''Bank of New South Wales v The Commonwealth'', also known as the Bank Nationalisation Case, is a decision of the High Court of Australia. that dealt with the constitutional requirements for property to be acquired on "just terms",(xxxi) "The Parliament shall, subject to this Constitution, have power to make laws for ... the acquisition of property on just terms ...". and for interstate trade and commerce to be free. Trade within the Commonwealth to be free. The High Court applied an 'individual rights' theory to the freedom of interstate trade and commerce that lasted until 1988, when it was overturned in favour a 'free trade' interpretation in '' Cole v Whitfield''..

Background

Comfortable in government after two strong election wins, the

Labor Labour or labor may refer to: * Childbirth, the delivery of a baby * Labour (human activity), or work ** Manual labour, physical work ** Wage labour, a socioeconomic relationship between a worker and an employer ** Organized labour and the la ...

government of

Ben Chifley Joseph Benedict Chifley (; 22 September 1885 – 13 June 1951) was an Australian politician who served as the 16th prime minister of Australia from 1945 to 1949. He held office as the leader of the Australian Labor Party (ALP) from 1945, follow ...

announced in 1947 its intention to

nationalise Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to pri ...

private banks in Australia. To accomplish this goal the Parliament passed the '' Banking Act 1947''. Under the Act, shares in the private banks would be owned by the

Commonwealth Bank of Australia The Commonwealth Bank of Australia (CBA), or CommBank, is an Australian multinational bank with businesses across New Zealand, Asia, the United States and the United Kingdom. It provides a variety of financial services including retail, busine ...

, which in turn would be owned by the Federal Government. The proposal was controversial, and the constitutional validity of the law was challenged by a number of banks, including the

Bank of New South Wales The Bank of New South Wales (BNSW), also known commonly as The Wales, was the first bank in Australia, being established in Sydney in 1817 and situated on Broadway. During the 19th century, the bank opened branches throughout Australia and N ...

, as well as the non-

states of Victoria, South Australia and Western Australia. The banks were represented by a formidable legal team, with the Australian incorporated banks represented by

Garfield Barwick Sir Garfield Edward John Barwick, (22 June 190313 July 1997) was an Australian judge who was the seventh and longest serving Chief Justice of Australia, in office from 1964 to 1981. He had earlier been a Liberal Party of Australia, Liberal Part ...

, who would later become the Chief Justice, and the United Kingdom incorporated banks represented by Kitto , who would later be appointed to the High Court, while the Commonwealth was represented by the former High Court judge H. V. Evatt .

Decision

The Court hearing lasted for a record 39 days. The summary of the parties arguments occupies 143 pages of the Commonwealth Law Report. A number of arguments were put to the Court, most of which were rejected. However the Court declared the law invalid on four grounds, albeit by different majority of judges: *Section 92 of the Constitution, in providing that "trade, commerce, and intercourse among the States ... shall be absolutely free." conferred a positive right on the banks to engage in the business of interstate banking. *it involved the acquisition of property that was not "on just terms, contrary to section 51(xxxi) of the Constitution. The problem with acquisition arose out of the Act's sections detailing the appointment of new directors for all private banks with the power to control, manage, direct and dispose of assets of those banks. Dixon J held that this was a "circuitous device to acquire indirectly the substance of proprietary interest." *The Act, in setting up a "Court of Claims", invalidly attempted to oust the original jurisdiction of the High Court. Original jurisdiction of High Court.

Aftermath

The Commonwealth government appealed the decision in the

Judicial Committee of the Privy Council The Judicial Committee of the Privy Council (JCPC) is the highest court of appeal for the Crown Dependencies, the British Overseas Territories, some Commonwealth countries and a few institutions in the United Kingdom. Established on 14 Aug ...

, in '' Commonwealth v Bank of New South Wales'' (1949). The Privy Council affirmed the High Court's decision. At the 1949 federal election the Chifley Government lost power, ostensibly due to the problems regarding this legislation and the Court case. This particular understanding of s 92 would remain highly influential, until it was overturned in favour a 'free trade' interpretation in '' Cole v Whitfield''.

References

{{reflist High Court of Australia cases Australian constitutional law Freedom of interstate trade and commerce in the Australian Constitution cases Acquisition of property in the Australian Constitution cases Corporations power in the Australian Constitution cases 1948 in case law 1948 in Australian law

Background

Decision

Aftermath

See also

References