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[1974] HCA 7
High Court of Australia
1974-03-04
Stephen JJ
Original judgment source is linked above.
High Court of Australia Barwick C.J. McTiernan, Menzies, Gibbs and Stephen JJ. Re Trade Practices Tribunal; Ex p St George County Council [1974] HCA 7
ORDER Rule nisi for prohibition made absolute. Respondent Commissioner to pay prosecutor's costs.
The applicant for a writ of prohibition to restrain proceedings pending before the Trade Practices Tribunal is a county council created and incorporated under the provisions of Pt XXIX of the Local Government Act 1919 N.S.W. (as amended) (the Act). The ground on which the writ is sought is that the applicant is not a trading corporation formed within the limits of the Commonwealth within the definition of corporation in s. 5 of the Restrictive Trade Practices Act 1971 (No. 138 of 1971) and therefore not subject to the jurisdiction of the Trade Practices Tribunal set up by s. 7 of that Act. The Court gave leave to the States of New South Wales, Victoria and Queensland to intervene in the argument before the Court upon the footing that a decision whether or not the applicant is such a corporation would bear on the meaning of the power of the Parliament under par. (xx.) of s. 51 of the Constitution, in so far as it rested on the inclusion of "trading corporations formed within the limits of the Commonwealth" in that paragraph.
Corporation is defined in s. 5 as meaning a corporation that is a foreign corporation, a trading corporation formed within the limits of the Commonwealth or a financial corporation so formed.
Under s. 561 of the Act the Governor by proclamation may constitute a county district composed of the whole or part of a group of municipalities or shires, or of both or of a combination of each. In proclaiming such a county district it is sufficient for the proclamation to say that it is constituted for local government purposes without indicating the particular purposes of its formation.
By s. 562 it is provided that in respect of a county district there shall be a county council composed of delegates elected as provided by that section. By s. 563 (1) the county council is incorporated with power, amongst other things, to purchase and dispose of real and personal property.
Section 564 empowers a county council to undertake any function delegated to it in accordance with the Act for the joint benefit of the local government areas of which the county district is composed. Under that section the councils of the local government areas included in the county district may request the Governor to delegate to the county council the power to exercise or perform for the benefit of the county district any power which by law those councils may exercise or perform.
Having received such a request conforming to the requirements of the section by a majority of such local government bodies, the Governor may by proclamation delegate (which, by definition, means "transfer", see s. 560) to the county council the powers so requested to be delegated: but such transfer to the county council does not preclude the exercise of such powers by any of the constituent councils within their respective areas.
Upon the proclamation of the delegation the county council shall have full power to exercise the delegated powers for the benefit of the county district. If so mentioned in the delegation the county council shall have the power to borrow and to levy loan rates: that is to say, if so mentioned in the proclamation, the power described in s. 124 can be exercised by the county council. Equally in those circumstances it may borrow within the limits and in accordance with the provisions of Div. 4 of Pt VII of the Act.
Part XVII of the Act under the heading "Trading" empowers a council, which expression does not include a county council (see s. 4), "to establish and conduct trading undertakings" of the kind described in s. 418. These include, in a miscellaneous list of trading activities, "the supply of electricity and the supply and installing of electrical fittings and appliances".
By proclamation made on 26th October 1920, the St. George County District was constituted and the powers of the local government bodies whose areas the county district comprises under ss. 416 to 419 of the Act relating to the supply of electricity and the supply and installing of electrical fittings and appliances were transferred to the applicant with power to borrow under and subject to the provisions of s. 181 of the Act within an upward monetary limit and with power to levy a loan rate under and subject to the provisions of ss. 181 and 124 in connexion with a loan borrowed under and within the limits of the Act and delegation. By later proclamations incidental powers were given to the applicant.
The reservation by s. 564 (4A) (a) of the powers of the local government bodies, in my opinion, has no significance in this case. Moreover, from its nature in the local circumstances, a monopoly of the supply of electricity by the applicant was clearly intended.
The question raised by the case involves the construction of the expression "trading corporation formed within the limits of the Commonwealth" as it appears in the Act through the definition for the purposes of the Act of a "corporation". Because of identity of language and the fact that the statutory formula is designed to keep the Act within constitutional power, that construction would be applicable to the words of the Constitution, a circumstance which must influence the construction placed on the statutory formula.
I ought to point out at the outset that the ultimate question in the case is to be answered in relation to the applicant and not as to all county councils. The powers and functions which under the Act may be transferred to a county council are diverse (cf., e.g. s. 564 (1) and (2)). Consequently, considerations which, in my opinion, are definitive in this case may not be so in the case of other county councils with different powers and activities.
No question of the validity of the Act is raised in this case. The prohibition is sought on the single ground that the applicant does not fall within the definition of "corporation" in the Act. Thus it has been unnecessary for me to consider whether or not any particular power, right or duty which the Act purports to grant or impose can properly be granted or imposed with respect to or upon the applicant.
It should then be said that the expression "formed within the limits of the Commonwealth" is satisfied, in my opinion, by incorporation under Commonwealth, State or Territorial laws. The expression is not confined to corporations existing at the date of the commencement of the Commonwealth but includes corporations whenever and however they have been or may be so incorporated.
It is clear that the applicant does trade. It does not generate electricity. It buys it in bulk and reticulates it within the county area, charging what is, in substance, a retail price for its supply to the consumer. The applicant is none the less trading, though it has in fact a monopoly of the supply of electricity. It also buys and sells electrical appliances and performs for reward services by way of installing and repairing such appliances in competition with other persons and bodies selling and servicing such appliances. If it matters, it is clear that such trading activities constitute the purposes of its incorporation. They exhaust the principal power which was given to it, all other transferred powers being incidental to the exercise of such principal power. However, as I will later indicate, the description "trading corporation", in my opinion, refers not to the purpose of incorporation but to the activities of the corporation at the relevant time.
So far then the applicant is evidently a corporation which has been formed within the Commonwealth. It trades in the supply of electricity, of electrical appliances and of electrical services. It has no other purpose or activity.
Two other aspects of the incorporation of the applicant, however, should be mentioned. It is directed to supply electricity as cheaply as possible to the residents of the county district (s. 419). That direction, however, in my opinion, does not deny an intention that the applicant should trade at a profit. Indeed, the annual report of the county council included in the evidence in the case clearly demonstrates that in fact the operations of the county council are and have been highly profitable. But the direction does mean, of course, that the applicant may not be motivated by an uninhibited commercial desire to make the utmost profit attainable. That circumstance, however, does not mean, in my opinion, that its activities in selling electricity and electrical appliances and in servicing electrical installations are not essentially trading activities. Though profit-making is perhaps not of the essence of trading, it is a usual concomitant, and it can be said that the applicant trades at a profit.
The second feature is that the applicant has been given a power to levy a loan rate in the same manner and to the same extent that a municipal or shire council may do so, i.e. in conformity with ss. 181 and 124 of the Act. As I have mentioned, a ceiling was placed on the applicant's borrowing power. There is no suggestion that the applicant has in fact levied a loan rate or that such a rate is in contemplation. Certainly its balance sheet, as in evidence, would not suggest any such need. But it is the existence of the power to rate on which the applicant's counsel places reliance.
The applicant submits that, notwithstanding its activities and the evident purpose of its incorporation, it is not a trading corporation formed within the limits of the Commonwealth because of four principal facts. First, the source of the incorporation, i.e. the Act as an Act providing for local government; second, the power to levy a loan rate; third, the limitation on profitability with the object of ensuring that the applicant performs a public service for the county district; and, fourth, that, in reticulating electricity to the residents of the county district, it is merely performing a public service, which assertion is intended to deny that the applicant is or could be regarded as a trading body.
These submissions are combined in the submission that the applicant should be "characterized" as a "municipal" corporation or, at any rate, as a corporation not having the character of a trading corporation.
Along with these submissions there was the suggestion that the description of the subject matter in s. 51 (xx.) of the Constitution and the definition of a "corporation" in the Act require the corporation, if it is to fall within the form and scope of the Act, to be of its nature as distinct from the range of its current activities one of what are said to be three distinct categories of corporation in the definition: and that to be of that nature the corporation must be formed as such, i.e. placed from and by its inception into one of those categories. It is then said that the four features of the applicant which I have mentioned combine to deny the possibility that the applicant was so incorporated and is by its nature such a trading corporation. Much emphasis was laid upon the fact that electricity, being almost indispensable to domestic and industrial life in an area such as the county district, its supply is a service to the community which, when performed by a body such as the applicant with what I might call a local government affiliation, cannot be regarded as a trading activity.
To consider these submissions, I turn first to the construction of the statutory formula bearing in mind its relationship to the terms of s. 51 (xx.) of the Constitution. The words should therefore be construed according to the principles of construction appropriate to the construction of the Constitution. Thus, the words must be given their full import without any constraint derived from the circumstance that so construed the constitutional power they express will affect State power, legislative or executive, or that the exercise of the constitutional power so construed will or may affect the exercise of State power. The reserved powers doctrine of the past has been fully exploded: but care needs to be taken that it does not still in some form or another infiltrate one's reasoning when construing Commonwealth powers or Acts of the Parliament. This aspect of constitutional interpretation was recently discussed, see Strickland v. Rocla Concrete Pipes Ltd. [1] .
Further, if the terms of an Act expressed in the language of the constitutional power properly construed embrace a government or local government instrumentality or agency, the connexion of the corporation with the government of a State will not of itself place the corporation outside the scope of the power or the statute: Victoria v. The Commonwealth [2] . Thus, in my opinion, there can be no objection to the inclusion of the applicant within the scope of the Act founded merely on its association with local government in the State if it otherwise satisfies the description of "corporation" in the Act.
Further, the words to be construed being drawn from an organic instrument, the purpose of the vesting of the power in the Parliament must bear on the assignment of meaning to the cryptic expressions of the instrument.
Of course, it must be recognized that words which were generally used with an artificial meaning in the period of the formation of the Constitution may in some circumstances need to be given that meaning now. But nothing of that kind, in my opinion, is present in this case. No doubt during and at the end of the nineteenth century, corporations were classified for various purposes and, on occasions, special rules made applicable to corporations in one category which were not applicable to corporations in another. Trading corporations were both known and referred to as such. But there does not appear to have been any generally accepted definition of a trading corporation. It was assumed, I think, that such a corporation could be identified by its activities. If its nature was being sought, it was to be found in what it did. It seems to me that no assistance in the solution of the present problem is to be derived from the undoubted statement that, as at 1900, there were trading and non-trading corporations or that consequences were attached to such descriptions or classifications. But it is certain that the community of that day were aware of the influence which the activities of foreign and local trading and financial corporations could have on the Australian community and its affairs. The framers of the Constitution appear to have concluded that the power to control those activities should be included in the powers given to the Parliament concurrently with the residual powers of the several States. Thus, the question in this case should be approached bearing in mind the purpose of the grant of the power and without any special or technical meaning of the description "trading corporation" derived from nineteenth century usage.
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.
The power quite obviously, in my opinion, is given to the Parliament to enable it by legislation to control amongst other things at least some of the activities of corporations which fall within its description. It seems to me that the activities of a corporation at the time a law of the Parliament is said to operate upon it will determine whether or not it satisfies the statutory and therefore the constitutional description. Thus, in my opinion, the identification of the corporation which falls within the statutory definition will be made principally upon a consideration of its current activities.
To say that a corporation's description for relevant purposes will be determined by its activities does not mean, of course, that a corporation which to any extent engages in trade is a trading corporation. It is evident that the legislative power given by s. 51 (xx.) is not a power to legislate with respect to trading. It is a legislative power with respect to some corporations. But a corporation whose predominant and characteristic activity is trading whether in goods or services will, in my opinion, satisfy the description: and a corporation which does nothing but trade and, if it matters, was incorporated so that it could trade, i.e. exercise the trading powers of the constituent local government councils, is, in my opinion, properly described as a trading corporation within the constitutional power. It seems to me that the reason why a corporation trades as its sole or predominant and characteristic activity is irrelevant to the description of the corporation for present purposes, that is to say, the ends which such a corporation seeks to serve by trading are irrelevant to its description. As I have indicated, the purpose of the grant of legislative power includes the control of the corporate activities of the corporation: it is not so concerned with the motives which prompt those activities, nor the ultimate ends which those activities hope to achieve. If, upon that consideration, the corporation can fairly be described by reason of those activities, their extent and relative significance in the affairs of the corporation as a "trading corporation" it will, in my opinion, be nothing to the point that it is also a government or State or municipal corporation. The effect of the trading activities of such a corporation upon and in the community will not be lessened or necessarily affected by the fact that it is a State or municipal instrumentality.
However, it was said that for a body such as the applicant to reticulate electricity bought by it in bulk is to perform a public service and not to trade. Of course, one of the justifications put forward for the entry of government into manufacture, trade or commerce is that the public will be better served by the government corporation than it would be by a non-government body seeking only profit or gain. But whatever the merit of such a claim, the fact that government, or a "government" corporation, conducts activities which are of their nature manufacturing, trading or commercial activities does not, in my opinion, alter the nature of those activities. This must particularly be so in relation to an Act made under a constitutional power which extends to enable the control of such activities conducted by government, or "government" corporations. Were it not for the express exception in s. 51 (xiii.) of the Constitution, the financial activities of a State bank which fell within the scope of banking would have fallen within the scope of that power. Nor could it, in my opinion, be denied that an incorporated State bank is a financial corporation within s. 51 (xx.) and, apart from any limitations which may flow from the exceptions in s. 51 (xiii.), may fall within the scope of Commonwealth power. Rich and Williams JJ. appeared so to think: see Bank of New South Wales v. The Commonwealth [1] . Of course, it may be said that a State bank performs a public service, employing its funds directly for the benefit of the community rather than for the benefit of individual shareholders in its capital as in the case of what we call a "private" bank. But so to speak does not deny that it is a financial corporation or that its activity is banking. So, in the case of the applicant, to say that it performs a public service by reticulating electricity does not deny that it trades and, because of the extent of its trading activities, is a trading corporation.
It was said that the prices for electricity charged by the applicant were minimal but of this in fact there was no evidence. Indeed, as I pointed out earlier, the large profits made by the applicant seemingly with regularity over a long span of years, make it difficult to believe that charges for electricity made by the applicant are either minimal or uneconomic, though they may be less than might have been or be charged if the applicant were not restrained by s. 419 (1) of the Act. But, although of assistance to denominate the applicant as a municipal corporation, the fact that the applicant is to benefit the county district by its efforts - as I think, its trading efforts - does not, in my opinion, preclude its description as a trading corporation.
It may be granted that the applicant may properly be styled a "municipal" corporation; it is both the creature and servant of "local government": but it is, none the less, in my opinion, a trading corporation within the statutory definition. It is easily demonstrated that the purpose of the applicant's incorporation and of its activities is the performance of what has come to be regarded as a local government function, its charter being to provide electricity at low cost to the ratepayer. But it is to achieve and satisfy this purpose by trading, both in electricity and in electrical goods and services. It buys and sells - an activity recognized by the Act itself as "a trading undertaking" (s. 418 (1) and (2)). To say that it is a "municipal" corporation is, in my opinion, to say no more than that it is a government, or local government, agency; or, put another way, that it is a municipal trading corporation.
The power to levy a rate is pointed to as itself an indication that the applicant is not a trading corporation. I am unable to agree. Governments may enter into almost any field of commerce or industry. We have had experience in Australia of various examples of such government endeavours. When governments do so through corporate agencies - as, indeed, they usually do - capital may be provided by grant or loan out of general government funds or arrangements may be enacted to cast the capital burden on some section of the community thought to derive particular benefit from the corporation's activities.
At times the corporate agency may be given power to levy rates or tolls as a means of drawing its finance for capital or recurrent needs from a part of the community which the activities of the corporation are meant to serve. The existence of such a power will not, in my opinion, determine the description which should be applied to the corporate agency according to its current activities. Consequently, the fact that the applicant is empowered to look to the ratepayer for contributions to its capital by means of a loan rate does not deny the trading character of the activities of the applicant or prevent it being described as a trading corporation.
In my opinion, the power to borrow and the power to levy a rate for the repayment of moneys borrowed, whilst no doubt emphatic of the close association of the applicant with local government, does not require the conclusion that the buying and selling of electricity and electrical appliances and the servicing for reward of electrical installations and appliances, even at the cheapest rates, are not trading activities or the applicant which engages in these activities as its exclusive function is not a trading corporation.
In my opinion, because of these considerations, the applicant is at the present time a trading corporation formed within the limits of the Commonwealth within the meaning of the Act. I would discharge the rule nisi.
This matter is an application for a writ of prohibition. The High Court has jurisdiction in the matter under s. 75 (v) of the Constitution. The application relates to proceedings pending in the Trade Practices Tribunal instituted by the Commissioner of Trade Practices. They are instituted in respect of alleged monopolization by the St. George County Council (prosecutor). The Commissioner joined this Council as a party to the proceedings. The corporate name of the Council, under s. 573 (1) of the Local Government Act, 1919 N.S.W., is "The St. George County Council" (the "Council").
The proceedings purport to be based upon s. 37 (2) (a) of the Restrictive Trade Practices Act 1971 Cth. Section 37 is applicable only to "a corporation". By s. 5 of the Restrictive Trade Practices Act 1971, " "corporation" means a corporation that is a foreign corporation, a trading corporation formed within the limits of the Commonwealth or a financial corporation so formed". The Council is not a foreign corporation or a financial corporation. It was formed within the limits of the Commonwealth. The question at issue is whether the Council is a "trading corporation" to which the legislature intended that the provisions of the Act, in which the words, "a corporation" are used, would be applied. The Act puts no express restriction on the application of the definition of "corporation".
In the case Bradlaugh v. Clarke, it is said (per Lord Blackburn) [1] :
All statutes are to be construed by the courts so as to give effect to the intention which is expressed by the words used in the statute. But that is not to be discovered by considering those words in the abstract, but by inquiring what is the intention expressed by those words used in a statute with reference to the subject matter and for the object with which that statute was made; it being a question to be determined by the court, and a very important one, what was the object for which it appears that the statute was made. The words of the definition are "a trading corporation" not any trading corporation. It can hardly be contended that the legislature intended any corporation which trades. The preamble of the Restrictive Trade Practices Act 1971 Cth expresses an object with which the Act was made. The object is: "To preserve Competition in Trade and Commerce to the extent required by the Public Interest". This is naturally an object directed to - that is, pertaining to - private enterprise. 1. (1883) 8 App. Cas. 354, at p. 372.
Turning to s. 35, the sort of business to which the provisions of the section seem to me to be applicable is private business, not a public undertaking supplying goods or services. I think the same comment can be made about s. 36. A limitation upon the general words "a trading corporation" in the definition of corporation arises from the context of ss. 35 and 36 respectively. I think that in each of those sections Parliament intended to legislate with respect to a free enterprise corporation and this ought to be so in the case of s. 37 - it is difficult to infer from the wording of the latter section that the words "a corporation" are not used in the same sense as in ss. 35 and 36. Where by legislation a body within the central government of a State, or a local authority, is supplier of goods or services within the State, I think it is too remote a deduction to draw from the general words "trading corporation" that the legislature intended to make such body amenable to the jurisdiction of the Trade Practices Tribunal to determine whether, in any of the respects covered by ss. 35, 36 or 37 of the Act, such body is acting contrary to the public interest; thus putting it on the same footing as a private enterprise company supplying goods and services.
The St. George County Council conducts an undertaking of the kind designated by the Local Government Act, 1919 N.S.W. as a "trading undertaking". It has been conducting the undertaking for many years. The undertaking was established for the benefit of the ratepayers of the municipalities that are the constituents of the Council's own area - the St. George County District. The undertaking is of the class described in the Local Government Act as the supply of electricity and the supply and installing of electrical fittings and appliances. When the Council was established the executive, pursuant to authority conferred by the Local Government Act, vested the Council with the powers and duties of a municipal council under the Act to establish, acquire and conduct "trading undertakings". The power does not extend to the supply and installing of electrical fittings and appliances as a separate undertaking. It includes power to purchase electricity and electrical fittings and appliances for the purposes of sale or hire. The Council obtains what it supplies in the course of its business from the State Electricity Commission. Section 419 of the Local Government Act, 1919 N.S.W. provides as follows:
(1) Subject to the provisions of this Act, and in particular to making proper provision for depreciation and obsolescence of assets, and for reserves and for the payment of principal, interest, and expenses in respect of moneys borrowed for the purposes of the undertaking, the council shall endeavour so to conduct each trading undertaking that without any loss being incurred the service, product, or commodity of the undertaking may be supplied to the consumer as cheaply as possible.
(2) Except with the approval in writing of the Minister, the council shall not supply electricity to any person in any part of its area upon terms or at rates different from those upon which it supplies electricity in similar circumstances to other persons within that part of its area.
The allegation of monopolization in the proceedings in relation to which the application for prohibition relates is made in respect of the supply of goods within the category of "electrical fittings and appliances". In my opinion the fact that the Council supplies electricity and other goods and is a corporate body does not expose any practice it carries out in the conduct of the business to the liability of being made the subject of proceedings under s. 47 of the Restrictive Trade Practices Act 1971 Cth. The proceedings now in question were instituted under s. 47 (2) on the footing that the Council is the kind of corporation to which s. 37 applies - "a trading corporation formed within the limits of the Commonwealth". The Council conducts a municipal trading undertaking. This is not sufficient to put into the category of a "trading corporation" - a trading company which is incorporated. The Council does not supply electricity or electrical goods purposely to win sums of money as profits. If the Council's operation of the undertaking is revenue-producing that does not change the character of the enterprise from public to private.
In my opinion the Trade Practices Tribunal does not have jurisdiction to deal with the proceedings in respect of which prohibition is sought for the reason that the Council is not a "corporation" within the meaning of the Act. The jurisdiction of the Tribunal conferred by s. 49 (1) does not extend to the proceedings. The Trade Practices Tribunal is an arbitral tribunal. A writ of prohibition lies against the Tribunal on any proper ground for the issue of the prerogative writ of prohibition. One such ground is lack of jurisdiction in the inferior court. This ground is applicable to an administrative tribunal. The Trade Practices Tribunal has commenced the hearing of the proceedings. It seems to me that there is a proper ground - lack of jurisdiction - for granting the present application. I would order that the order nisi granted by Mason J. be made absolute.
Under the Restrictive Trade Practices Act 1971-1972 Cth, for a corporation to engage in the practice of monopolization is an examinable trade practice. The Commissioner for Trade Practices instituted proceedings under the Act before the Trade Practices Tribunal against the St. George County Council (the Council) claiming that by giving concessions by way of discount or subsidy upon the sale of electrical water heaters the Council was engaging in what the Act defines as "monopolization". The Council seeks prohibition against the Commissioner and the Tribunal on the ground that it is not within the terms of the Act because it is not a "corporation" as defined in s. 5, namely:
"Corporation" means a corporation that is a foreign corporation, a trading corporation formed within the limits of the Commonwealth or a financial corporation so formed; a definition in which the draftsman obviously had regard to the terms of s. 51 (xx.) of the Constitution. In this case, however, no question arises as to the validity of the Act or of the constitutional powers of the Commonwealth. The question is simply whether the Council is a "trading corporation" within the meaning of s. 5 of the Act.
It is, I think, of primary importance to examine the law under which the St. George County Council was established on 29th October 1920. It is Pt XXIX of the Local Government Act, 1919 N.S.W. which makes provision for the establishment of county councils in New South Wales. The procedure is for the Governor by proclamation to constitute municipalities or shires or parts thereof "as a county district for local government purposes" and to define the boundaries of the county district so constituted. It is expressly provided that it is sufficient that such a district is expressed to be for "local government purposes" without further definition: s. 561. For each county district so constituted there is a county council comprised of elected delegates: s. 562. It is provided by s. 563 (1) as follows:
The body corporate shall continue to exist notwithstanding any vacancy or vacancies in its membership.
A county council must report annually to the Minister and to each shire and municipal council within its district: s. 563 (9). The functions of a county council are stated in s. 564 (1) as follows:
It follows that all county council powers are powers derived from shires and municipalities. Provision is made for the delegation of any of the powers of councils of constituent municipalities or shires to be exercised by a county council "for the benefit of the county district": s. 564 (2) (2A) and (3). Section 564 (4) (a) is as follows: Upon the proclamation of the delegation of powers or duties the county council shall have full power to exercise the powers and shall perform the duties so delegated; and for that purpose it shall have all the powers which by law may be exercised by the council of an area in or in connection with the exercise of the delegated powers and the performance of the delegated duties and the provisions of any laws relating to areas, and their councils shall, mutatis mutandis, apply for the purposes of this Part to county districts and county councils:
Provided that the power to levy rates or the power to borrow shall not be deemed to have been conferred upon a county council unless it is expressly mentioned in the delegation.
County council securities are trustee investments: s. 564A. Borrowing by a county council for the purposes of works of water supply or supply of electricity may be guaranteed by the Treasurer: s. 564D. A county council which has borrowed for works of water supply or for the supply of electricity may impose differential rates in cases where particular localities are specially benefited by the works: s. 564E. Where the parts of a county district are united, the council becomes the council of the united area and elaborate provisions are made for the succession: s. 565A.
This short survey of the provisions of Pt XXIX satisfies me that, according to the law under which any county council is established, it is incorporated as a municipal corporation for "local government purposes" whatever its particular powers and functions may be at the time of its establishment or later. Furthermore, it appears to me that by virtue of s. 564 (4A) the precept stated in s. 419 governs the trading of a county council. Indeed both parties before us relied upon the provisions of s. 419 which is as follows:
Subject to the provisions of this Act, and in particular to making proper provision for depreciation and obsolescence of assets, and for reserves and for the payment of principal, interest, and expenses in respect of moneys borrowed for the purposes of the undertaking, the council shall endeavour so to conduct each trading undertaking that without any loss being incurred the service, product, or commodity of the undertaking may be supplied to the consumer as cheaply as possible.
Upon the constitution of the Council there was delegated to it "the powers under sections 416 to 419, both inclusive, of the said Local Government Act, 1919, relating to the supply of electricity and the supply and installing of electrical fittings and appliances". By the same proclamation the Council was given power to borrow under the provisions of s. 181 a sum not exceeding £100,000, and it had delegated to it "the power to levy a loan rate, under and subject to the provisions of sections 181 and 124 in connexion with the said loan of £100,000."
Further delegations of power have, from time to time, been made to the Council but they all relate to the Council's electrical undertaking, the borrowing of moneys therefor, the levying of rates in connexion with such loans and the supply of electrical equipment to users of the power which the Council supplies.
The submission of the Solicitor-General for the Commonwealth, who appeared for the respondents, was that the Council is and has always been a trading corporation. He relied exclusively upon the contention that this Council had been established for no purpose other than to trade and he refrained from submitting, in these proceedings, that a local government corporation which has local government purposes other than trading purposes is a "trading corporation" within the meaning of s. 5.
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.
In short, the Council is unquestionably a corporation for local government purposes which has defined trading powers.
Having so identified the Council, the question must then be faced whether it is properly to be described as a trading corporation.
It seems to me that trading corporations were in 1900 a well-recognized classification of companies. This is readily apparent from the many cases which distinguish between the powers of trading and non-trading corporations - including municipal corporations - to make executory trading contracts not under seal. Trading corporations could make such contracts because as Dixon J. said in Johnsons Tyne Foundry Pty. Ltd. v. Maffra Corporation [1] :
a trading corporation from its very nature must contract through its servants and agents in the ordinary course of its business as other traders do A non-trading corporation could not make such a contract without the use of its seal. Its "very nature" differed from that of a trading corporation. In Halsbury's Laws of England, 3rd ed., vol. 9, pp. 5-6 the distinction between trading and non-trading corporations is conveniently drawn and corporations having statutory powers of local government are included in the classification there appearing of non-trading corporations. It may also be observed that in 1850 James Grant in his Treatise on the Law of Corporations classified "Municipal Corporations" separately from trading bodies and devoted 150 pages of his book to the consideration of municipal corporations. 1. (1948) 77 C.L.R. 544, at p. 562.
The difference between a trading corporation and a municipal corporation was noticed in this Court as early as 1908 in Huddart Parker & Co. Pty. Ltd. v. Moorehead when Isaacs J., in considering the language of s. 51 (xx.) of the Constitution, said [2] :
it is always a preliminary question whether a given company is a trading or financial corporation or a foreign corporation. This leaves entirely outside the range of federal power, as being in themselves objects of the power, all those domestic corporations, for instance, which are constituted for municipal, mining, manufacturing, religious, scholastic, charitable, scientific, and literary purposes, and possibly others more nearly approximating a character of trading; a strong circumstance to show how and to what extent the autonomy of the States was intended to be safe-guarded. The federal power was sufficiently limited by specific enumeration, and there is no need to place further limits on the words of the legislature. 1. (1908) 8 C.L.R. 330, at p. 393.
Moreover, municipal corporations, so called, were certainly known to the law as early as 1835 when the first Municipal Corporations Act was enacted in England. According to Halsbury's Laws of England, 3rd ed., vol. 24, p. 366, local administration of government has, since 1834, been based upon the following principles, namely:
that local administration should be of duties prescribed by the central government; that it should be by locally elected bodies; that those bodies should exercise their functions over areas chosen primarily for administrative convenience; that they should exercise them under the supervision of the central department or of a series of central departments appropriate to differing functions; that new functions could be added by the central government, or old functions could be varied or re-shaped by the central rather than the local government; and that the same area might be subject to the jurisdiction of more than one local authority, according to whether the function being exercised was more conveniently administered by a larger or a smaller local body or in a larger or a smaller area. The Council is unquestionably based upon the foregoing principles.
That a corporation trades is clearly insufficient by itself to bring it within the classification of a trading corporation. Not only authority but common usage establishes this. A university may trade - its bookshop is an example of this - but if incorporated it is not because of its trading within the classification of a trading corporation. A body such as a Board of Works, charged with the supply of water and the provision of sewage for a city, may sell water, but, should it do so, it would not, if it happens to be incorporated, thereby fall within the classification of a trading corporation. A church incorporated by Act of Parliament might, as part of its activities, run a co-operative shop, but were it to do so it would not be a trading corporation. The councils of many municipalities trade but they are not, if incorporated, trading corporations. A body such as the Snowy Mountains Authority sells electricity but I hardly think that it would be natural to call it a "trading corporation". That body and many other corporations which do trade are in essence public authorities.
It is not my purpose to attempt to define all that falls within the limits of the classification of "trading corporation". Rather, I am concerned to indicate that the classification has limits and those limits are not to be ascertained simply by asking the question "Does the corporation trade?" As I have indicated, many corporations which do trade are clearly outside the limits of the classification and one group of corporations that is not comprehended is, in my view, corporations of an essentially different character, namely corporations for local government purposes.
I have shown that the St. George Council is a corporation for local government purposes and, for the reasons which I have stated, it is my opinion that although it trades it is not a "trading corporation" for the purposes of s. 5 of the Restrictive Trade Practices Act.
Accordingly I would make absolute the order nisi for prohibition.
By s. 37 (1) of the Restrictive Trade Practices Act 1971 Cth the engaging by a corporation in monopolization within the meaning of that section is an examinable practice for the purposes of that Act. Section 37 (2) defines what is meant by engaging in monopolization. Where the Commissioner of Trade Practices ("the Commissioner") has reason to believe, inter alia, that a corporation is engaging in an examinable practice, and he is of opinion that the practice is contrary to the public interest, he may institute proceedings in the Trade Practices Tribunal ("the Tribunal") under s. 47 in respect of that practice - s. 47 (2). In such proceedings the Tribunal, if satisfied that an examinable practice is being engaged in, shall make a determination by which, inter alia, it determines whether the examinable practice is contrary to the public interest - s. 49 (1) (b). The Commissioner has commenced against the St. George County Council ("the County Council") proceedings in the Tribunal claiming that the grant by the County Council of a "subsidy" (or discount) on the price which it charges for electric storage water heaters sold by it for connexion to its electricity supply constitutes the examinable practice of monopolization as defined in s. 37. The County Council now seeks prohibition directed to the Tribunal, its President and the Commissioner prohibiting them from further proceeding with or upon those proceedings, upon the ground that the Tribunal has no jurisdiction to proceed to determine whether the practice of the County Council in granting the "subsidy" is contrary to the public interest under the provisions of s. 49 (1) (b), in that the County Council is neither a foreign corporation, a trading corporation formed within the limits of the Commonwealth nor a financial corporation so formed within the meaning of the Constitution, s. 51, pl. (xx.) and is in no way subject to the provisions of the Restrictive Trade Practices Act 1971.
It was common ground that the question that now falls for determination is whether the County Council is a corporation within the meaning of the Restrictive Trade Practices Act 1971. By s. 5 of that Act, unless the contrary intention appears "corporation" means "a corporation that is a foreign corporation, a trading corporation formed within the limits of the Commonwealth or a financial corporation so formed". It is not suggested that any contrary intention appears in any relevant section so as to exclude the definition of corporation contained in s. 5. The words of that definition echo those of pl. (xx.) of s. 51 of the Constitution - "Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth" - and were obviously intended to bear the same meaning as that constitutional provision. Clearly enough the Restrictive Trade Practices Act 1971 was enacted in reliance on the power conferred by pl. (xx.) and if it applied to corporations other than those referred to in pl. (xx.) its provisions would go beyond the limits of that power.
It was not suggested that the County Council is a foreign corporation or financial corporation. The question is whether it is a trading corporation formed within the limits of the Commonwealth.
County councils in New South Wales are constituted under Pt XXIX of the Local Government Act, 1919 N.S.W. (as amended) ("the Act"). So far as they are relevant the provisions of that part are as follows. The Governor has power by proclamation to "constitute as a county district for local government purposes any groups of wholes and parts of municipalities or shires, or of both municipalities and shires": s. 561 (1). Upon the constitution of a county district, a county council for that district necessarily comes into existence. Section 562 (1) provides:
For each county district there shall be a county council composed of the delegates elected as provided in this section. The delegates are elected by the councils of the municipalities or shires which are in whole or in part included in the county district, and from among the members of the council concerned, that is, a delegate must be a mayor, deputy mayor, alderman, president, deputy president or councillor (s. 562 and s. 4, "Member of a council"). Section 563 (1) provides, inter alia, as follows: A county council shall be a corporate body with perpetual succession and a common seal, and may sue and be sued in its corporate name; and shall, for the purposes and subject to the provisions of this Act, be capable of purchasing holding granting demising disposing of and alienating real and personal property, and of doing and suffering all such other acts and things as bodies corporate may by law do and suffer.
The functions of a county council are those delegated to it in accordance with the Act for the joint benefit of the areas included within the county district (s. 564 (1)). The delegation is made by the Governor, by proclamation (s. 564 (3)). The councils of the municipalities and shires concerned in a district may request the Governor "to delegate to the county council the power to exercise or perform for the benefit of the county district any power or duty which by law those councils or any one of them may exercise or perform" (s. 564 (2)). Where the request is made by a majority in number of the councils of the municipalities and shires concerned the Governor may proclaim the delegation (s. 564 (3)). In some cases, not here relevant, a delegation may be made notwithstanding that no such request has been made (s. 564 (3)). The effect of the proclamation of a delegation is dealt with by s. 564 (4) as follows:
(a) Upon the proclamation of the delegation of powers or duties the county council shall for the benefit of the county district have full power to exercise the powers and shall perform the duties so delegated; and for that purpose it shall have all the powers which by law may be exercised by the council of an area in or in connection with the exercise of the delegated powers and the performance of the delegated duties and the provisions of any laws relating to areas, and their councils shall, mutatis mutandis, apply for the purposes of this Part to county districts and county councils:
Provided that the power to levy rates or the power to borrow shall not be deemed to have been conferred upon a county council unless it is expressly mentioned in the delegation.
(b) Except where otherwise expressly provided in this Act a council concerned shall not undertake any function delegated to the county council.
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)).
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.
Sections 416-419 appear in Pt XVII of the Act, which is headed "Trading". Section 417 provides that subject to the provisions of the Act "a council may establish, acquire and conduct trading undertakings". Section 418 (1) states what shall be trading undertakings within the meaning of the part. In addition to the supply of electricity and the supply and installing of electrical fittings and appliances, the section refers to the supply of gas, and the supply and installing of gas fittings and appliances; the supply of hydraulic power, and the supply and installing of hydraulic fittings and appliances; the business of a ferry service; the business of a motor-bus service for the conveyance of passengers for hire; the business of the conveyance of goods or merchandise for hire by locomotive and transport appliances with animal or mechanical motor power and the letting of such appliances for hire; the supply of ice; the supply of building materials; the operation of a coal mine and the supply and distribution of coal; and the supply of liquefied petroleum gas and the supply and installing of pipes, fittings, apparatus and appliances used for, or designed for use in, the conveyance or consumption of such gas. The section provides that the power to trade in electrical, gas or hydraulic fittings and appliances shall not apply except in cases where the council is engaged in the supply of electricity, gas or hydraulic power, as the case may be. Section 418 (2) provides:
The power to trade in any article or commodity (including the supply of power) shall include the power to purchase, generate, manufacture, or obtain the article or commodity for the purpose of sale or hire. Finally, s. 419 provides as follows:
(1) Subject to the provisions of this Act, and in particular to making proper provision for depreciation and obsolescence of assets, and for reserves and for the payment of principal, interest, and expenses in respect of moneys borrowed for the purposes of the undertaking, the council shall endeavour so to conduct each trading undertaking that without any loss being incurred the service, product, or commodity of the undertaking may be supplied to the consumer as cheaply as possible.
(2) Except with the approval in writing of the Minister, the council shall not supply electricity to any person in any part of its area upon terms or at rates different from those upon which it supplies electricity in similar circumstances to other persons within that part of its area.
Although the proclamation of 26th October 1920 expressly delegates to the County Council the powers under s. 419 of the Act, it does not mention the duties imposed by that section, and in this respect it differs in form from the later proclamations made in 1922 and 1923. It might be thought that s. 419 imposes duties rather than confers powers and that a delegation of the powers under that section is therefore meaningless. However that may be, in my opinion the provisions of s. 419 are, without any express delegation, rendered applicable to the County Council by s. 564 (4) (a). Upon the proclamation of the delegation of 26th October 1920 "the provisions of any laws relating to areas, and their councils" became applicable to the County Council for the purposes of Pt XXIX by virtue of that sub-section. A provision of the Act itself may be a "law relating to councils" within this provision - see Mackellar County Council v. Jones [1] . As that case shows, not every provision of the Act relating to councils will be rendered applicable to a county council by s. 564 (4) (a). However, the provisions of s. 419 are very closely connected with those of ss. 417-418 - the sections which confer the power which has been delegated to the County Council. Section 419 governs in certain respects the manner in which the very power delegated to the County Council is to be exercised. In my opinion s. 564 (4) (a) applies such a provision to the County Council.
The intention of s. 419 (1) in my opinion is that a trading undertaking shall not be conducted by a council, or, where s. 564 (4) (a) has rendered it applicable, by a county council, with a view to making a profit if that can be avoided. The section does not forbid a county council to make a profit and it is no doubt contemplated that a county council which frames a budget with a view to avoiding a loss may through overcaution in fact show a profit. Further, the section allows a county council to make proper provision for reserves and impliedly allows it to make such profit as may be necessary for this purpose. It may be true that the provisions of s. 419 are directory rather than mandatory - a question that need not here be decided. Nevertheless the section, as applicable to the present case, gives the clear direction that the County Council shall endeavour so to conduct its trading undertaking that, without any loss being incurred, the electricity may be supplied to the consumers as cheaply as possible. It is obvious that electricity could be supplied more cheaply if the County Council made no profit than if it made a profit. The inevitable inference is that in the conduct of the electricity undertaking the County Council is required to endeavour to avoid making a profit.
Pursuant to the powers thus delegated to it the County Council is the sole supplier of electricity within the St. George County District. It purchases electricity in bulk from the Electricity Commission of New South Wales, a statutory body constituted by the Electricity Commission Act, 1950 N.S.W. (as amended). It sells electricity to consumers within the district at rates which it determines from time to time. It also supplies, installs, services and repairs electrical fittings and appliances. If it matters, the total "trading revenue" (as it is called in the accounts) of the County Council in its financial year ended 31st December 1972 was approximately 13.7 million dollars, comprising approximately 12.3 million dollars from the sale of electricity and approximately 1.4 million dollars from the sale of electrical fittings and appliances and from service and miscellaneous charges.
The County Council is, in my opinion, a corporation "formed within the limits of the Commonwealth" within the meaning of those words in s. 51 (xx.) of the Constitution and in the definition of corporation in s. 5 of the Restrictive Trade Practices Act 1971. Since the words of the definition have the same meaning as those of the constitutional provision, I shall, for convenience, henceforth refer only to the latter. It was rather faintly argued that the words "formed within the limits of the Commonwealth" refer only to corporations formed under the provisions commonly found in legislation with regard to companies. That submission is quite untenable. Those words include any corporation which has come into existence in Australia, under the authority of any law of the Commonwealth or of a State or Territory. They are not limited to corporations formed in a particular way.
The question however is whether the County Council is a trading corporation. In my opinion, the words "trading corporation" in s. 51 (xx.) do not mean "a corporation which is trading". The word "trading" forms part of a composite expression and indicates the essential attribute of the kind of corporation to which it refers. It is common to describe corporations according to their nature, and to speak, for example, of ecclesiastical, eleemosynary or municipal corporations. There can be no doubt that the words "foreign corporations" and "financial corporations" in pl. (xx.) describe corporations of a particular kind rather than corporations of any kind which happen to act in a particular way. The same is true of the words "trading corporations" which, in their natural meaning, as well as in the context of the placitum, refer to corporations of a particular kind. This was the view of Isaacs J., who in Huddart, Parker and Co. Pty. Ltd. v. Moorehead [1] said of the power given by pl. (xx.):
Next, it is clear that the power is to operate only on corporations of a certain kind, namely, foreign, trading, and financial corporations. For instance, a purely manufacturing company is not a trading corporation; and it is always a preliminary question whether a given company is a trading or financial corporation or a foreign corporation. This leaves entirely outside the range of federal power, as being in themselves objects of the power, all those domestic corporations, for instance, which are constituted for municipal, mining, manufacturing, religious, scholastic, charitable, scientific, and literary purposes, and possibly others more nearly approximating a character of trading; a strong circumstance to show how and to what extent the autonomy of the States was intended to be safeguarded. The federal power was sufficiently limited by specific enumeration, and there is no need to place further limits on the words of the legislature. It is unnecessary to decide whether or not Isaacs J. was right in saying that a purely manufacturing company, or a mining company, is not a trading corporation, and of course the correctness of all his views as to the scope of the power conferred by pl. (xx.) does not now fall for consideration. Whether or not it is necessary to place "further limits" on the words of the placitum, I completely agree that the power is limited to the corporations specifically enumerated, since the only possible reason for expressly referring to three kinds of corporation was to exclude all other kinds from the range of the power. In short, the power given by s. 51 (xx.) is not in respect of trading, and it does not extend to corporations generally; a corporation, even if trading, is not within the power unless it is a foreign, trading or financial corporation. 1. (1909) 8 C.L.R., at p. 393.
A trading corporation is one formed for the purpose of trading. However, as I have indicated, the mere fact that a corporation is trading does not mean that it is a trading corporation. It is necessary to determine the true character of the corporation, upon a consideration of all the circumstances that throw light on the purpose for which it was formed. Thus there is no difficulty in holding that the fact that a corporation carries on some trade which is merely incidental or ancillary to the fulfilment of its main purpose does not give it the character of a trading corporation. In the course of argument the learned Solicitor-General for New South Wales gave some examples of corporations which, although engaged in some trading activities, clearly could not be described as trading corporations, e.g. an eleemosynary corporation such as a hospital, which conducts a kiosk or a restaurant for the convenience of visitors, an educational corporation which conducts a tuckshop at its school or a municipal corporation which sells literature containing information about the municipality. However, in the present case the activities of the County Council which the Commissioner asserts are trading activities are not subordinate or subsidiary to some other dominant activity. The County Council was formed for the purpose of conducting what the Act itself describes as a "trading undertaking" - namely, the supply of electricity and the supply and installing of electrical fittings and appliances. The conduct of that undertaking is its main, if not its only, activity, and, according to the submission advanced on behalf of the Commissioner, the County Council in engaging in that activity is engaging in trade. Therefore, it was said, the County Council is a corporation which was set up to trade and does in fact trade and is a trading corporation.
I would agree that the activities of the County Council can properly be described as trading. The supply and installation of electrical fittings and appliances, with a view to profit, would of course be a form of trading. Further, since trade is not limited to the buying and selling of taxable commodities, the supply of electricity for profit would also constitute trading: cf. Bank of New South Wales v. The Commonwealth [1] . In the present case the County Council must endeavour so to conduct its undertaking as to avoid making a profit. However, it has been held in a number of cases that, although in general trade is carried on with the intention of making a profit, it is not essential to the carrying on of a trade that the persons engaged in it should make or desire to make a profit: see In re Duty on Estate of Incorporated Council of Law Reporting for England and Wales [2] , and Griffiths (Inspector of Taxes) v. J. P. Harrison (Watford) Ltd. [3] . The activities of the County Council are described in the Act which authorizes them as the conduct of a "trading undertaking" and this description cannot be rejected as wholly inappropriate. Indeed a similar usage was employed in Federated Engine-Drivers and Firemen's Association of Australasia v. Broken Hill Proprietary Co. Ltd. [4] , where Griffith C.J., speaking of the activities of the Melbourne Corporation in supplying electricity to consumers, referred to "a municipal corporation" which chooses to engage in "municipal trading" [5] (see also per Barton J. [6] and Isaacs J. [7] ), although perhaps it should be added that it appears that in the statute under which that corporation was acting (the Electric Light and Power Act 1896 Vict.) there was no direction that electricity be supplied as cheaply as possible and Isaacs J. spoke of "municipalities engaging in what is simply trading for profit" [1] .
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.
The description of the corporations to which the powers of s. 51 (xx.) extend does not include municipal corporations. In Municipal Council of Sydney v. M'Beath [2] , it was said that of corporations which are not trading corporations "we have scarcely any but Municipal Corporations in this colony". Certainly, at the time of federation, municipal corporations and charitable corporations of various kinds were the most important of the corporations formed in Australia which were not trading or financial corporations. It seems to me that the purpose of specifically mentioning the corporations intended to be within the power given by s. 51 (xx.) was to exclude from the scope of the power at least those corporations which could properly be characterized as municipal and charitable corporations. In Huddart, Parker & Co. Pty. Ltd. v. Moorehead, Isaacs J. [1] suggested the reasons why s. 51 (xx.) was included in the Constitution - the business strain and anxiety caused by the activities of trading and financial corporations, the potential power of such bodies and the danger of its improper exercise and the consequent need "for handing over to a strong national authority for uniform and effective treatment, should it consider the occasion requires it, the comparatively vast and far-reaching transactions of foreign and trading or financial corporations". If this is the true explanation of the purpose of s. 51 (xx.), a municipal corporation, formed under and controlled by State law, would not be the kind of corporation whose transactions were intended to be subject to the control of the Commonwealth Parliament.
The question which s. 51 (xx.) requires to be posed in the present case is of course whether the County Council is a trading corporation, not whether it is a municipal corporation. However, the considerations that lead to the conclusion that the true character of the County Council is that of a municipal corporation entail the consequences that it is not a trading corporation. When all the circumstances are considered, it is incomplete and misleading to describe the County Council as a corporation formed for the purpose of trading. The purpose of its formation is more properly described as that of fulfilling a function of local government. This is not to say that a body which is formed to engage in trading will never be a trading corporation if it is constituted by, and derives its powers from, a statute relating to local government. My conclusion rests on the view I have formed as to the true nature of this corporation, having regard to all the circumstances to which I have referred.
For the reasons I have given, I hold that the County Council is not a trading corporation within s. 51 (xx.) of the Constitution, or a corporation within s. 5 of the Restrictive Trade Practices Act 1971. It follows that the Tribunal had no jurisdiction to entertain the proceedings brought by the Commissioner against the County Council.
I would accordingly make absolute the order nisi for prohibition.
The Commissioner of Trade Practices has instituted proceedings against the St. George County Council before the Trade Practices Tribunal in which he alleges that the County Council engages in the examinable practice of monopolization. The County Council now seeks prohibition in respect of those proceedings upon the ground that the Tribunal lacks jurisdiction because the County Council is not a "Corporation" as defined in s. 5 of the Restrictive Trade Practices Act 1971 Cth. The only part of that definition of "Corporation" which may be apt to describe the County Council is the phrase "a trading corporation formed within the limits of the Commonwealth". The question in issue is, therefore, whether the County Council is such a "trading corporation". This calls for some examination of the genesis of the County Council and of its activities.
The St. George County Council is constituted under Pt XXIX of the Local Government Act 1919 N.S.W.. The relevant legislative provisions are examined in detail in the reasons for judgment of my brother Gibbs, as are the circumstances in which the County Council came to be an important distributor of electric power in Sydney's southern suburbs, and I will not attempt to cover again that ground. Certain features of that legislation and of those circumstances appear to me to be critical and to these I will refer.
When in 1920 the areas of four Sydney suburban municipalities were proclaimed as the St. George County District the legislation operated, without more, to confer corporate status upon the County Council. It derived no inherent functions from its mere creation but depended, for its functions, upon some delegation to it of the power to exercise or perform, for the benefit of the county district, powers or duties which the municipalities within that district might themselves have undertaken. In fact by the initial proclamation of 1920 there was delegated to the Council "all the powers under sections 416 to 419, both inclusive, of the said Local Government Act, 1919, relating to the supply of electricity and the supply and installing of electrical fittings and appliances", together with a limited power to borrow moneys and levy a loan rate. In 1922 certain ancillary and incidental powers were expressly delegated to the County Council and in 1947 its borrowing and rating power was increased; nothing turns upon these subsequent grants of power.
It is this delegated power to supply electricity and install fittings and appliances which the County Council has exercised at all material times. The four sections of the Act referred to in the proclamation form Div. 2 of Pt XVII of the Local Government Act, entitled, aptly enough, "Trading by Councils". Section 417 empowers a council to establish, acquire and conduct "trading undertakings", which term is defined in s. 418 (1) to mean "the supply of electricity and the supply and installing of electrical fittings and appliances" as well as the supply of gas, hydraulic power, liquefied petroleum gas, ice and building materials, the undertaking of certain transport services and the operation of coal mines and the supply of coal. Although primarily restricted in its trading undertakings to its council district a county council may extend its trading undertakings into any other area with the consent of the council of that area.
The St. George County Council has, in exercise of the powers delegated to it, become the sole supplier of electricity within its district, buying in bulk from the Electricity Commission of New South Wales and selling to consumers. It has none of the regulatory or governmental functions associated with ordinary local government bodies; its activities as they affect the public appear to be indistinguishable from those of any joint stock company which might carry on business as a distributor of electricity within a given area. Only the manner of its creation, the composition of its governing body, its power to levy rates so as to repay loans, the absence of shareholders and the existence of two statutory restrictions upon its terms of trading distinguish it from such a company and of these features none but the last relate to its dealings with the public as customers.
Looking then at the facts as they now present themselves it appears that, at least in New South Wales, local government bodies do not confine themselves to the governing of their locality; they may also undertake what are accurately enough described as trading activities, the supply of goods and services. However, instead of themselves undertaking those trading activities which are within their competence, a separate corporate entity may be created to undertake one of those activities and to do nothing else and its sole activity and the sole purpose for which it is created will then be the undertaking of a particular trading activity. Although that activity is one which might theretofore have been undertaken by a local government body, a municipal corporation, it is itself in no sense one concerned with local government, the governing of a locality. That the power of performance of the function hitherto resided in a municipal council confers upon that function no particular character other than that which it derives from its own nature. If the function involves no more than the buying in bulk and reselling by retail of a commodity, electrical energy, then the function is a trading function and when a corporation is especially created to perform that function and none other it appears to be both natural and proper, if a generic term is to be applied to that corporation, to describe it as a trading corporation.
When s. 5 of the Restrictive Trade Practices Act speaks of "trading corporations" the use of the participle "trading" necessarily involves reference to function, either to the activities which a corporation is intended to undertake or to those which it in fact does undertake. In the present case there is no distinction to be drawn between these two, the County Council was at the time of its creation vested with one delegated function and that it has performed ever since.
All but one of those respects in which the County Council differs from any commercial enterprise engaged in the distribution of electrical energy are matters which might be termed domestic to the corporation; they are unrelated to its public or external activities, to the activities in which it is engaged as a corporation. Since it is with those activities that the phrase "trading corporation" is concerned it follows that I regard matters domestic to the County Council as irrelevant in determining whether it is such a corporation. The description "trading corporation", like that of "banking corporation" or "mining company", is a description of actual or intended activities and may be contrasted with descriptions such as "chartered corporation", "proprietary company" or "no liability company", each of which is, on the contrary, a description not related to activities but to matters internal to the entity in question.
The one matter distinguishing the County Council from a commercial undertaking and which is related to its activities is the existence of restrictions upon its terms of trading. By s. 419 (1) of the Act it must conduct its trading activities so that, "without any loss being incurred" and after proper provision is made for depreciation, obsolescence, reserves and the servicing and repayment of loans, the electricity it supplies "may be supplied to the consumer as cheaply as possible"; it must also not discriminate between different consumers in the terms or rates upon which electricity is supplied - s. 419 (2). It was contended on behalf of the respondents that the provisions of s. 419 did not apply to the County Council; however in my view the effect of s. 564 (4) (a) is to make those provisions applicable to it, my reasons for so concluding are those stated in the judgment of my brother Gibbs.
It is said that the effect of the statutory restraints imposed by s. 419 is either of itself sufficient to prevent the County Council from being a "trading corporation" or has that effect when combined with other features, such as its incorporation by virtue of local government legislation, its power, albeit a limited one, to levy rates and the fact that it is to carry out its functions for the benefit of the area which it is to serve.
In my view those statutory restraints do not produce this consequence. That provided by s. 419 (2) can be of no consequence in this respect; to deny to a corporation the right to discriminate, as to terms of supply or rates, between different consumers of its product casts no light upon whether it possesses the character of a trading corporation.
As to s. 419 (1) it can no doubt be said that there is a strong element of profit-making present in the concept of trading and that this element will usually be possessed by a trading corporation. This is, perhaps, only because, traditionally, in societies organized upon capitalist lines, the undertaking of trading activities has been left substantially to private enterprise rather than to government intervention; in these circumstances the common incentive for entry into those activities has necessarily been the profit motive. Hence the conduct of a trading activity has commonly come to be associated with the gaining of profits, that being the motive leading to the undertaking of those trading activities.
However if some other motive actuates a corporation or individual to engage in trading activities those activities will not themselves be altered in character and, if they consist of what is properly described as trading, a corporation which undertakes them as its sole or principal business will, in my view, be a trading corporation. Since it is the activity carried on or intended to be carried on that is described by the participle "trading" it would not matter, if such were the case, that the County Council so arranged the margin between the price it paid for electricity in bulk and the price at which it supplied it to consumers as to ensure that it derived no surplus after making the provisions referred to in s. 419 (1). It might be otherwise if it distributed electricity free of charge but so long as its activity is that of buying and reselling rather than distributing by way of gift it is, in my view, engaged in trading and since this is its only activity it is properly described as a trading corporation. In In re Duty on Estate of Incorporated Council of Law Reporting for England and Wales [1] , Lord Coleridge C.J. said of the phrase "established for any trade or business" that "it is not essential to the carrying on of a trade that the person engaged in it should make, or desire to make, a profit by it" - see also British Institute of Preventive Medicine v. Styles [2] .
It is the acts of buying and selling that are at the very heart of trade; as Lush J. said in Higgins v. Beauchamp [1] , "a trading business is one which depends on the buying and selling of goods". The word "trade" was said by their Lordships in Commissioners of Taxation v. Kirk [2] , to mean primarily "traffic by way of sale or exchange or commercial dealing". The Shorter Oxford English Dictionary gives, as meanings of "trading", the "carrying on of trade; buying and selling; commerce, trade, traffic".
I might add that, as has been pointed out in the reasons for judgment of the Chief Justice, the County Council in fact has been shown to make substantial profits from its activities. Had I thought the absence of profits to be a material factor in this case I could not have concluded that a factual basis exists for the view that the County Council in fact does not derive profits from the conduct of its undertaking.
For the foregoing reasons I conclude that the County Council is a "trading corporation". That it is "formed within the limits of the Commonwealth" is undeniable. I would accordingly conclude that it is a corporation as defined by s. 5 of the Restrictive Trade Practices Act.
In deference to the arguments which were advanced to the contrary I should refer briefly to certain of these.
It is true that the County Council is a creation of the Local Government Act, that it undertakes the functions delegated to it "for the joint benefit of the areas included within the county district" - s. 564 (1) - and that those functions are some of the many which may be undertaken by individual municipal councils, ordinary local government authorities. It may be proper to describe the distribution of gas, water and electricity as traditional incidental functions of local government and in this sense the activity of the County Council is a typical activity of local government. This does not, however, make it inappropriate to describe the County Council as a trading corporation. Division 2 of Pt XVII of the Local Government Act specifically recognizes the existence of certain functions of local government to be of a trading character, it describes them as trading undertakings; one such is the acquisition in bulk of electricity and its supply to consumers and it is that very function which is undertaken by the County Council. This function, so long as it is undertaken as one of the many activities of an ordinary municipal council, will not result in that council being other than a municipal corporation. However when a corporation is formed for the sole purpose of undertaking that function and undertakes none of the functions of local government which typify the activities of a municipal corporation it is both appropriate to describe that corporation as a trading corporation and inappropriate to describe it as a municipal corporation.
It was urged that the genus "trading corporation" was one which, at the turn of this century, was understood to be in contradistinction to that of "municipal corporation". I see no reason to doubt this, but it is not a proposition which assists the prosecutor. Reference was made to Grant on Corporations (1850) and to the contrast there drawn between trading and municipal corporations. What emerges from that work is that a municipal corporation is one concerned with the government of a locality and not with the undertaking of a trading activity; thus the Municipal Corporation Act of 1835 Eng., which began the task of reducing to a uniform model the various municipal corporations in England in that time, recites, in its first section, the existence of divers bodies corporate constituted so that their municipal areas "might for ever be and remain well and quietly governed". This aptly describes the function of a municipal corporation, a function remote from that of the County Council.
It may be noted that the reference to the County Council undertaking its functions for the benefit of the areas within the county district is wholly equivocal. As Kekewich J. points out in Attorney-General v. Company of Proprietors of Margate Pier and Harbour [1] , the special Acts incorporating railways and canal companies have customarily referred to their projects as being for the public benefit yet these corporations "are commercial companies".
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.
Again I would of course accept that every corporation which happens to trade is not a trading corporation, the engaging in trading activities ancillary to some other principal activity cannot make the corporation one properly described as a trading corporation. But that proposition has no relevance in the present case since the County Council's activities, both as contemplated by the terms of its creation and as they are in fact undertaken, are concerned with trading and with nothing else. I see no distinction in the present case between what the County Council was set up to do and what it in fact does; it is doing precisely what, by its creation, it was intended to do.
In Federated Engine-Drivers and Firemen's Association of Australasia v. Broken Hill Proprietary Co. Ltd. [6] , this Court had to consider the activities of the City of Melbourne as a supplier of electricity both in connexion with the lighting of its own streets and also to meet the needs of Melbourne's domestic, commercial and industrial users. Griffith C.J. described the latter activity as "municipal trading" [7] . O'Conner J. described the city as involved in carrying on two undertakings "the one generally regarded in Australia as a public service, the other being clearly a private business" [8] ; Barton J. contrasted the City's electricity supply functions with its governmental functions, the "ordinary functions of local government" and described the former as "the purely business or trading enterprises of a municipality" [1] . Isaacs J. said that the city, while primarily constituted for the purposes of municipal government, had other non-governmental functions [2] . He was at pains to distinguish between those two functions and said:
The mere fact that a corporation is constituted a regulating agent for certain purposes, and for those purposes is entrusted with governmental powers, cannot alter the nature of added capacities which are inherently different. There is a manifest distinction between governing and trading. Regulating, in the character of lawgiver, the industrial operations of others, cannot be classed as one with personally engaging in such operations in competition with others. The two things may simultaneously reside in the same structure, but they are not therefore related. I regard it as significant that only some ten years after the framing of the Constitution the members of this Court found no difficulty in describing a municipality's activity in supplying electrical energy to private consumers as something quite distinct from its local governmental functions and as an activity appropriately described as "municipal trading", a "purely business or trading enterprise", a "private business". When the case is not one of a municipal corporation having vested in it both the regulatory governmental powers of local government and also what Isaacs J. described as the inherently different and unrelated power of supplying electrical energy to private consumers, but is instead that of a distinct corporate entity having vested in it only the latter power, there seems to me to be no ground for denying to that corporation the description of "trading corporation". 1. (1911) 12 C.L.R. 398. 2. (1911) 12 C.L.R., at p. 415. 3. (1911) 12 C.L.R., at p. 442. 4. (1911) 12 C.L.R., at pp. 426-427. 5. (1911) 12 C.L.R., at pp. 452-453.
It was said that the judgment of Isaacs J. in Huddart Parker & Co. Pty. Ltd. v. Moorehead [3] disclosed the purpose of the framers of the Constitution in conferring upon the Commonwealth legislative power in respect of "trading corporations" and that this purpose was such as to suggest that the County Council should not be regarded as such a corporation. His Honour did, in the passage referred to, speak of the need felt at the time of Federation to control the activities of trading and financial corporations; he referred to the magnitude and wealth of such corporations and the great power thus conferred upon them and which might not be exercised for the public good. His Honour was no doubt there directing his mind to the agencies of private enterprise but the facts of this case suffice to show the magnitude of operations and the wealth of a corporation such as the County Council. If the allegations of the Commissioner of Trade Practices prove to be wellfounded there would seem to exist no less need for control over such a corporation than over ordinary commercial corporations. I doubt whether this consideration is properly of weight in the interpretation of s. 5 of the Restrictive Trade Practices Act, but to the extent that the prosecutor sought to rely upon what was said by Isaacs J. I would regard his Honour's observations as tending rather to the contrary.
It is for these reasons that I would discharge the rule nisi.