Bank Nationalisation Case

Comfortable in government after two strong election wins, the Labor government of Ben Chifley announced in 1947 its intention to nationalise 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, 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, as well as the non-Labor states of Victoria, South Australia and Western Australia. who would later become the Chief Justice, and the United Kingdom incorporated banks represented by Frank Kitto , who would later be appointed to the High Court, while the Commonwealth was represented by the former High Court judge Herbert Evatt . ==High Court decision==

The Court hearing lasted for a record 39 days. The summary of the parties arguments occupies 143 pages of the Commonwealth Law Report. 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. 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." == Privy Council decision ==

}} In appealing the decision to the Privy Council, the Commonwealth adopted a deliberate strategy of limiting the grounds of appeal to avoid seeking a certificate from the High Court under section 74 of the Constitution. The case was argued for 37 days before the Privy Council, one of the longest in its history, during which two of the Lordships assigned to the case (Lord Uthwatt and Lord du Parcq) died. The Privy Council endorsed the High Court decision in adopting the individual rights approach. Provisions of the Commonwealth law prohibited private banks from carrying out interstate business banking. Interstate banking transactions under the law were thus not "absolutely free" and hence in violation of Section 92 of the Constitution. The Law Lords held that a simple legislative prohibition of interstate trade and commerce would be constitutionally invalid, but a law seeking to regulate or prescribe rules as to the manner of trade and commerce would not necessarily be in breach of section 92. The Board noted that the question of whether a law was merely regulatory or unduly discriminatory "will often be not so much legal as political, social or economic. Yet it must be solved by a court of law." Additionally, while rejected this nationalisation by the government, the Board left the door open to future takeovers where "on its own facts and in its own setting of time and circumstances ... prohibition with a view to State monopoly was the only practical and reasonable method of regulation". (centre) with Herbert Evatt (left) and Clement Attlee (right) at the Dominion and British Leaders Conference, London, 1946 ==Aftermath==

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. ==See also==