II.  NEXUS

There is an implied incidental aspect to every head of power.[10] The traditional conceptions of the test for connection are stated by Zines as follows: a law generally falls within the aspect if it “deals with a matter that ‘directly affects’ the subject or is ‘conducive’ to it or whether it is ‘an appropriate means’ or ‘reasonably necessary’ to the effectuation of a purpose within the power”.[11] These tests are largely subjective. Dixon CJ conceded in Burton v Honan[12] that because “matters of incidental powers are largely questions of degree”,[13] “there will always be room for sharp differences of opinion”.[14] Yet, the nexus itself is the fluctuating standard that constrains the ambit of power. As will be seen, the history of the judicial dispute concerning the appropriate formulation of that nexus under the implied incidental aspect of the corporations power indicates several central issues: namely, the ‘gravity’ and ‘modality’ of an ‘effect’ that a particular act by a third party must have upon the activities of a constitutional corporation and the relevance of the ‘purpose’ of the said act to cause such effect. The framing of the issues in this way seems to stem from the unique nature of a person’s power. Typically, as will be observed, the persistent trend is towards an expansive notion.

Fontana Films,[15] which concerned secondary boycotts, established for the first time that a law which “imposes no obligation”[16] on a constitutional corporation is valid under the incidental aspect of the power. The upheld law protected the activities of a constitutional corporation from acts by individuals that had the purpose and likely effect of hindering or preventing them and accordingly would, or would be likely to, cause substantial loss or damage.[17] An essential point that Gibbs CJ,[18] and particularly Mason J,[19] emphasised was that the conduct must have a combination of both purpose and effect or likely effect of causing damage.[20] That importance is perhaps demonstrated by the invalidation of a provision that deemed certain conduct to be purposeful.[21] The requisite gravity of damage must be “substantial”.[22] However, there was a refusal to exhaustively define the outer limits of the power.[23]

Later in Re Dingjan,[24] a slim majority,[25] including McHugh J, held that the corporations power did not support a law that concerned unjust contracts between natural persons and which only ‘related to the business’ of a constitutional corporation. McHugh J considered that this connexion was “extremely wide”,[26] requiring “no more than a relationship, whether direct or indirect”,[27] and merely referred to or operated upon the existence of certain corporate activities as the supposed “constitutional switches that throw open the stream of power”.[28] For his Honour, the true test was whether the law had practical or legal “significance” for a constitutional corporation in the sense of “some beneficial or detrimental effect” on it or its activities.[29] Potential effects are thus excluded. This is a difficulty. For as Mason J in Fontana Films[30] said, “it matters not that the operation on the corporation is preventive or prospective rather than punitive or retrospective”.[31] There is no necessary reason for the power to be restricted in such manner. Nevertheless, the “test for invalidity” was then thought to be authoritatively enunciated.[32]

Contrariwise, in upholding the provision, Gaudron J thought that it was sufficient that an impugned law was “expressed to operate on or by reference to the business” of a constitutional corporation.[33] Accordingly, the power extended to a third party “who performs the business functions” or “a person who is in a business relationship with” a constitutional corporation.[34] This understanding was amplified in Re Pacific Coal[35] where her Honour thought the power to extend to “the regulation of those whose conduct is or is capable of affecting” the activities of a constitutional corporation.[36] The ambit of the power is certainly more expansive under this latter conception due to both the modality being potential and the vague nature the terms: what constitutes the ‘position of being capable of affecting’ is uncertain, especially the status of contingent effects.

The responses to the thematic concerns vary and are intertwined. Reconciliation is thus difficult. The term ‘effect’ naturally includes acts that are either beneficial or detrimental, and would clearly constitute direct acts and, potentially, indirect acts or omissions. The requisite gravity of an effect has shifted from ‘substantial’ to ‘some’ sort of effect that need only be materially slight, if existent at all. The modality of that effect also swung from ‘is’, to ‘is likely’, to ‘is capable of’. There is scope within the spheres of these modalities for strong and loose conceptions; however, the natures of the respective formulations constrain the possibilities.

The relevance of the ‘purpose’ to affect the activities of a corporation is also contentious. Fontana Films[37] combined purpose with substantial effects that were actual or likely. ‘Purpose’ has seemingly since been discarded as a requirement for actual effects. It may also have been abandoned for potential effects, or is perhaps implied in the phrase ‘is capable of’. This is unclear despite the frequent references to ‘intent’ in WorkChoices.[38] This is regretful as the criterion of purpose or intent tends to constrain the ambit of potentiality and provides some strength to the connection. This is so despite the vague notion of ‘purpose’ and the unresolved question whether it is subjective or, more appropriately, objective. The requirement further incorporates the principle that, under the incidental aspect, a law must be reasonable and appropriate in relation to the object.[39]

The rationale for the adopted elements may be explained by reference to the concepts of protection and relation. The impugned law in Fontana Films[40] was upheld on the basis that its purpose was to protect the activities of a corporation. This fuzzy rationale underlies the emphasis laid upon purpose in constraining the test for connection. Conversely, the words ‘in relation to’ elucidate the prominence that legalistic characterisation held in Re Dingjan.[41] This led to a consideration of the things which had a ‘sufficient connection’ with a corporation. The respective questions and thus answers are different. The stronger connection in Fontana Films[42] thus reflects federalist concerns about the limits of the power as was explicit in the reasons of Gibbs CJ.[43] These most recently clashed with the expansive tendencies of orthodox legalistic characterisation in WorkChoices.[44]

III.  WORKCHOICES

Exactly what the High Court held concerning the incidental aspect of the corporations power in WorkChoices[45] is difficult to ascertain. This is for several reasons. First, they merely ‘adopted’ the words of Gaudron J and then mechanically applied them without explanation.[46] This “assumes that because the words are applicable” they “are authoritative”.[47] Secondly, the last few lines of the glorified descriptive dictum seemingly encompass the incidental power;[48] however, the further complication is the failure to identify clearly whether their conclusions rested upon it. The devil is therefore in the detail of the upheld legal regime. The gist, however, is that there now need not be any “definite effect”[49] on a corporation’s activities, and if there be one, it need only be slight. This does not accord with the trajectory of previous authorities,[50] and a discussion of McHugh J’s approach was omitted.

For instance, the control or occupation of a premises is sufficient and there is no need to show interference.[51] Further, it is “apparently sufficient if a law operates on persons who are acting in the course of a business relationship with a constitutional corporation”.[52] There is no need that they be performing or carrying out the corporation’s business functions or activities.[53] Rather, “it is sufficient that they are engaged in providing services to a constitutional corporation.”[54] The breadth of this notion is immense. The terms ‘engaged’ in ‘providing services’ or ‘acting in the course’ of a ‘business relationship’ are broad and their outer limits are undefined. The ‘depth’ or type of regulation that may be valid is also unknown. Further, it may be sufficient if provisions merely “form an integral part” of broader schemes that affect constitutional corporations.[55] There is doubt as to whether these conceptions are supposed to either clarify or expand the ambit of the ‘capability of affecting’. The former seems more likely—given that it was Gaudron J’s own understanding[56]—and would constrain the ambit.

Beyond the phrase ‘capable of affecting’, there is no explicit rationale for this position or sophisticated discussion of what constitutes a ‘sufficient connection’. There are inklings in the judgment which may however allude to the unstated justification. The majority[57] frequently referred to Fontana Films[58] and understood it to generally require conduct that “will, or would, be likely to have substantially adverse effects” on a constitutional corporation.[59] Yet, no emphasis was placed upon the word ‘substantial’. Rather, they held that the “need to demonstrate actual or likely damage” was not of “significance”[60] and that the principle in Fontana Films was not the “only” test.[61] There is then no conclusive indication as to what test is preferred, and the “significance” eluded to would only arise if “a new or different filter” were “inserted into the process of characterisation”.[62] This can be viewed as an implicit criticism of McHugh J’s approach.

Accordingly, the quick acceptance of the dictum perhaps stems from a strong reaction to notions of ‘federal balance’ which are perceived to underlie propositions about imposing particular ‘limits’ to the sufficiency of connection as reflected in the distinctive character test.[63] The approach of “tracking and dismissing” these matters led to the general ignorance of “issues of constitutional principle”[64] which are immanent in the problem of nexus. The subsequent result is a failure to then elucidate a principled and appropriate test for sufficient connection. Overall, as Evans et al write: “perhaps deliberately, the majority did not specifically adopt or reject any...formulations” and thus left “extensions to the reach of the power to be explained by reference to the inevitably subjective determination” of sufficient connection, upon a “case by case basis”.[65]

Though no provisions were invalidated, there are cases which suggest that “there are circumstances in which the connection between the law and the head of power will be too remote”. Those circumstances are left largely undefined. However, “examples can be drawn, with caution,” in which “the majority read down a particular provision, or insisted upon a particular understanding of it”.[66] For instance, a certain right of entry provision was construed to apply only to contractors who are engaged in the course of providing services to a corporation.[67]

IV.  LIMITS

The WorkChoices[68] decision thus “entails the effective triumph”[69] of the minority view in Re Dingjan.[70] What then are the limits? The ambit is immense and the boundaries are uncertain. Further, caution must be exercised when inferring negative limits from positive statements about the ambit of a power: strict correlation is often not possible. Generally then, matters which are not ‘capable of affecting’—with the appropriate modifications—the activities of a constitutional corporation will not fall within the power. Practically, given that corporations pervade every aspect of modern life, there are few things that do not.  

There is a perceived need to limit constitutional power. Yet, to speak of ‘limits’ to a positive grant of power is considered incorrect and uncouth;[71] [JS1] rather, the substituted question is that of nexus.[72] Thus framed, constitutional interpretation becomes the application of the “well settled” principles of legal characterisation.[73] These seek to supply impartial guides within the penumbra created by the indeterminacy of the general words ‘with respect to’. Frequently, they are not determinative: there is much room for idiosyncratic value judgment. The principles thus provide no logical reason or mechanism for constraint within that sphere; however, they are not completely arbitrary. They represent, as Aroney argues, “a series of interpretive choices that have been made by the High Court over the course of its history...”.[74] The nature of the exercise is then no longer legal, but political.

The trend towards a looser connection is a symptom of this central problem. The process of reasoning by analogy ensures that this trend will, without interpretive revolution, generally continue. This may be viewed as evolution by small degrees of variance and it conforms to the accepted orthodoxy of not setting out to decide the ambit of the power in one blow.[75] Thus, the point at which the nexus becomes “insubstantial, tenuous or distant”[76] is perhaps never fully realised, and in any event, is a matter of personal judgement. The tests are toothless tigers. This demonstrates the limits to legal reasoning. Despite this scepticism, perhaps the end point—if there be one—is not far off in sight for the corporations power. The future question will be how far the nexus of ‘capability’ will stretch.

V. CONCLUSION

The judicial responses to the issue of potential effects have been to either exclude or incorporate them into the test for connection. Exclusion, whilst providing more certainty, suffers from a need for a necessary rationale; incorporation means an immense, if not amorphous, power. Yet, this alone cannot be seen as a reason for limitation: the text is the only authoritative criterion for constraint. As seen, the nexus required by the words “with respect to”[77] remains unsettled as represented in the progressive shift of modalities of that connection. The expansive trend will nonetheless generally continue. The point at which the nexus then becomes “insubstantial, tenuous or distant”[78] seems to be a matter of personal judgement. Accordingly, though a principled and appropriate test for connection is desirable, the content of such a proposition is at best elusive. The question of connection is thus bound to remain highly contested.[79] If, and when, the matter arises again for the High Court, it is hoped that, at the very least, there will be both a sophisticated justification and an explicit statement of principle for connection under the implied incidental aspect of the corporations power.

BIBLIOGRAPHY

A.  Books / Articles

Applegarth SC, Justice Peter, ‘The WorkChoices Case: Corporations Power Aspects’ (Paper presented at the Constitutional Law Conference, Gilbert & Tobin Centre of Public Law, February 2007)

Aroney, Nicholas, ‘Constitutional Choices in the WorkChoices Case, or What Exactly is Wrong with the Reserved Powers Doctrine’ (2008) 32 Melbourne University Law Review 1

Blackshield, Tony, ‘New South Wales v Commonwealth: Corporations and Connections’ (2007) 31 Melbourne University Law Review 1135

Blackshield, Tony & George Williams, Australian Constitutional Law and Theory (Federation Press, 5^th ed, 2010)

Evans, Simon, et al., WorkChoices: The High Court Challenge (Lawbook Co, 2007)

Hanks, Peter, Frances Gordon & Graeme Hill, Constitutional Law in Australia (LexisNexis Butterworths, 3^rd ed, 2012)

Joseph, Sarah & Melissa Castan, Federal Constitutional Law:  A Contemporary View (Lawbook Co, 3^rd ed, 2010)

Lee, HP & George Winterton (eds), Australian Constitutional Perspectives (Lawbook Co, 1992)

Ratnapala, Suri, Australian Constitutional Law (Oxford University Press, 3^nd ed, 2012)

Stewart, Andrew & George Williams, WorkChoices: What the High Court Said (Federation Press, 2007)

Zines, Leslie, The High Court and the Constitution (Federation Press, 5^th ed, 2008)

B.  Cases

Actors and Announcers Equity v Fontana Films (1982) 150 CLR 169

Burton v Honan (1952) 86 CLR 169

Grannall v Marrackville Margarine Pty Ltd (1955) 93 CLR 55

New South Wales v Commonwealth (2006) 229 CLR 1

Re Dingjan; Ex parte Wagner (1995) 183 CLR 323

Re Maritime Union of Australia; Ex parte CSL Pacific Inc (2003) 214 CLR 397

Re Pacific Coal Pty Ltd; Ex parte Construction, Forestry, Mining and Energy Union (2000) 203 CLR 346

Strickland v Rocla Concrete Pipes Ltd (1971) 124 CLR 468

C.  Legislation

Constitution of the Commonwealth of Australia