Ku-Ring-gai Co-Op Building Society (No 12) Limited ; Dee Why Co-Op Building Society (No 29) Limited ; Declarations and orders under Section 163A of the Trade Practices Act 1974 [1978] FCA 107

Federal Court of Australia|1973-12-18|Before: Deane JJ, Brennan J, Deane J, Doara J, Doane J, Isaacs J

societics ~ Wnether trading or financial corporations ~

Exemption by State regulation - Whether State leyislative

commerce" - Nature of condition of supply ~ Whether acts

(N.S.W.) s.82; Co-operatives "aculetionrs 1961 reg.35A;

Trajie Practiccs (Reroval of D.cections) Peculations

AND IN THD "MAe™IR of Declaraticis and Orders under

The answers to cuestions (a), (b), (c), (ad), (fe), (1), (c) ard (h) are as folleys:

IN THT of KWARIMG-CAT COmAT RAT AVE PULLING Smo (NO.]2) aa alu 1)

BOWHW C.J. I agree with the sucmaxy of the facts and the

Question (c) asks whether the upplicant societies are financial corporations formed within the limits of Australia. The authoritics on the phrase "finaneral corporations" in

s.51(xx) of the Constitution are meagre. We have the anthority

of Isaacs J. in Huddoert Parker & Co. Ptv. Limited ve. Moor

(1909) 8 C.L.R. 330 ut pp.405-107 for the view that the pever in s.51(xx) was granted to the Conronwealth Parliament in order to ensure there was a strong national aathoraty able to cc.uctvol the transactions of bodies of considevenle size, wealtn and influence, which micht be harmful to the public. Isaacs J. also said (at p.395) that s.51. (xx) empovers the Conmmenwoa! ch Parliament to regulate the conduct of the corperations therein described in their dealings with the public. This, however, assumes that the object to which the pover of the Cownowerlta

Parliament uider s.51 (sr) extend It does not assist in Getermining what corporations are iveclui:i

130 C.L.R. 335 at p.S?4). Counsel for the arplicant societics subritted thot S02 taz

Practices \ct 1974, a financial corporation 16 a corporation

that has a purpose of trading in noney, evinced either in 2t- constituent doctucents, or in its activities, or in a combie.i o of both. IF that arvvrent 1s soand, it would seem tnar ne

corporation 16 arnclude?d within s.81(:.) es a finene..ut cer w2.7

corporation. Trading includes trading in intangibles such as moncy, as well as in goods. Counsel for the applicants arquod that jn 1900 it may have been thought that a trading corporacicn would only compichend a corporation buying or selling voods, that being then a current conception of trade. In order to include within the scope of legislative power those corporations which commercially borrowed, lent or otherise dealt in money, the words "or financial" were ancluded in s.51(sx). But 1t wos said, the commercial nature of a trading corzoration should alio attach to a financial corporation.

I do not consider that there 1s any reason for interyprceiu~ s.51(xx) so as to subordinate the meaning of "finanerol" to tact

which borrows and londs or otherwise Ceals in finance as ics principal or characterist_c activity or, dependang cn which approach one trkes, 1t 1$ a corporaticn forred for the ru. os of borrowan¢e and lending or other. ise dealing in finance. TF

it does co in the way of trade it vay also bo a trating eco slat

eosary featacc of a fananctal cores rac The phrase "tradine or f2nancial] corporations" has a ¢Cistrinpa cs

Operation, and neither adjective qualifies the otner. YPurthar. -

although the connotation of the words used in s.51l(xe2) rerocies

constant, their denotation may charge (Tne xing v. Brislan;

Do the aprlicent socictics foll within tue vords "Fanuc. .

corporations"? The purpoce end activities of tne arylicinis ). However, uncer the loan

agreements, inmgarance was reqiired to be oeffected witha company Within New South Vales. because reg.3 removes the exception and e:roses the applicants to contravention of s.47(6), I would answer qvestion (g) no.

Although the applicants are not protected by s.513(1) (b),

the ansver J have given io giucstian (£) Jerds ame to the

I would answer the questions raised by the Special Case,

in respect of cach of Ku-ring-gai Socicty and the Dee Why

5 . F . F Wheelie guenk ecaletu tgs 2 trading corvceat ln fompe luttt ta tym tap fh x ar auele ride Lp fs ce E ° nae 1 > ' Many Te Loa I. awa 4 Oye are tm Seeri~en (fd ar ere "ide Foals Foves Aeoty fare, It is unnecessary to answer this question. fed Fleer lial cams. aoe

ra . 7 -7 4 -~ oa thy 44 - aos rv or a formu Tolen 22h te 3: we 1LE9D Oo F won 4 aie tf 7 Ta ser ty Ty ey © ye ,O% in Secilon sl., of tea Traio Paces At, 80s. Yes.

wie ti Cel ot ve ether to? ae ae de Crates a fF) ar fig 7

Ty ne Sse "y 49 Wretncop Irge72 a7

- a ~~ - 7 rpop A wel, purpoet ta owed epina * ~Jer oo OuLat o 7 tee t . Lote Commo. ait ¢

. rroperiy ct, sire lag 7 } . gee ani then, : 7 , POON ES Gh TivevvGlse Welk x company Por appeape? by euch ecgretu t F contraven: tee provicteme of So vri 7 . : ood : the Aes by vivrrue cf Seetr-i 27 (0) oj bh: reat Aet, lari. No. Whetngp 72 Seetive Plies ta the Soetei, eo trate Poot rhe tat Pequtre wrth po.as a a rr

ae + ak . ot : itodge ot, > "Nye mae eM ue Gh VOM Slr oe, CV Tarts Sleste

. raed - +t _ eu a OO 3 oot a oN ee nm Tan Malet en he toe ' . at Te . & ae' ' - = fe

wouid order that the Comnissicn pay the apelicanes' costs

IN THE MATTER OF _KU-RING-GAT CO-OPURATIV J ~ LLY (NOw2) 09

AND Li TAL MATeRP Or Di CO=OPLIGTTIVE RGTLDIG SCCEL

The stated case and its annerures ave analy - : in the judcnent of Deane J. which I nave hed the advance + of reading. I agree an the answers proposed by his Loncve to the several questions ra2sed by the case; anc cxecpe to the extent that these reasons depart from the rcetons expressed by his Honour, I concur in his judgnent.

5.1634 of the Tre ve Pruci tess net 1974. They will wcer

nominated by it, and if the Ku-ring-gai Socicty requires performance by its borrowers of their undertaking to insure with an insurer nominated by it. The reality of the risk of prosecution, and the certainty that the applicants are engaging and wish to continue to engage in a practice the lawfulness of which 1s challenged by an authority competent to prosecute, show the present case to be one where a declaration mignt properly be made, and where the declaration sought should be wade if tne

challenged practice be lawful (Re Trade Practices Act J97-

19 ALR 191). In determining waether the challengua practice is lawful, questions of the validity of s.47 of

the Trade Practices Act or of its construction in conforurtty

with the Constitution may ar'se. There is ample jurisdiction conferred upon this Court by $.1637. to

determine those questions. (See In the nutter of an

application by Tooth 6 Co. Ltd. [1978] A.T.P.R. 17805}.

Section 47 relevantly ap lies to trading and fanancial corporations as they are defined by s.4(1) of the Act. That definition - "a trading coxporation formed within the lamits of Australia or ... a fanancial corporation so forred" - cchoes the languace of s.51(x) of the

Constikrutzon which, proaing Cras upon as a soures of pover '

phrase "trading or financial corporations formed within the limits of the Commonyealth" denotes two classes of corporations locally formed, and that criteria of classification are necessarily to be applied to distinguish between those corrorations which fall into one or other of the stated classes, and those which do not. The subjects are not arenable to classification wiachin the natural order, for corporatiors are artificial entities htviana no enisterce save to the c.ttent prescribed Fy a system of law; yeu Clu description of a corporation as a "trading" or "financial" corporation refers to a factvrl activity or function and imports a nerus of some kind batween the activity or functitoa and the corporitiron,

there concviled to Ccetorriaus the cl iss1in St.Gcoruc County Cowivil, @ corporation creeted vider tre

trading activity as 1t was ewpevered to do. Thoair Voneurs' reasors for judgiout show varying ipproaccacs ro the criteria of classifieation, and no single ratio decidend2 appears.

Corporskien Fs, a Faritrewe of als clarcectler. He said

"TL sears to,e than tne eetivities of au corpuration at the time a Jaw of Parliavent

21s said tu operate vpon it will dotermine Whether or not it satisfies the statutory

and therefore the constitutional description, Thus, in my opinion, the rvdentifacation of

the corporation which falls within the statutory definition will be made principally upon a consideration of its current aclivittres."

NcTrernan J. construed the Act as exhibiting a legislative intention to apply to trading corporations which were engaged an a private enterprise and to exclude corporations which co:.jJuct a municipal] trading uncercating.

"Tt cen huedly bo 2 tieab tha Jcalwielure anterstd any col: EN eraucs. ine pre. til ef .a2 Pre L9O7L(Sch.) oe Et me act "as mide. weg ot Co voit on Li 2 Cy et recury d py the Pivolic LEST Nacucaliy en ec Lo percutnany ce - ps NULQLpruse

Couner] or or elceuraca) aeons 2b taaely to wr Gums OL money @% profits. FEF tne Council's of the unaéerichaing is revenue-ored tering that doos rot chenya tre Churacter cr tac enecut prise i u

Menzies J. rejected tho actavitres test us sutficient by atself, pointing Lo the siveral kinds of coLrpordvions Vhiea are nol tracing corporellers tnevsyh boty

ON > in sO att ane eo rbraewL is, Mo ydded (at y.554):

it 1s not mv purpose to attempt to @efiane all that ralis wrthin the limits the classircicution of 'trading corporation', Rather, I am concerned to indicate that the Clausuifieation has lamits 2 these liwits

are not to pe ascertained simply by asking ° the question "Docs the corporation trade?! As I have tinaicated, meny corporations which

cutside tne limits of and one group of corporations

that is not coupreheracd 18, in my view, corporations of an ecsantially diiferent character, nucely corporations for Local GOveLMncAL nurpo cs." Gibbs J., reyoetinyg the activities of the Council as sufficient by therselvas to determine its Catevorlzaticn a8 a trévine corporation, said:

" A treding corn. reaction 1s one formcd ior the puss CF -Oang. olorovor, as b have mete. od, tno wwre ect tle. & cavvrertion LS Treai.ig Geos NOt thn that at as a tracing eorrorrticon., It is neo cer La fetus ca tae rra. Coaleiiar ect te PEEL BERET T, "an a consicerst ion e1rreuntt chat

thre? Lc tate ent Foxu.. ad, wus vi holé.ungy wict the carrice aa ct

1atution of che ctreora at 18 required to fali.t Gibbs J. suid:

" The crucral question then 1s whether, because the County Council vas sel up to conduct, as 115 sole or at least its dominant activity, what may, for sone purposes at Jeasr, be described asa a trading undertak-ng, it 1s therefore a treding corporation. To say that the County Courcil was formed Cor ine puLlpose of trade seams to me to state a nalf-truth and to ignore a numeer of sienisrveant eireumstanc2s that reveal its true nature. It as clear that the County Council vas formed to fulcil a rereccron i w2ed was Give nN vy the Ace

prirarily to mu.iecips) and sh: which it Vas Aap sarently censidvred might more benerficrally ov wrercisedc br rn omaythoarity

operatanyg wethi1a awider area then that of one municipality or shire, That funcrion 1s cask

upen ebro Cooney Courier) ier wcticn taken ny tho Goverror uraer Mtoe ity or tac .ct. he prounaypal the "onecron 2° tra snoriy

e.sonti2) eam. Life - and an fultriling 2s funebica i Correo] ~ st enerer.G ths YeS Cavite. Los tne o,actiiL cf

the areas an the Coanty Oistrict. The Comnty Cou Noa Ore 2 ers are

Golo .tes Dy, GMA ale ctnew .etveas ii dors Of, TMa ec COri a1S. TH west saroly the cl cer. J diets aS Creapir a. pocsible 2 efore must n9nt zim ta «s-e@ a procit. % Liev ma ea a to. e rsdn ean oly L eT rerOvadire FOr the waters montlrar ad 1) of tna fet, and wall net enare for te oF Reveers of the Corah_ Co, moots VoLVvaed ene? taicls, Ine County C i to lovy caves, ard IES C.theI SCs vo be vat by tie constituent council . 7 ay bo.vo. uoreyvs unces Urans ity guarantes, when ali tnese fucrs are corse ored,

auyghedat1oa of Tuccl undar conditteone trom to wut yO seneficacld to ther, Th ie pron a Min ci pes

" Again I would of course acecpt that every corporation which happens to trido is not a trading corrorétion, tue engaging in trading activitzes anerllary to 'ome other principal activity cannot make the corporatrian o1e properly @eseribed as a trading corporation, But that preposition nas po relevance in the present case since the Comety Corrcil's activitins, boly as conte nleved ty the teras of its creation end as they are in fact un@ertekun, are concerné¢d wath tradiug and with nethiug cise, "

In each of these judamants the prefominant activity ain wutch the corpocuticn cngage:s oF which 1t

vas formed Lo wy. j@ Un Was rewiied «Ss cacher in@icc tyra

chavec.u.r. But in the view of the majority, Other features sho «d the subject af

corporatiou LG re in 4 caceyory which 3s cvclusive of

"trading core ratione", mai therefare te ite outs: O> the

ambit of Cor oivealth Pegisletie? peir. The relevant

category wos 2elnrified as local covernernt or menreical

corporations, ord the crresm chow inat the St.Groerge

County Council was forned for tre purpose of cond.wctine

undertaking" and tradea wecord neoly dad not take the Covneil out sf thet category. Tie minarity were nol so

concarned to veny the Cound) t)> enceractir of ao narseai

L 22 Patpdto. corpsration, hut tney regarced Aual cheroctorivzation as

corseritoenm"™ ooteor or neh stor cg alro vith bho

category of 1mnicipal corperation (see pp.543,573).

In choosing between the categorics, a number of features was referred to in the majority judgrents: the public character of the enterprise (pp.548, 564), the purpose of the Council's function (pp.551, 565), the povers of the Council (pp.551, 552,564) and the nature ol its borrowings (pp.552,564). These features were regardeca as the relevant criteria for placing the Covneil within a category of corporations which evelyded trading corporations (sce per Gibbs J. at p.565).

In the present case the relevant incwviry 15 whether e:thec of the applicant corporations 15 a financial corporation. Unless some feature of 115 constitution, or purpose of incorporation, or manaconent, would place it in a category which 1s exclusive of the cateqory of Financial corporation, its predomiaant activity must be recardea in order to ascertain whetnaer it answers the relevant description, Tts precomimmant activity 1s the activity which ait was Sormed to undertake - the borrowing of moneys to lend to its members, the lending of those moneys, the receipt of repayments and the ultimate repayment of the moneys to the source from vhich thty cam. Those are money dealins.. The activitics of borrowing 2n order to lend and lendiig at interest are financial activities which give to cach

of a financial corporation, It 3s no doubt right to describe the applicant socictics as co-operative societies or, more fully, as co-operative terminating building societies, bui that dascription neither places them in, nor removes them from, the category of financial corporations, Nor do the features of each society - Lts constitution, orcanizction and aanigaaent, the source

ana nature Of 1ts borrowings, its subjcetion to governmental controls - identify 1t as falling within some category of corporstion when excindcs abrancial

COYTPOLTALIONS, It zs net no neogoceasry ta aceternine

whether either cocicety 19 a trauing cozvoration, or the

an@ fanancial cosvporet.ons coinside, practices of cech at ui eent sectaty vere tivs e« er mde toa

Unlees an exerption 315 to be found elsewhere, s.47(1) anc (6) «3:ld yprourbit esch of ine applicant soc.cties frou engiging in the practice of making ioans on condition that tne Lorre ir taxes out an insurance

policy with a nomenauted cenpany. Scectren 51(2) (>) of

the ') -de Practices stonas relaed on to furnich such an

"(1) In determining .bether a contrivention of a g provision of this Part has been cormiited, regard shall not be had -

(b) in the case of acts or Lhings done in a State - except as provided by the regulatiors, to any act or thing that 1s, or is of a 'and, specificaliy authoriceae er approved by, cr uy reeniaksons

under, an Act passed by the rarliacnt of that State;"

Where an act or thang has reeerived tha crcorfic autnoriecc ins or approval mentioned in s.5](1) (yo), 1t 98 incarchble of forming a part of that body of facts which rust be proved

to establish a contliuvenczion of s.47. Sawtron 51(1) (bh)

opera*es distriabutively cver cuch of tao ultimate facts

(being actus or thirgs) which tegcianr waynes others ise

constitute a contraveition, That 1s not to sey That the ultamate facts are to bt 30 sreclvaed into thoir coneeptued constituents that the relevant mavcure of the acti or thingy GQ-samve2ars, The tatery of a leon on condirion t..L tne borne er takes out an insurance polacy "len a ro: sacred coupany £5 not the waeruyg of a loan siwrlscicer, wiin the

amposition of tie condilion being senmaratuly suneroddnd:

it as the meking of a loun uron the steked condition, The G x

The following matter is prescribed pursuant to ction 82(3) (2) of the Act to be set forth in the

The manner in which the insurance of any building or premises che subyect of a mortgage to tne society 18 to be effected and whether the insurance of that bui]ding or those premiscs 1s required to be etfected with an insurance company or insarance society specified, nowirated or epproveu by the society or Lhe board, "

prescrabing the ansertion of the reuuirenine an Of cha -ociety. Tie erevaision no docht as-uws cgu.lrcehont as layltul, for 1t 18 nov. to he thougnt esulakbticn prescribes the crearion of unlasful under th2 rules of the soctery. It 35 one thins to assume that 1t 1s Javfnl

of Jendaing vpon the relevant condition. It 1s conn place tLoat Crace laws assume the Layvfulnes:, va : ' roo ate

noo ocho: Orads Pp "hieg a Cet, for Part IV of thot Pet

is concerned for the most part with trading practices which would be perfectly lawful if 1t were not for the provisions of that Part.

It is a consequence of the enactment of Lhe Trade _

Practices Act that practices hitherto lawful are proscribed

by Conmmon..calth law, Section 51(1)(b) linits the operation

of s.47 so that the lavs of a State may defire the acls or

things which do not fall withon the prehilbictons of 8.47,

rom The bouncerres of this Alsuatia are to Le chosen, in the

farst 1nsia:rce, by the luvs of Lue relevant Scate, Buk

\ 7 7 - 5 . ~ or yop, oa Lhe approvriatc Seate lesislicion whicn c.cre2ten che

ered, TPG pessrt att specaric lly Aubborac? or apurove Lac

act or thang, tpakb ac, pt walt muir le ie) intention taut the «ct or tning, if daore aay, shall

Cavil Oo. criicnal, 'ole sur_, te do not levfulness of ects or things sateh aro rot otherwise proserivod, 2 4t a Jo aslétice .seummtion of cle Jew cits of an act or thing is net tantamount to a specific auchorizetion or approval] of that act or thiny; What 1s necessary 1s that the Stete Tas should esinb2r' a specific Tegielative ancention to anthoer1i72 or cporove

for the roves tons oF tne Tria Practices Act - be unlawfal.

Regulation 35, +3 NOt SO drawn ag Co give that Specific authorization Or approval

case in the manner proposed in the judgment of Deane g,

tee sae T acrenet neretn ct pay mone Rd. TS LOT du | AvoCC1a148 '

) ) NEW SOUTH WALI S DISTRICT REGISTRY ) No. G64 of 1977 ) GENERAL DIVISION )

IN THE MATITR of KU-RING-GAT CO-OPERATIVE SUTLDING socn Ty TNO. T2) EU En

AND IN HL MATTER of DY CO-OTERA LTV SULT CO. 26) TEM res

OF THE TRADL pracy isis SOT rv CORAM: Bowen C.J., Brennan and Deane JJ.

DANE J. This 1S a Special Case Stated in proceecin, 3 by the applicants, the hu-ring-gai Co-Operative Building

Socicty No, 12 Limited ("the Ku-ring-gai Society") and the

Dee Why Co-Operative Building Society No. 29 Limited ("the

Dec Why Society"), against the Trade Practices Commission

('the Comeission'), for declaratory relicf, pursuant to

s.163\ of the Trade Provtrees let, 1974 ("the Act"), us to

provisions of the Government Guarantees Act 1934 (N.S.W.).

The moneys made available to the Ku-ring-gai Society were offered and accepted on the condition that the loans by the Society be to enable the erection of new dwellings or the purchase of new dwellings erected and not previously occupied. The moneys made available to the Dee Why Society were offered and accepted on the condition that loans by the Society be,

in effect, restricted to enable the erection or acquisition of dwellings within the Sydney suburbs of Manly and Dee Why.

The Ku-ring-gai Society has corpleted its pro to members and, being a terninating society, its future activities can be expected to be directed towards receipt of the moneys cue under the nortgages granted by menbers, payrent of principal and interest in respect of the loan fror the Rural Bank of New South Wales and, ultimately, voluntary liquidation It would, however, seem at least theoretically possible that it could nake sone future loans to menbers. The Dee why Socucty

had not, at the time of the Special Case, actually conienced ¢

: making of loans to 1ts rewbers. That activity has, na deabt,

now commences and I shall refer to the Dee Why Society on the

basis that 1t has caamenced to make loans to 1ts nenbers.

The income of the applicants 1s derived fron intere:? paid by nenbers upon loans sade to them, management fees, fines and discharge fees paid by menbers and allowances and

commissions received Fro. mnsurance companies. The revenue

of the ben Guar, weaeye cat feos and acciastretive capoa ol.

The applicants neither receive money or deposits from the public

nor lend to the public. Each confines its borrowing to the one overall loan from a bank to which reference has been made.

Their lending 1s, under their Rules, restricted to lending to their members. They do not conduct their activities for the purpose of making financial profits but, subject to a loading

of less than 1% per annum charged as a contribution to nanageri.s and administrative expenses and a difference between rests for calculation of interest, lend to their members at the same rate

as that at which they borroy from the relevant bank. In the

event that an overall financial profit as found to bhuve re fo,

from their activities when the occasion for their voluntary liquidation arrives, any surplus is, under the Rules of cach applicant, to be distributed among the members propertionstels to the amount of the principal of their respective loans. Anv accumulated losses not written off at the comnencerent of voluntary winding up are, under the Rules, to be borne by

The applicants perform an important soc1él funeticn of assisting in the provision of finance to enable the acquisit- 1on and erection of dicllings. They perform their functions under strict governmental supervision and, in the perfornance of them, participate in the implementation of governmental policies of encouraging both the availability of housing to family units in what was referred to in argunent as "the lower income groups" end the erectryon of new housing by

the bu tdi aed tr. Mars cut d se ynadte tents ardor orto -

1Ons Canpoowd by Reevlateas s wide uncer the Co onperdeoioi y a -

or, less formally, by direction and advace comyunicated thivcsh

the New South Wales Registry of Co-operative Socicties) extend,

in the case of societies which, like the Ku-ring-gai Society, receive funds made available under the Commonwealth/State Housing Agreement or which, like the Dee Why Socicty, operate with the aid of a New South Wales Government Guarantee, to matters such as permissible sources of funds, the content of mortgages given by members to secure repayment of lcans, the maximum amount which can be lent to the i1undividual member,

the maximum income of a prospective borrower and the maximum value of improvencnts of the house for the purchase or erection

There 1s a degree of confusion in the Spec2zal Cass and annexed matcrial as to the terns of the requirenent as to insurance of the mortgaged property which the applic.nts impose and, 1n the case of the Dee thy Society, the Special Case (paragraph 28) incorrectly states the effect of Rule i7 of the Society's Rules. The rules of cach applicant each case) provide that the Society itself shall effect the relevent ansurance in the joint nanes of the Socicty and the

member with an insurer specified by the Society and provide trut the member shall reimburse the Society for the premium vithon

14 days of 1ts payment by the Society. The standard form of mortgage used to secure the repaynent of moneys lent to menbers provides that the mortgagor (1.e. the borrorang menber) :311 repay to the Society in accoidance with the Rules for t being of the Socicty ali premiums for insurance effected hy whe

tempest on all bualdines and nie ses the subzyect of the 1ort-

gage provided that the mortgagor if required by the Society in

accordance with the Rules for the time being of the Society will insure against such loss or damage such buildings and premises. Since there is nothing in the Rules which authorizes the Socicty to require that the member effects the relevant insurance, the reference in the form of mortgage to the Society's imposing such a requirement "ain accordance with the Ruics'' would appear to be without content with the result that the only operative provision of the mortgage in that revard 1s

that the insurance be effected by the Society on behalf of

On the other hand, the Special Case (paragraph 15) defines the requirement imposed by the hu-ring-gai Secicty as being a requirement that the member himself effect insurance on the property to he mortgaged in the joint names of the member and the Socicty "as owner and nortgazee respectively

and for their respective rights and interests" with a nowingice

insurance conpany (in the case of the Ku-ring-ga1 Society tne Australian General Insurance Comrpany limited). The Specia: Case (paragicph 28) states that 1t will] be the Dee why Socici'' practice to require borrowers from 1t to insure with a noracic. insurer. The statement of the relevant requirement in this form (i.e. that the insurance be effected by the member) finds some support in the annexed material (see Clause 5 of the Ku-ring-gaj Society's Standard Conditions of Loan}. When the discicpane, betreen the practice us stated in the Snecial Case ad the npr rere. 6 © the Mat og ye wr apesd an the corse of arouweht', Cie Co ullst do) asa sted toat pellet out uract!

was as stated in agreed toirms an the Speciul Case and no

application was made or foreshadowed by the applicants for a

variation of that statement of the practice in the Special Case. In all the circumstances, I consider that the questions raised by the Special Case should, at least in the farst instance, be approached on the basis that, notwithstanding

the provisions of the Rules, the relevant practice 1s as stated, by agreement between the partics, in the Special Cause and that the requirenent is that the borrowing member effect insurance of the subject property with a particular nomineted

Commission is paid by the nominated insurer to the relevant Society in respect of premiums paid under the policies of insurance effected or maintained in complicnee vita the requilerent relating to insurance. In monetars, teri, to amount of such commission is not great. For the year ended 31 March, 1977, the total of such comu:ssion received by tac Ku-1ing-2a1 Socicty 1.235 less ther 3400. Such coimissic: 367

however, in relative teins, male a significant contiibutivl.

The Special Case raises, in respect of cach arplicant, eight different questions. Those questions involve consiicr-

ation of certain prelininary ratters going to jurisdictavi ond

discretion and of four substantive issues between the parties.

It is convenient, before going to the actual questions, to

examine those preliminary matters and, if it is appropriate

that the substantive issues be dealt with, those four sub-

The four substantive issues between the parties are'

Whether cach (or either) of the applicants is a "corporation" for the purpasces of s.17 of

If so, whether the provisions of s.47 of the Act ian so fa1 as they purport to apply to that applicant are within the legislative

If yes to (1) and (11}, whether the condit- 4 or requirerent as to insurance or the practice of lending upon that condition or requirenent is to be disregarded in deteimining whether there 18 any contravention of the provisions

to insusance constitutes, in the abseree a7 authors ataea snder the \et, a centraventocr

The preliminary matters coing to jurisdiction and Ni g J

At a glance

Court

Decision date

Before

Source

Judgment (334 paragraphs)