Bank of New South Wales v Commonwealth
Encyclopedia
Bank of New South Wales v The Commonwealth (1948) 76 CLR
1, also known as the Bank Nationalisation Case, is a notable case of the High Court of Australia
.
government of Ben Chifley
announced in 1947 its intention to nationalise
private banks in Australia. It achieved this process by passing the Banking Act 1947 (Cth). The policy was that banks would be purchased by the Commonwealth Bank of Australia
, which in turn would be owned by the Federal Government. The policy proved controversial, and the Bank of New South Wales
challenged the constitutional validity
of the law.
lasted for a record 47 days. A number of arguments were put to the Court, most of which were rejected. However it eventually declared the law invalid on two primary bases. The first of these was based upon an 'individual rights' interpretation of the operation of the constitutional freedom of interstate trade and commerce (s 92), which the Court held conferred a positive right on the banks to engage in the business of interstate banking. This particular understanding of s 92 would remain highly influential, until it was overturned in favour a 'free trade' interpretation in Cole v Whitfield
. The second basis for the Court's decision was that the mechanism used to nationalise the banks was not on "just terms" and therefore was outside the Commonwealth's constitutional power to acquire property compulsorily under section 51(xxxi)
.
. The Chifley Government lost power ostensibly due to the problems regarding this legislation and the Court case.
Commonwealth Law Reports
The Commonwealth Law Reports are the authorised reports of decisions of the High Court of Australia. The CLR are published by the Lawbook Company, a division of Thomson Reuters...
1, also known as the Bank Nationalisation Case, is a notable case of the High Court of Australia
High Court of Australia
The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, has the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the States, and...
.
Background
Comfortable in government after two strong election wins, the LaborAustralian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
government of Ben Chifley
Ben Chifley
Joseph Benedict Chifley , Australian politician, was the 16th Prime Minister of Australia. He took over the Australian Labor Party leadership and Prime Ministership after the death of John Curtin in 1945, and went on to retain government at the 1946 election, before being defeated at the 1949...
announced in 1947 its intention to nationalise
Nationalization
Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
private banks in Australia. It achieved this process by passing the Banking Act 1947 (Cth). The policy was that banks would be purchased by the Commonwealth Bank of Australia
Commonwealth Bank of Australia
The Commonwealth Bank of Australia is a multinational bank with businesses across New Zealand, Fiji, Asia, USA and the United Kingdom. Commonwealth Bank provides a variety of financial services including retail, business and institutional banking, funds management, superannuation, insurance,...
, which in turn would be owned by the Federal Government. The policy proved controversial, and the Bank of New South Wales
Westpac
Westpac , is a multinational financial services, one of the Australian "big four" banks and the second-largest bank in New Zealand....
challenged the constitutional validity
Constitutionality
Constitutionality is the condition of acting in accordance with an applicable constitution. Acts that are not in accordance with the rules laid down in the constitution are deemed to be ultra vires.-See also:*ultra vires*Company law*Constitutional law...
of the law.
Decision
The Court hearingHearing
Hearing may refer to:* Hearing , the sense by which sound is perceived* Hearing , a person who has hearing within normal parameters* Hearing , a legal proceeding before a court or other decision making body or officer...
lasted for a record 47 days. A number of arguments were put to the Court, most of which were rejected. However it eventually declared the law invalid on two primary bases. The first of these was based upon an 'individual rights' interpretation of the operation of the constitutional freedom of interstate trade and commerce (s 92), which the Court held conferred a positive right on the banks to engage in the business of interstate banking. This particular understanding of s 92 would remain highly influential, until it was overturned in favour a 'free trade' interpretation in Cole v Whitfield
Cole v Whitfield
Cole v Whitfield 165 CLR 360; [1988] HCA 18 was a landmark High Court of Australia decision where the Court overruled the long-held notion that the words "absolutely free" in Section 92 of the Australian Constitution protected a personal individual right of freedom in interstate trade. It was...
. The second basis for the Court's decision was that the mechanism used to nationalise the banks was not on "just terms" and therefore was outside the Commonwealth's constitutional power to acquire property compulsorily under section 51(xxxi)
Section 51(xxxi) of the Australian Constitution
Section 51 of the Constitution of Australia is a subsection of Section 51 of the Constitution of Australia providing that the Commonwealth has the power to make laws with respect to "the acquisition of property on just terms from any State or person for any purpose in respect of which the...
.
Aftermath
The case was appealed to the Privy CouncilPrivy council
A privy council is a body that advises the head of state of a nation, typically, but not always, in the context of a monarchic government. The word "privy" means "private" or "secret"; thus, a privy council was originally a committee of the monarch's closest advisors to give confidential advice on...
. The Chifley Government lost power ostensibly due to the problems regarding this legislation and the Court case.
See also
- ConstitutionalismConstitutionalismConstitutionalism has a variety of meanings. Most generally, it is "a complex of ideas, attitudes, and patterns of behavior elaborating the principle that the authority of government derives from and is limited by a body of fundamental law"....
- Constitutional economicsConstitutional economicsConstitutional economics is a research program in economics and constitutionalism that has been described as extending beyond the definition of 'the economic analysis of constitutional law' in explaining the choice "of alternative sets of legal-institutional-constitutional rules that constrain the...
- Political economyPolitical economyPolitical economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...
- Rule according to higher lawRule according to higher lawThe rule according to a higher law means that no written law may be enforced by the government unless it conforms with certain unwritten, universal principles of fairness, morality, and justice...