Bank of New South Wales v Commonwealth

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Bank of NSW v Commonwealth
Court	High Court of Australia
Full case name	Bank of New South Wales v The Commonwealth
Date decided	11 August 1948
Judge(s) sitting	Latham CJ, Rich, Starke, Dixon, McTiernan and Williams JJ
Case history
Prior action(s)	none
Subsequent action(s)	Appeal to Privy Council
Case opinions
Nationalisation of private banking amounts to a violation of an individual right to engage in particular types of trading and commercial activity under s 92. Failure to provide for the provision of interest on compensation makes the acquisition of bank shares and business and acquisition in violation of the protection provided by pl.(xxxi).

Bank of New South Wales v The Commonwealth (1948) 76 CLR 1, also known as the Bank Nationalisation Case, is a notable case of the High Court of Australia.

Background

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. It achieved this process by passing the Banking Act 1947 (Cth). The policy was that banks would be purchased by the Commonwealth Bank of Australia, which in turn would be owned by the Federal Government. The policy proved controversial, and the Bank of New South Wales challenged the constitutional validity of the law.

Decision

The Court hearing lasted for a record 47 days. A number of arguments were put to the Court, most of which were rejected. However it eventually declared the law invalid on two primary bases. The first of these was based upon an 'individual rights' interpretation of the operation of the constitutional freedom of interstate trade and commerce (s 92), which the Court held conferred a positive right on the banks to engage in the business of interstate banking. This particular understanding of s 92 would remain highly influential, until it was overturned in favour a 'free trade' interpretation in Cole v Whitfield. The second basis for the Court's decision was that the mechanism used to nationalise the banks was not on "just terms" and therefore was outside the Commonwealth's constitutional power to acquire property compulsorily under section 51(xxxi).

Aftermath

The case was appealed to the Privy Council. The Chifley Government lost power ostensibly due to the problems regarding this legislation and the Court case.

See also

• Constitutionalism
• Constitutional economics
• Political economy
• Rule according to higher law