & Co. v. Barkley (4) ). 'There is no difference between the expressions "making laws investing " and " making laws with respect to investing" a State 'Court with Federal jurisdiction. [Counsel referred to Bazter v. Ah Way (5); Roche v. Kronheimer (6); R. v. Macfarlane: Ex parte O'Flanagan and O'Kelly (7).]_ As to question 3, it is not claimed that sec. 20 of the Bankruptcy Act enables the State Court to sit outside its territorial limits. It is intended that a State Court invested with Federal jurisdiction, sitting in that State, may deal with any act of bankruptcy committed in any part of Australia, -and that its orders shall have effect throughout Australia (Crates on Statute Low, 3rd ed., p. 162). It would not be a Court at all if it purported to sit outside the territorial limits of the State. Unless this view is correct, there would still only be local jurisdiction over persons and acts if the Governor-General proclaimed Bankruptey

H.C. or A. 20 (1) presupposes that the State Court is sitting in the State in neae, which it has jurisdiction. As to question 4, "the Court" in see. Le 12 (5) of the Bankruptcy Act means the " State Court having juris- pascates diction in bankruptcy under this Act." _" ' Bankruptey,' in relation nies to jurisdiction or proceedings, includes any jurisdiction or proceedings. under or by virtue of this Act" (Bankruptcy Act 1924, sec. 4). The person appointed as Registrar was not appointed as an officer of the Court simpliciter, and the Attorney-General does not prescribe his duties except in so far as he is an officer of the Federal Bankruptey Court. Sec. 77 (m1.) of the Constitution gives power to invest a State Court with Federal jurisdiction, and sec. 12 (5) of the Bank- ruptey Act only enables the State Court to carry out that Federal jurisdiction. {Isaacs J. referred to Skinner v. County Court Judge of North- allerton (1) and Savill v. Dalton (2).} None of the powers conferred on the Registrar by the Bankruptcy Act are judicial so as to constitute him a judicial officer. His powers. at most are quasi-judicial, and if they are judicial the portion of the Act conferring them is severable (Local Government Board v. Arlidge (3) ). None of these matters are such as to form part of the judicial powers within chapter III. of the Constitution. [Srarxe J. referred to Waterside Workers' Federation of Australia v. J. W. Alexander Ltd. (4). (Knox C.J. referred to Federal Commissioner of Taxation v. Munro; British Imperial Oil Co. v. Federal Commissioner of Taxation (5).] In Skinner's Case (6) the Court was not acting as a County Court but as a different Court. All that has been done here is to appoint Federal officers who will act as Federal officers in State Courts. Skinner's Case (7) supports this view. As to questions 5 and 6, sec. 78 of the Commonwealth Public Service Act 1922-1924 does authorize the "arrangement " set out in the Commonwealth Gazette of 25th July 1928, and the provisions of that section together with such "arrangement" do authorize the appointment of Registrars-

invest the Bankruptcy Courts with judicial power. Such a power is implicit in sec. 51 (xvit.) without reference to chapter III. of the Constitution. The word " bankruptcy " connotes judicial power, and the Federal Parliament, having been given power to legislate with regard to bankruptcy, can under the powers conferred by sec. 51 (xvut.) alone invest a State Court with Federal jurisdiction in bankruptcy. Such power exists either under sec. 51 (xvu.) or under sec. 77 (111.), or both. The issue of a bankruptey notice is of course (Byrne's Law Dictionary, p. 625, tit. " Of course"). There is no power for the Registrar to refuse to issue a notice where the facts relating to it were brought to his knowledge (In re Clark; Ex parte Beyer, Peacock & Co. (1); Huddart, Parker & Co. Pty. Lid. v. Moorehead (2)). The function of issuing such a notice may be delegated, as the Registrar has only to ascertain the relevant facts and if they are found to exist the notice must issue. The only function of the Registrar under this section is to ascertain whether the facts exist or not. No judicial powers have been conferred on the Registrar, though in some instances he may have power to make certain inquiries or investigations. In the perform- ance of many administrative functions it becomes necessary for the officer to make an adjudication which does not amount to an exercise of judicial power (New South Wales v. Commonwealth (3) ). There are powers given to the Registrar under the Bank- ruptcy Act to make an adjudication, but in exercising that power he is not exercising judicial power (R. v. Murray and Cormie; Ex parte Commonwealth (4) ). Sec. 20 of the Bankruptcy Act conferring on the Bankruptcy Court jurisdiction throughout the Commonwealth can be supported by Lorenzo v. Carey (5). The Federal Parliament can give the State Court power to deal with bankruptcy matters wherever the material facts arise. The power to punish for contempt is given as a separate power upon its extended jurisdiction. Sec. 20 does not involve a State Court exercising jurisdiction in another State. Assuming the validity of

Upon this reading of sec. 51 (xxxrx.) what calls for consideration is that portion which empowers the Parliament to make laws with respect to matters incidental to the execution of a power vested by the Constitution in the Federal Judicature. But before this power could avail in the present case it would be necessary to surmount two difficulties: it would be necessary to treat State Courts invested with Federal jurisdiction as forming part of " The Federal Judicature" ; it would be further necessary to treat Federal jurisdiction invested by a statute of the Parliament as a power invested by the Constitution. Itis not, however, necessary to consider these two matters if the view is correct which has already been stated with respect to the meaning of sec. 77 (m1.) and the place and purpose of secs. 77 and 79 in the Constitution. This view is that express and particular powers are thereby conferred with respect to State Courts because general legislative powers did not extend to authorize legislation regulating their jurisdiction or their constitu- tion and that the power given by sec. 77 (m1.) contemplates the selection by Parliament of an existing judicial organ which depends alike for its structure and its being upon State law and the grant to that Court of powers of adjudication upon specified subjects of Federal jurisdiction. Upon such a view it is evident that the reconstitution of the tribunal itself or of the organization through which its powers and jurisdiction are exercised cannot be considered to be a matter incidental to the exercise of the jurisdiction which it takes by the grant. It should, perhaps, be added that if sec. 51 (xxxrx.) had such an effect sec. 79 would be quite superfluous in respect of State Courts. It follows, in our opinion, that secs. 12 (5), 23 and 24 are nugatory in relation to the Courts of the States, and the person appointed to execute the office of Registrar of the District of Western Australia has no authority to issue the bankruptcy notice in this case.

it is said there does not legally exist at the present moment any Commonwealth Bankruptey Court may be shortly explained. By sec. 18 of the Act it is provided as follows: " (1) The Courts having jurisdiction in bankruptcy shall be (a) such Federal Courts (if any) as the Parliament creates to be Courts of Bankruptcy ; and (b) such State Courts or Courts of a Territory as are specially authorized by the Governor-General by proclamation to exercise that jurisdiction." No Federal Bankruptcy Court has been created, and therefore par. (a) is, of course, inert. Par. (6) was passed as by virtue of the power of the Commonwealth Parliament conferred by sec. 77 (11.) of the Constitution, namely, " investing any Court of a State with Federal jurisdiction." The objection is rested on the meaning and extent of the word "investing." It is said that the Constitution, in empowering the Parliament to make a law "investing" a State Court with jurisdiction, requires the law to be one which instantly on its passing " invests " the given Court with the given jurisdiction. That is to say, if the Act is one which could continue in force for any time without the Court being so invested, then, as to that Court at all events, the Act is not a law investing jurisdiction ; or, in other words, the law must itself define the jurisdiction to be invested and identify the State Court in which the jurisdiction is thereby invested. If the question arose with reference to the severely limited statutory conditions under which a Local Government body is usually entrusted with authority to make a by-law with penalties, I could better understand the rigidity of language suggested. But when addressed to the exercise by the Commonwealth Parliament of an admitted legislative power, under a great instrument of government, with all the historic attributes of a supreme representative assembly of a self-governing people, the narrow interpretation proposed appears to me impossible of acceptance. True it is that the Parlia- ment possesses none but the powers granted by the Constitution, but the manner in which it is expected, and in my opinion entitled, to exercise them in the absence of express restriction is as a British Parliament usually exercises powers, and in accordance with pre- cedent and an unbroken line of development, which means in a

as required by the objection in hand. There might be no State Court having the required jurisdiction, but one might be subse- quently created by the State. And the matters in which jurisdiction may be exercised may not exist in law for years to come, if ever. True it is that there is nothing said in sec. 39 about an intervening proclamation by the Governor-General, whose action can be con- trolled as an Executive by the Parliament. But there is, as to future Courts and even as to the alteration of presently existing Courts, the necessary intervening action of State Parliaments and State Executives, outside the control of the Commonwealth Parlia- ment. The "investing" is not confined to instant operation. Nor can it possibly be so confined in any case. You cannot, in the sense suggested, invest "' jurisdiction " - which is to be distinguished from judicial power - even on an existing Court, in respect of subject matters that do not yet exist. The " matters " in which jurisdiction. is to be exercised may never come into legal potentiality, much less actual existence, for years after the investing enactment is passed. And as the provision in sec. 39 is a standing provision constantly speaking in the present (see Halsbury, vol. xxvtt., p. 208, and Craies, 4th ed., at p. 29), the identification of a given State Court depends on the circumstances as they exist at the moment when jurisdiction is exercised. Prior to that event, and perhaps since the passing of the Act, new Courts may have come into existence, old Courts have been abolished or remodelled, jurisdiction extended or restricted, and it would be impossible to say that in 1903, when that Act was passed, the State Courts pointed to by sec. 39 were all in effect enumerated and inalterable. Never in the whole history of this Court has it even been suggested that a State Court exercising Federal jurisdiction under sec. 39 must be one of the Courts identifi- able on 25th August 1903 or with its jurisdiction in all respects as then identifiable. Again, there are a host of special statutory provisions of the same character. For instance, sec. 245 of the Customs Act 1901, permitting certain prosecutions to be instituted in "any County Court District) Court Local Court or Court of summary jurisdiction." It is, I should have thought, beyond controversy that Courts as described (though not identified), if

all provisions as to the Courts which should have jurisdiction to enforce it - makes a general form and character typical of bank- ruptcy legislation for a very long period, over sixty to eighty years, and more distinctly marked since 1883. Indeed, as far as Registrars are concerned, they were appointed, as is stated in Robson on Bank- ruptey, 3rd ed. (1876), at p. 40, as early as by the Statute 1 & 2 Will. IV. c. 56, " to attend upon and assist the Judges and Commissioners of the Court." It would be burning daylight to insist that no scheme of bankruptcy legislation, as known and understood in 1900, would be imaginable without Registrars and other officers of the Court. In considering the identical expression, " bankruptcy and insol- vency," in the Canadian Act, Lord Herschell L.C. in Attorney-General of Ontario v. Attorney-General for the Dominion of Canada (1) said it would not be expedient to define what is covered by those words. He added, however: " But it will be seen that it is a feature common to all systems of bankruptcy and insolvency to which reference has been made, that the enactments are designed to secure that in the case of an insolvent person his assets shall be ratably distributed amongst his creditors whether he is willing that they should be so distributed or not." And then his Lordship points out that some power of compulsion by law to secure this is a common feature. Again: "A system of bankruptcy legislation may frequently require various ancillary provisions for the purpose of preventing the scheme of the Act from being defeated." It is incontestable that the Act in all respects - apart from questions of judicial power - was quite within sec. 51 (xvu.) and (xxx1x.) of the Constitution. The Act accordingly made provision for Registrars and other officers of the Court - that is, whichever Court it should be wherein the duties were required. I should think no one would suggest the purposes of such legislation are possible of achievement without an official staff. If such a suggestion were made, it would be met by a reference to Cushing v. Dupuy (2), where the Privy Council says : - " It would be impos- sible to advance a step in the construction of a scheme for the administration of insolvent estates without . . . providing some mode of special procedure for the vesting, realization and distribution of the estate, and the settlement of the liabilities of the

Then, under sec. 77 (u1.) of the Constitution, the Parliament enacted that State Courts could exercise the jurisdiction. Plainly, unless the vast expenditure necessary to create Federal Courts for the purpose was to be undertaken, either State Courts were to be availed of or the project of a national Bankruptcy Act must be abandoned. The power extends to any State Court that the Commonwealth Parliament thinks proper to select. It may be the Supreme Court in the capitals, the District or County Courts in the country cities and towns, or, for more or less limited purposes, inferior Courts in less closely populated districts. The choice of State Courts, however constituted, however equipped, perhaps with no officer but a clerk, is unqualified. But for further economy, under sec. 78 of the Commonwealth Public Service Act, an arrangement was then made for permitting the Registrar of the State Supreme Court to be appointed by the Attorney-General of the Commonwealth to perform the duties of the Registrar in Bankruptcy when that Court was exercising its Federal jurisdiction, and to hold the office during the pleasure of the Attorney-General and the concurrence of the State Minister of Justice, and without salary, and equitable payments being made by the Commonwealth to the State for the services of "officers of that State." The Attorney-General then appointed the State Registrar to perform the duties. It is amazing to me that the conjoint force of the Commonwealth and State Constitutions are considered inadequate to permit of so simple, economical and effective an arrangement being made between the two Governments. I should not hesitate to hold that the arrange- ment alone is sufficient warrant for the legality of the appointment. If not, the question could not present itself more appropriately than with respect to bankruptcy. I do not, however, think the matter should be allowed to rest on the permission of any State to the Commonwealth to enable it to discharge a great national function entrusted to it by the Constitution. A bankruptcy law concerns

not merely the repression of fraudulent conduct of debtors, but also the just and equitable treatment of creditors. It, moreover, is a means of enabling citizens weighed down by debts regaining their capacity to perform the ordinary duties of citizenship. Further, it conduces to a higher standard of commercial morality. And lastly, a Commonwealth law of that nature is essentially of import nationally, and, as ultimately affecting inter-State trade and commerce. must, on its procedural incidents, if of use at all, be under the control of the Federal Parliament. I would refer those who desire the authority for this, except the last characteristic mentioned - if authority is needed - to the observations of Vaughan Williams J. in Ex parte Painter (1) and of Mr. Manson in the Encyclopedia of the Laws of England, sub verb. Bankruptcy (2nd ed., vol. m., at p. 4). These considerations make it very clear that the incidents of the relevant powers in the Constitution are comprehensive. One of those powers is that contained in sec. 77 (11.), namely, a legislative power of the Parliament with respect to matters arising under Commonwealth laws : " Investing any Court of a State with Federal jurisdiction." Although it seems almost like fotcing an open door to enter upon the inquiry, it will, I think, conduce to facility of construction generally if we first arrive at a clear understanding of what the Constitution means by the expression " Court of a State." It means some organ as constituted by the State to exercise judicially some portion of the King's judicial power. All judicial jurisdiction in this Empire proceeds from the King, and his officers for dispensing the Royal justice are the Judges. Blackstone (vol. 1., at pp. 266, 267) observes: "The original power of judicature . . . in England E has immemorially been exercised by the King or his substitutes." And again: ' Our Kings have delegated their whole judicial power to the Judges of their several Courts." (And per Willes J. in Mayor dc. of London v. Cox (2).) Holdsworth's History of English Law (vol. 1., p. 207), in connection with the fact of the King ceasing to be present in the Court, says of the Courts of common law: "The Judges formed the Court." At p. 246 we find reference to the "official stafls " of the Courts, which were distinct from the Judges, who are the judicial staff, some " officials" being appointed by the

legislation, and in this case applies, unless the Bankruptcy Act in sec. 12 is ultra vires the Commonwealth Parliament. The third is not disputable, and, as I understand, is undisputed. If sec. 18 were limited to Federal and Territorial Courts, there would be no challenge of sub-secs. 2 and 5 of sec. 12. Let us assume then that those sub-sections were omitted, and that the State Supreme Courts were invested with the Federal jurisdiction. The present point would disappear, and the investment would be complete, but without adequate provision for effectuating the scheme of the Act. The fourth step is that to which no effect is given by the objection in hand. The moment the legislative investing is complete, the State Court becomes ipso facto one of the Courts described in sec. 71 of the Constitution, and, pro hac vice, a component part of the Federal Judicature. True, it is and always remains a State Court, but by virtue of sec. 71 it becomes an integral part of the " Judicature," that is, that portion of the political organism called the Commonwealth of Australia to which, as distinguished from the Legislature and the Executive, the Constitution has entrusted the " judicial power," that is, the power to construe the laws of the Commonwealth and to determine certain justiciable controversies. Chapter I. of the Constitution vests the legislative power in "The Parliament" as defined. The term "legislative power" is a generic expression, and does not indicate its extent. It is the specification of subjects and conditions of legislation that marks out the limits of the legislative jurisdiction. Chapter II. vests the executive power of the Commonwealth in the Sovereign, and is again a generic term. Its specific limits have to be determined aliunde. Chapter III. is emphatic in declaring that the judicial power, also a generic term, shall be vested - that is (see sec. 51 (XxxIx.)), a mandatory self-executing declaration of vesting - in certain Courts, one named, the others described - and whatever Courts at a given moment answer the description, they are by the Constitution directly made depositaries of the "power" to the exclusion of both the other departments of government. But again something further is necessary to mark out the extent of jurisdiction of each individual Court within the total area of Commonwealth judicial power. That is to say, in those Courts

the Court in the State jurisdiction remains unaltered and knows nothing of the Commonwealth official staff. But for Federal pur- poses, unless the Commonwealth, notwithstanding sub-sec. xxxrx. of sec. 51, must be dependent on the will of the State, and of every State, for the execution of the Commonwealth judicial power by State Courts, the Parliament must have the power to supply the ministerial staff required. Even some of the acts done by the Judge are ministerial (see Assets Co. v. Mere Roihi (1) ). But if the Com- monwealth is to be so dependent, then the power of utilizing State Courts in a scheme of bankruptcy, and others also, is quite illusory. At best, it would not be uniform, and at every instant might at the will of the State be frustrated. Consequences are not unimportant in the construction of statutes, unless the words are so plain as to be incapable of more than one construction (per Lord Parker of Waddington for the Privy Council in Brunton v. Commis- sioner of Stamp Duties (2)). If, therefore, sub-sec. xxX1x. were even ambiguous, the consequences I have mentioned would be formidable reasons for not defeating an express power in an instrument of self- government. But the words of the sub-section seem to me to leave no room for hesitation. What are " matters incidental to the execution of" the portion of the judicial power vested by the Constitution in the Supreme Court of Western Australia on the investing of Federal bankruptcy jurisdiction in that Court by the Commonwealth Parlia- ment? If the scheme is a permitted scheme, the appointment of a Registrar and his official attachment to that Court are so closely incidental as almost to provoke impatience should it ever be ques- tioned. The power granted by sub-sec. xxx1x. is in this connection not only a power to regulate the incidents of the main legislative power exercised by Parliament under sub-sec. xvur., but is also a power to regulate, consistently with sec. 71, the incidents of the execution of the judicial power by the Court itself. Preparatory steps by officials of the Court leading up to the exercise of exclusive judicial functions, assistance in the course of adjudication, and acts consequential on adjudication, all being under judicial guidance and control, are manifestly incidental. In my opinion the enactments

[4]

The arrangement under sec. 78 and the appointment to duties under sec. 12. - Apart from the objection already dealt with, the only reason advanced for denying the validity of the arrangement under sec. 78 was that the Registrar's duty was judicial, and therefore his appointment must be for life, and under sec. 72 of the Constitu- tion. There is no substance in this objection. A Court, though strictly consisting merely of Judges, cannot function without assistance. Neither history nor reason tolerates the opposite notion for an instant. A Court is a place where controversies are deter- mined judicially. But as necessary adjuncts of the tribunal, and to perform acts antecedent and subsequent to, and even synchronously with, the actual hearing and determination, officers are appointed. It is altogether a mistaken notion that because the Constitution distinguishes between the legislative and the executive and the judicial departments of the Commonwealth, there can ever in the practical working of any Constitution be a rigid demarcation placing each class of acts in an exclusive section. As containing some illus- trations of this truth, I refer to what I said as to the Board of Review in Federal Commissioner of Taxation v. Munro (1) at pp. 174 et seqq. T refer to these, but do not repeat them here. The separation of the powers must be understood, as Story J. says in his work on the Consti- tution in sec. 525, "in a limited sense." In sec. 529 he says: "A perfect separation is occasionally found supported by the opinions of ingenious minds, dazzled by theory, and extravagantly attached to the notion of simplicity in government." Then he refers to the refutation of the idea by "the illustrious statesmen who formed the Constitution," since they maintained the proposition that "unless these departments be so far connected and blended as to give to each a constitutional control over the others, the degree of separation which the maxim requires, as essential to a free govern- ment, can never in practice be duly maintained." Indeed, if our

ic Reid v R aid

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