Re Hawthorn Pty Ltd; Diano Motors Pty Ltd; Diano Nominees Pty Ltd; Diano Motors (Tennant Creek) Pty Ltd; and Dino Joseph Diano and Diane Margaret Diano v State Bank of South Australia and Richard England [1993] FCA 9 (29 January 1993)

FEDERAL COURT OF AUSTRALIA

Re: HAWTHORN PTY. LTD.; DIANO MOTORS PTY. LTD.; DIANO NOMINEES PTY. LTD.;
DIANO MOTORS (TENNANT CREEK) PTY. LTD.; and DINO JOSEPH DIANO and DIANE
MARGARET DIANO
And: STATE BANK OF SOUTH AUSTRALIA and RICHARD ENGLAND
No. D G14 of 1991
FED No. 15
Number of pages - 26
Practice and Procedure
(1993) 14 ATPR 41-219
(1993) 112 ALR 691
(1993) 40 FCR 137

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NORTHERN TERRITORY DISTRICT REGISTRY
GENERAL DIVISION
O'Loughlin J.(1)

CATCHWORDS

Practice and Procedure - application to strike out Statement of Claim - whether provisions of Trade Practices Act 1974 (Cth) apply to State Bank of South Australia - whether State Bank of South Australia is an instrumentality of the Crown in right of the State.

Crown Immunity - See above

HEARING

ADELAIDE
29:1:1993

Counsel for the Applicants: Mr P.A. Tribe

Solicitors for the Applicants: Messrs Forbes Quinert

Counsel for the State Bank of Mr R.D. Lawson QC and South
Australia: Mr N.G. Rochow

Solicitors for the State Bank of

South Australia: Messrs Finlaysons

(No appearance for the Respondent

Richard England)

Counsel for the Applicants : Mr P.A. Tribe

ORDER

THE COURT ORDERS THAT:
1. The amended Statement of Claim be struck out.

2. The applicants be at liberty to file and serve a further amended Statement of Claim, within fourteen days of this date.

3. The applicants pay the costs of the respondent, the State Bank of South Australia, of and incidental to these orders which costs are to be taxed in default of agreement.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

O'LOUGHLIN J. The four corporate applicants were each incorporated in the Northern Territory of Australia. One or other of them conducted the Mitsubishi and the Toyota car dealerships in Alice Springs and another separately in Tennant Creek; others were involved in large property developments in those towns. Those developments sustained large losses. As a result, on 13 April 1988, the first named respondent, the State Bank of South Australia, exercised its powers as a secured creditor to enter into possession of various properties owned by the first three named applicants.

2. At or about the same time, the Bank appointed the second named respondent, Mr Richard England, its agent to conduct the businesses of the applicants and to oversee the realization of the properties that were the subject of its securities. It has been pleaded in the Statement of Claim (and for the purpose of considering the present application I accept) that Mr England was, at all material times, an officer of the Bank within the meaning of s3 of The State Bank of South Australia Act 1983 (S.A.), ("the State Bank Act") and that he was acting as an agent of the Bank.

3. Paragraph 10 of the Statement of Claim contains the following allegation:

"10. In about the month of November 1988 England acting for
and on behalf of the bank proposed to the applicants
that there be a restructuring of the affairs of the
first three named applicants which would involve the
third to sixth named applicants in providing
securities and guarantees to the bank. ("The
Restructuring Proposal")."

4. Later provisions of the Statement of Claim list the representations that were allegedly made by Mr England as part of the Restructuring Proposal (paragraph 11) and the details of the proposal, which, so it was claimed, was implemented pursuant to an agreement in writing made on 7 April 1989 (paragraphs 14 and 15). In paragraph 17 of the Statement of Claim it is alleged, for the reasons therein set out, that the representations that had been made by Mr England were misleading or deceptive. Paragraphs 18-20 thereafter proceed to claim that the Bank and Mr England have thereby engaged in conduct that contravened the Trade Practices Act 1974 (Cth) ("the Trade Practices Act"), the Consumer Affairs and Fair Trading Act 1990 (N.T) ("the N.T. Fair Trading Act") and the Fair Trading Act 1987 (S.A), ("the S.A. Fair Trading Act"). Additionally, the applicants have sued the Bank and Mr England in negligence.

5. The applicants' claims for loss and damage allegedly arising as a consequence of the contraventions of the three statutes and the respondents' negligence are particularised in paragraph 21 of the Statement of Claim; they include claims that the second named applicant:

"... was unable to trade within the overdraft limit set by
the (Bank) and was unable to meet payments under its floor
plan arrangements with Custom Credit Limited by reason of
which those arrangements were terminated on or about 19th
October, 1990. By reason of this termination the (Bank)
ultimately entered into possession of the motor dealerships
of (the first and fourth named applicants) on the 2nd
November 1990. As a consequence of this Toyota and
Mitsubishi terminated dealership agreements with (the first
and fourth named applicants) respectively. (The first and
fourth named applicants) have lost the value of those
dealership arrangements."

6. Other losses were said to have occurred in March 1991 and, in respect of the fourth named applicant, it was alleged that it had "... lost profits from 2 November 1990 and continuing."

7. The Bank moved the Court for an order striking out the Statement of Claim as disclosing no cause of action. In the alternative, the Bank sought orders that various paragraphs of the Statement of Claim be struck out as embarrassing, vexatious or disclosing no cause of action. At the time when the notice of motion was filed, the applicants had filed a Statement of Claim naming the Bank as the only respondent and limiting their claims to allegations of breaches of the TPA and the N.T. Fair Trading Act. After the notice of motion was filed, the applicants, with leave, filed an amended Statement of Claim naming Mr England as a second respondent; they also added their claims in negligence and under the S.A. Fair Trading Act and they better particularised their allegations so that they might overcome the claims of embarrassing and vexatious pleadings. In these circumstances it was agreed that argument on the motion would proceed on two discrete issues.

8. The first of these was whether the provisions of the TPA. applied to the State Bank of South Australia or whether the Bank was immune from suit by virtue of it being an instrumentality of the Crown in right of the State of South Australia. The second issue was whether the provisions of the N.T. Fair Trading Act were available to the applicants. The express provision of the latter Act upon which the applicants sought to rely was s42 which is found in Part V of the Act; Part V came into force on 1 April 1991: see N.T. Government Gazette of 28 March 1992. That section, which is in pari materia with s52 of the TPA, provides:

"42.(1) A person shall not, in trade or commerce, engage in
conduct that is misleading or deceptive or is likely to
mislead or deceive.
(2) Nothing in this Division shall be taken as
limiting by implication the generality of subsection (1)."

9. Likewise, s.91 of the N.T. Fair Trading Act is the analogue of s82 of the TPA. in that it entitles a person, who suffers loss or damage by conduct of another, to recover the amount of the loss or damage by action. At a late stage in the proceedings Mr Tribe, counsel for the applicants, conceded that the applicants' grounds of complaint all accrued before the N.T. Fair Trading Act came into operation. As there was nothing in the legislation to suggest that it had retrospective effect, I find that the applicants do not have a cause of action in the circumstances of this case against either of the respondents under the N.T. Fair Trading Act. Paragraph 19 of the Statement of Claim, claiming a contravention of s42 of that Act, must therefore be struck out.

10. Mr Lawson QC, counsel for the Bank, argued that all references in the Statement of Claim to the TPA. should be struck out for the reason that the Bank is an instrumentality of the Crown in right of the State Bank of South Australia and that the TPA. does not apply to the State and to such an instrumentality. This argument derives from the language of s2A of the TPA. which provides:

"2A. (1) Subject to this section, this Act binds the Crown
in right of the Commonwealth in so far as the Crown in right
of the Commonwealth carries on a business, either directly
or by an authority of the Commonwealth."

11. No reference is made in s2A or elsewhere in the TPA. about it binding the Crown in right of a State or Territory.

12. Having regard to the provisions of the State Bank Act and the authorities which I will proceed hereafter to summarise, I have concluded, first, that the TPA. does not bind the Crown in right of the State of South Australia and, secondly, that the Bank is an emanation of the Crown in right of the State and is thereby entitled to its immunities and privileges. The State Bank Act assumes this latter proposition to be the case; subs6(4) provides:

"Notwithstanding that the Bank is an instrumentality of the
Crown, the Bank is liable to rates, taxes and other imposts
under the law of the State as if it were not such an
instrumentality."

13. In addition, there are several other provisions in the Act which favour the same conclusion. For example, the Bank is established by s6 as a body corporate without corporators. Subs(3) of that section acknowledges that the Bank holds its property "for and on behalf of the Crown". The Board of Directors is appointed by the Governor who also holds the power to appoint the Chairman of the Board (s7). The powers of removal from the Board are limited, being restricted to incapacity, neglect of duties and the like, but it is the Governor who holds that power of removal. The Governor also fixes the remuneration of the Directors (other than the Chief Executive Officer). Although the Bank is not required to have its accounts audited by the Auditor-General, the Governor may appoint the Auditor-General to make an investigation into the affairs of the Bank (s25).

14. As is now widely known in South Australia, the liabilities of the Bank are guaranteed by the Treasurer out of General Revenue (s21). Section 22 points to the "public" character of the Bank by requiring it to pay a portion of its annual operating surplus to the Treasurer. The amount to be paid is fixed after consultation between the Board and the Treasurer and any difference in views is to be reported in the Bank's Annual Report which, together with its audited accounts, are to be laid before each House of Parliament, (s23(4)). The provisions of subs22(1), however, make it clear that the final determination of the amount of the surplus that is to be paid over by the Bank to the Treasurer is determined by the Treasurer.

"22. (1) Where it appears from the audited accounts of
the Bank that an operating surplus has been achieved by the
Bank in respect of a financial year, the Bank shall, within
three months after presentation to the Governor of the
Bank's audited account for that financial year, pay to the
Treasurer, for the credit of the General Revenue of the
State -
(a) a sum equal to the income tax for which
the Bank would have been liable under the
law of the Commonwealth assuming that it
were a public company liable to income tax
under that law;
and
(b) such further sum (if any) as the
Treasurer, having regard to the
profitability of the Bank and the adequacy
of its capital and reserves, determines to
be an appropriate return on the capital of
the Bank."

15. Perhaps the last of the provisions of the State Bank Act that warrants mention is s15. It is the provision that entrusts to the Bank a social responsibility for the economic well-being of the State. The section provides as follows:

"(1) In its administration of the Bank's affairs, the Board
shall act with a view to promoting -
(a) the balanced development of the State's economy;
and
(b) the maximum advantage to the people of the State,
and shall pay due regard to the importance both to the
State's economy and to the people of the State of the
availability of housing loans.
(2) The Board shall administer the Bank's affairs in
accordance with accepted principles of financial management
and with a view to achieving a profit.
(3) The Board and the Treasurer shall, at the request of
either, consult together, either personally or through
appropriate representatives, in relation to any aspect of
the policies or administration of the Bank.
(4) The Board shall consider any proposals made by the
Treasurer in relation to the administration of the Bank's
affairs and shall, if so requested, report to the Treasurer
on any such proposals."

16. In his "First-Report: Royal Commission into the State Bank of South Australia: November 1992", the Honourable SJJA cobs AO QC, Royal Commissioner, acknowledged that the Bank had been conceived "as a commercial entity, purportedly independent of government control and influence...". Of this, the learned Commissioner said at pp 18-19:

"There is a fundamental flaw in that concept, which fails to
recognise that:
the Bank was a semi-government authority within
the meaning of the Government Financing
Authority Act 1982 (the SAFA Act);
the Bank was dependent upon the Government for
its capital needs;
the State had rights and an ultimate obligation
as guarantor of the Bank's liabilities;
in accordance with constitutional principle, a
statutory authority required to act in the
public interest and using public funds is
subject to ministerial direction;
the Bank and the Minister are accountable to
Parliament."

17. Having considered the legislation and the authorities that are hereinafter referred to, I find that I respectfully agree with those observations.

18. In coming to these conclusions I have sought to answer the first two points of Mr Tribe's three-pronged argument. His first point was a direct confrontation with the argument advanced on behalf of the Bank. He claimed that the Bank was not an instrumentality of the Crown and, therefore, should not be afforded Crown immunity. He argued that the words of subs6(4) did not explicitly provide the necessary immunities, and pointed to authorities which, so he claimed, established the need for clear and coherent language. Examples of those authorities and the legislative language considered in them were: Sundell v The Queensland Housing Commission (No.5) (1955) SR Qd 162: "For all the purposes of this Act - (a) the Commission shall have and may exercise all the powers, privileges, rights and remedies of the Crown"; Wynyard Investments Pty. Ltd. v Commissioner of Railways (N.S.W.) [1955] HCA 72; (1955) 93 CLR 376 where subs4(2) of the Transport (Division of Functions) Act provided that for the purposes of any Act the Commissioner shall be deemed to be a statutory body representing the Crown. In Yeats v Central Mortgage and Housing Corporation (1950) 3 DLR 801, however, where the relevant legislation provided that "the Corporation is for all purposes an agent of His Majesty in right of Canada and its powers under this Act may be exercised by it only as an agent of His Majesty", it was held that such language was insufficient to give Crown immunity.

19. Although it is true that the legislative intent in each of the first two examples spells out more deliberately the intention of the Parliament, they do not lead of necessity to a conclusion that the language of subs6(4) of the State Bank Act is somehow deficient or that it falls short of its objective. Rather than stating that "The Bank is an instrumentality of the Crown", it assumes that to be the case by providing "notwithstanding that the Bank is an instrumentality of the Crown". In my opinion, there is a clear manifestation in the State Bank Act that the Bank is to be an instrumentality of the Crown in right of the State of South Australia.

20. Mr Tribe had also argued that the relationship between the Bank and the executive arm of Government was such that the necessary degree of control was lacking; it was his case that a review of the State Bank Act established that the day to day management and policy of the Bank was not subject to Ministerial control. In considering this argument it is necessary to bear in mind that what is relevant is the degree of control that the executive may lawfully exercise - not the control that has been exercised. The position is clearly explained by Lord Reid in Bank Voor Handel en Scheepvaart N.V. v Administrator of Hungarian Property (1954) AC 584 at p 616:

"In my judgment the question whether the custodian is a
servant of the Crown depends on the degree of control which
the Crown through its Ministers can exercise over him in the
performance of his duties. The fact that a statute has
authorized his appointment is, I think, immaterial, but the
definition in the statute of his rights, duties and
obligations is highly important. In the ordinary way a
civil servant's duties are not prescribed, though his salary
may be fixed in Parliament, and I have no doubt that he is a
servant of the Crown. But when a statute creates an office
it may give to the holder more or less independence from
ministerial control so that the officer has to a greater or
less extent a discretion which he alone can exercise, and it
may be that the grant of any substantial independent
discretion takes the officer out of the category of servants
of the Crown for the present purpose. But I cannot find
that the custodian has any such independent discretion."

21. In Superannuation Fund Investment Trust v Commissioner of Stamps (S.A.) [1979] HCA 34; (1979) 145 CLR 330 at 347 Stephen J. explained that he placed "most weight upon the entire independence of the members of the Trust in relation to their investment function" in concluding that the Trust was not to be equated to the Crown in right of the Commonwealth. His Honour went on to add at p 348:

"If a corporation is no more that the passive instrument of
the Crown, subject in a high degree to control by the
executive, it is appropriate enough that its acts be viewed
as those of its master and that it be itself treated as the
alter ego of the Crown, enjoying accordingly those
immunities and privileges with which the Crown is clothed.
If, on the contrary, a statutory corporation is essentially
autonomous, its acts being in no sense the outcome of
directions by the executive but truly its own, there will be
little reason to clothe it with any of those immunities or
privileges. In saying this I do not intend to suggest the
need for any examination of the actual extent to which
particular actions are or are not the result of the exercise
of control by the executive: it is the existence of the
statutory ability to control or its absence, that is to be
looked at."

22. In arguing that the statutory ability to control was absent, Mr Tribe pointed first to s14 of the State Bank Act which identifies the Board as the governing body of the Bank with "full power to transact any business of the Bank". Next, he relied on s16 which gives to the Chief Executive Officer responsibility for the management of the Bank subject to the control of the Board. The Board is entitled to appoint officers who are not subject to the provisions of the Public Service Act 1967 (s17), and the Board and the Chief Executive Officer are entitled to delegate their respective powers and functions (s18). These provisions, and the absence of any provisions that constitute express control by the executive, militate, it was claimed, against a finding of control. According to Mr Tribe's argument, the requirements in s15 for the Board and the Treasurer to consult in relation to policies and administration and the requirement that the Board consider and report upon proposals made by the Treasurer in relation to administration highlighted the Board's autonomy. I cannot agree. In fact, it is my view that these provisions, calling for consultation with and consideration of the views of the executive coupled with the executive's powers to determine the disposal of the Bank's operating surplus (s22) establish an abundant and sufficient degree of control - so much so that the government guarantees the Bank's liabilities (s21).

23. The second prong of Mr Tribe's attack was that the nature of the Bank's relationship with the Crown in its commercial banking activities (as distinct, say, from its housing and house-lending activities which contain a strong social element, as to which see, for example, subs15(1)), do not attract Crown immunity. This argument must stand or fall with the first argument. If the first argument is correctly rejected because the sweep of the legislation refers to the Bank as an instrumentality of the Crown and refers to the Bank and the control of the Bank without differentiating between its several branches of activity, then it is not possible to advance an argument where the Bank can invoke Crown immunity for one activity (such as housing) but not for another (such as banking).

24. The third prong of Mr Tribe's argument calls for a consideration of the decision of Wilcox J. in Bourke v State Bank of New South Wales (1988) 22 FCR 378 (on appeal to the High Court [1990] HCA 29; (1990) 170 CLR 276) and I will address that at a later stage of these reasons.

25. In State Bank of New South Wales v Commonwealth Savings Bank of Australia [1986] HCA 62; (1986) 161 CLR 639 the State Bank sued the Commonwealth Savings Bank in the Supreme Court of New South Wales to recover moneys allegedly due under an agreement. Clarke J. made a declaration that the proceedings were within the exclusive jurisdiction of the High Court, being a suit "by a State, or any person suing on behalf of a State, against the Commonwealth or any person being sued on behalf of the Commonwealth" within s38(d) of the Judiciary Act 1903 (Cth).

26. An appeal pending in the Court of Appeal was removed into the High Court where the decision of Clarke J. was affirmed. In the course of their joint judgment the High Court traversed the provisions of the relevant legislation (the State Bank Act 1981 (NSW)), having previously approved of the following remarks of Kitto J. in Inglis v Commonwealth Trading Bank of Australia [1969] HCA 44; (1969) 119 CLR 334 at 337-388:

"The decisive question is not whether the activities and
functions with which the respondent is endowed are
traditionally governmental in character, though their
possession of a traditional or generally accepted
governmental character may well help in the ascertainment of
the legislative intention. The question is rather what
intention appears from the provisions relating to the
respondent in the relevant statute: is it, on the one hand,
an intention that the Commonwealth shall operate in a
particular field through a corporation created for the
purpose; or is it, on the other hand, an intention to put
into the field a corporation to perform its functions
independently of the Commonwealth, that is to say otherwise
than as a Commonwealth instrument, so that the concept of a
Commonwealth activity cannot realistically be applied to
that which the corporation does?"

27. In coming to the conclusion that the State Bank of New South Wales was, for the purposes of the Judiciary Act, to be regarded as a "person suing on behalf of a State", the High Court had regard to the Bank's legislation. Many, although not all, of its major provisions are also present in the State Bank Act. The absence of corporators, the Governor's power to appoint and remove directors, the guarantee of the Bank's liabilities and the payment by the Bank of surplus profits to the Treasurer were all important indicators even though there was an absence of express executive control. The High Court also emphasised the public character of the Bank's functions (c.f. s15 of the State Bank Act) commenting at p 651:

"Next, the public character of the functions of the
appellant in its general banking business is emphasized by
the declared duty of the Board to ensure that the policy of
the Bank is directed to the greatest advantage of the people
of New South Wales and has due regard to the stability and
balanced development of the economy of the State. These
objectives coincide with the responsibility of the State
Government."

28. The High Court concluded that its summary of the provisions of the relevant legislation led to the finding that "the Bank is for this purpose the State of New South Wales" (p 652). In coming to this conclusion the Court said at p 651:

"These provisions demonstrate a very close relation between
the results of the general banking business of the Bank and
the financial resources of the State such as one would
expect if the corporation was chosen by the legislature to
be the means by which the State carried on the business of
general banking."

29. Although it was not necessary for the High Court to determine whether the State Bank was, additionally, an instrumentality of the Crown, entitled to the privileges and immunities of the Crown, I believe that the approach adopted by the High Court coupled with the relevant provisions of the South Australian legislation (and, most particularly, subs6(4)) must lead to the conclusion that the State Bank is justified in claiming immunity.

30. In Deputy Commissioner of Taxation v State Bank of New South Wales [1992] HCA 6; (1992) 105 ALR 161 the question of the status of the Bank was once again tested. On this occasion the issue was whether the Bank was to be regarded as the State for the purpose of s114 of the Constitution and whether sales tax that had been levied on it was a tax on property (s114, so far as material, prohibits the Commonwealth from imposing any tax of any kind on property belonging to a State). In finding in favour of the Bank, the High Court reaffirmed its decision in State Bank of New South Wales v Commonwealth Savings Bank of Australia saying at pp pp 169-170:

"The question then is whether the State Bank is discharging
governmental functions for the state or, to put it another
way, is the state carrying on banking through its statutory
corporation, the State Bank. The unanimous decision in
State Bank of New South Wales v Commonwealth Savings Bank of
Australia is decisive of that question. There the court
held that an action by the State Bank was a suit by 'a
State' for the purposes of s38(d) of the Judiciary Act. In
the course of reasoning to that conclusion, the court, after
considering in detail the relevant provisions of the State
Bank Act, which have not been amended in any substantial
respect, held that 'the State carries on banking through its
statutory corporation, the Bank, and that it necessarily
follows that the Bank is for this purpose the State of New
South Wales'."

31. The breadth of the language that is used in this passage rebuts the argument advanced by Mr Tribe that this case has only limited application as an interpretation of the provisions of s114 of the Constitution.

32. Having concluded that the Bank is an instrumentality of the Crown in right of the State of South Australia, it is next necessary to question whether the TPA. binds a State and an instrumentality of the Crown in right of a State.

33. Mr Lawson relied on the decision of the High Court in Bradken v The Broken Hill Pty. Co. Ltd. [1979] HCA 15; (1979) 145 CLR 107 where, by a majority, the court held that the TPA. does not bind the Crown in right of a State because the requisite intention does not appear in the legislation. The applicant had instituted proceedings in the Federal Court alleging breaches of s45 of the TPA. It named various parties including the Commissioner for Railways for Queensland as respondents. In his defence, the Commissioner claimed that he was an instrumentality of the Crown and that the TPA. was not intended to bind the Crown in right of a State. Gibbs AC.J. explained the position in these terms at p 116:

"It is an established rule of construction that no statute
binds the Crown unless the Crown is expressly named therein
or unless there is a necessary implication that it was
intended to be bound; there will be such a necessary
implication if it is manifest from the very terms of the
statute that it was the intention of the legislature that
the Crown should be bound: Province of Bombay v. Municipal
Corporation of Bombay. The Trade Practices Act, by s.2A,
expressly states that (subject to that section) it binds the
Crown in right of the Commonwealth in so far as the Crown in
right of the Commonwealth carries on a business, either
directly or by an authority of the Commonwealth. The Act is
however silent on the question whether it is intended to
bind the Crown in right of a State. The question thus
arises whether the rule to which I have referred means that
a statute of the Commonwealth will not be construed as
binding the Crown in right of a State unless it appears by
express words or necessary implication that it was intended
to do so. In other words, does the rule apply to the Crown
in all its capacities, or only to the Crown in right of the
community whose legislation is under consideration? When
construing a Commonwealth statute does 'the Crown', for the
purpose of this rule, mean only the Crown in right of the
Commonwealth or does it include the Crown in right of a
State?"

34. Thereafter his Honour proceeded to review the authorities which he described as "not altogether satisfactory" (p 116) before concluding (at p 121) that he inclined in favour of the wider view of the rule of construction. His Honour then went on to say at pp 122-123:

"Although, within limits that it is now unnecessary to
discuss, the Commonwealth can legislate so as to bind a
State, the States are neither subjects of the Commonwealth
nor subordinate to it.... It seems only prudent to require
that laws of the Parliament should not be held to bind the
States when the Parliament itself has not directed its
attention to the question whether they should do so. And,
of course, as was said in Province of Bombay v. Municipal
Corporation of Bombay (1947) AC 58 at p 63: '... it must
always be remembered that, if it be the intention of the
legislature that the Crown shall be bound, nothing is easier
than to say so in plain words'. In my opinion it does not
appear by express words or necessary implication that the
Trade Practices Act is intended to bind the Crown in right
of a State. It therefore does not bind the Commissioner."

35. Stephen J. was of a similar opinion (p 129) while Mason and Jacobs JJ. adopted a more fundamental approach saying at p 136:

"Even if there were no presumption of an intention not to
bind the Crown in right of a State but likewise no
presumption of an intention to bind that Crown, so that it
was necessary to examine the particular nature of the
provisions made by the statute, the expression of an
intention to bind the Crown in right of the Commonwealth and
the absence of a like expression in respect of the Crown in
right of the States would as a matter of construction lead
to the conclusion that the Crown in right of the States was
not intended to be bound."

36. The next case to consider is Bropho v State of Western Australia [1990] HCA 24; (1990) 93 ALR 207. In that case the appellant instituted proceedings in the Supreme Court of Western Australia under the provisions of the Aboriginal Heritage Act 1972 (W.A.) against the State of Western Australia and the Western Australian Development Corporation. He sought a declaration that certain land, described as "The Swan Brewery Site", was within an Aboriginal site, and an injunction restraining the respondents from developing the site. The Development Corporation, which intended to develop the site, was an agent of the Crown and claimed enjoyment of its conventional rights and privileges. Unless it was able to claim Crown immunity, its proposed development would be in breach of the Heritage legislation. The applicant was ultimately successful in the High Court which, pointed to the modern day activities of executive governments in the fields of commerce, industry and development and, qualified some of the earlier (rigid) authorities, and the presumption that a statute does not bind the Crown except by express statement or necessary implication. In their joint judgment, Mason C.J., Deane, Dawson, Toohey, Gaudron and McHugh JJ. said at p 216:

"It is simply to point to the fact that the historical
considerations which gave rise to a presumption that the
legislature would not have intended that a statute bind the
Crown are largely inapplicable to conditions in this country
where the activities of the executive government reach into
almost all aspects of commercial, industrial and
developmental endeavour and where it is a commonplace for
governmental commercial, industrial and developmental
instrumentalities and their servants and agents, which are
covered by the shield of the Crown either by reason of their
character as such or by reason of specific statutory
provision to that effect, to compete and have commercial
dealings on the same basis as private enterprise. It is in
that contemporary context that the question must be asked
whether it is possible to justify the preservation in our
law of an inflexible rule which, in the absence of express
reference, requires a reading down of the general words of a
statute to exclude the Crown (and its instrumentalities and
agents) unless it is 'manifest from the very terms of the
statute' that it was the legislative intent that the Crown
should be bound and which, in ascertaining whether such a
legislative intent is manifest, allows account to be taken
of the purpose of the statute only if it is possible to
affirm that that purpose must be 'wholly frustrated' unless
the Crown is bound."

37. Although their Honours were at pains to point out that nothing that had been said overturned "the settled construction of particular existing legislation" or reversed or abolished the presumption that the general words of a statute do not bind the Crown or its instrumentalities or agents (p 218), they nevertheless made it clear that there was no "inflexible rule". Earlier at the same page they said:

"It follows from what has been said above that consideration
of principle preclude recognition of an inflexible rule that
a statute is not to be construed as binding the Crown or
Crown instrumentalities or agents unless it manifests a
legislative intent so to do either by express words or by
"necessary implication" in the limited and stringent sense
explained above. If such a legislative intent appears when
the relevant legislative provision is construed in a context
which includes the presumption against the Crown and its
instrumentalities or agents being so bound, that legislative
intent must, as a matter of principle, prevail. That being
so, earlier judicial statements to the effect that it must
be manifest from the very terms of the statute itself that
it was the legislative intent that the general words of a
statute should bind the Crown, or that it must be apparent
that the purposes of the statute would be wholly frustrated
unless the Crown were bound, should be read as applying to
the context of the particular statutory provisions involved
in the cases in which they were made. Such statements
should no longer be seen as precluding the identification of
such a legislative intent in other circumstances or as
warranting the overriding of a legislative intent which can
be discerned in the provisions of a statute when construed
in context."

38. This shift in emphasis by the High Court is to be compared with the retention, six months earlier, by the House of Lords in Lord Advocate v Dumbarton District Council (1989) 3 WLR 1346 of the strict rule of adherence. The decision in Bropho's case has led one writer to suggest that it constitutes "a not insubstantial crack" in the "protective wall of Crown Immunity": David Kinley "Crown Immunity: A Lesson from Australia?" (1990) 53 The Modern Law Review 819 at 819. Another writer has described the decision as qualifying "the entrenched presumption that a Statute does not bind the Crown": Mark Mourell, "Bropho v The State of Western Australia - A Case Note" (1991) 7 Australian Bar Review 790 at 90.

39. In State Government Insurance Corporation v Government Insurance Office of New South Wales (1991) 28 FCR 511 French J. had to consider an argument that the authority of Bradken's case had been called into question by the decision of the High Court in Bropho. His Honour pointed out that the decision in Bropho did not abolish the common law presumption on which the Bradken decision was based; rather -

"...it rejected the requirement that the presumption could
not be displaced except by a contrary legislative intention
that was 'manifest from the very terms' of the Statute or
unless the purpose of the Statute would be otherwise 'wholly
frustrated'." (p 556)

40. French J. concluded, and I respectfully agree, that "(t)he common law presumption that Statutes are intended not to bind the Crown remains in force, but as a more flexible guide to construction which may be displaced without the stringent requirements that previously existed." (p 557). I do not consider that the decision in Bradken's case has been eroded in such a way as to affect the outcome of these proceedings; in my opinion it remains authority for the proposition that the TPA. does not bind the Crown in right of a State.

41. I turn finally to the decision of Wilcox J. in Bourke v State Bank of New South Wales, (supra). The applicant sued the Bank in the Federal Court of Australia, alleging, amongst other matters, breaches of ss52 and 52A of the TPA. The transactions which were the subject of the proceedings took place wholly within New South Wales. The Bank filed a notice of motion seeking orders striking out the paragraphs in the statement of claim which related to those allegations on the ground that they disclosed no reasonable cause of action. That ground was based on three arguments: (a) that upon the proper construction of s4(1), the Act did not apply to the Bank; (b) that to the extent that those sections purported to apply to the Bank, ss52 and 52A of the Act exceeded the legislative power of the Commonwealth and were constitutionally invalid; (c) alternatively, if those sections were valid, they did not apply to the Bank because it was entitled to the immunity of the Crown in right of the State of New South Wales. Wilcox J. held (a), that, on the proper construction of s4(1), the Act applied to the Bank; (b) that in so far as the Act purported to regulate a transaction of a State Bank taking place wholly within the limits of the State concerned, it was beyond the legislative power of the Commonwealth; and (c) that the Bank was not an emanation of the Crown in right of the State of New South Wales and would not have been entitled to Crown immunity if the Act had applied to the conduct concerned. The applicants appealed to the Full Court of the Federal Court against the judgment of Wilcox J. on the question of constitutional invalidity. On the application of the Attorney-General for the State of New South Wales pursuant to s40(1) of the Judiciary Act 1903 (Cth) the High Court ordered that so much of the cause pending before the Full Court of the Federal Court that raised the question of constitutional limitations be removed to the High Court. The High Court, however, was not concerned with, and did not address, the question of Crown immunity. The views of Wilcox J. that the Bank was not an emanation of the Crown entitling it to immunity were therefore not challenged.

42. In his judgment, Wilcox J. referred to the relevant New South Wales legislation and to the views of the High Court and its comments on the same legislation in State Bank of New South Wales v Commonwealth Savings Bank of Australia (supra). He also discussed the decisions of the High Court in Superannuation Fund Investment Trust v Commissioner of Stamps (S.A.) [1979] HCA 34; (1979) 145 CLR 330 and State Superannuation Board v Trade Practices Commission [1982] HCA 72; (1982) 150 CLR 282, concluding that a consideration of the matters referred to in those two decisions led him to the conclusion that it would not be correct to treat the State Bank of New South Wales as an emanation of the Crown in right of the State. His Honour said at p 393:

"In coming to that conclusion I am influenced by a number of
factors: the primary function of the Bank is not an ordinary
or usual function of government; the width of the
discretions reposed in the directors and management of the
Bank in the performance of that function, even within the
general policy referred to in s9(3); the substantial
independence of the directors and management from
Ministerial control or direction; and the fact that the
funds controlled by the Bank are Bank funds, not public
funds. The Bank is owned by the Government, which
guarantees its liabilities. Accordingly, the statute
provides for the supply of, and access to, financial and
other information. But it is clear from the authorities
that these circumstances are not enough to warrant a
particular corporation being designated as 'the Crown'."

43. With varying degrees of emphasis, much of what Wilcox J. had to say about the New South Wales legislation could also be applied to the State Bank Act but with one important exception. In the New South Wales legislation there is no reference to a provision such as subs6(4) of the State Bank Act. In my respectful opinion, that alone is sufficient to distinguish the decision in Bourke's case from the case at bar.

44. The conclusion that I have reached is that the State Bank is protected under Crown immunity from proceedings instituted against it under the provisions of the TPA.; it would therefore be futile to allow that claim to proceed and it should be struck out. Likewise, in view of the applicants' concession, the claim under the N.T. Fair Trading Act should be struck out. The applicants, however, still retain their claims in negligence and under the S.A. Fair Trading Act and these causes of action may be pursued. It would seem to me that it would probably be more expeditious to strike out the current amended Statement of Claim and grant leave to the applicants to file and serve a further amended Statement of Claim within 14 days of this date; there will be orders accordingly. The applicants must pay the Bank's costs.