Commonwealth v Bank of New South Wales


Commonwealth v Bank of New South Wales, was a Privy Council decision that affirmed the High Court of Australia's decision in Bank of New South Wales v Commonwealth, promoting the theory of "individual rights" to ensure freedom of interstate trade and commerce. The case dealt primarily with Section 92 of the Constitution of Australia.

Background

After two strong election wins, the Australian Labor Party government of Ben Chifley announced in 1947 its intention to nationalise private banks in Australia. It achieved this process by passing the Banking Act 1947. The policy proved very controversial, and the Bank of New South Wales challenged the constitutional validity of the law. The High Court found specific provisions of the law were invalid and struck them down. The Commonwealth government decided to appeal the decision in the Privy Council and in doing so 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.
with HV Evatt and Clement Attlee at the Dominion and British Leaders Conference, London, 1946

High Court of Australia

The High Court held in Bank of New South Wales v Commonwealth that the Banking Act 1947 was unconstitutional on a number of grounds:
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. In addition, the act was held to be not an act with respect to banking, and therefore invalid under s51, the banking power.