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The role of negative implications in the interpretation of Commonwealth legislative powers.

CONTENTS

   I Introduction
  II The Origin of the Argument That It Is Wrong to Draw Negative
     Implications from Positive Grants of Power
       A The Huddart ParkerExpress Reserved Powers Doctrine
       B Isaacs J's Critique of the Reserved Powers Doctrine
         in Huddart Parker
 III Work Choices and the Interpretation of Commonwealth Powers
  IV The Legitimacy and Necessity of Drawing Negative Implications
     from Positive Grants of Power
   V Drawing Negative Implications from Positive Grants of Power and the
     Interpretation of Commonwealth Grants of Power
  VI Reserved Powers and the Drawing of Negative Implications
     from Positive Grants of Power
 VII Implications and the Holistic Interpretation of Commonwealth Powers
VIII Conclusion


I INTRODUCTION

The orthodox approach to the interpretation of Commonwealth grants of power which was endorsed in New South Wales v Commonwealth ('Work Choices') (1) is that each power is to be interpreted broadly as a discrete standalone power. As a result, each power is usually interpreted without reference to the existence of other grants of power and the limits which they contain. (2) Similarly, the impact of any interpretation on the position of the states and the scope of state residual legislative power is for the most part considered irrelevant. (3) As a result of the consistent application of the orthodox approach in cases such as Commonwealth v Tasmania ('Tasmanian Dam Case') (4) and Work Choices, Commonwealth legislative powers have expanded greatly, and there has been a corresponding reduction in the scope of effective state legislative power. (5)

There are few limits to the orthodox approach. Section 51(xxxi) of the Australian Constitution, which contains a guarantee of compensation on just terms, limits the scope of other powers so that they cannot be used to acquire property without just terms. (6) Similarly, prohibitions on the exercise of Commonwealth legislative power, such as those contained in the powers over banking and insurance, limit the scope of other powers. (7) Despite these exceptions, the general rule is that each power is interpreted broadly without considering other powers or the limitations which they contain or the impact of the interpretation on the states.

This article argues that the reasoning underlying the orthodox approach is so flawed that it lacks a rational basis. The words of the Constitution, interpreted according to normal principles of interpretation, require an interpretation of Commonwealth powers in which limits on some powers are relevant to the interpretation of other powers. This is the case even if we discount the history of the Constitution, the intentions of the framers and the context in which the Constitution was adopted and do not impose any model of federalism or of the Commonwealth-state balance of legislative power on it. Accordingly, even if we limit ourselves to the literalistic approach favoured by the High Court, the orthodox approach lacks any justification.

According to received wisdom, the orthodox approach originated in Amalgamated Society of Engineers v Adelaide Steamship Co Ltd ('Engineers' Case'). (8) Alternatives to this approach in which the limits on other powers and the impact on the states are seen as relevant to the interpretation of a power, are castigated as variants of the reserved powers doctrine which the Engineers' Case is said to have rejected. (9) The orthodox understanding of the effect of the Engineers' Case was summarised in Work Choices as the discarding of an 'approach to constitutional construction that started in a view of the place to be accorded to the states formed independently of the text of the Constitution. (10) Although the Engineers' Case laid down the general approach to be followed in determining Commonwealth-state issues, it was mainly concerned with the issue of whether the states were subject to Commonwealth law and did not consider the arguments for a stand-alone interpretation of Commonwealth powers in any detail. But Isaacs J, who was the principal author of the judgment in the Engineers' Case did consider them in detail in Huddart, Parker & Co Pty Ltd v Moorehead ('Huddart Parker'), (11) concluding that the corporations power and by implication other Commonwealth powers were to be interpreted broadly as separate stand-alone grants. That conclusion is important because it, along with the Engineers' Case, is the source of the current approach to interpreting Commonwealth powers. The majority in Work Choices relied on similar arguments to support their conclusion that the limits on the arbitration power were irrelevant to the interpretation of the corporations power. (12)

There are three main arguments for a stand-alone interpretation of Commonwealth powers: the broad grants argument, the no negative implications argument, and the argument that it is impossible to devise coherent limits on Commonwealth power without first defining state powers. The first argument, the argument that grants of power to the Commonwealth are to be interpreted broadly, is based on dicta of O'Connor J in Jumbunna Coal Mine NL v Victorian Coal Miner's Association ('Jumbunna Case') (13) and on the judgment of the majority in the Engineers' Case. (14) It has been relied on in many cases on the interpretation of Commonwealth powers. (15) Isaacs J first developed the second argument, the argument that it is wrong to draw negative implications about the scope of Commonwealth powers from positive grants of power, in Huddart Parker. (16) This argument was taken up by Latham CJ in Pidoto v Victoria, (17) without reference to Huddart Parker, and was adopted by the majority in Work Choices. (18) It was one of the key arguments on which the majority in Work Choices based their judgment. The third argument, the argument that it is impossible to devise coherent limits on Commonwealth power without first defining state powers, was advanced in the Engineers' Case and variants of it were developed in the two most important cases on the interpretation of Commonwealth powers in the last 30 years, the Tasmanian Dam Case and Work Choices. (19)

This article focuses largely on the second argument, the no negative implications argument, demonstrating that it is wrong. This article argues that regardless of context, it is difficult, if not impossible, to interpret positive grants of power, individually or as a whole, without drawing negative implications from them. As it is a normal step in the interpretation of individual grants of power to draw negative implications from them, it is a small step to use negative implications drawn from the scope of one grant of power in the interpretation of other grants of power. If negative implications drawn from the words of one power may be used in the interpretation of other powers, this article argues that we can determine coherent limits to the scope of Commonwealth powers without first determining the scope of state powers. If that is the case, we can accept that state exclusive powers are residual without accepting that each Commonwealth power is to be interpreted separately, without reference to the wording of other powers. This article accepts the former but rejects the latter, arguing that the Constitution requires that Commonwealth powers be interpreted holistically rather than separately.

Part II of this article considers Isaacs J's arguments for the view that it is wrong to draw negative implications about the scope of Commonwealth powers from positive grants of power, as they are the most detailed defence of this position. As Isaacs J developed these arguments as a critique of the views of the majority in Huddart Parker, Griffith CJ, Barton J and O'Connor J, it is difficult to understand Isaacs J's position without first considering the majority's position. Hence Part II considers the majority's position and its strengths and weaknesses before looking at Isaacs J's critique.

Part III examines the way in which the majority in Work Choices used a similar argument to that of Isaacs J in Huddart Parker to defend their conclusion that the limits on the arbitration power, s 51(xxxv), have no implications for the interpretation of the corporations power and do not prevent the use of the corporations power to enact a general law on industrial relations.

Part IV considers when it is legitimate and necessary to draw negative implications from positive grants of power. It criticises the majority argument in Work Choices that it is only legitimate to draw negative implications from grants of power which prohibit legislation on a particular topic or which contain a safeguard in the nature of a right. This Part argues that it is difficult, if not impossible, to make sense of positive grants of power without implying negative limitations from them. It demonstrates that this is the case whether the limits on power are found in a federal constitution or in legislation conferring limited powers on subordinate authorities.

Part V considers when it is appropriate to draw negative implications from one grant of power for the interpretation of other powers. Not every limit on every power is relevant to the interpretation of every other power. This Part considers the types of case in which the limits on one power are relevant to the interpretation of other powers and the situations in which those limits are not relevant.

Part VI examines arguments in the Tasmanian Dam Case and in Work Choices that it is impossible to give any content to implications drawn from the limits on one power for the interpretation of another power without assuming that the Constitution reserves to the states some identifiable exclusive powers which can be used to define the scope of Commonwealth powers. It rejects those arguments. In doing so it examines in more detail the differences between interpreting Commonwealth powers in the light of reserved state powers and interpreting Commonwealth powers in the light of implications drawn from other powers.

Identifying negative implications which limit the scope of positive grants of power is only a first step in interpreting those grants. The next step is to develop an interpretation which is consistent with the words of the grant, the negative implications and the constitutional context. Part VII suggests that it may not be possible to do this without developing a coherent, holistic interpretation of Commonwealth powers. It argues that this can be done without first identifying state exclusive powers and using those powers to limit the scope of Commonwealth powers. Although it is possible to develop a holistic interpretation of Commonwealth grants of power, this article argues that that is unlikely to happen until the High Court reconsiders its interpretation of the corporations power and the relationship between that power and the trade power, because any holistic interpretation of the two powers is likely to limit the scope of the corporations power in order to give effect to the limits on the trade power. As part of the reconsideration of the relationship between the corporations and trade powers, the Court needs to adopt a broader interpretation of the trade power as the Commonwealth's most important economic power, to ensure that it gives the national government adequate power over the national economy. Failure to do that is a major barrier to the development of a coherent, holistic interpretation of Commonwealth grants of power.

This article concludes that the current approach to interpreting Commonwealth powers, in which the limits on one power are seen as irrelevant to the interpretation of other powers, is rationally indefensible even if we ignore the fact that s 51 imposes limits on Commonwealth powers in order to achieve a federal division of legislative power between the Commonwealth and state Parliaments. The approach is based on the claim that it is wrong to draw negative implications from positive grants of power. That claim is wrong because limited grants of power cannot be interpreted in any context unless we draw negative implications from them. A more rational approach is one in which negative implications for the scope of some powers are drawn from the limits on other powers. Not only does such an approach give effect to stated limits on power, but it has the advantage of recognising that in the absence of any grant of specific exclusive powers to the states, the express limits on Commonwealth power are the most important way in which the Constitution divides power between the Commonwealth and the states. (20)

II THE ORIGIN OF THE ARGUMENT THAT IT IS WRONG TO DRAW NEGATIVE IMPLICATIONS FROM POSITIVE GRANTS OF POWER

Isaacs J developed the negative implications argument in his critique of the majority judgments in Huddart Parker, (21) concluding that it was wrong to take into account the limits on one power in the interpretation of other powers. This Part examines the majority position in Huddart Parker before considering Isaacs J's critique of it.

A The Huddart Parker Express Reserved Powers Doctrine

The phrase 'the state reserved powers doctrine' is used to describe the approach of the High Court to the interpretation of Commonwealth powers before the Engineers' Case in 1920. This approaches adopted a coherence model of Commonwealth powers, appealing to express or implied limits on Commonwealth powers to attempt a coherent division of power between the Commonwealth and the states. The reserved powers doctrine is often presented as one in which the High Court implied limits to the scope of Commonwealth powers in order to reserve certain identifiable powers exclusively to the states. These powers were reserved so as to implement the view that the Constitution was a treaty between the states in which they agreed to confer some vaguely defined powers on the Commonwealth and to reserve the rest to themselves. (22)

Cases such as Peterswald v Bartley, (23) R v Barger, (24) and Australian Boot Trade Employes Federation v Whybrow & Co (25) fit this understanding of reserved powers. In these cases, the Court tended to start from an assumption that the states had exclusive control over their domestic economies or internal affairs and used that assumption to limit the scope of Commonwealth powers. However, in Huddart Parker and to a lesser extent in A-G (NSW) ex rel Tooth & Co Ltd v Brewery Employes Union of New South Wales ('Union Label Case), (26) Griffith CJ, Barton J and O'Connor J developed another version of the reserved powers doctrine, the express reserved powers doctrine, which was based on an interpretation of the express words of the Constitution. (27) Their Honours argued that by limiting the power over trade to overseas trade and trade among the states, s 51(i) expressly reserved to the states power over their internal economies. In Griffith CJ's opinion, that reservation of power was as clear as if it had been in express words. (28) That reservation of power to the states governed the interpretation of other related Commonwealth powers, such as the corporations power, which had to be interpreted so as to be consistent with it. Hence, it was wrong to interpret other powers as enabling the Commonwealth to invade the power over local trade which the trade power reserved to the states unless the express words of the grant required that the power extend to the internal affairs of the states. (29) This led to a narrow interpretation of powers such as the corporations power, which was seen as adding little to the commerce power. (30)

Although Griffith CJ, Barton J and O'Connor J concluded that the limits on the trade power limited the scope of other powers, the judgments do not suggest that their Honours viewed the limits on other powers, such as the corporations power, as relevant to the interpretation of the trade power. For example, their Honours did not suggest that limiting the scope of the corporations power to foreign, trading and financial corporations limited the scope of the trade power, so that it could only be used to regulate the activities of trading, foreign and financial corporations and could not be used for the regulation of other types of corporation. It is probable that their Honours did not view the corporations power as limiting the scope of the trade power or of other powers in this way because their Honours did not see it as containing an express reservation of power over other corporations to the states.

Because their Honours interpreted s 51(i) as containing an express reservation of power to the states, Griffith CJ, Barton J and O'Connor J appear to have assumed that it was the governing power so that the limits it contained governed the interpretation of other grants of power, while the limits that they contained were of little relevance to its interpretation. Their Honours derived the view that the commerce power was the governing power not only from the constitutional text, but from American cases on the corresponding provision in the United States Constitution. It was possible in 1900 to argue, on the basis of the American precedents, that the commerce power in s 51(i) was of paramount importance, so that the limits it contained governed the interpretation of other economic powers. By 1900, the American commerce power was seen as the most important of the legislative powers of the United States Congress. (31) The limits on the United States commerce power prevented it and other powers being used to regulate the internal trade of the states so that the federal balance of power over the economy in that country was largely seen as involving a balance between the commerce power and state powers over their internal economies. (32) Griffith CJ in Huddart Parker relied heavily on American authority His Honour argued that as the Australian provision was in similar terms to that in the United States Constitution, the Australian drafters, in adopting the words of the United States section, intended to adopt the way in which it had been interpreted. (33)

Even if the United States cases are ignored, there are good reasons for assuming that the limits on the trade power are relevant to the interpretation of other Commonwealth powers. Any attempt to divide economic power so as to give the Commonwealth control of the national elements in the economy while retaining state control over purely local economic activity is likely to give some priority to the trade power and to see its limits as relevant to the interpretation of other economic powers. It is the broadest of the Commonwealth's economic powers, applying to commerce as a whole rather than to 31 32 33 particular aspects of it such as corporations, intellectual property or communications. It also supports a rational division of economic power, inviting courts to consider what aspects of the economy are properly national and therefore should be subject to Commonwealth control and what is properly local and hence better left to state control. (34) No other economic power shares these two characteristics. Some, such as the conciliation and arbitration power, (35) distinguish between national and local economic activity, but are limited in scope to a particular topic, such as industrial relations. Others, such as the corporations power, are capable of being interpreted so as to cover a broad range of economic activity, but do not embody a distinction between national and local economic activity. Hence no other power provides as much support as does the trade power for a division of economic power in which the Commonwealth has control over the national elements in the economy while the states retain control over the local elements.

To base a division of power over the national and local economies on the trade power, it is necessary to interpret that power as being the broadest and most important of the Commonwealth powers over the economy and to interpret the limits on that power as governing, to some extent at least, the interpretation of other Commonwealth economic powers. As the majority in Huddart Parker conceded, some of those powers may be worded so as to give the Commonwealth some control over local elements in the economy. (36) However, for that to be the case, the words of the grant have to be clear, (37) and the control over the local economy has to be clearly defined and limited in scope. (38) If it is not, it risks giving the Commonwealth so much control over the local economy that the division of powers based on the trade power breaks down. Hence, using the trade power to achieve a division of power over the economy requires that a power such as the corporations power, which has the potential to give the Commonwealth broad-ranging powers over the local economy of a state, not be interpreted as giving such a broad power. Therefore, the majority in Huddart Parker were not without justification in treating the trade power as the most important of the Commonwealth's economic powers. There is also some justification for the conclusion that it governs to some extent the interpretation of other Commonwealth economic powers. However, there is little justification for interpreting it as an express reservation of some specific identifiable powers to the states, rather than as containing limits on power which are relevant to the interpretation of other powers.

B Isaacs Js Critique of the Reserved Powers Doctrine in Huddart Parker

In his Honour's dissent in Huddart Parker, Isaacs J developed a detailed critique of the reserved powers doctrine which is similar to that of the majority in Work Choices. (39) The critique was aimed at the view that the limitation of the trade power to overseas trade and trade among the states governed the scope of other economic powers so as to reserve power over state internal trade to the states. The critique led Isaacs J not only to reject that doctrine, but to the conclusion that as a general rule it is wrong to hold that the limits on one power are relevant to the interpretation of other powers. Instead, his Honour argued for an interpretation of Commonwealth powers in which each power is interpreted as a stand-alone power not subject to any implications drawn from other powers and their limits. (40)

Isaacs J argued that as a general rule it is wrong to hold that the limits on one power are relevant to the interpretation of other powers for two reasons. First, his Honour argued that it is wrong because it is based on implying unjustified prohibitions into s 107 and grants of power such as s 51 (i). Secondly, his Honour argued that the interpretation is based on a more fundamental mistake, that of reading negative implications into positive grants of power. (41) That mistake, his Honour argued, made it impossible to interpret Commonwealth powers sensibly because it entailed the illogical conclusion that the more powers the Commonwealth had, the less actual power it possessed. (42)

Isaacs J's first argument was that neither s 51(i) nor s 107 contained an express reservation of exclusive power to the states or any express prohibition prohibiting the Commonwealth from using any of its powers to legislate on local trade, so that the reservation of power over local trade to the states had no basis in the constitutional text. The point differs from the one his Honour made with respect to s 107 in the Engineers' Case, which has become part of the received wisdom with respect to reserved powers. In the Engineers' Case, Isaacs J argued that it was wrong to assume that s 107 reserved any power, including power over their domestic economies, to the states. (43) Other judges have since adopted this criticism, so that it is now well recognised that s 107 of the Constitution does not reserve any exclusive powers to the states. (44)

Isaacs J's point in the Engineers' Case cannot be accepted as a criticism of Huddart Parker because no judge in Huddart Parker relied on s 107 alone as reserving power to the states. The majority in Huddart Parker found the reservation of exclusive powers to the states in the limits which s 51 (i) imposed on the Commonwealth commerce power, combined with s 107, not in s 107 alone. Although Griffith CJ in the Union Label Case, quoted in Huddart Parker, said:
   It follows that the power does not extend to trade and commerce
   within a State, and consequently that the power to legislate as to
   internal trade and commerce is reserved to the State by the
   operation of sec. 107, to the exclusion of the Commonwealth, and
   this as fully and effectively as if sec. 51(i) had contained
   negative words prohibiting the exercise of such powers by the
   Commonwealth Parliament, except only, in the words of Chase CJ, 'as
   a necessary and proper means for carrying into execution some other
   power expressly granted.' (45)


Griffith CJ was not arguing that s 107 by itself reserves any powers exclusively for the states. His Honour's point was that the limit in s 51 (i) by itself does not reserve any powers exclusively to the states. All it does is limit the Commonwealth power to trade among the states, preventing the Commonwealth from legislating with respect to trade within the one state. As s 107 gives the states a general legislative power unlimited as to subject matter, the combined effect of the two provisions is to reserve power over trade within a state exclusively to the state concerned.

In Huddart Parker, Isaacs J recognised this and his Honour's point was not that s 107 is not a grant of exclusive power to the states but that the conclusion that the Constitution reserves exclusive power over intrastate trade to the states has to be based on a provision which reserves that exclusive power or prohibits the Commonwealth from legislating on that topic. (46) The only candidates for such a provision are s 51(i), the trade power, and s 107. Section 51(i) does not reserve any exclusive power to the states because, as Griffith CJ conceded in the above quote from the Union Label Case, s 51 (i) only contains a limitation on the Commonwealth power over trade. Isaacs J argued that that limitation could not be fairly interpreted as a reservation of power over domestic trade to the states or a prohibition on the Commonwealth using other powers to legislate with respect to that trade. To do so was to read a prohibition or negative implication into the words of a positive grant of power and that was wrong. (47) Section 107 does not reserve power over domestic trade to the states because it is not a reservation of any exclusive powers. Hence the interpretation of ss 51(i) and 107 as reserving some exclusive powers to the states had no textual base and could not be accepted. With respect to s 107, Isaacs J said:
   Sec. 107 of the Constitution is relied on by my learned brothers
   who have preceded me. No doubt that section expressly reserves
   certain powers to the States. But an inspection of the clause at
   once discloses that the reservation of a power to a State does not
   imply prohibition to the Commonwealth. The reserved powers are
   those which are not either exclusively vested in the Commonwealth,
   or withdrawn from the States. But a power may be concurrent in
   both; and such a power is reserved to the State though existing
   also in the Commonwealth. Consequently reservation to the States
   cannot be taken as the test of whether a given federal power
   includes the right to affect internal trade, and cannot amount 46
   47 to a prohibition express or implied. It is always a question of
   grant, not of prohibition, unless that is express. (48)


The argument demonstrates that s 107 standing alone does not enable us to identify exclusive state powers because the powers it reserves to the states may be shared with the Commonwealth or be exclusive to the states. That may be accepted but does not rule out the possibility that ss 51(i) and 107 combined reserve some powers exclusively to the states.

Isaacs J argued that the interpretation of s 51 (i) as reserving power over local trade exclusively to the states was not consistent with the plain meaning of the words of s 51 (i) which only contain a limitation on Commonwealth power, not an express prohibition of any attempt to regulate local trade. (49) Interpreting s 51 (i) as containing that prohibition can only be defended by implying that s 51(i) does more than impose a limit on Commonwealth power and reserves some subjects to the states exclusively by excluding those subjects from the scope of other Commonwealth powers. (50)

Isaacs J's arguments are a fair criticism of a rigid application of the majority's argument in which the limits on the trade power are interpreted as identifying specific state reserved powers, which are then used to reduce the scope of all other Commonwealth powers so as to prevent any infringement of the state powers so identified. (51) Such an interpretation falls within Isaacs J's criticism because it does see the limits on s 51 (i) as prohibiting any regulation of local trade under any other Commonwealth power and hence as reserving some specific powers to the states. However, the argument is not a fair criticism of a more moderate version of the majority's argument in which the limits on the trade power are seen as indicating an intention to divide economic power between Commonwealth and states, so that the Commonwealth controls the national elements of the economy, while the states control the local elements, without specifying exactly how the line is to be drawn. (52) This version does not see the limits on s 51(i) as prohibiting any regulation of local trade under any other head of Commonwealth power because it requires that those powers be interpreted before we know the exact demarcation between Commonwealth and state power. However, it does require a division of power, thus ruling out any interpretation of any other Commonwealth power which tends to undermine that division of power.

Hence, Isaacs J's argument does not by itself support his Honour's conclusion that as a general rule the limits on one power are irrelevant to the interpretation of other powers. An interpretation in which the limits on one power are seen as playing an important role in dividing power between the Commonwealth and the states, and hence as relevant to the interpretation of other powers, does not entail that the limits on that power reserve identifiable exclusive powers to the states or impose any specific prohibitions on the exercise of other Commonwealth powers. Hence it is not open to Isaacs J's objection that it is implying too much into sections such as ss 51(i) and 107.

There is a more fundamental objection to Isaacs J's conclusion that as a general rule the limits on one power are irrelevant to the interpretation of other powers. An interpretation which sees the limits on one power as relevant to the interpretation of other powers is consistent with ordinary principles of statutory interpretation because it interprets specific provisions in the light of the document as a whole. It also has the advantage of giving due weight to all the words of the Commonwealth grants by preventing limits on one power being evaded and being rendered of no effect by the use of other, more broadly drafted powers. (53)

Although Isaacs J was committed to the view that ordinary principles of statutory interpretation are relevant to constitutional interpretation, (54) his Honour did not view those principles as requiring that limits on one power be taken into account in interpreting other powers. Isaacs J described this approach to interpretation as that of drawing negative implications from positive grants of power. His Honour was critical of it on the grounds that if the limits on one power, such as the trade power, govern the interpretation of another power, such as the corporations power, then the opposite should apply, so that the limits on the corporations power should govern the interpretation of the trade power. If the limits on each power were interpreted as 53 54 reserving state exclusive powers and hence as limiting the scope of every other power, Commonwealth power would be reduced to almost nothing. Each grant of additional power would do more to limit than to extend the scope of Commonwealth powers. This leads to the seemingly perverse result that the more powers the Commonwealth was given the less power it would actually have. Isaacs J suggests that this is counterintuitive because the cumulative effect of giving the Commonwealth many rather than few grants of power may be to leave it with very little actual power:
   With reference to United States v. Dewitt I would observe that,
   even if I agreed with the wide meaning placed by my learned
   brothers who have preceded me on the words used by Chase C.J., I
   could not see my way to incorporate his dictum into the Australian
   Constitution, and then construe that document as if the Imperial
   legislature had enacted his words. If the interpretation placed on
   his observations be correct, it applies equally well to everything
   excluded from the various enumerated powers; and, inasmuch as
   manufacturing and mining companies are not included in paragraph
   (xx.), they ought prima facie by parity of reasoning to be excluded
   from the commerce clause, and the taxation clause, and the bills of
   exchange clause, notwithstanding the generality of the words,
   because it is quite consistent with a restricted construction of
   the language of those clauses to regard the unspecified classes of
   corporations as entirely reserved to the States. Those corporations
   are not, expressly or by necessary implication, contained in those
   powers except upon a fair construction of the words themselves, and
   are not there at all if this doctrine of implied prohibition be
   applied to the several clauses referred to. (55)


Isaacs J's argument demonstrates that the principles governing the interpretation of s 51 (i) as reserving power to the states cannot be applied across the board to the other powers. They are special principles applying to the trade power alone. Isaacs J assumed that for this reason they are inconsistent with the plain meaning of s 51 because there is nothing in the words of s 51 which requires that special principles be used in the interpretation of the trade power. (56) This assumption may be unjustified because, as argued above, there are good reasons for treating the trade power as the most important of the Commonwealth's economic powers, the limits on which are important for the interpretation of the other economic powers. (57)

Isaacs J assumed that the above argument ruled out not only the Huddart Parker reserved powers doctrine but any interpretation of s 51 in which the limits on some powers are seen as limiting the scope of other powers. This is because if the limits on some powers limit the scope of others, then as a matter of logic, the limits on each power must limit the scope of every other power. That assumption cannot be accepted because it ignores the possibility that not all or even most of the limits on each power limit the scope of other powers. (58)

Isaacs J's critique of the drawing of negative implications from positive powers is the most comprehensive defence of that position and the conclusion to which it leads: the conclusion that each power must be interpreted separately. It remains important because the assumption that it is wrong to draw negative conclusions from positive grants of power is widely accepted and forms one of the bases of the majority judgments in Work Choices. (59)

III WORK CHOICES AND THE INTERPRETATION OF COMMONWEALTH POWERS

The Work Choices majority adopted an approach to the interpretation of Commonwealth powers in which each power is interpreted as a stand-alone power, separately and broadly. In doing so the majority followed a well-established line of authority beginning with Strickland v Rocla Concrete Pipes Ltd ('Strickland') (60) and including among others, the Tasmanian Dam Case and Re Dingjan; Ex parte Wagner. (61) But their Honours also considered the relevant principles for interpreting Commonwealth grants of power and based their interpretive approach on arguments similar to those used in Isaacs J's critique of the majority in Huddart Parker, especially his Honour's attack on the drawing of negative implications from positive grants of power and his Honour's claim in the Engineers' Case that the Griffith Court was guilty of arguing that s 107 reserved some specific powers to the states:
   So, too, the doctrine of reserved powers depended upon drawing
   negative implications from the positive grants of legislative power
   to the federal Parliament, and sought to draw support for that
   approach from s 107 of the Constitution. As Dixon J pointed out in
   Melbourne Corporation v The Commonwealth, 'the attempt to read s
   107 as the equivalent of a specific grant or reservation of power
   lacked a foundation in logic'. But no less fundamentally, the
   doctrine of reserved powers could be supported only if the
   Constitution was understood as preserving to the States some
   legislative power formerly held by the unfederated Colonies. (62)


It is the first of these arguments, the critique of drawing negative implications from positive grants of power, which will be considered here.

In holding that no implications could be drawn from the conciliation and arbitration power, s 51(xxxv), for the interpretation of the corporations power, s 51(xx), the Work Choices majority agreed with Isaacs J's conclusion that it was improper to draw negative implications from a positive grant of power where the power contained no express prohibition. The majority dealt at some length with cases in which other powers had been interpreted as allowing the Commonwealth to legislate with respect to industrial disputes and other aspects of industrial relations, pointing out that the Commonwealth had been permitted to use the defence power and the trade power to regulate industrial relations. (63) The majority expressly approved a statement of Gleeson CJ from Re Pacific Coal Pty Ltd; Ex parte Construction, Forestry, Mining and Energy Union ('Re Pacific Coal') (64) to the effect that the arbitration power did not contain any negative implication or express prohibition preventing the Commonwealth from using other powers to regulate industrial disputes:
   First, it is one thing to say that the nature of the power is such
   that it deals with instituting and maintaining a system of
   conciliation and arbitration, and that it 62 63 64 is only through
   such a system that conditions of employment may be regulated under
   s 51(xxxv); it is another thing to find some negative implication
   amounting to a prohibition against the Parliament enacting any law
   which has the effect of altering conditions of employment. That
   there is no such negative implication, and no such prohibition,
   must follow from the acceptance that, where Parliament can rely
   upon some other power conferred by s 51, it can legislate in
   relation to conditions of employment. Such an implication was
   rejected, for example, in Pidoto v Victoria. In the present case,
   an attempt was made to rely, if necessary, upon the power conferred
   by s 51(xx). It is unnecessary to deal with that attempt but if, in
   a given case, legislation were validly enacted pursuant to that
   power, then it would not be affected by any negative implication or
   prohibition of the kind mentioned. (65)


The Work Choices majority adopted reasons similar to those of Isaacs J for holding that it was impermissible to draw negative implications from positive grants of power. As noted above, Isaacs J argued that if negative implications were to be drawn from the limits on one power, they had to be drawn from the limits on all powers, leading to some peculiar limitations on particular powers and to the odd conclusion that the more powers the Commonwealth was granted the narrower its powers were likely to be. (66) The majority did not refer to Isaacs J's argument on this point but did quote Latham CJ in Pidoto v Victoria to similar effect:
   [It was argued that s 51(xxxv) implies] not only that the
   Commonwealth Parliament shall have power to legislate in relation
   to the industrial disputes there defined and in the manner there
   prescribed, but also that the Commonwealth Parliament shall not
   have power to deal with any other industrial matter or with any
   industrial dispute in any other manner. ... Section 51 (xxxv.) is a
   positive provision conferring a specific power. The particular
   terms in which this power is conferred are not, in my opinion, so
   expressed as to be capable of being so construed as to impose a
   limitation upon other powers positively conferred. Further, if s.
   51 (xxxv.) were construed so as to prevent the Parliament from
   dealing with industrial matters except under that specific
   provision, similar reasoning would lead to the conclusion that the
   Commonwealth Parliament 65 66 could not (under any legislative
   power) provide for the use of conciliation and arbitration in
   relation to any other matter than inter-State industrial disputes.
   It must, I think, be conceded, for example, that the Commonwealth
   Parliament can, in legislating with respect to the public service
   of the Commonwealth (Constitution, s. 52 (ii.) ), provide for
   conciliation and arbitration in relation to matters such as wages,
   conditions and hours, whether or not any dispute about those
   matters is industrial ... (67)


It has been accepted for a long time that limits on some powers do limit the scope of other powers. For example, the just terms limit on the acquisitions power has been incorporated into other powers which could be used to authorise acquisitions, (68) and the exceptions in the banking and insurance powers which prevent the Commonwealth from controlling state banking and state insurance extend to other powers. (69) The majority in Work Choices conceded that these limits do limit the scope of other powers because the safeguard or guarantee of just terms in s 51(xxxi) would be of no effect if the Commonwealth could compulsorily acquire without giving just terms under other heads of power, while positive prohibitions, such as that on the Commonwealth legislating with respect to state banking or insurance, would be of no effect if they did not extend to other powers. (70) The majority distinguished these powers from the arbitration power on the grounds that they contained a limitation in the form of a prohibition on Commonwealth legislation on a particular topic, whereas the arbitration power was a positive grant of power containing no such prohibition. Unlike Kirby J in dissent, (71) their Honours did not find any guarantee or safeguard in the arbitration power analogous to that in s 51(xxxi) or any prohibition of laws on a particular topic analogous to the prohibitions in the banking and insurance powers. (72)

IV THE LEGITIMACY AND NECESSITY OF DRAWING NEGATIVE IMPLICATIONS FROM POSITIVE GRANTS OF POWER

The argument that each power should be interpreted as a stand-alone power because it is wrong to infer prohibitions or negative implications from positive grants of power fails for a number of reasons. It depends on a distinction between limits on positive grants of power and prohibitions on the exercise of a power which is less clear cut than Isaacs J and the Work Choices majority supposed. The Work Choices majority considered both the substance and form of particular grants in drawing the distinction. The distinction between the limitation in the banking and insurance powers to banking and insurance other than state banking, and the limitation in the arbitration power to disputes extending beyond the limits of any one state, is purely one of form, while the distinction between the acquisition power and other powers is one of substance, in that the acquisition power gives individuals a guarantee akin to a right whereas most other powers do not. (73)

There is room for disagreement about whether the limits on a power contain a guarantee akin to a right. In Work Choices, Kirby J in dissent argued that the arbitration power guaranteed workers and employers the right to an impartial umpire in industrial disputes, thus protecting the weaker party from the coercion which can result from imbalances of economic power. His Honour held that this guarantee limited the scope of other powers, preventing the Commonwealth from enacting workplace laws which did not provide such guarantees. (74) The majority did not find any such guarantee in the provision. (75) Disagreements of this sort do not undermine the distinction. We can recognise that there is a real difference between grants of power which contain a guarantee akin to a right and those which do not, although we disagree about whether a particular section contains such a guarantee. Kirby J developed a broad concept of safeguard or guarantee which threatened to undermine the distinction between provisions which contain guarantees and those which merely contain limitations. His Honour's conception of a safeguard included safeguards designed to protect the interests of the states as well as those designed to protect individual interests. (76) The guarantee of an impartial umpire in industrial disputes is designed to protect the individual interests of workers and employers, not the interests of the states. But although Kirby J did not point it out, the second safeguard which his Honour argued that the arbitration power contained--the requirement that it only extends to industrial disputes extending beyond the limits of any one state--safeguards the interests of states, not of individuals. (77) On this view, almost all the limits on powers in s 51 can be interpreted as safeguards because they are designed to safeguard the interests of the states. Hence it may seem that Kirby J is misusing the distinction between safeguards and the limited terms in which powers are granted to advance his Honour's argument. However, in his Honour's defence it is not unreasonable to view the limits on power in s 51 as the safeguards of the states and to require that the limits on one power be taken into account in the interpretation of other powers. In the end, the majority's position is that safeguards other than safeguards for the interests of the states may be taken into account in interpreting a provision which divides up power in a federal system. That is an odd conclusion because it ignores the obvious purpose of most of the limits in s 51, which is to safeguard state legislative power.

As noted above, the majority does allow one exception to this conclusion. (78) Where a limit on power takes the form of a prohibition on the exercise of a Commonwealth power, the majority interpreted it as limiting powers other than the power which contains it, even though the prohibition protects state interests rather than individual interests. The distinction is formalistic and makes the way in which a grant of power is drafted decisive in determining whether the limits on power which it contains are relevant to the interpretation of other powers:
   Paragraph (xxxv) is to be read as a whole; it does not contain any
   element which answers the description in Bourke of a positive
   prohibition or restriction upon what otherwise would be the ambit
   of the power conferred by that paragraph. ... The text of para
   (xxxv), like that of para (i), expresses a compound conception; the
   paragraph contains within it, and not as an exception 76 77 78 or
   reservation upon what otherwise would be its scope, the element of
   interstate disputation. (79)


This passage infers that the result may have been different if s 51(xxxv) had been drafted differently so that the requirement of an interstate dispute took the form of a restriction on what would otherwise have been the scope of the grant rather than as part of the definition of the power. For example, if the power had read 'for the prevention and settlement of industrial disputes but not disputes limited to one state, the majority may have interpreted the exception 'disputes limited to one state' as a prohibition on legislating with respect to local disputes which limited the scope of other powers.

The argument places far too much weight on form and not enough on substance. The majority do not explain why so much should turn on whether a limitation is included in the subject over which the Commonwealth is given power or is drafted as an exception to what would otherwise be a broader grant of power, especially as the choice of phrase makes no obvious difference to the overall meaning of the grant. If the arbitration power had read 'for the prevention and settlement of industrial disputes but not disputes limited to one state' rather than 'for the prevention and settlement of industrial disputes extending beyond the limits of any one state, (80) there is no apparent difference in meaning except that in the opinion of the Work Choices majority, the former form of words is capable of limiting the scope of other powers, whereas the latter is not. The distinction would be defensible if the majority could point to a drafting convention under which one form of words indicates an intention to limit the scope of other powers whereas the other does not, but their Honours did not appeal to such a convention. In the absence of such a convention, the distinction is empty formalism and indefensible.

Even if it were justifiable to distinguish between limitations defining the power granted and limitations restricting what would otherwise be a broader grant, the argument that it is a mistake to draw negative implications from positive grants of power fails for a more fundamental reason: refusing to draw negative implications from positive grants of power may render other grants of power otiose. In Work Choices the plaintiffs and the minority, especially Kirby J, relied on this argument pointing out that a failure to draw negative implications from the arbitration power to prevent the corporations power being used to control industrial relations, would render the arbitration power irrelevant. (81) This result was counterintuitive because it entailed that over 100 years of detailed exegesis of s 51(xxxv) had been unnecessary because the corporations power covered the same ground but was not subject to the s 51(xxxv) limitations. (82)

The majority rejected this argument. Their Honours stressed that in 1901, interpreting the corporations power as extending to industrial relations would not have had the effect of making the arbitration power redundant because corporations did not play such a major role in the economy as they do now. The majority argument suggests that interpreting the corporations power as a stand-alone power in 1901 would not have had a dire impact on state powers or rendered other powers irrelevant because of the more limited role of corporations in the economy and in society. The changing and expanding role of corporations as the preferred way of structuring large and small businesses may have greatly increased the reach of the corporations power to an extent which the framers could not have expected or foreseen, but the majority implied that this is not a reason for limiting the scope of the corporations power. (83) To use hindsight to limit the corporations power because economic and commercial changes have brought far more activities in its scope than was the case in 1900, would be to remake the Constitution in the light of changing economic and social conditions, something which the Court has no power to do.

This may not be a reasonable argument because as early as 1909, in Huddart Parker, Higgins J described the implications of a broad interpretation of the corporations power as 'extraordinary, big with confusion', giving as examples the possibility that the Commonwealth could directly regulate the wages and conditions of corporate employees, stipulate who could be a director and establish special licensing laws for hotels owned by trading and financial corporations. (84) His Honour's argument indicates that even then, a broad interpretation of the corporations power had such major implications for the constitutional balance of power and for the relevance of other powers that it should not be accepted.

Kirby J's argument was stronger than his Honour may have realised because the law normally draws negative implications from positive grants of power because failure to do so undermines the raison d'etre of limited grants of power. The law assumes that grantors of limited power, including constitutional and legislative power, do not intend to give the recipient of the grant other unlimited powers, because to do so would render the grant of limited power unnecessary and otiose. Hence, arguments about the scope of the grants of power in s 51 assume that the grant of limited powers in that section, taken as a whole, gives rise to a negative implication, the implication that the Commonwealth does not have a general legislative power unlimited as to subject matter. This is not stated anywhere in the Constitution, but is an obvious implication because if the Commonwealth had a general legislative power, the grants in s 51 would not be needed.

The interpretation of specific grants of power proceeds on the basis of a similar implication which is so obvious that it escapes notice. For example, the grant of power over trade among the states contains the negative implication that the Commonwealth cannot use the trade power to regulate trade confined within one state and the power over trading, and financial corporations contains the negative implication that the corporations power cannot be used to regulate corporations which are not trading and financial corporations. These are negative implications because there is nothing in the words of the grant of power over trade which specifically says that the Commonwealth does not have a general power over local trade and there is nothing specific in the words of the corporations power which says that it does not have a general power over non-trading corporations. (85) We draw the negative implication as a matter of course because there would be no point in granting a power over a topic if the Commonwealth already had power over that topic. The issue is not whether negative implications can be drawn from positive grants of power because we routinely draw them. The issue is whether the negative implications in one grant of power are limited to that grant itself or whether they extend to other grants.

It is clear that the existence of a power may have negative implications for the scope of other powers. Taken alone, the trade power may be wide enough to allow the Commonwealth to regulate corporations on the basis that as most corporations are business corporations, a law regulating them is at least incidental to trade. But the grant of a specific power over corporations implies that the trade power does not extend to corporations, at least in some respects, because, if it did, there would be no need for a separate corporations power. Hence, the grant of a power over corporations has a negative implication for the trade power: the implication that the trade power does not extend to those aspects of corporations covered by the corporations power. The argument for this implication is identical in form to the argument that the overall grant of power in s 51 implies that the Commonwealth does not have a general legislative power and the argument that the grant of a power over interstate and overseas trade implies that the Commonwealth does not have a general power over trade; if the broader power existed there would be no need for the grant of a narrower power.

The argument that the limits on one power are relevant to the interpretation of other powers is slightly more complex but has a similar basis: the existence of a broad power over a topic renders the limits on the grant of a narrower power over that topic pointless. Hence the existence of a narrow power subject to defined limits is a good reason for assuming that the Commonwealth does not possess a broad unlimited power over the same subject matter. For these reasons, it may be implied from the existence of the arbitration power that the Commonwealth has no general power over industrial disputes, especially the power to intervene in disputes limited to one state. If that is the case, no other power should be interpreted as containing that general power so as to enable the Commonwealth to avoid the limits on the arbitration power completely.

Isaacs J's judgment in Huddart Parker suggests that the only argument for not interpreting each power as a separate stand-alone grant is the argument that the purpose of the limitations on the grants is to reserve power to the states and that if we reject that as the purpose of the limitations, there is no reason why limitations in one grant should influence the interpretation of other grants. (86) The argument above suggests that Isaacs J is wrong because, regardless of purpose, it is reasonable and commonplace to infer negative 86 implications from positive grants of power and to read limitations in one power into the scope of other powers. (87) That can be demonstrated by considering the interpretation of grants of power in other contexts.

Not all limited grants of legislative power have the purpose of dividing up power between two levels of government in a federation. It is common to give subordinate authorities, such as local government, defined grants of power to make regulations and by-laws. This is done not to achieve a division of power with the central government, because typically the central government retains jurisdiction over all matters over which it has granted power to a subordinate authority and because the central government may at any time repeal the grants. Instead its purpose is to limit the powers of the subordinate authority to defined topics. Because the central government retains power over all matters over which it has granted jurisdiction to the subordinate authority, it would be futile to look to the powers of the central government in order to define the limits on the powers of the subordinate authority. But that does not entail that each power of the subordinate authority must be interpreted in a stand-alone fashion or that negative implications for the scope of particular powers cannot be drawn from the fact that other powers were granted. In cases interpreting the powers of subordinate authorities, it is common for the courts to draw negative implications from positive grants of power although no issue with respect to a division of power with another authority arises. (88) In particular, where the subordinate authority is given a narrow power subject to limitations and a broad power not subject to those limits, the broad power will not usually be interpreted as enabling the authority to avoid the limits on the narrower power, thus rendering the narrower power otiose and the limits it contains of no effect. (89)

This Part has defended an interpretive approach which views limits on each power as relevant to the interpretation of other powers without taking into account the federal reasons for limiting the scope of Commonwealth powers or arguments based on the history and purpose of the Constitution. The argument has been developed without reference to the fact that ss 51, 106, 107, 109 and other sections of the Constitution are intended to achieve a division of power between the Commonwealth and the states. That this is their intended purpose supports an interpretation of s 51 in which the limits on one power are seen as relevant to the interpretation of other powers because, as noted above, the limits on Commonwealth powers in s 51 are the most important way in which the Constitution guarantees the states some exclusive powers, (90) and this interpretation takes that fact seriously. But even if the federal reasons are ignored, there are still good reasons for drawing negative implications from positive grants of power and their limitations.
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Title Annotation:I. Introduction through IV. The Legitimacy and Necessity of Drawing Negative Implications from Positive Grants of Power, p. 175-203
Author:Stokes, Michael
Publication:Melbourne University Law Review
Date:Aug 1, 2015
Words:9936
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