Re Trade Practices Tribunal; Ex p St George County Council [1974] HCA 7

Re Trade Practices Tribunal; Ex p St George County Council [1974] HCA 7 - HCA 1974 case summary — Zoe

[28]

The qualification "formed within the limits of the Commonwealth" is used, in my opinion, in contrast to the word "foreign". It serves to require local incorporation, the locality being any part of Australia. Though only some local corporations are to fall within the power, the qualification "formed within the limits of the Commonwealth" is not part of the description by which those local corporations, which fall within the power as distinct from those which are outside the power, will be identified. Thus it would be, in my opinion, a misreading of the relevant parts of the definition or of the terms of s. 51 (xx.) to treat those words as requiring that the corporation be formed for a purpose, i.e. for trading or financial purposes. In my opinion, it is not necessary, if the corporation is to fall within one of the descriptions in s. 51 (xx.) or the definition, that the corporation was formed as such, e.g. as a trading corporation, though, of course, because of its corporate condition, the power to trade must be within the corporate charter, whether expressly or by implication. But to conclude that the purpose of its incorporation was to trade is quite another matter. It is, in my opinion, only necessary to recall the wide spread of the objects of a company formed under the Companies Acts as expressed in its memorandum of association, particularly in days when the doctrine of ultra vires was more readily applied, to appreciate the difficulties encountered in attempting in all cases to attribute purpose to incorporation. Material extrinsic to the memorandum might for some purposes be resorted to, to decide why and to what end a body was incorporated. But it would be, to my mind, most unsatisfactory to have to follow such a course in order to identify the subject matter of constitutional power. Further, even if an object of a company seemed dominant at the date of incorporation, in the course of the company's existence it may cease to have significance and an object which seemed incidental at incorporation may become central to its current activities. In days of "diversification" in corporate industry this may prove a frequent phenomenon.

[63]

The Solicitor's submission, to my mind, takes far too narrow a view of the character and purpose of the Council. The supply of water and electricity are commonly entrusted to municipal government bodies for obvious and strong reasons. Such undertakings require substantial capital outlay which is most conveniently provided by borrowers backed by Treasury guarantees and rating power. To carry on such undertakings requires the exercise of governmental powers such as those of entering upon and using or taking private land. Such undertakings require public supervision to ensure that the necessary monopoly powers are exercised in accordance with the public interest and for the purposes for which they were granted. Applying the foregoing general considerations to the case in point, the following features of the Council are to be observed. 1. First and foremost, the district of St. George was established and the Council was formed "for local government purposes" and the Local Government Act, in conformity with common sense and long usage, treats matters such as the supply of water and electricity for a municipal district as dominated by a local government purpose. It is because trading of a council is subordinate to its governmental purposes that the Act contains a section such as s. 419. It is this subordination of trading to community purposes that is, to my mind, the real importance of s. 419 in this case. It reveals the very nature of a council to which it applies. 2. The power delegated to the Council to rate land within the county district is a power entirely foreign to the character of a trading corporation; that power signifies government. 3. The fact that the Council is formed as a county council and is the competent recipient of further governmental powers betokens both its original and existing character. It exists for local government purposes. A further delegation of powers, for instance to control building operations in the St. George District, would not change the character of the Council; it would be but a further recognition of its character of a county council for local government purposes. 4. The power of the Treasurer to guarantee the Council's borrowing; the fact that its loans are trustee investments are further indications, though by themselves slight, of the character of the Council.

[85]

The provisions of Pt XXIX generally make it clear that a county council is a municipal body, set up by the Governor under the authority of the Act for the purpose of exercising or performing powers or duties which would otherwise be exercised or performed by the municipal or shire councils within the county district. To indicate the public nature of a county council, and its close connexion with the municipal and shire councils within the county district, it is sufficient to refer to some only of the other provisions of the part. Where a county district is constituted for the purpose of the supply of water, gas or electricity in bulk only, and the Governor delegates to the county council the power to exercise or perform, for the benefit of the county district, so much of any power or duty which by law those councils or any one of them may exercise or perform, as relates to the supply of water, gas or electricity in bulk only, the following consequences follow - each constituent council shall have power to exercise or perform so much of any power or duty as has not been delegated to the county council; a county council may with the consent of the council of an area supply water, gas or electricity, otherwise than in bulk, to persons within that area; the county council shall sell and deliver the water, gas or electricity to the constituent councils and a constituent council shall not, except with the consent of the county council, supply water, gas or electricity which has not been bought and received from the county council (s. 564 (2A), (4A)). Where the powers and duties in relation to any works (other than works for the purpose of the supply of water, gas or electricity in bulk only) which are vested in, or controlled and managed by, the council of an area wholly or partly included in a county district are delegated to the council of that county district then, to state the matter broadly, all property, rights and liabilities in connexion with those works are transferred to the county council, and employees wholly or principally employed in connexion with such works are transferred to the service of the county council (s. 564B). Where the boundaries of a county district are altered by adding an area or part of an area, the council of that county district shall have all the functions, powers and duties which it was entitled to exercise immediately before the alteration and such functions, powers and duties shall be deemed to have been delegated to the county council in respect of the area or part added to the county district; conversely when the boundaries are altered by excluding the whole or part of a constituent area without at the same time adding it to another county district the functions, powers and duties exercisable by the county council immediately before the date of the alteration of the boundaries shall be limited to the county district as constituted after that date and those functions, powers and duties shall be exercisable and performable within the excluded area by the council of the shire or municipality of which the excluded area forms part (s. 564 (3A), (3C)). The Treasurer may guarantee the due repayment of money borrowed by a county council for the purpose inter alia of works for the supply of electricity (s. 564D). A majority of the councils concerned may make an agreement respecting the whole or any part of the powers delegated to the county council, and in particular, prescribing the manner in which the expenses of the county council, other than expenses in respect of a matter for which the county council is authorized to rate, are to be met by the municipal and shire councils concerned; in the absence of an agreement the county council may assess its expenditure upon the constituent councils in the manner prescribed by the Act (ss. 565, 572B). Where a power of rating is delegated to a county council it may levy the rate directly or (except in the case of a loan rate) may require the councils concerned to act as its agent in levying the rate (s. 572 (1)).

[86]

The St. George County District was constituted by a proclamation dated 26th October 1920 and published in the Government Gazette on 29th October 1920. It comprised the areas of the municipalities of Rockdale, Kogarah, Hurstville and Bexley. The municipality of Bexley has since been merged in Rockdale and part of Rockdale (Mascot Airport) has been excluded from the St. George County District. By the proclamation of 26th October 1920 the Governor delegated to the County Council all the powers under ss. 416-419, both inclusive, of the Act relating to the supply of electricity and the supply and installing of electrical fittings and appliances, the power to borrow, under and subject to the provisions of s. 181 of the Act, a sum not exceeding £100,000 and the power to levy a loan rate, under and subject to the provisions of ss. 181 and 124 of the Act, in connexion with the loan of £100,000. By certain later proclamations made in 1922 and 1923 there have been delegated to the County Council the powers and duties contained in the following sections: s. 110 (as to the trading fund in respect of a trading undertaking); ss. 173-200 (as to borrowing money); s. 482 (power to provide buildings for public purposes); s. 506 (as to the extension of electricity works and the supply of electricity outside the area); ss. 516-517 (as to contracts); ss. 518-520 (as to the sale, exchange or lease of property); ss. 524-525 (power to enter land and do works); s. 528 (power to insure); s. 529 (power to do acts necessary for the proper exercise and performance of its powers and duties); and ss. 531-536 (the power to acquire land). Further, by a proclamation of 11th June 1947 the County Council's borrowing and rating power was increased; the Governor then delegated to the County Council the power to borrow in accordance with ss. 173 and 176-200 of the Act such sums as might be required from time to time for the purposes of exercising the powers delegated to it; and the power to levy loan rates under and subject to the provisions of Div. 4 of Pt VII and s. 124 of the Act in connexion with any loan so raised. The most important function exercised by the County Council is the supply of electricity in accordance with ss. 416-419 and the other delegated powers and duties are ancillary to this function.

[100]

The crucial question then is whether, because the County Council was set up to conduct, as its sole or at least its dominant activity, what may, for some purposes at least, be described as a trading undertaking, it is therefore a trading corporation. To say that the County Council was formed for the purpose of trade seems to me to state a half-truth and to ignore a number of significant circumstances that reveal its true nature. It is clear that the County Council was formed to fulfil a function which was given by the Act primarily to municipal and shire councils but which it was apparently considered might more beneficially be exercised by an authority operating within a wider area than that of one municipality or shire. That function is cast upon the County Council by action taken by the Governor under the authority of the Act. The principal aspect of the function is the supply of electricity - a commodity regarded as essential for modern life - and in fulfilling its function the County Council must exercise its powers and perform its duties for the benefit of the areas included in the County District. The County Council is a body whose members are delegates elected by, and are themselves members of, the constituent councils. It must supply the electricity and appliances as cheaply as possible and therefore must not aim to make a profit. Any profit that may happen to be made can only be applied in providing for the matters mentioned in s. 419 (1) of the Act, and will not enure for the benefit of the members of the County Council or any other private individuals. The County Council has power to levy rates, and its expenses may be met by the constituent councils. It may borrow moneys under Treasury guarantee. When all these facts are considered, the proper conclusion in my opinion is that the County Council is a corporation constituted for the purposes of local government to provide an essential service to the inhabitants of an aggregation of local authority areas, under conditions thought most likely to prove beneficial to them. It is properly described as a municipal corporation.

[128]

Reliance was placed upon the distinction at common law between trading corporations and non-trading corporations, including municipal corporations, in relation to their use of the corporate seal. Dixon J. discusses the relevant historical background in Johnsons Tyne Foundry Pty. Ltd. v. Maffra Corporation [2] . However this distinction provides no assistance in determining whether or not a particular corporation is or is not a trading corporation, it is concerned rather with the consequences once that determination has been made. If anything, the reasoning of the cases concerned with this distinction points in a direction adverse to the prosecutor's submission. Corporations found to have been created for the purposes of trading were regarded as excluded from the common law rule applicable to municipal and other non-trading corporations; in my view the County Council cannot be regarded as incorporated otherwise than for the purpose of trading. InChurch v. Imperial Gas Light and Coke Co. [1] , Lord Denman C.J. referred to companies "incorporated for the purposes of trade" and finding that the respondent had been incorporated for the purpose of supplying individuals willing to contract with it for gas light and coke held that the general rule did not apply to it. In South of Ireland Colliery Co. v. Waddle [2] , in the Exchequer Chamber Cockburn C.J., delivering the judgment of the Court, said [3] that the general rule did not apply to corporations constituted for the purposes of trading, this being settled law; and see Beverley v. Lincoln Gas Light & Coke Co. [4] ; Henderson v. Australian Royal Mail Steam Navigation Co. [5] . A similar argument, open to a like objection, was founded upon those cases which denied to a non-trading corporation an implied power to borrow moneys. Once again. the real question is to determine whether or not a particular corporation is of that character, only if it is will the limits upon its implied powers emerge and the cases cited do not aid in this primary task of characterization.

At a glance

Court

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Before

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Judgment (134 paragraphs)