Talga Ltd v MBC International Ltd [1976] HCA 22

High Court of Australia Barwick C.J. Gibbs, Stephen, Mason and Jacobs, JJ. Talga Ltd v MBC International Ltd [1976] HCA 22

ORDER Appeal dismissed with costs. Paragraph 20 of the plaintiffs' amended demurrer to the amended defence of the first defendant, and paragraph 22 of the plaintiffs' amended demurrer to the amended defence of the second, third and fifth defendants overruled with costs.

Cur. adv. vult.

The following written judgments were delivered:—

May 6 Barwick C.J.

I have had the advantage of reading the reasons for judgment prepared in these matters by my brothers Stephen, Mason and Jacobs JJ. I agree with their construction of s. 5(1)(a) of the Banking Act 1974 Cth and their conclusion that so construed the section does not involve giving the court in which the relevant proceedings are heard other than judicial power.

I also agree that, for the reasons my brothers assign, the appeal from the findings of my brother Gibbs fails.

These conclusions suffice to dispose of the matters. There is no need for me to express any view on any of the other matters raised and detailed in the hearing of the appeal or of the demurrer.

I agree with the orders my brothers propose.

Gibbs J.

In this matter the Full Court heard first an appeal from my decision on the trial of certain issues arising in the action and then a demurrer by the plaintiffs to part of the defences of the defendants. I, of course, did not participate in the hearing of the appeal but was a member of the Court that heard argument on the demurrer.

The question raised by the demurrer was whether s. 5(1)(a) of the Banking Act 1974 Cth is beyond the power of the Parliament. The plaintiffs contended that the sub-section is invalid for three reasons. First it was said that it purports to confer on a court power which is not judicial power. The submission was that the sub-section does not involve the court in ascertaining, declaring or enforcing existing rights and liabilities but empowers the court to create new rights and liabilities in persons who are not in any existing legal relationship. Therefore, it was said, the court is required to act legislatively, or perhaps administratively, but not judicially. However, in my opinion it is quite unreal in fact, and wrong in law, to say that the parties in the present case were not in any legal relationship. The circumstances of the case are set out in my judgment on the trial of the issues [28] . The parties had entered into a number of transactions intended to have contractual force but said to be invalid or unenforceable by reason of a failure to comply with the Banking (Foreign Exchange) Regulations. Section 5(1)(a) in effect requires a court, in proceedings in which the validity of transactions has been called in question by reason of such a failure, to treat the transactions as never having been invalid for that reason only, if the court holds that it is just and equitable that they should be treated as being valid. Once the court holds that it is just and equitable that the transactions should be treated as being valid, the legal effect is that they never were invalid. It is wrong to regard the sub-section, or the sub-section operating in conjunction with the regulations, as first invalidating the transaction, and then rendering valid what was formerly invalid. It is true that s. 5(1)(a) gives the court a very wide discretion, but it is not an arbitrary one. Cominos v. Cominos [29] and the cases there cited strongly support the conclusion that when the court acting under s. 5(1)(a) applies to the facts of the case the standard imported by the words "just and equitable" it is exercising judicial power.