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Wednesday, 22 August 1906

Senator BEST (Victoria) .- The Committee is entitled to listen with the greatest respect to anything urged by my honorable friend Senator Symon, particularly in regard to a constitutional point, he having had the advantage of being a member of the Convention which ultimately framed the Constitution as we have it today. But in attempting to construe the Constitution we are obliged to eliminate from consideration1 every debate that took place in regard to it while it was being evolved. We have to cast aside every expression of opinion at the Convention. As a matter of fact, the High Court has held that in construing the Constitution it has no right, for judicial purposes, to look at the Convention debates, although for historical reasons it is justified in turning to the various stages of the Bill as considered by the several Conventions. The High Court has drawn that distinction. Although even an anomaly may be created by the terms of the Constitution itself, it has to be construed exactly as we find it. That principle of judicial construction of Acts of Parliament is constantly applied in the Courts, where sometimes it leads to hardship, and even to a degree of absurdity. But the Courts will, of course, endeavour to reconcile every section of an Act of Parliament, and, so far as they can, will give to all the sections the most intelligent meaning they can be made to bear. We have to see exactly what the Constitution, as we find it worded to-day, and as the Courts have to construe it, actually provides. Section 51 of the Constitution is generally governed by the words -

The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to.

Then follow thirty-nine paragraphs. According to my view, for the purpose of construing each' one of those thirty-nine paragraphs, the Court is* justified, if it so desires, in reading each independently, and even in not looking at the other thirty-eight.. The principle followed by the American Courts is to look to each paragraph which confers jurisdiction, and give to each the widest meaning and the fullest construction. It will even read them independently. I am not announcing any views of my own. I am announcing the views of the highest authorities of the United States, and views which have been laid down in judicial decisions. My first point is, therefore, that each paragraph can be read independently, being covered by the opening words of section 51, which I have quoted, and being also affected by paragraph XXXIX., which, reads -

Matters incidental to the execution of any power vested by this Constitution in the Parliament or in either House thereof, or in the Government of the Commonwealth, or in the Federal Judicature, or in any department or officer of the Commonwealth.

That is to say, Parliament has power to make laws "for the peace, order, and good government of the Commonwealth," with regard to each matter mentioned in the paragraphs of section 51, and also under paragraph xxxix., with respect to matters incidental to the execution of any power vested by the Constitution in Parliament. That is my first important point - that Parliament has the widest and fullest jurisdiction to deal with every subject mentioned in the thirty-nine articles. My second point is that where the Constitution intends any limitation we must find that limitation within the paragraph itself. For instance, there is a limitation in paragraph 1., which says that Parliament may make laws with respect to -

Trade and commerce with other countries and among the States.

There is a limitation in that paragraph outside which we must not go, although, as Senator de Largie has said, the power is further extended by section 98. The draftsman in preparing this Bill, adopted the actual word's of the Constitution in clauses 4 and 6, because he recognised that we are prevented by the terms of the Constitution from dealing with any person trading within a State because of the limitation in paragraph 1. Then, in framing clauses 5 and 8 of the Bill, the draftsman saw that we had more extended powers ; because Parliament may make laws with respect to -

Foreign corporations and trading or financial corporations formed within the limits of the Commonwealth.

It will be observed' that there are no limitations whatever in regard to these words. We therefore have, according to my view, to give the fullest and most extensive meaning to them. Senator Symon has urged that .that provision was only in tended to insure uniformity in companies law. It is a singular thing, however, that the various Conventions, in dealing with this clause, modified it considerably. In Quick and Garran's Annotated Constitution, page 604, there is the following historical note: -

51.   (xx). Foreign corporation's, and trading or financial corporations formed within the limits of the Commonwealth : -

Historical Note - " Status of .corporations and joint stock companies in other colonies than that in which they have been constituted " was a subject which might be referred to the Federal Council under the Act of 1885.

In the Bill of 1891 the sub-clause was worded - " The status in the Commonwealth of foreign corporations, and of corporations formed in any State or part of the Commonwealth." In Committee Mr. Munro and Mr. Bray suggested that there should be power to prescribe :i uniform law for the incorporation of all trading corporations ; but Sir Samuel Griffith thought it unnecessary. (Conv. Deb., Syd., 1891, pp. 685-6).

At Adelaide the sub-clause was drawn as follows : - " Foreign corporations and trading corporations formed in any State or part of the Commonwealth." In Committee the words " or financial" were added. (Conv. Deb., Adel., pp. 793-4). At Melbourne, after the fourth report, the words " within the limits of the Commonwealth " were substituted for the words " in any State or part of the Commonwealth."

Then, of course, we got the Constitution in its present form. I will admit that, if paragraph xx. of section 51 stood in its original form -

The status in the Commonwealth of foreign corporations and of corporations formed in any State or part of the Commonwealth, the contention of my honorable friend Senator Symon would be completely correct. But, as a matter of fact, the Convention rejected that limited conveyance of jurisdiction.

Senator Sir Richard Baker - Bv- what was considered to be one of the drafting alterations.

Senator BEST - I do not care whether it was a drafting alteration or otherwise. My contention is that, if status: had been meant, and it had been intended to limit the paragraph to status, that word would have been inserted. But instead of that the Convention declared that it would not limit the jurisdiction to status.

Senator Sir Josiah Symon - It did nothing of the kind. Let the honorable senator read the debates.

Senator BEST - The Court will not read the debates.

Senator Sir Josiah Symon - The Senate is not a Court.

Senator BEST - But my honorable friend will realize that it is the Court that has to construe this provision of the Constitution.

Senator Sir Josiah Symon - The Court can always listen to the history of an enactment, although it would not be guided by the opinions of individuals.

Senator BEST - The High Court expressly decided, in the case of Tasmania against the Commonwealth, that it could not take notice of what was said at the Conventions.

Senator Sir Josiah Symon - We had the debates read before the Court in South Australia the other day.

Senator Mulcahy - Is it not our duty to legislate according to the terms of the Constitution ?

Senator BEST - We have an absolute right, according to my view, lo legislate generally in regard to foreign corporations and trading or financial corporations formed within the limits of the Commonwealth, and not only in regard to their status.

Senator Sir Josiah Symon - Does the honorable senator think that the States would ever have consented to the Commonwealth interfering with trade and commerce within their respective limits?

Senator BEST - That consideration is hardly relevant. What the States might or might not have done is beside the question. The question is, what are our powers under the Constitution ? If it h|ad been intended, as Senator Symon contends, to limit our powers in regard to foreign corporations and trading and financial corporations formed within the limits of the Commonwealth, to status, or .the enactment of uniform laws, the Constitution would have said so, and the limitation would have appeared in paragraph xx. itself. Instead of that we have the widest and fullest words -

Foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth.

I propose making a verv short reference in support of my contention first, that we have the right to read each of these paragraphs independently; secondly, that the limitations must be conferred within the terms of each paragraph itself;, and, thirdly, that we have the right to give the fullest meaning to each of the paragraphs.

Senator Mulcahy - Is the honorable senator not reading paragraph i into paragraph xx. ?

Senator Keating - Why not read subparagraph xx. into paragraph i ?

Senator Mulcahy - I am afraid that Senator Best is confusing the two paragraphs

Senator BEST - What I say is that, for the purposes of clauses 5 and 8, we depend on paragraph xx. alone.

Senator Sir Josiah Symon - Where is the power?

Senator BEST - Under paragraph xx. of section 51 of the Constitution.

Senator Keating - The desire seems to be to subordinate paragraph xx. to paragraph 1.

Senator BEST - I ask amy honorable senator if he can see any limitation in the words of paragraph xx. -

Foreign corporations and trading or financial corporations formed within the limits of the Commonwealth.

There is no limitation there, and, consequently, according to American decisions, Parliament may legislate as it pleases in regard to foreign corporations and trading or financial corporations - we may limit and control their trade exactly as we like. I contend that that is in accordance with all the principles, and the construction, of the American Constitution. Why .should the Senate limit itself in the exercise of its jurisdiction ? When the Constitution confers, as it does, the right to deal with the subjects set forth in the various paragraphs of section 51, why not give the fullest meaning to the words, instead of .limiting the meaning in the manner suggested.

Senator McGregor - Why is there not a limitation as in the case of insurance and banking companies?

Senator BEST - I can illustrate what I mean by referring to half-a-dozen or more of the paragraphs of section 51 of the Constitution. For instance, paragraph 11. gives the power to make laws with respect to taxation, but there is the limitation -

Taxation ; but not so as to discriminate between States or parts of States.

Then, in regard to banking, paragraph xiii. is as follows: -

Banking, other than State banking; also State banking extending beyond the limits of the State concerned, the incorporation of banks, and the issue of paper money.

Mark the limitations in every line. . In regard to trading corporations, if the intention had been to cut our powers down, it must have been so expressed.

Senator de Largie - Does the honorable senator contend that the absence of limiting words gives a significance to paragraph 1 of section 51, so far as trade matters are concerned?

Senator BEST - I say that the meaning of paragraph xx. is that we may regulate trading and financial corporations formed within the Commonwealth in relation to their trade and commerce,1 though the same be confined to any one State.

Senator Keating - Regulate all their operations ?

Senator BEST - Regulate all their operations, even although it should interfere with State legislation. I propose to read only a few lines on this question; and I first refer to Notes on the United States Constitution, in which, at page 77, there is the following : -

The powers conferred upon Congress must be regarded as relative to each other and all means to a common end ; so when Congress has power to do an act by virtue of distinct powers it may exercise which it pleases; and when it professes to act under one it need not resort to any other, or when Congress has power to accomplish a certain result, indirectly by one mode, it may do so directly by another; but no power in itself substantive can be exercised or contravened by action under an incidental power, nor can an act which cannot be done directly, because of defect in power, be done indirectly.

That seems to me to show very conclusively ' that Congress has. distinct powers, and may exercise which it pleases, and in clauses 5 and 8 we have seen fit to exercise the powers given by paragraph xx. of section 51 of the Constitution. I should now like to refer to the volume Treaty Making Power of the United States, bv Butler, page 59 -

In this chapter it is intended to refer to certain instances in which the treaty-making power has been exercised to its widest extent, and far beyond any prerogatives expressly stated in the Constitution, and, possibly, in direct contraven-. tion of constitutional limitations, but in which it has also been determined by the Supreme Court that it was properly exercised.

The author goes on to refer to State legislation as controlled by treaty stipulations. In the United States the Federal authority has direct power to make treaties, and I desire to show that the exercise of this power extends even to the contravening of State laws, if the latter in .any way interfere with the making of treaties.

As already shown the regulation of the descent of property, a matter wholly within the local jurisdiction of the separate States, has been the subject of treaty negotiation and stipulations, with the result that State laws in regard thereto have been declared inoperative, so far as they conflict with treaty provisions; that condition, however, results from the fact that the United States, through the treaty-making power, directly controls State legislation pursuant to that clause in the Constitution which makes treaties the supreme law of the land ; in this chapter it is intended to refer to matters which are not within the jurisdiction of any State, but which affect the people of the United States in their relation to the Federal Government.

This shows that the mere power to make treaties enables, the central power to enter into treaties of such a character as to interfere with State laws; it shows the great extent to which the Courts, bv giving the widest and most extended meaning, have carried the powers conferred by the United States Constitution. That must be so, because, otherwise, where is the limit to be drawn ?

Senator Keating - It is for those who oppose the honorable senator to show exactly where the boundary of our power is.

Senator BEST - Yes, to show us the boundary line.

Senator Dobson - The boundary line is that we cannot interfere with trade within a State.

Senator BEST - But that is not provided.

Senator Dobson - That is the limit.

Senator Keating - Suppose we were passing a Companies Bill, where would Senator Dobson say the limit was?

Senator Dobson - We could do anything in regard to the regulation of companies, not going beyond paragraph 1 of section


Senator BEST - That is. what the American Constitution and the decisions thereon show conclusively is not the case. According to those decisions, we are at liberty to read separately all the paragraphs conferring jurisdiction, and give them the widest and most extended meaning. In the report of the case of Buckfield v. Strachan, in the United States Reports, Vol. 192, page 470, is the following:

Every intendment is in favour of the validity of a statute, and it must be presumed to be constitutional unless its repugnancy to the Constitution clearly appears.

In other words, this Bill, if passed, must be presumed to be right unless it is clearly against the Constitution. The report of the case proceeds -

The power of Congress to regulate foreign commerce, being an enumerated power -

In the same way paragraph 1 of section 51 is an enumerated power - is complete in itself, acknowledging no limitations other than those prescribed in the Constitution.

Senator Dobson - It is prescribed in the Constitution ; between the States is the limitation.

Senator BEST - Senator Dobson must see that what this case decides is that each of the thirty-nine powers conferred by section 51 is complete in itself, and must be regarded- as complete in itself, just as though the other thirty-eight were absent. In this case it was argued for the plaintiff that, the police power being within the control of the States, Congress could not exercise any jurisdiction involving police power. Later on, at page 492, we read -

The power to regulate commerce with foreign nations is expressly conferred upon Congress, and being an enumerated power is complete in itself, acknowledging no limitations other than those prescribed in the Constitution.

Senator Drake - That is right.

Senator BEST - Exactly ; but the honorable senator ignores the fact that the power is complete in itself. Certain cases were quoted in support of that view.

Whatever difference of opinion, if any, may have existed or does exist concerning the limitations of the power, resulting from other provisions of the Constitution, so far as Inter-State commerce is concerned, it is not to be doubted that from the beginning Congress has exercised a plenary power in respect to the exclusion of merchandise brought from foreign countries -

Could anything be clearer than that? - not alone directly by the enactment of embargo statutes, but indirectly as a necessary result of provisions contained in tariff legislation. It has also*, in other than tariff legislation, exerted a police power over foreign commerce -

The police power being essentially a State power - by provisions which in and of themselves amounted to the assertion of the right to exclude merchandise at discretion. This is illustrated by statutory provisions which have been in force for more than fifty years, regulating the degree of strength of drugs, medicines, and chemicals entitled to admission into the United States, and excluding such as did not equal the standards adopted.

Although it is within the power of the States to make police laws, and to limit the standard of drugs and so forth, yet Congress has the right to put aside the State powers so far as they interfere with the exercise of the central plenary powers.

Senator Pulsford - The honorable senator is not defending. States rights.

Senator BEST - I am defending the Constitution; I am arguing as to what our rights are under the Constitution. I challenge any honorable senator to point to any limitation in paragraph xx. by virtue of which the two clauses in the Bill have been framed. I have now the case to which I referred, ira which, it was held that we were not justified in referring in Court to the opinions of members of the Federal Convention. It is the case of Tasmania v. the Commonwealth of Australia. Chief Justice Griffith said -

We think that as matter of history legislation, the draft Bills prepared under the authority of the Parliaments of the several States may be referred to. That will cover the draft Bills of i8gi,*i8o7, and 1898. But expression of opinion of members of the Conventions should not be referred to.

Senator Drake - Putting the opinions on one side, the history of the particular paragraph shows what was intended.

Senator Keating - The history shows that at that time status alone was considered.

Senator BEST - History, to which we are justified in referring, completely establishes mv contention. The history of this legislation is that then status alone was referred to. whereas, when we come to the Constitution itself, we have the wider words which appear in paragraph xx.

Senator Henderson - Which show the intention.

Senator BEST - Exactly. We exercise our powers, not by the more limited words, but by the wider words. According to my view, honorable senators are justified in exercising to the fullest extent our powers in this connexion. I do not think that we should be deterred for a moment from doing so when we know that the object of the two clauses is to limit the' improper and nefarious operations of corporations which have a special design upon Australian industries.

Senator Sir RICHARDBAKER (South Australia) [5.31]. - Senator Best has laid down some rules for the construction of Statutes correctly, and others), I think, incorrectly. There are some rules to which he has not referred. One is that if the construction which ia contended for a Statute leads to an absurd and ridiculous conclusion the Court will struggle against that construction. Does not the construction for which Senator Best contends lead to a ridiculous conclusion? He, in effect, affirms that if two corporations - one a foreign corporation and the other a corporation registered in the State - are trading within the limits of a State, the laws of the Commonwealth may be applied to one but not to the other.

Senator Best - I never suggested that for a moment.

Senator Sir RICHARDBAKER.That is what it comes to. It is admitted that' we cannot apply Commonwealth laws to the trade of a corporation registered in a State when it confines its operations within the State.

Senator Best - I say most distinctly that we can deal with all corporations.

Senator Sir Josiah Symon - But not with individuals.

Senator Sir RICHARD BAKER - It comes to the same thing. If a corporation trades alongside an individual in a State, and attempts to do the same kind of business, those two persons - for in law both are persons - have to trade under different laws, namely, one under Commonwealth law and the other under State law. Can it be supposed for a moment that the Convention ever intended a differentiation of that kind ?

Senator Best - I do not care what the Convention intended.

Senator Sir RICHARD BAKER - Where the construction of a Statute leads to an absurd conclusion, the Court will always try to put a common-sense meaning on the Act, or, as. in this case, on the Constitution. When the Constitution Bill was introduced in the Convention of 1891 - I was a member of the Convention of 1891 and of that of 1897-8 - the words used were " The status in the Commonwealth of foreign corporations," and that phrase was noc intended to be altered, nor was it ever altered, except as a drafting amendment. I contend that the framers of the Constitution undoubtedly did what thev intended to do.

Senator Best - Does the honorable senator see the word "status" in paragraph xx. ?

Senator Sir RICHARD BAKER - It was taken out of the paragraph as a drafting alteration, but it is there in effect, although not in words. Undoubtedly that is what it means. I entirely agree with the contention of Senator' Symon. The Senate is not a court of law, and we ought to adopt a common-cense meaning when we can. Is there anything in paragraph xx. of section 51 which prevents us from doing so ? It seems to me to be quite clear that our powers in relation to trade and commerce are limited to " trade and commerce between the States." I do not believe that the States would have agreed to accept the Constitution Bill if they had imagined for a moment that the Commonwealth could interfere in their internal affairs. I am an> advocate of States rights, and I do not desire to speak at any length. Senator Best has spoken at great length, and used a great many arguments which seem to me not to bear upon the point at issue. As regards the power of the American Congress to regulate the strength of drugs which are imported into the United States what has that to do with the point under consideration? I do not see that it has any relevancy. No one doubts that this Parliament has the power to regulate the strength of drugs imported into the Commonwealth ; the contrary is not contended for. I hope that the Committee will not so frame this Bill that it would be upset directly it was taken before the High Court, which, 1 feel sure, would be the result if Senator Best's view were adopted. I do not pretend to be an admirer of the Bill. If I wanted to make it null and void I should certainly vote with Senator Best. That would be mie best course for the violent enemies of the Bill to take.

Senator Best - I should be prepared to take the risk.

Senator Sir RICHARD BAKER - I do not wish to be a party to the passing of a Bill which I believe would be of no use, because the High Court would say that we had exceeded our powers. I hope that a common-sense view will prevail.

Seantor DOBSON (Tasmania) [5.35].- I hope that Senator Stewart will withdraw his amendment, because, if adopted, it would reflect no credit upon the Senate. The speeches of Senators Symon and Baker axe so clear that I cannot understand anyone doubting their statement of the law. I have in my hand an indirect authority on the question at issue. In his Trusts in the United Slates, Von Halle says -

What seems to the author indispensable for the beginning of an effective solution of the difficulties is, above all, a uniform commercial code, or at least a uniform corporation law for the whole United States. A uniform practice is indispensable, considering that the activity of the great enterprises has extended far over the boundaries of individual States. It can only be a question of time, until, by an amendment of the Constitution, the corporation law shall have been brought within the reach of congressional legislation.

It is quite true, as Senator Best has said, that the Constitution of the United States does not contain a provision empowering the Congress to exercise control over foreign corporations.- But let us see what has led up to the paragraph I have quoted. It will be recollected by those who have read books on trusts that one of the greatest curses or evils of the trust system in America is that when a big meat company seeks to get rid of competition it sets to work to buy up every meat factory or canning company in the territory. It gives the different factories full market value, generally their own price, and issues to them preference shares for that amount. But in order to make a good thing out of the transaction, the big company issues millions of ordinary shares, for which there is no good-will or value. Of course, in order to pay a dividend on this enormously watered stock, the trust has to be run for all it is worth, and, therefore, it acts with that brutal tyranny and selfishness which we read about. Von Halle goes on to say -

No author has conceived better the meaning of the corporation problem for the Commonwealth than Henry C. Adams. He asks for publicity, publication of the results, and the ways in which they were reached, a control through public bodies, and a responsibility of the individual member of the administration of the corporation for the observance of the necessary restrictions. The leaders of the large companies have power and honour, but are not kept face to face with sufficient public supervision.

Senator Keatinghas said that it rests with us to show the limits of our legislative power in regard to foreign corporations. I contend that the Parliament has the power to enact any law" in that regard. It is enabled to say that there shall be the most perfect publicity relative to different trading companies; also, that trusts shall not issue shares beyond a legitimate value, certified to by proper valuers, and shall publish the results of their dealings. It can lay down rules without limit in regard to the status and doings of companies.

Senator Playford - It can say that they shall not do anything to the injury of Australian manufacturers, and so on.

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