Section 51(xx) of the Constitution of Australia

Section 51(xx) of the Australian Constitution, is a subsection of Section 51 of the Australian Constitution that gives the Commonwealth Parliament the right to legislate with respect to "foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth". This power has become known as "the corporations power".

Early approaches to 1971

After the High Court's decision in Huddart, Parker & Co Pty Ltd v Moorehead (1909), the "corporations" power was largely ignored as a basis for Commonwealth legislation. The majority judges agreed in this case that the power should be construed narrowly, though they were unable to agree on any appropriate interpretation. Their approach reflected the perceived need to protect "the reserved powers of the States", an idea abandoned in 1920 as a result of Amalgamated Society of Engineers v Adelaide Steamship Co Ltd. Justice Issacs, in dissent, gave a broad meaning to s 51(xx) but attempted to set limits to the power.

It was not until Huddart Parker was overruled in Strickland v Rocla Concrete Pipes Ltd (Concrete Pipes Case) (1971) that the modern development of the power began. The leading judgment was delivered by Chief Justice Barwick. He refused to define the scope of the corporations power, stating instead, "the decision as to the validity of particular laws yet to be enacted must remain for the Court when called upon to pass upon them". The Concrete Pipes Case gave a clear indication that the Commonwealth could enact trade practices legislation by relying chiefly upon s 51(xx).

The course of High Court decision-making on s 51(xx) since the Concrete Pipes Case has been mostly confined to particular issues and has proceeded on the case-by-case basis foreshadowed by Barwick.

Trading and financial corporations

The first issue to be addressed after the Concrete Pipes Case was the meaning of "trading or financial corporations". The characteristics of the term have been the focus of much attention and debate.

The crucial issue in R v Trade Practices Tribunal; Ex parte St George County Council (1974) was whether an organisation's characterisation as a corporation was to be assessed by reference to the "original purposes" for which the Council was incorporated, or by reference to its "current activities". In this case, the majority preferred the "purposes" test.

Five years later in 1979, however, the High Court went the opposite way in R v Federal Court of Australia; Ex parte WA National Football League (Adamson's Case). Chief Justice Barwick, and justices Mason, Murphy and Jacobs all applied an "activities" test - although Justice Murphy asserted that a corporation will fall within s 51(xx) if either test applies. Although the majority judgments did not explicitly overrule St George County Council, they may now be taken to have done so. While Adamson's Case established the activities case, it did not settle whether the activities of a corporation need to be its "predominant" activities in order for it to wear the character of a trading corporation, or if a "substantial part" was all that was required.

The characteristics of a "financial corporation" were approached in State Superannuation Board of Victoria v Trade Practices Commission (1982) by justices Mason, Murphy and Deane in much the same way as Adamson's Case approached "trading corporations": that is, a corporation is a "financial" corporation if it engages in financial activities. State Superannuation Board is significant because the majority held that, in order for a corporation to be a "financial corporation", its financial activities need not be its predominant activities, but need only form a substantial proportion of its total activities. The majority justices, however, did not entirely exclude the "purposes" test.

The case of a shelf company with no current activities was considered in Fencott v Muller. Justices Mason, Murphy, Brennan and Deane, who had hiterto favoured the "activities" test, now held that it was a "trading or financial corporation" by applying the "purposes" test. They argued that in the absence of any current activities, the character of the corporation should be determined by the purposes for which it was created.

Regulating the activities of corporations

In most of the early cases, the question of what aspects or activities of a corporation can be regulated under s 51(xx) was not directly addressed. Some incidental points were clarified in R v Australian Industrial Court; Ex parte CLM Holdings Pty Ltd (1977). That case established that, where the activities of a s 51(xx) corporation were validly regulated, the conduct of individual persons taking part in those activities, such as company directors, could incidentally be regulated as well.

In Actors and Announcers Equity Association v Fontana Films Pty Ltd (1982), the Court still did not deal directly with the regulation of a corporation's activities. The whole Court upheld a section which protected a corporation against a secondary boycott. The legislative purpose thus upheld was protection of corporations rather than regulation of them. The case also provided an opportunity for extensive discussion of how far the "corporations" power might extend.

See also

• Workplace Relations Act 1996
• Australian industrial relations legislation, 2005
• New South Wales v Commonwealth (Workplace Relations Challenge)