View towards Ultra Vires Acts and Statutes
‘The question for determination in this case is purely a question of verbal construction. It arises under the Customs Act 1901, which contains general regulations as to the importation of goods into Australia. The Act was passed in execution of what is called the trade and commerce power—the power to regulate trade and commerce with external countries—and in an Act of that nature, the legislature primâ facie, addresses its mind to that subject, that is to say, the importation or introduction of goods into the Commonwealth— bringing them into the Commonwealth. The legislature does not concern itself with the regulation of the internal affairs of the States in such an Act. Indeed, any attempt to do so by means not merely incidental to the regulation of importation would be ultra vires.
The Act should therefore be construed, where general words are used which, taken literally, are capable of including matters which are ultra vires, as having been intended to refer to those only which are intra vires. Primâ facie, the Act is only dealing with importation and matters incidental to it.[1]’
In some cases the question as to whether a piece of legislation was ultra vires or not is apparent on the face of it. In other cases the Court has to consider the evidence as to the legal effect of the piece of legislation complained of.[2] The Supreme Court Of America has recently stated that :[3] “Only recently this Court reaffirmed that the invalid portions of a statute are to be severed " '[u]nless it is evident that the Legislature would not have enacted those provisions which are within its power, independently of that which is not[4]. A provision is further presumed severable if what remains after severance "is fully operative as a law.[5]"
An incidental and related situation makes this point clear:
LORD ESHER M. R. stated the rule as follows: "Although a statute contains no express words making void a contract which it prohibits, yet, when it inflicts a penalty for the breach of the prohibition, you must consider the whole Act as well as the particular enactment in question and come to a decision, either from the context of the subject-matter, whether the penalty is imposed with intent merely to deter persons from entering into a contract, or for the purpose of revenue, or whether it is intended that the contract shall not be entered into so as to be valid in law[6].. In the same case, at page 453, Bowen L. J. said: ‘We have to find out, upon the construction of the Act, whether it was intended by the legislature to prohibit the doing of a certain act altogether, or whether it was only intended to say that, if the act was done, certain penalties should follow as a consequence. If you can find out that the act is prohibited, then the principle is that no man can recover in an action founded on that which is a breach of the provision of the statute’. In the case of Trans-African Bank v. Union Guarantee and Insurance [7] , Theron A. J. stated the principle thus: "The general rule applicable to the construction of a statute is that every transaction carried out in contravention of a statutory prohibition should be considered null and void despite the absence of any express declaration of nullity in the particular statute in question, unless it appears from the wording of the statute or from a consideration of its object and its scope that the legislature did not intend to render the prohibited transaction invalid". Viscount Haldane in Cornellius v. Phillips [8] referred to the general rule and to the modification thereof by the context in which the apparently prohibitory words are used: "So standing they (the words which the legislature has used) are clear and they prohibit and therefore make void any contract which contravenes them ... There might have been inserted in the statute a special context which would have modified the application of the general rule".
It is a well established principle of law that a Court will not assist a party to enforce an agreement which is either expressly or impliedly prohibited by statute. Statutes containing such prohibitions sometimes expressly state that a contravention of such prohibition entails the nullification of the transaction. Such words of nullification however are not always considered necessary and such a consequence can, in a proper case, be inferred as a result following from the illegality. The general rule is that a transaction which is in contravention of a prohibition contained in a statute would be considered null and void, although it does not expressly state so, unless it can be inferred from a consideration of the whole Act that there was no intention to render the prohibited transaction illegal[9].
Ordinarily, it can be presumed that a statute's literal meaning, as construed in the context of the statute as a whole, best reflects the intention of the legislature. In some cases, however, this presumption can be countered by the competing presumption that the legislature does not intend to violate the constitution. If the words in a statutory provision reasonably bear an interpretation other than a literal reading, the presumption of constitutionality can sometimes justify rejecting the literal interpretation in favour of the non‑literal reading, when the former interpretation would render the legislation unconstitutional and the latter would not. If, however, the terms of the legislation are so unequivocal that no real alternative interpretation exists, respect for legislative intent requires that the court adopt the plain meaning, even if the legislation must then be struck down as unconstitutional.[10]”
Australian Approach
In Peters v Attorney General[11]it was stated that -
The effect of an unconstitutional statute has not been authoritatively determined by the High Court. In South Australia v Commonwealth[12], however, it was observed that: "The law is not valid until a court pronounces against it - and thereafter invalid. If it is beyond power it is valid ab initio".
It was pointed out that this theory once represented the prevailing doctrine in the United States but,
Australian constitutional theory seems to have generally proceeded upon the void ab initio doctrine", citing Antill Ranger & Co Pty Limited v Commissioner for Motor Transport [13] where it was considered that the reasoning of both courts seemed to have proceeded on the theory that the Act in question, once declared to be in breach of s 92 [14]of the Constitution, was of no force or effect at any time[15]. The qualification mentioned as stated was that "a judgment of a court of record would seem to be binding upon private parties until set aside upon appeal or judicial review even though the judgment was based on an unconstitutional statute" does not seem to me to be apt to the exercise of an administrative function albeit by a judge. In Peters the issue was whether there was a conflict between the Listening Devices Act 1984 and the Customs Act 1901 concerning warrants obtained to investigate narcotic offences. The Court held that there was a material inconsistency, although there was disagreement as to the extent and effect of it. The crucial question which arose, as to which there was a difference of opinion, was the extent to which s 109 of the Commonwealth Constitution effected the warrants. McHUGH J, stated that:[16] -
While inconsistency continues, the Listening Devices Act is to that extent inoperative but it is not void. It simply has no effect in respect of matters covered by 219B [of the Customs Act](CTH). In the face of the constitutional directive that the Act is pro tanto inoperative, it is not possible for this court to say that, nevertheless, it has sufficient effect to validate the issue of warrants purporting to be made under it. There is no scope for any presumption of validity or "case to case doctrine" doctrine.
Nor do the warrants obtain any validity because they were made by judicial order. As the Solicitor General for the Commonwealth, who intervened in the argument said, the stream cannot rise higher than its source. No doubt in other areas of law, an order of a superior court of general jurisdiction is valid until set aside even though it was made without authority.But in my opinion that doctrine has no application to acts done under legislation which the Constitution expressly declares to be inoperative. The constitutional directive in s 109 [17]would be empty of content if acts done under ex parte judicial orders made under inoperative State legislation had the same effect as if the legislation was operative[18].
In Riverina Transport Pty Ltd v Victoria[19]it was stated that, it was said -
‘It is, I think, a serious error to suppose that a statute can begin life as a valid statute and then at some point of time become invalid because some person takes some action which he unsuccessfully attempts to justify under the Statute. The validity of the Act obviously cannot depend upon what people do, or think that they are entitled to do, under the Act. I am of the view that the effect of the decision of the High Court in Ha declaring the Act invalid meant that it was invalid at the time of the issue of the warrant. It follows that the warrant was sought to investigate activities which were not contrary to the law. The warrant was therefore not authorised by the Act. It does not seem to me that those cases dealing with the issue of impossibility such as DPP v Nock[20]and R v Kingswell [21]apply. The Crown relied, in addition, on the decision of the New Zealand Court of Appeal in Sew How [22], where it was held that persons could be guilty of conspiracy to defraud the revenue notwithstanding that the means adopted pursuant to the agreement were incapable of achieving their purpose. It was submitted before us that the following passage assisted the Crown in this case – [23]‘
Candian approach
If the provision at issue has only one plausible construction, the constitutional question is simple: is the provision ultra vires its legislator? If the provision is genuinely ambiguous, however, greater care is required. The presumption of compliance with constitutional norms is a well-established principle of statutory interpretation, but it does not apply unless one possible interpretation would render the legislation invalid.[24]
[1] Lyons v Smart (No 1) [1908] HCA 34; (1908) 6 CLR 143 (11 June 1908) ,HIGH COURT OF AUSTRALIA per GRIFFITH J
[2] See Attorney-General of Alberta v. Attorney-General of Canada [ (1939) A. C. 130]. Involved in the question of the legal validity of an Act is the question of its legal effect-Lane v. Wilson[307 V. S. 268.] ; Tick Wo v. Hopkins[118 U. S. 256.].
[3]Quoted from” INS v Chadha [1983] USSC 143; 462 U.S. 919; 103 S.Ct. 2764; 77 L.Ed.2d 317;Nos. 80-1832, 80-2170 and 80-2171 (23 June 1983
[4] Buckley v. Valeo, [1976] USSC 24; 424 U.S. 1, 108[1976] USSC 24; , 96 S.Ct. 612, 677[1976] USSC 24; , 46 L.Ed.2d 659 (1976), quoting Champlin Refining Co. v. Corporation Comm'n, [1932] USSC 92; 286 U.S. 210, 234[1932] USSC 92; , 52 S.Ct. 559, 565[1932] USSC 92; , 76 L.Ed. 1062 (1932). Here, however, we need not embark on that elusive inquiry since Congress itself has provided the answer to the question of severability in § 406 of the Immigration and Nationality Act, 8 U.S.C. § 1101 note, which provides:
"If any particular provision of this Act, or the application thereof to any person or circumstance, is held invalid, the remainder of the Act and the application of such provision to other persons or circumstances shall not be affected thereby." (Emphasis added.)
This language is unambiguous and gives rise to a presumption that Congress did not intend the validity of the Act as a whole, or of any part of the Act, to depend upon whether the veto clause of § 244(c)(2) was invalid. The one-House veto provision in § 244(c)(2) is clearly a "particular provision" of the Act as that language is used in the severability clause. Congress clearly intended "the remainder of the Act" to stand if "any particular provision" were held invalid. Congress could not have more plainly authorized the presumption that the provision for a one-House veto in § 244(c)(2) is severable from the remainder of § 244 and the Act of which it is a part. See Electric Bond & Share Co. v. SEC, [1938] USSC 78; 303 U.S. 419, 434[1938] USSC 78; , 58 S.Ct. 678, 683[1938] USSC 78; , 82 L.Ed. 936 (1938).
[5] Champlin Refining Co. v. Corporation Comm'n, supra, 286 U.S., at 234, 52 S.Ct., at 565 as quoted from INS v Chadha [1983] USSC 143; 462 U.S. 919; 103 S.Ct. 2764; 77 L.Ed.2d 317;Nos. 80-1832, 80-2170 and 80-2171 (23 June 1983
[6] (Mellis v. Shirley Local Board (1885) 16 Q. B. D. 446; 53 L.T.810; 2 T.L.R.360. at 451
[7] Trans-African Bank v. Union Guarantee and Insurance (1963) 2 S.. A.. L. .R. 92
[8] Cornellius v. Phillips (1918) A.C.199; 118 L.T.228; 54 T.L.R.116.[ Thus, although a statute may in terms apparently prohibit an act or omission and attach a penalty for any disobedience, it does not necessarily follow that all transactions to which the penalty attaches are illegal; they would be illegal if the statute is in fact prohibitory. But they are not so if on the true construction of the statute the penalty is, as it were, the only sanction for doing what the statute apparently prohibits. Before one can make out that a contract is illegal under a statute, one must make out distinctly that the statute has provided that it shall be so.]
[9] Perumal v. Dharmalingam - SLR - 26, Vol 1 of 1981 [1981] LKSC 27; (1981) 1 Sri LR 26 (5 February 1981)[Further it was observed that : The prohibition in the present case is in categorical terms and is the main device for securing the objects intended by the Law. To assert that transactions contravening these provisions are not illegal or invalid would be to give the words containing this prohibition a meaning exactly opposite to what it normally means. The main thrust of this legislation is to bring all foreign companies within the control of the State as part of our national policy. If the Law is so interpreted as to suggest that incorporation of such companies under our Law is not compelling, then such a view will have the effect of frustrating the entire purpose of this legislation and rendering it nugatory.
It has been submitted that the only sanction for non-compliance is acquisition by the Government of such a business. It was even suggested in the course of argument that this Law merely enacted the machinery for acquisition of business undertakings. A close examination of the relevant provisions shows that these views are clearly untenable. Acquisition can take place only if a Company fails to incorporate under our laws and in no other circumstance. It will also be seen that such an acquisition or risk of acquisition is by no means intended to be a sanction. It is hardly conceivable that the Government would like to be saddled with the responsibility of taking over all companies that fail to comply with the Law. The right of acquisition is clearly discretionary. The Government may acquire any such undertaking or may decide not to do so depending on the need for such a business, its viability, the public and national interest involved and the available resources of the Government. If we have regard to this Law in practical terms, the provisions for acquisition can never operate as a sanction. Then the question has also been asked why provisions exist in the Law for the payment of compensation in respect of a business that may be carried on illegally after the operative date. I have examined those provisions and I find nothing therein that indicate the payment of compensation on the basis of an existing de jure Company. There must be numerous cases of persons who continued to do business despite the provisions of this Law, particularly because it contains no criminal sanctions. The present case is one such example. A law does not have a magical quality to enable it to prevent this kind of action. We must therefore have regard to the fact that there would be de facto transactions regardless of the legal provisions.
My understanding of the position is that when there is such a de facto business in existence, the law empowers the Government to acquire "the whole or any part of the undertaking of any such company". The term 'undertaking' has been defined "in relation to a Company to mean the business carried on by such Company and includes all the movable and immovable property and other assets of such Company". Such property would naturally be in the possession or custody of a particular person or persons. The acquisition would be from the possession or custody of such person or persons. Compensation will have to be paid because it cannot be expected of any self-respecting Government that it would resort to plunder and will not pay for property which it takes from a person or persons. Where such property is acquired, the Law requires that written claims should be called for from "every person who had an interest in such an undertaking or part thereof immediately before the date on which such undertaking or part thereof was so vested", and a person is entitled to prefer claims indicating "the nature of his interest in such undertaking or part thereof"-section 9. The operative date for valuation is the date of vesting. The valuation would have to be done not on the basis of a de jure partnership but on a de facto basis. It is also to be expected that there could well be competing claims, especially in the case of a de facto enterprise. Such claims have necessarily to be decided by a court of law in the last resort and this is precisely what the Law envisages-vide section 19. In a matter of such a nature, I have no doubt that a court will resolve the matter on an equitable basis; but having regard to the provisions of this Law, it is forbidden to do so on the basis of an existing legal partnership. The fact that a person is deprived from claiming his rights on the basis of a de jure transaction seems to me the true sanction in this Law. I, therefore, see nothing in these provisions which has the effect of taking away the equitable rights a person may have to rights, interests, or property of such a de facto business, provided that they are claimed in a properly constituted action.[ per WANASUNDERA, J.]in Perumal v. Dharmalingam - SLR - 26, Vol 1 of 1981 [1981] LKSC 27; (1981) 1 Sri LR 26 (5 February 1981)
[10] Ontario v. Canadian Pacific Ltd., [1995] 2 S.C.R. 1031
[11] Peters v Attorney General (1988) 84 ALR 319 at 331
[12] In South Australia v Commonwealth [1942] HCA 14; (1942) 65 CLR 373 at 408 per LATHAM J
[13] Antill Ranger & Co Pty Limited v Commissioner for Motor Transport [1955] HCA 25; (1955) 93 CLR 83 (HC) and [1956] HCA 35; (1956) 94 CLR 177 (PC)
[14] COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT - SECT 92
Trade within the Commonwealth to be free
On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free.
But notwithstanding anything in this Constitution, goods imported before the imposition of uniform duties of customs into any State, or into any Colony which, whilst the goods remain therein, becomes a State, shall, on thence passing into another State within two years after the imposition of such duties, be liable to any duty chargeable on the importation of such goods into the Commonwealth, less any duty paid in respect of the goods on their importation.
[15] (84 ALR at 333)
[16](85 ALR 319 at 334)
[17] COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT - SECT 109
Inconsistency of laws
When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.
[18]see R v Eid & Ors [1999] NSWCCA 59 (4 March 1999) per ADAMS J
[19] Riverina Transport Pty Ltd v Victoria (1937) 57 CLR 237 at 341 per LATHAM CJ
[20] DPP v Nock [1978] AC 979
[21]R v Kingswell [1984] 3 NSWLR 373
[22] Sew How [1994] 1 NZLR 257
[23] R v Eid & Ors [1999] NSWCCA 59 per ADAS J
[24] R. Sullivan, Driedger on the Construction of Statutes (3rd ed. 1994), at p. 322. [Iacobucci J. makes a similar point about the use of Charter values in Bell ExpressVu, supra. In other words, where an interpreter is choosing between versions, neither one of which is constitutionally invalid, there is no reason to prefer one over the other. There are two stages to the division of powers analysis. The first step asks: What is the essential character of the law? The second step asks whether that character relates to an enumerated head of power granted to the enacting legislature by the Constitution Act, 1867. If it does, the law is valid: Ward v. Canada (Attorney General), [2002] 1 S.C.R. 569, 2002 SCC 17; Reference re Firearms Act (Can.), [2000] 1 S.C.R. 783, 2000 SCC 31; Global Securities Corp. v. British Columbia (Securities Commission), [2000] 1 S.C.R. 494, 2000 SCC 21; General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641.]
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