¹ See G Sawer, “The Public Corporation in Australia” in W Friedmann (ed), The Public Corporation — A Comparative Symposium (1954) at 9; M Sexton and L Maher, “Competitive Public Enterprises with Federal Government Participation; Legal and Constitutional Aspects” (1976) 50 ALJ 209.

² Two examples: Commonwealth Hostels Ltd, which was the subject of discussion in Commonwealth v Bogle (1953) 89 CLR 229; and the Maritime Industry Finance Company Ltd (MIFCo), registered by the Commonwealth in 1998 to establish a loan facility for the purpose of paying redundant waterside workers.

³ New South Wales v Bardolph (1934) 52 CLR 455 at 496 per Rich J; Johnson v Kent (1975) 132 CLR 164 at 169 per Barwick CJ; Attorney-General v De Keyser's Royal Hotel [1921] AC 508 at 575 per Lord Parmoor.

⁴ Building Construction Employees and Builders Labourers Federation of New South Wales v Minister for Industrial Relations (1986) 7 NSWLR 372; Union Steamship Co of Australia Pty Ltd v King (1988) 166, CLR 1.

⁵ New South Wales v Bardolph (1934) 52 CLR 455 at 474-75 per Evatt J.

⁶ An unsuccessful challenge was mounted to the existence of Australian National Airlines Commission in Australian National Airways Pty Ltd v Commonwealth (1945) 71 CLR 29. In Victoria v Commonwealth and Connor (1975) 134 CLR 81, legislation purporting to establish the Petroleum and Minerals Authority was declared to be wholly invalid for non–compliance with the Constitution, s 57 with the result that the Authority never existed.

⁷ (1976) 138 CLR 492. See also Australian National Airways Pty Ltd v Commonwealth (1945) 71 CLR29.

⁸ Australian National Airlines Act 1945 (Cth), s 19B.

⁹ Constitution, s 51(i). However, an intrastate journey was held by the majority to be permissible under the Constitution, s 122 (the territories power) if it occurred in the course of a journey between a State and Territory.

¹⁰ (1926) 39 CLR 1. An unsuccessful attempt to challenge the Australian Atomic Energy Commission's purchase of shares in a mining company was made in Kathleen Investments (Aust) Pty Ltd v Australian Atomic Energy Commission (1977) 139 CLR 117.

¹¹ Commonwealth Shipping Act 1923 (Cth).

¹² (1926) 39 CLR 1 at 9 per Knox CJ, Gavan Duffy, Rich and Starke JJ.

¹³ Atomic Energy Act 1953 (Cth), s 17(4).

¹⁴ (1977) 139 CLR 117.

¹⁵ A more detailed treatment of the question as it applies to the Commonwealth's power to enter into contracts is found in N Seddon, Government Contracts: Federal, State and Local (1995) at 34-56.

¹⁶ Winterton, G, Parliament, the Executive and the Governor-General (1983) chs 2-3Google Scholar.

¹⁷ Rose, D, “The Government and Contract” in PD Finn (ed) Essays on Contract (1987) at 246Google Scholar Victoria v Commonwealth and Hayden (1975) 134 CLR 338 at 362 per Barwick CJ “… the executive may only do that which has been or could be the subject of valid legislation.” See also ibid at 379 per Gibbs J “… the Executive cannot act in respect of a matter which falls entirely outside the legislative competence of the Commonwealth” and at 396-97 per Mason J. The assumption behind the arguments in Attorney-General (Victoria) v Commonwealth (the Clothing Factory case) (1935) 52 CLR 533 and Re KL Tractors Ltd (1961) 106 CLR 318 is that it is necessary to tie a particular exercise of executive power (making contracts in these cases) to a head of power found in the Constitution (the defence power in these cases).

¹⁸ Of course, it might be said that the word “extends” is merely inclusive and so s 61 does not offer guidance on the limits of executive power (as to which see G Winterton, above n 16 at 28). Even so, on the rare occasions when this issue has arisen, the assumption is made that the executive power is limited. Winterton terms the limits on executive power stemming from the limits on subject matter found in the Constitution to be the “breadth” limitation on executive power: see ibid at 29-31. See below n 29 as to the “depth” of executive power.

¹⁹ (1975) 134 CLR 338. See in particular at 397 per Mason J.

²⁰ (1988) 166 CLR 79. The scope and existence of the unexpressed power was itself a matter of some controversy in Davis with Wilson, Dawson and Toohey JJ saying that they did not consider that the legislative powers of the Commonwealth extended beyond the specific powers conferred by the Constitution.

²¹ The Australian Assistance Plan case (1975) 134 CLR 338 at 397 per Mason, J; Davis v Commonwealth (1988) 166 CLR 79 at 111Google Scholar per Brennan J .

²² D Rose, above n 17 at 246.

²³ We acknowledge that there is some debate about the extent to which the Commonwealth ought to engage in commercial activity. See Commonwealth Parliament Joint Committee of Public Accounts, Public Business in the Public Interest: An Inquiry into Commercialisation in the Commonwealth Public Sector, Report 336 (1995). For similar concerns regarding State government commercial activity, see Western Australia Royal Commission into Commercial Activities of Government and Other Matters, Report Part II (1992) at paras [3.13.1-3.13.4]. We do not enter into that debate in this article. We begin from the assumption that the Commonwealth does engage in this type of activity.

²⁴ Australian National Airways Pty Ltd v Commonwealth (1945) 71 CLR 29.

²⁵ A non-exhaustive list of powers relevant to commercial activity include activities within a Territory (s 122), activities within a “Commonwealth place” (s 52(i)), radio and television (s 51(v)), defence (s 51(vi)), fisheries in Australian waters beyond territorial limits (s 51(x)), banking (s 51(xiii)), insurance (s 51(xiv)), railway acquisition and construction within a State (s 51(xxxiii) and (xxxiv)), matters referred to the Commonwealth by a State (s 51 (xxxvii)) and matters incidental to an area of Commonwealth power (s 51 (xxxix)).

²⁶ The principal proponent of the view that Commonwealth's contracting power is not limited by reference to subject matter is Professor Enid Campbell. See Campbell, E, “Commonwealth Contracts” (1970) 44 ALJ 14 at 17-18 and 23Google Scholar. See also Campbell, E, “Federal Contract Law” (1970) 44 ALJ 580Google Scholar. See also G Winterton, above n 16 at 45-7. But see also at 121-2 where Winterton makes the important point that the government's power must be more limited than that of the citizen when the government is exercising powers which either have no parallel with what an ordinary person can do or which, when done by the government (such as surveillance), take on a quite different character.

²⁷ Winterton prefers to call the power a “common law” power, above n 16 at 45.

²⁸ The debate is fully canvassed in N Seddon, above n 15.

²⁹ It may be that the Commonwealth's power to engage in commercial activity could be further limited by what Winterton terms the “depth” of the executive power, that is, the scope of the power as defined by the prerogative. For example, if the Commonwealth used its executive power in breach of legislation limiting that power, the use of the power would be invalid. See G Winterton, above n 16 at 29-31. As to the “breadth” of executive power, see above n 18. A challenge to Commonwealth commercial activity is most likely to be based on the “breadth” limit on executive power, that is, by reference to the limits on subject matter found in the Constitution.

³⁰ Commonwealth v Australian Commonwealth Shipping Board (1926) 39 CLR 1 at 9 per Knox CJ, Gavan Duffy, Rich and Starke JJ.

³¹ An example is provided by Attorney-General (Western Australia) v Australian National Airlines Commission (1976) 138 CLR 492, where some journeys undertaken by a Commonwealth statutory corporation were constitutionally valid while others potentially were not.

³² An example being the market for legal services. It appears to be accepted that the Australian Government Solicitor cannot compete with private sector solicitors for private sector business. Yet private sector solicitors are allowed to compete against the Australian Government Solicitor for government business.

³³ The spare capacity argument is set out in Commonwealth Parliament Joint Committee of Public Accounts, Public Business in the Public Interest: Inquiry into Commercialisation in the Commonwealth Public Sector, Report 336 (1995) at 30. This was relied on as being an “exception” to the general constitutional limits on the Commonwealth's powers to engage in commercial activities by the Industry Commission in Competitive Tendering and Contracting by Public Sector Agencies, Report No 48 (1996) at 227.

³⁴ Attorney-General (Victoria) v Commonwealth (the Clothing Factory case) (1935) 52 CLR 533 and Re KL Tractors Ltd (1961) 106 CLR 318.

³⁵ Rich J in the Clothing Factory case stated a wider spare capacity argument, ibid at 562, saying that it would be wasteful to leave capacity idle and unemployed. He drew on old company law cases (at a time when companies could be found to have acted ultra vires). “The question how far this doctrine is to be pushed in relation to corporations is one of degree, and has excited some difference of opinion”, citing Forrest v Manchester, Sheffield and Lincolnshire Railway Co (1861) 30 Beav 40; 54 ER 803 and on appeal (1861) 4 De GF & J 126; 45 ER 1131. In KL Tractors no final decision was in fact reached about whether the activities of the factory were within constitutional limits because the Court decided that goods delivered had to be paid for on the basis of the law of restitution, even if the contracts were void.

³⁶ (1975) 132 CLR 164 at 169. This statement is too broad in the sense that it probably is legitimate for the Commonwealth to charge for its services to recover costs and even to make a profit from activities in which it is legitimately able to engage. The reference by Barwick CJ to “do anything” is to activities not otherwise within constitutional power.

³⁷ The Auditor-General, Efficiency Audit. Department of Defence. Commercial Activity in the Defence Science and Technology Organisation (Audit Report No 21992-1993) at 29-30. See also Auditor-General, Efficiency Audit. Auscript. Commercialisation of the Commonwealth Reporting Service (Audit Report No 6 1992-1993) at 11-12 where the constitutional constraints were thought to undermine the commercial viability of Auscript.

³⁸ (1977) 139 CLR 117 at 159.

³⁹ The next sentence was, ibid, “The word 'formed' ins. 51(20) does not confine Parliament to laws with respect to corporations which have been formed.”

⁴⁰ New South Wales v Commonwealth — the Incorporation Case (1990) 169 CLR 482 in which it was held that the Constitution, s 51(xx) only covers regulation of existing trading and financial corporations but not the initial incorporation of such corporations.

⁴¹ Constitution, s 122. Whether this power is limited in its scope by other provisions of the Constitution is a matter of some controversy. In Newcrest Mining (WA) Ltd v Commonwealth (1997) 147 ALR 42 the High Court was divided on whether s 122 was limited bys 51(xxxi) (acquisition of property on just terms). Gaudron, Gummow and Kirby JJ were prepared to overrule Teori Tau v Commonwealth (1969) 119 CLR 564 on this issue. See also Toohey J at 71. In a future case it may well be thats 122 is limited at least by those provisions of the Constitution which are in the nature of guarantees. See C Horan, “Section 122 of the Constitution: a 'Disparate and Non-Federal' Power?” (1997) 25 F L Rev 97 which was written before the High Court's decision in Newcrest.

⁴² See text at n 47 below. Whether there are limits on the Commonwealth's power to establish a territory company are discussed below.

⁴³ As to any relevant limits on the Commonwealth's power under the territories power, see below.

⁴⁴ The Commonwealth has used State companies legislation to incorporate a company in the past. This occurred in Commonwealth v Bogle (1953) 89 CLR 229.

⁴⁵ Kathleen Investments (Aust) Ltd) v Australian Atomic Energy Commission (1977) 139 CLR 117 at 159 per Murphy J.

⁴⁶ See Zines, L, The High Court and the Constitution (4th ed 1997) ch 4Google Scholar.

⁴⁷ Spratt v Hermes (1965) 114 CLR 226.

⁴⁸ (1975) 132 CLR 164 at 169.

⁴⁹ The analogous problem of whether, in relation to an activity which is justified by reference to the trade and commerce power (s 51(i)), an intrastate aspect is also permissible has generated some fine distinctions but, overall, the answer appears to be that the intrastate activity is likely to be invalid. See L Zines, The High Court and the Constitution (4th ed 1997) 68-75.

⁵⁰ Lamshed v Lake (1958) 99 CLR 132; Attorney-General (Western Australia) v Australian National Airlines Commission (1975) 138 CLR 492.

⁵¹ Davis v Commonwealth (1988) 166 CLR 79 at 94-95 per Mason CJ, Deane and Gaudron JJ.

⁵² See, for example, Airlines of New South Wales Pty Ltd v New South Wales (No 2) (1965) 113 CLR 54 at 88 per Barwick CJ; at 115 per Kitto J where this point was made with respect to the trade and commerce power. In Attorney-General (Western Australia) v Australian National Airlines Commission (1975) 138 CLR 492, a majority (Stephen, Mason and Murphy JJ) held that engaging in an intrastate journey in the course of conducting an airline service between a State and a Territory was justified because it made practical and economic sense. Barwick CJ and Gibbs J thought otherwise. See, generally, L Zines, The High Court and the Constitution (4th ed 1997) at 68-79.

⁵³ Attorney-General (Western Australia) v Australian National Airlines Commission (1975) 138 CLR 492.

⁵⁴ An example is Employment National, the Commonwealth company which operates to provide case management services to job seekers in competition with private sector providers. Its intrastate operations would have to be justified by reference to the social security power (s 51(xxiiiA)) on the basis that providing these services was “provision of … unemployment … benefits”.

⁵⁵ Attorney-General (Victoria) v Commonwealth (the Pharmaceutical Benefits case) (1946) 71 CLR 237 at 254 per Latham CJ; the Australian Assistance Plan case (1975) 134 CLR 338 at 417-18 per Murphy J. And see M Sexton and L Maher, above n 1 at 215. Latham CJ in the Pharmaceutical Benefits case, ibid, argued that the Commonwealth's financial support for Antarctic exploration, medical and scientific research, literary grants and public health was justified by reference to “purposes of the Commonwealth” in the appropriation power. See also the remarks of Mason J in the Australian Assistance Plan case, ibid at 394-395 and 397.

⁵⁶ Constitution, s 51(xxxix).

⁵⁷ In the Australian Assistance Plan case (1975) 134 CLR 338, the Court was divided 3-3 on the question whether there were limits, dictated by the terms of the Constitution, on the use by the Commonwealth of money appropriated under an Appropriation Act for running the Plan.

⁵⁸ Davis v Commonwealth (1988) 166 CLR 79 at 96 per Mason CJ, Deane and Gaudron JJ. Cf Barwick CJ in the Australian Assistance Plan case (1975) 134 CLR 338 at 361.

⁵⁹ The Australian Assistance Plan case (1975) 134 CLR 338 at 360 per Barwick CJ; at 375 per Gibbs J; at 396 per MasonJ. L Zines, The High Court and the Constitution (4th ed 1997) at 261- 262.

⁶⁰ (1988) 166 CLR 79 at 110.

⁶¹ The Australian Assistance Plan case (1975) 134 CLR 338 at 397 per Mason J, cited by Brennan J ibid at 111.

⁶² (1988) 166 CLR 79 at 111 per Brennan J.

⁶³ The Acts Interpretation Act 1901 (Cth), s 15A allows for legislation to be struck down in part.

⁶⁴ N Seddon, above n 15 at 62-66.

⁶⁵ See Mason, K and Carter, JW, Restitution Law in Australia (1995)Google Scholar.

⁶⁶ From a corporate law perspective, of course, it is the company ․ as a separate legal entity ․ which engages in the activity. In the second part of the article we examine whether it is possible to lift the corporate veil in the case of Commonwealth companies.

⁶⁷ Davis v Commonwealth (1988) 166 CLR 79 at 94 per Mason CJ, Deane and Gaudron JJ.

⁶⁸ In fact there are no provisions in the Corporations Law dealing with this issue. It is interesting to note, however, that in New South Wales the Registrar-General did refuse registration under the Companies Act 1936 (NSW) when one of the subscribers to the memorandum was a minor: Burns, N, “Infants as Shareholders” (1955) 28 ALJ 407 at 408Google Scholar.

⁶⁹ See the discussion by Barwick CJ in Kathleen Investments (Aust) Pty Ltd v Australian Atomic Energy Commission (1977) 139 CLR 117 at 128.

⁷⁰ A somewhat similar distinction was made by the Full Federal Court in General Newspapers Pty Ltd v Telstra Corp (1993) 117 ALR 629, which held that a statutory corporation's power to contract provided for in its enabling legislation was not the same as its capacity to enter into contract. The issue was whether, by entering into a contract, the corporation had done something “under an enactment”. It was held that it had not because it had simply exercised its inherent common law capacity to contract.

⁷¹ (1975) 134 CLR 338 at 396.

⁷² Corporations Law, s 140(1).

⁷³ Bailey v New South Wales Medical Defence Union Ltd (1995) 132 ALR 1 at 28 per McHugh and Gummow JJ.

⁷⁴ The current version of this section (Corporations Law, s 140(1)) was introduced in July 1998 by the Company Law Review Act 1997 (Cth). It is intended as a simplified version of the previous section (s 180(1)) which, in turn, was preceded by Companies Act 1981, s 78(1).

⁷⁵ As we note later (see below n 110) the Corporations Law no longer requires a company to have a memorandum and articles of association.

⁷⁶ (1977) 139 CLR 117.

⁷⁷ Ibid at 132. See also Gibbs J at 138-39 and Stephen J at 147-51.

⁷⁸ Corporations Law, s 114.

⁷⁹ (1977) 139 CLR 117 at 138 per Gibbs J.

⁸⁰ See also ibid at 157 per Jacobs J “… it is not a hypothetical but an actual absence of relationship between the purported exercise of the power and the function or purpose which would need to exist.”

⁸¹ Corporations Law, s 125.

⁸² Corporations Law, s 136(2).

⁸³ See H Burmester, “Locus Standi in Constitutional Litigation” in Lee, HP and Winterton, G (eds), Australian Constitutional Perspectives (1992) ch 6Google Scholar.

⁸⁴ In a different context it was held that a fellow member of a company had standing to challenge the membership of a statutory corporation as a shareholder in the company: Kathleen Investments (Aust) Ltd v Australian Atomic Energy Commission (1977) 139 CLR 117.

⁸⁵ The Australian Assistance Plan case (1975) 134 CLR 338 at 402 per Mason J. See also H Burmester, above n 83 at 168-71.

⁸⁶ See H Burmester, ibid at 171-76.

⁸⁷ Ibid at 365-66.

⁸⁸ Ibid at 383 per Gibbs J; at 401-402 per Mason J.

⁸⁹ See text at above n 7.

⁹⁰ This argument may involve “lifting the veil of incorporation”, an issue which is examined in the second part of this article.

⁹¹ For example, controlling the composition of a company's board of directors is relevant to its status as a subsidiary company (s 46(1)); having the capacity to determine the outcome of a company's decisions in relation to its financial and operating policies is relevant to the application of the share self-acquisition rules (s 259E).

⁹² Berle, AMeans, G, The Modem Corporation and Private Property (1968 rev ed) at 66Google Scholar.

⁹³ (1977) 139 CLR 117. The case involved the question whether a Commonwealth statutory corporation could own shares in a company. However, much of what was said in that case could be applied equally to the question of the Commonwealth owning shares in company.

⁹⁴ The Financial Management and Accountability Act 1997 (Cth), s 39(1) allows the Finance Minister to invest Commonwealth money in any “authorised investment” which is defined ins 39(8) to mean Commonwealth, State or Territory securities or securities guaranteed by the Commonwealth, a State or a Territory, a deposit with a bank or “any other form of investment prescribed by the regulations”. Regulation 22 then limits investment to bills of exchange accepted or endorsed by a bank; and a professionally managed money market trust so long as the Minister is satisfied that the trust is only in government securities and no charge over the assets of the trust is incurred in support of borrowings.

⁹⁵ The challenge was in fact not successful.

⁹⁶ A discussion of the question can be found in N Seddon, above n 15 at 104-113.

⁹⁷ (1992) 174 CLR 219 at 230. See also State Government Insurance Corp v Government Insurance Office of New South Wales (1991) 28 FCR 511 at 558-559 per French J. Cf Commonwealth v Bogle (1953) 89 CLR 229, in which it was held that Commonwealth Hostels Ltd, incorporated under the Companies Act 1938 (Vic), was not a manifestation of the Crown and could claim no Crown immunities or privileges.

⁹⁸ (1996) 139 ALR 127. The case is, at the time of writing, on appeal to the High Court.

⁹⁹ See, for example, State Authorities Superannuation Board v Commissioner of State Taxation for the State of Western Australia (1997) 189 CLR 253 at 282-4 per McHugh and Gummow JJ where it is made clear that the “Commonwealth” or a “State”, for the purpose of s 75, is a different concept from a body which is entitled to the privileges and immunities of the Crown. In the present case a Commonwealth company may be the “Commonwealth” for the purpose of s 75(iii) and yet may not necessarily enjoy Crown privileges and immunities.

¹⁰⁰ Ford, H, Austin, R Ramsay, I, Ford's Principles of Corporations Law (8th ed 1997) at 165Google Scholar. This argument refers to s 114 prior to the amendments made by the Company Law Review Act 1997 (Cth).

¹⁰¹ Ibid, giving the example of trade unions which cannot be registered under the Corporations Law: sees 116 (replacing s 1347 to which Ford et al refer).

¹⁰² Nor is there any discussion in the proposal which preceded the draft Bill … see Corporate Law Simplification Program, Forming a company: Proposal for simplification (1994).

¹⁰³ Corporations Law, s 125(2).

¹⁰⁴ Bowman v Secular Society Ltd [1917] AC 406 at 425 per Lord Finlay.

¹⁰⁵ (1991) 9 ACLC 1,147 at 1,156. The Court referred to the previous provision found in s 123.

¹⁰⁶ Salomon v Salomon & Co Ltd [1897] AC 22.

¹⁰⁷ [1908] 2 KB 89 at 95.

¹⁰⁸ (1953) 89 CLR 229.

¹⁰⁹ Ibid at 267-68.

^1l0 Following the commencement of the Company Law Review Act 1997 on 1 July 1998, the Corporations Law uses the term “constitution” instead of referring to the memorandum and articles of association (s 136). Indeed a company is no longer required to have a memorandum or articles of association. Instead it can either adopt the standard “replaceable rules” which are found in the Corporations Law, or it can modify those rules and thereby adopt its own “constitution”. Because we are concerned in this article with the constitutional position of Commonwealth companies, we will try to avoid confusion by continuing to use the label “memorandum and articles”.

¹¹¹ Corporations Law, s 136(2). A special resolution must be passed by at least 75% of the votes cast by members: s 9.

¹¹² Corporations Law, s 136(3). The authority for the proposition that a company cannot deprive itself of the power to alter its articles of association is Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656.

¹¹³ Corporations Law, s 136(4).

¹¹⁴ Breach of s 232 is governed by the civil penalty provisions in Corporations Law Part 9.4B under which only the'Australian Securities and Investment Commission or some other delegate or authorised person may make an application (s 1317EB). Standing under s 230 is given to ASIC, a member, creditor, liquidator or administrator of the company, or a person authorised by ASIC to make an application: s 230(6).

¹¹⁵ Re Tivoli Freeholds Ltd [1972] VR 445 at 468 per Menhennitt J.

¹¹⁶ For a well-known illustration of this point see Lee v Lee's Air Farming Ltd [1961] AC 12. We note that it may be possible to challenge the actions of the Commonwealth in appointing the directors, but this would only be likely where it was apparent at the time of appointment that the purpose of company was to engage in unconstitutional activities.

¹¹⁷ Bennetts v Board of Fire Commissioners of New South Wales (1967) 87 WN (Pt 1) (NSW) 307. The duties of the nominee director can be attenuated by agreement amongst the company members: Levin v Clark [1962] NSWR 686. This will not be necessary where the appointer is the sole shareholder in, or member of the company, as in the case of a wholly-owned Commonwealth company.

¹¹⁸ [1991] 2 Qd R 360.

¹¹⁹ Ibid at 371.

¹²⁰ Ibid at 370.

¹²¹ Ibid.

¹²² See Baxt, R, “Ultra Vires -Has itBeen Revived?” (1991) Companies & Securities LJ 101Google Scholar.

¹²³ Ford, Austin and Ramsay, above n 100 at 130.

¹²⁴ (1953) 89 CLR 229 at 249 and 253.

¹²⁵ [1939] 4 All ER 116.

¹²⁶ The case was applied in Hotel Terrigal Pty Ltd v Latec Investments (No 2) [1969] 1 NSWR 676, which was distinguished (along with Smith, Stone & Knight) by the Federal Court in Dennis Wilcox Pty Ltd v Federal Commissioner of Taxation (1988) 79 ALR 267. Dennis Wilcox was then distinguished, and Smith, Slone & Knight applied, in Spreag v Paeson Pty Ltd (1990) 94 ALR 679 (a trade practices case).

¹²⁷ For the same reason there would be difficulties in applying the decision in Standard Chartered Bank of Australia v Antico (1995) 13 ACLC 1381 and arguing that the Commonwealth is a “shadow director” of a Commonwealth company. This autonomy is what prompted the enactment of the Commonwealth Authorities and Companies Act 1997 (Cth).

¹²⁸ [1933] Ch 935.

¹²⁹ Ibid at 955-956 per Lord Hanworth MR.

¹³⁰ This company was registered by the Commonwealth Government in April 1998 in the context of the industrial dispute between the Maritime Union of Australia and the Patrick group of stevedoring companies.

¹³¹ There is no doubt that the Commonwealth could register a company which has the power to borrow money, for example, for some entrepreneurial purpose which is within the constitutional limits. The possible objection in this case is that the Commonwealth has established a company to assist in carrying out a policy, namely, reform of the stevedoring industry. The purpose behinds 37 is evidently to ensure that, if the Commonwealth ever needs to borrow money to implement its policies, the borrowing must be scrutinised and approved by Parliament. It is arguable that s 37 represents a limit on the Commonwealth's executive power in which case the formation of MIFCo was ultra vires the executive power.

¹³² [1933] Ch 935 at 956 per Lord Hanworth MR.

¹³³ (1987) 11 ACLR 108 at 120.

¹³⁴ This is suggested by Ford, Austin and Ramsay, above n 100 at 128, and depends on whether emphasis is placed on the idea of the company being formed or on the misuse of the company form.

¹³⁵ This expression refers to a Corporations Law company which is classified as a State owned corporation by being included in Schedule 1 to the Act.

¹³⁶ For further suggestions about reform of the CAC Act, see S Bottomley, “Corporatisation and Accountability: the case of Commonwealth Government Companies” (1997) 7 Aus J of Corp Law 156 at 175-176.

¹³⁷ (1977) 139 CLR 117.

¹³⁸ Atomic Energy Act 1953 (Cth), s 17(4). Compare the Acts Interpretation Act 1901 (Cth), s 15A which provides “Every Act shall be read and construed subject to the Constitution, and so as not to exceed the legislative power of the Commonwealth …”

¹³⁹ The Government Owned Corporations Act 1993 (Qld) does the reverse, expressly stating that the Act does not reintroduce the doctrine of ultra vires in relation to government owned companies (s 153). This can be explained by the fact that the Queensland State government does not have close constitutional limitations on i powers.

¹⁴⁰ Stokes, M, “Company Law and Legal Theory” in W Twining (ed), Legal Theory and Common Law (1986) 155 at 162Google Scholar.

¹⁴¹ The Act does not define what is meant by the term “controlling interest”.

¹⁴² Australian Law Reform Commission, Beyond the Doorkeeper: Standing to Sue for Public Remedies (ALRC 78 1996) Appendix F.

¹⁴³ Finn, P, “Public Trust and Public Accountability” (1994) 3 Griffith L Rev 224 at 237Google Scholar.

¹⁴⁴ It may also provide the Commonwealth with a way of avoiding existing legislation, on the same “pragmatic” argument that the chance of a challenge is low. We saw an example of this in the registering of the Maritime Industry Finance Company Ltd the purpose of which was to raise a loan facility — something the Commonwealth itself could not do except by legislative authority under s 37 of the Financial Management and Accountability Act 1997 (Cth).

¹⁴⁵ See Daintith, T, “Regulation by Contract: the New Prerogative” (1979) 32 Current Legal Problems 41CrossRefGoogle Scholar.