EXTERNAL AFFAIRS POWER

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CONSTITUTIONAL INTERPRETATION

Reading Cth power in relation to state powers (1) Pre-Engineers

Doctrine of implied immunity of instrumentalities

- Cth and state governments are immune from each other’s laws

- Doctrine implied from federalism. Cth and states separate sovereign entities ‘within the ambit of [their] authority’ subject only to restrictions imposed by Constitution (D’Emden v Pedder)

Doctrine of reserved state powers

- Cth’s powers in s 51 narrowly interpreted to not intrude on ‘reserved’ state powers (R v Barger) - Restrictions in one head of power used to read down ambit of other heads of power (Huddart) (2) Modern approach

Engineer’s Case

- Exploded implied immunity of instrumentalities and reserved state powers doctrines - Doctrines based on illegitimate reading strategy and not on the text of the Constitution Jumbunna principle

- The Court should always lean to the broader interpretation unless something in the context or the rest of the Constitution indicates the narrower interpretation will best carry out its object and purpose Methods of constitutional interpretation

Overview

- No single preferred approach (Callinan, Work Choices) (1) Originalism

- Textual originalism: gives effect to original meaning of Constitution as it would have been understood in 1900

- Intentional originalism: gives effect to framers’ intentions, rejected (Work Choices) (2) Textualism

- Gives primacy to words of Constitution

- Flexibility achieved through connotation/denotation distinction (Street v Queensland Bar Association)

 Connotation fixed at 1900, denotation varies (i.e. as new objects possess fixed attributes) (3) Incremental accommodation

- Gives effect to the modern (‘ambulatory’) meaning by taking account of changing social values, technological change and/or new legal institutions

 s 51(xviii) ‘Copyrights, patents, trademarks’ includes ‘plant variety rights’ (Grain Pool) - ‘Living tree’: words given contemporary meaning w/o ref to historical meaning (Brownlee v Queen)

CHARACTERISATION

Test

The test for whether a law is within power is a two stage test. The first step is to define the subject matter of the law with reference to the ‘rights, liabilities, duties and privileges’ it creates (Re Dingjan).

This is not a search for ‘true character’ (Fairfax). The second step is to decide whether the law so characterised is within power. If a subject-matter power: As … is a subject matter power, the relevant test is ‘sufficiency of connection’ (Burton v Honan).

Irrelevant factors

- The justice and wisdom of the law (Leask)

- The degree to which the means it adopts are necessary or desirable (Leask)

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INCONSISTENCY

Under s 109, a State law will be “invalid” to the extent that it is inconsistent with a Cth law. The word

“invalid” means “inoperative” (Carter v Egg Pulp Marketing Board). The first step is to consider whether … [laws] are valid. This is because only valid laws may be inconsistent with each other. The next step is to determine whether any of the three tests of inconsistency trigger s 109.

Simultaneous obedience test

Laws will be inconsistent if it is impossible to obey both at the same time (Brisbane Licensing).

Conferral of rights test

Laws will be inconsistent where one alters, impairs or detracts from rights conferred by the other (Clyde Engineering)

Colvin v Bradley Brother – basic illustration of taking away a right

- Cth law provided employers could employ women, State law made it offence to do so

- No inconsistency under simultaneous obedience test because employing women was permissive not mandatory under Cth law

- State law took away rights conferred by Cth law

Australian Mutual Provident Society v Goulden – interference with essential operation - Goulden sought life insurance policy, AMP would not provide it under s 78(1) of Life Insurance Act (Cth), Goulden sued for discrimination under Anti-Discrimination Act (NSW)

- Held inconsistency under test 2

 State law interfered with insurance companies’ ability to set premiums which was essential to their business

APLA v Legal Services Commissioner (NSW) – interference non-essential - NSW Act prevented advertising for legal services for personal injury

- Alleged impairment of Cth rights to compensation for victims - Held no inconsistency under test 2

 Preventing lawyers from advertising does not prevent victims from receiving compensation Cover the field test

The cover the field test will produce an inconsistency if the Commonwealth law intends to ‘cover the field’ in which the State law operates (Ex Parte McLean).

The first step is to define State law’s field of operation. If there is overlap between the State and Cth law, the next step is to determine whether the Cth intended to cover the field.

Step #1

- A broad view and a narrow view will often be possible Step #2

- Intention to cover the field may be express or implied - Two bases of implication:

(1) From the detail of the legislative regime (Work Choices)

 Generally the more exhaustive the detail the more likely an intention to cover the field

 Absence of detail may found intention to cover field e.g. empowering provision (2) From the subject matter of legislation (Goulden)

 Does subject matter by its nature require uniform regime across all States (e.g. currency, intellectual property, weights and measures, quarantine)

Manufactured inconsistency

- Cth cannot ‘manufacture’ inconsistency to bring s 109 into operation (West) Clearing the field

- Cth can validly declare intention not to cover the field (R v Credit Tribunal) Retroactive laws

- Cth cannot enact law which would retrospectively deprive s 109 of its operation (Metwally)

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Illustration of tests

Commercial Radio Coffs Harbour v Fuller

- Condition of Cth TV licence granted under Cth Act was erection of two antennae - Alleged inconsistency with Environmental Planning Act (NSW)

- Held no inconsistency under any of the three tests:

(1) The Cth Act made it an offence not to comply with the condition of the licence. However, it was held that this stopped short of requiring a licensee to disobey a State law.

(2) The duty to erect the antennae was construed as a qualified duty, not an authority.

(3) The two laws were construed to operate in different fields – technical requirements of broadcasting, and the environment.

Ansett Transport Industries v Wardley

- Airline Pilots Agreement allowed termination of employment, made pursuant to Cth Act - Alleged inconsistency with Equal Opportunity Act (Vic), made sex discrimination unlawful - Held no inconsistency under any of the three tests:

(1) Did not apply because possible to obey both laws by not discriminating

(2) Did not apply because Agreement did not confer an absolute right to dismiss – still had to accord with State laws

(3) Did not apply because occupied different fields – employment agreements with employees, and the separate and far-reaching subject matter of discrimination

EXTERNAL AFFAIRS POWER

Head of power

Under s 51(xxix), the Cth can make laws w.r.t ‘external affairs’. For a law to be within s 51(xxix), it need only come within one subject-matter dimension of power

Relations with other countries

The test is whether the Cth law concerns Australia’s relations with other countries (R v Sharkey) R v Sharkey – preserving relations

- s 24A: offence to ‘excite disaffection’ against the Government of any of the King’s Dominions’

- Held to fall within external affairs power because preserved friendly relations with other countries Koowarta v Bjelke-Petersen – “international persons”

- External affairs power extends to relations with other ‘international persons’ (e.g. intl orgs) Seas and Submerged Lands Case – unilateral assertion of sovereignty

- External affairs power extends to assertion of sovereignty over Australia’s continental shelf

 The idea of a ‘continental shelf’ was the product of international relations

- Majority held external affairs power extends to assertion of sovereignty over territorial sea Thomas v Mowbray – international duty

- Part 5.3 Criminal Code provided for control orders to combat terrorism - Held to fall within external affairs power

 Immaterial that law purely domestic in operation

 Terrorist acts connected to relations with other countries b/c terrorism is a global phenomenon – intl money networks, local act may have intl focus

 Kirby (dissent): decision under control order does not affect intl relations Matters external to Australia

The test is whether the law concerns a matter geographically external to Australia (Polyukhovich) Polyukhovich v Commonwealth – mere externality

- s 9 War Crimes Act: offence to be an Australian citizen who had committed a ‘war crime’

- Majority held s 9 applied to matters external Australia so within power Horta v Commonwealth – possible qualification

- Legislation passed pursuant to bilateral treaty between Australia and Indonesia - Held that legislation was supported by external affairs power

 The legislation applied to external matters with an obvious and substantial nexus to Australia

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 Appears to place qualification i.e. mere externality not enough XYZ v Commonwealth – confirmation of mere externality

- ss 50BA and 50BC made it an offence for Australian citizens to commit indecent acts overseas - Held to be within external affairs power; sufficient that laws applied to matters external to Australia Pape v Commissioner of Taxation – distinction between external matters and external causes - Rudd stimulus package in response to GFC

- Held law could not be founded on external affairs power

 Law which relates to internal matter is not justified by a perceived external need

 Hayne & Kiefel: causes of GFC may be external but package directed at Australian economy which is an internal matter

Implementation of treaties

The Cth has a wide power to implement binding treaties (Tasmanian Dam). However, this is subject to two limits (Industrial Relations Act Case):

(1) The treaty must not be merely aspirational

(2) The law must be reasonably capable of being considered appropriate and adapted to the fulfilment of the treaty obligations

#1 Mere aspiration

- A treaty does not enliven s 51(xxix) if it is merely aspirational; it must specify the manner of implementation required by signatory states (Industrial Relations Act Case)

- Declaration or recommendations may enliven s 51(xxix) but are more likely to be merely aspirational Pape v Commissioner of Taxation –recommendations

- Tax Bonus Act defended as implementing recommendations of G-20, IMF and OECD - Heydon: G-20 declaration merely aspirational because did not specify fiscal measures

#2 Reasonable proportionality

Tasmanian Dam Case – arbitrary imposition

- s 9(a)-(g) disproportionate b/c imposed automatic prohibition if declared by Governor-General regardless of the appropriateness of the measures for preserving heritage property

Richardson v Forestry Commission – too general

- s 16 disproportionate b/c provided general environmental protection, not protection of particular qualities of outstanding universal value

Industrial Relations Act Case – too broad

- s 170(1) prohibited termination of employment w/o ‘valid reason’, s 170(2) stated that a reason is not valid if the termination is harsh, unjust or unreasonable

- s 170(2) disproportionate b/c too broad – a termination may be valid but harsh

Development of case law R v Burgess; Ex parte Henry

- s 4 Air Navigation Act authorised making of regulations for control of air navigation - Upheld power under s 51(xxix) as giving effect to International Convention

 Evatt, Latham, McTiernan: unqualified principle that Cth can implement binding treaties

 Evatt, McTiernan: parliament can give effect to non-binding recommendations

 Starke: limitation to matters of ‘international significance’

 Dixon: limitation to matters ‘indisputably international in character’

Koowarta

- Minister refused to transfer land to Aboriginal Fund, sued under Racial Discrimination Act - Minister challenged Act as invalid exercise of external affairs power

- Held Act was valid law implementing 1966 Convention on Racial Discrimination

 No majority view on test to be applied

 Minority (Gibbs, Aickin, Wilson): used Dixon’s limitation that subject matter be external affair

 Stephen: adopted Starke’s limitation that matter be of ‘international concern’

Commonwealth v Tasmania (Tasmania Dam Case)

-Cth enacted Act to prevent dam construction, purported to implement UNESCO Convention - Act upheld 4:3 as valid exercise of external affairs power

 Majority adopt unqualified view of power that Cth can implement any treaty obligation

 Minority apply Stephen’s test of ‘international concern’: protection of environment and cultural heritage fails test because failure by one nation to take protective measures is not likely to

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adversely affect relations with or interests of other countries Richardson v Forestry Commission

- Inquiry into whether certain forests could qualify as world heritage area under UNESCO convention - s 16(1) prohibited forestry and road construction in areas under investigation

- Act upheld by majority as valid exercise of external affairs power applying Tasmanian Dam

 Majority: legislative implementation of international treaty concluded in good faith is valid

 Minority (Deane, Gaudron): legislative implementation must be ’proportionate’; s 16 afforded environmental protection rather than protection of qualities constituting world heritage Victoria v Commonwealth (Industrial Relations Act Case)

- Amendments to Industrial Relations Act relied partly on international conventions - Majority applied Tasmanian Dam unqualified view together with conformity doctrine

 Applying this test majority invalidated several provisions of Act; not fatal that law only partially implemented treaty unless leads to inconsistency

Possible subject-matter dimension – international law Universal jurisdiction

- Law which vested court with jurisdiction recognised by intl law as universal jurisdiction would come within s 51(xxix) (Brennan (dissent), Polyukhovich)

- Rejected argument in this case because of ‘disconformity’: the s 9 definition of war crimes was significantly different to international law definitions

UN security council resolutions

- Law which meets Australia’s obligations under UN security council resolutions within s 51(xxix) (Kirby Thomas v Mowbray, but not settled)

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TRADE AND COMMERCE POWER

Head of power

s 51(i): Cth can make laws w.r.t ‘trade and commerce with other countries and among the States’

Scope of ‘trade and commerce’

The courts have declined to give a precise definition (might be obvious e.g. ‘exports’ clearly trade) W & A McArthur v Queensland – not confined to ‘transport’

- ‘Trade and commerce’ not limited to mere act of ‘transportation’; includes all the commercial arrangements of which transportation is the direct and necessary result

Australian National Airways v Commonwealth (ANA Case) – gov can establish organisation - Australian National Airlines Act created government-owned airline service

- Act upheld as valid under s 51(i)

 Confirms broad interpretative approach in keeping with character of Constitution

 Law encompasses entry of government itself into field of commercial activity O’Sullivan v Noarlunga Meat – incidental aspect

- Cth reg 4B prohibited export of meat unless certain health requirements met; Cth reg 5 provided that all premises used for slaughter, treatment and storage of meat for export be registered

- Majority upheld validity of regs under s 51(i)

- Reg 4B clearly within s 51(i) w.r.t other countries; s 51(i) authorises total prohibition of any export, and power to prohibit export unless in compliance with prescribed conditions

- Reg 5 valid:

 The registration standard had a real causative relation to the fitness of meat for export

 Impossible to achieve the objectives of the Act by inspections at point of export

 Counter-argument:

(1) Course of commerce w/ other countries begins at a later stage (e.g. what if meat from the slaughter house was also sold for domestic purposes?)

(#) Principle of constitutional interpretation is that there is included in an express grant of power the capacity to do things the denial of which would render the grant ineffective

 Court more inclined to give incidental power greater scope if it is a law relating to other countries because less likely to impinge intrastate trade and commerce

Pape v Commissioner of Taxation - Tax Bonus Act not within s 51(i)

 Insufficient it has an effect on general trade and commerce – must be direct link

 Insufficient it might lead citizens to participate in trade or commerce, nothing in Act ensures expenditures or expenditures in trade and commerce w/ other countries and among States Intrastate trade and commerce

Under s 51(i), the Cth may not regulate intrastate trade and commerce (R v Burgess). The only exception is where the intrastate regulation is necessary for the physical safety of the interstate activity (Airlines of NSW No. 2)

R v Burgess – strict boundary

- s 4 Air Navigation Act authorised making of regulations for control of air navigation in Cth

- Co-mingling argument: Cth has power to regulate interstate air navigation; to ensure safety of interstate navigation must be able to regulate intrastate air navigation

- Court rejected argument

Airlines of NSW v NSW (No. 2) – physical safety

- Cth reg 198 required aircraft to have Cth licence; reg 199 provided that Director-General shall consider safety in issuing intrastate licence; reg 200 allowed licensees to operate feeder flights - Cth regs 198 and 199 valid under s 51(i)

 Intrastate trade and commerce may be regulated if law protects physical safety

 Reg 200 invalid; cannot regulate intrastate trade to make interstate trade more profitable Attorney-General (WA) v Australian National Airlines Commission – not economic integration - s 19B authorised intrastate transport for efficient conduct of ANAC (airline)

- Held s 19B was outside s 51(i)

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 Not necessary to physical safety; purpose to enhance profitability of interstate activity

CORPORATIONS POWER

Head of power

Under s 51(xx), Cth can make laws w.r.t ‘foreign corporations and trading or financial corporations formed within the limits of the Cth’. The first step is to determine whether … [organisation] is a foreign corporation or trading or financial corporation formed within the limits of the Cth. The next step is to determine whether … [activities] may be regulated.

Foreign corporation

A foreign corporation is any corporation formed outside the limits of the Cth (Incorporation Case).

Trading corporation

The test is an activities test. The trading activities need not be the predominant activity but must be a substantial portion of the business (Adamson’s Case).

R v Trade Practices Tribunal; Ex parte St George County Council – incorrect approach - Issue was whether St George County Council was a ‘trading corporation’

- Originally incorporated for broad purposes but current activities were supply of electricity - Court split 2:2 over whether to apply activities or purposes test, McTiernan joined the latter (Adamson’s Case) – trading activity

- Issue was whether Football club was a ‘trading corporation’ covered by Trade Practices Act - Majority applied ‘activities’ test

- Mason: trading is not limited to buying and selling at a profit; extends to any activity to earn revenue - Football club had substantial trading activities both in terms of amount (look at $!) and variety souvenirs, advertising, TV rights, renting premises

- Counter-arguments:

(1) Trading incidental to the main activity of promoting and encouraging sport

(2) Revenue not distributed to fee-paying club members – shows main activity not generating a profit Commonwealth v Tasmania (Tasmanian Dam Case)

- HEC was a corporation planning to build dam, generate and sell electricity

- HEC was trading corporation: substantial portion of total activities constituted trade in electricity Financial corporation

The test is an activities test. The financial activities need not be the predominant activity but must be a substantial proportion of total activities (State Superannuation Board).

Re Ku-ring-gai Co-operative Building Society – financial activity

- Financial activity is where the subject of the transaction is finance (e.g. borrowing or lending); does not include transactions where finance not the subject but involve payment (e.g. buying a car) - Co-operative building society a financial corporation

State Superannuation Board of Victoria v Trade Practices Commission

- Primary business of board was provision of super benefits, engaged in financial activities to do this - Majority held super board was a financial corporation

 Applied activities test: the board’s investment activities and loan-making were substantial Fencott v Muller – shelf company

- Company was a shelf company with no current activities - Majority held it was a trading or financial corporation

 Applied the purposes test: character determined by purposes for which it was created; look to articles of association and memorandum

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Activities

The narrow or ‘distinctive character’ test has been rejected (Work Choices). Whilst not confirmed, the Cth appears to have a wide power to regulate the business functions, activities and relationships of constitutional corporations (Work Choices). At a minimum, it can regulate non-trading (non-financial) activities undertaken for the purposes of the corporation’s trading (financial) activities (Tasmanian Dam).

AAEA v Fontana Films – other persons

- s 45D Trade Practices Act protected corporations against ‘secondary boycotts’

- Majority upheld s 45D as valid under s 51(xx)

- Rule: s 51(xx) can be used to regulate activities of other persons to protect corporations - Narrow (Gibbs, Wilson): law w.r.t trading corporation must have nexus to trading activities

- Wide (Mason, Murphy, Aickin): sufficient that law confers rights on trading corporation to be a law w.r.t trading corporation

Tasmanian Dam Case – non-trading activities for purposes of trading activities - Issue was whether ss 7 and 10 of World Heritage Act supported by s 51(xx)

- s 10 prohibited construction activities either at all (2), (3) or for the purposes of trading activities (4) - Majority upheld s 10(4)

- Only clear rule: s 51(xx) allows regulation of non-trading activities for the purposes of trading activity

 Narrow (Gibbs, Brennan): regulated activities for purposes of trading (only s 10(4) valid)

 Broad (Mason, Murphy, Deane): all activities of trading corporations can be regulated (upheld s 10(2),(3),(4))

Re Dingjan; Ex parte Wagner – ‘sufficient connection’ approach

- s 127B Industrial Relations Act allowed review of unfair contracts relating to a s 51(xx) corporation - Majority held s 127B not supported by s 51(xx)

 Applied test of characterisation: (1) character of law (2) connection to s 51(xx)

 No sufficient connection: the law’s legal or practical operation did not regulate or have significance for the ‘activities, functions, relationships or business’ of a s 51(xx) corporation New South Wales v Commonwealth (Work Choices Case)

- Workplace Relations Act enacted under s 51(xx)

- States challenged Act: argued s 51(xx) did not allow regulation of corporation’s internal activities;

argued for narrow ‘distinctive character test’ where the connection to s 51(xx) must be significant - Majority rejected challenge

 No support for internal/external distinction; rejected narrow view Incorporation

New South Wales v Commonwealth (Incorporation Case)

- Corporations Act enacted under s 51(xx) to regulate formation of corporations - Majority held Act invalid

 s 51(xx) cannot be used to regulate incorporation, only corporations already formed

Early approach

Huddart, Parker & Co v Moorehead

- s 5 & 8 Australian Industries Preservation Act prohibited ‘foreign corporations, trading and financial corporations formed within Cth’ from engaging in restrictive trade practices

- Act not supported by s 51(xx)

 3 majority judges construed s 51(xx) narrowly on basis of reserved State powers doctrine

 Higgins (majority) decided case consequentially on basis of list of ‘horribles’

Strickland v Rocla Concrete Pipes (Concrete Pipes Case)

- Overturned Huddart Parker because decided on defunct reserved State powers doctrine

EXTERNAL AFFAIRS POWER

Table of Contents

CONSTITUTIONAL INTERPRETATION

CHARACTERISATION

INCONSISTENCY

EXTERNAL AFFAIRS POWER

TRADE AND COMMERCE POWER

CORPORATIONS POWER