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The Pamphlet Collection of Sir Robert Stout: Volume 50

Australasian Corporations Bill

Australasian Corporations Bill.

On the order of the day being called for the resumption of the debate on the question, that this bill be now read a second time,

Mr. Dodds said: Mr. President, the hon. member who introduced this bill very justly observed that the state of the law in regard to the status of corporations, and their right to hold land in colonics other than that in which they were established, is certainly very crude. I suppose that if you put the question to half-a-dozen lawyers you would have half-a-dozen different opinions, or, at all events, their opinion would be pretty equally divided, as to the status of corporations and their rights in regard to their holding of land. I suppose, speaking generally, we may say that the laws respecting corporations are practically the same in all the colonies, and that accordingly, by intercolonial courtesy, what a corporation can do in one colony it can do in another. So far as I understand the bill, what it proposes to do is to deal with the question of their holding land under the common law. We, in Tasmania, have done very little, if anything, to determine by legislative enactment what is the status of a corporation established in another colony. By the provisions of an Act of Parliament of Tasmania passed in 1877, we expressly provided that no lease should be granted, nor should any lease previously granted to any person, be transferred to any company not registered in this colony. In 1880 we repealed this section, and it appears to me left the law uncertain as to whether a foreign mining company could hold land in Tasmania. By the provisions of another Act we made provision by which certain foreign mining companies might sue and be sued in Tasmania, subject to certain conditions. This statute may be said to have put the existing law into the shape of an Act of Parliament, for I take it that foreign corporations would be allowed the general count of right to sue and be sued in our courts, although that permissive right to use the courts would not confer upon such corporations the powers, capacities, and privileges granted by our local law to our own legally constituted corporations, nor relieve them from the declared disabilities of our law. That is, a foreign corporation would be recognised to the extent of having the right to hold personal property, to make contracts, and to sue and be sued. Such contracts being upheld according to our own law, the Courts knowing nothing of that of a foreign country, and which could be of no force within our jurisdiction. We, however, appear to have considered it necessary in this colony by express enactment to provide that certain foreign mining companies, carrrying on business in Tasmania, might sue and be sued in Tasmania; but on the question of the right of foreign companies or corporations to hold land we have never legislated. We have in operation here what is known as the Companies Act—a transcript of the English Companies Act; but that only relates to companies incorporated and registered in Tasmania, and by the terms of that statute it is expressly provided that they shall be entitled to acquire, and hold land in the same way as individuals could do. We have not gone the length of saying by legislative authority that a British company carrying on operations in Tasmania could acquire and hold land. We have just left the law where it was. This raises an important question, namely, whether corporations can hold land in any colony other than that in which they are established, and my hon. and learned friend has endeavoured to settle by this bill. Although the provisions are carefully drawn I think the hon. gentleman is doing well in not asking the Council to give effect to them during the present session, not only for the reason he has already given, that only two colonies have referred it to their Legislatures, but also in consideration of the extraordinary state of uncertainty that the law appears to be in, and the necessity for the most careful consideration of the numerous points involved. There can be no doubt that if this Council were now to legislate on this subject in the direction indicated, we should, as far as Tasmania and Queensland are concerned, be practically making a declaration of war against the non-participating colonies. That is we should be determining the status of Queensland and Tasmanian corporations and companies and depriving corporations of the colonies of New South Wales, South Australia, Victoria, New Zealand, Western Australia, and Fiji of the rights, if any, which they now possess in Queensland and Tasmania. It would be practically saying that a Victorian company should not carry on business operations in Queensland as the colony of Victoria had not come within the federal law by referring the question to the Council, and the same argument would apply to a company carrying on business in Tasmania. Now as we are very desirous to complete this federation and inducing our sister colonies to come in and join in the advantages which must of necessity flow from being participators in a body like this, it is desirable we should not act with undue haste. The real question we have to consider is whether or not such a measure as this would overcome all the difficulties that are felt. Now, by section 8 of this bill it is provided that—

Upon such registration and publication being made, the corporation named in the certificate shall, within the colony of registration, have and be entitled to the same rights, powers, capacities, and privileges, and be subject to the same obligations, liabilities, and disabilities, as if it had been incorporated under the laws of the colony of registration.

Provided that no such corporation shall be entitled to take, hold, convey, or transfer land in the colony of registration, if by the laws of the colony of incorporation it is not entitled so to do in that colony, or to any greater extent than it is entitled so to do in that colony, or except under and subject to such conditions (if any) as are imposed by the laws of the colony of incorporation and by the constitution of the corporation. page 91 If by "not entitled" my friend means "forbidden," then I take it the section would be simply declaratory of existing law, because if a corporation is forbidden to hold land in its own colony a fortiori it could not hold land in any other colony to which it stood in the relation of a foreign company. If it means on the other hand that a corporation not expressly authorised to acquire and hold land, by the laws of the colony in which it is established a much broader question is raised. We have then to consider whether there is anything in the statute law of the country, or the common law, to prevent a foreign corporation holding land. Now so far as I am aware the common law of England would not prohibit any corporation from holding land—it is only by the statutes of Mortmain that the present disability in England was created as regards corporations holding land. It has been decided that the statutes of Mortmain are not applicable to this colony, so that if we have not expressly forbidden foreign corporations to hold land, and they are governed by the common law of England, or such portions of it as are applicable to a young colony; the question arises whether there is anything to prevent a foreign corporation holding land here, or in any colony where a similar state of things exists. I am taking this view of the question simply for the purpose of discussion. I am not giving this as my deliberate opinion on the state of the law, but it is a view that should be carefully considered. Perhaps after thrashing the subject out we shall come to the conclusion that my hon. friend has arrived at, but he has asked us to discuss this measure from different points of view, and it is therefore desirable we should take as far as we can a comprehensive view of the subject. The subject will require a great deal more time to consider it than is now available, before we can with safety pass a remedial measure. Then as regards section 9 of this bill it is provided—

Within any colony in which this Act is in force, a Corporation constituted under the laws of another Australasian colony, whether this Act is in force therein or not, is not competent to take, hold, convey, or transfer land, unless such corporation has been registered in the first-mentioned colony in accordance with the provisions of this Act, or unless some Act or ordinance has been passed by the Legislature of that colony empowering such corporation to take, hold, convey, or transfer land in that colony.

I apprehend that there are cases where a foreign company, capable of holding lands in the colony of domicile, holds or purports to hold land in other colonies, without being registered in any of those colonies. If that be so, and such land is rightly held, the provisions of section 9 would interfere with existing rights, and might cause much trouble. The provisions of this section would deprive them of those rights, and interfere to a considerable extent with existing things, unless they were registered under the provisions of the local statute of the colony. In regard to this question of registration there would be considerable difficulty. There would be no difficulty about registration in the colony in which the company is formed; that would be simple enough, but the difficulty would arise when the attempt was made to register in another colony. To illustrate, supposing a company in Tasmania desired to carry on operations in Victoria, the effect of section 9 would be that that corporation could not hold land in Victoria unless registered in Victoria. Now how would the registration be brought about. It was decided in 1881 by an appeal from the Supreme Court of Western Australia to the House of Lords that there would be very great difficulties indeed in reference to the registration of a corporation formed in one colony and registered in another colony. The case I refer to on this subject possesses a great interest to you, sir, as you were one of the parties. In giving judgment their lordships said, in speaking of a former decision—

"Applying that decision to the present case it is an authority that this company, being duly registered under the ordinance of the colony of Victoria and incorporated there, could not be again registered as a company in Western Australia. It was mentioned in the course of the argument that it would not be possible so to register it without, as it were, first disintegrating the company and making it cease to be, as far as Western Australia is concerned, a corporation at all."

It will be thus seen that on the question of registration raised by the 9th section of this bill, there was a very substantial doubt present to the minds of their lordships in the consideration of that case, as to whether practically any such provision as this could be applied, and it behoves us to consider very well indeed, the nature of the proposal made in this section, and how far we can practically give effect to it. I have no doubt that those and other considerations of a similar kind were present to the mind of the hon. member who drafted the bill, and therefore he very properly asked us only to discuss its provisions, and not to proceed to legislate upon them. In another case before the House of Lords, where the question of the rights of foreign corporations to hold land in Canada was raised, their lordships not finding it necessary to decide it for the purposes of the case, declined to do so. The Civil Code of Lower Canada I think permits a foreign corporation to acquire and hold land the provision being probably founded on the law of France, which prevailed in the early days of Canada. It will thus be seen that on this point there is ground for a difference of opinion, and as I have said there are many men of eminence in their profession who differ in regard to it. Therefore we should take great care before we attempt to legislate on the subject. Then as to the provisions in clause 11:—

"In the event of the winding-up of a corporation registered in any colony under the provisions of this Act, the liquidators or other persons duly appointed according to the laws of the colony of incorporation to wind up its affairs and distribute its assets, shall have full power and authority to convey, transfer, or otherwise deal with any land held by such corporation in the colony of registration."

Does this add to existing laws? I apprehend my hon. friend will say it does not. Under the Companies Act the Court can wind up an page 92 unregistered company founded and having its principal place of business in another colony, provided it has a branch establishment in this colony, whether there was liquidation going on in another colony or not.

Mr. Griffith: That's a vexed point.

Mr. Dodds: I don't think it is a vexed point. It was decided some few years ago in cases reported in the Law Report 27 Chancery Division, and also 29 Chancery Division.

Mr. Griffith: English Courts have always assumed it to be so and so have colonial Courts. It is a question whether they have the right to so assume.

Mr. Dodds: Well these cases are supposed to have decided that very point, that a corporation carrying on business in one country and holding land and having branch offices in another, that the Courts have the power, as matter of fact, to order the liquidators to sell the land, notwithstanding the pendency of liquidation in another colony. I do not know that I can usefully add anything to what I have already said. I hope when the question comes to be thrashed out by the Standing Committee, and its provisions come more under review, that we shall find a way to overcome these difficulties, and see our way to practical legislation. There is no point upon which useful legislation is required more than this, and if my hon. friend can only see his way clear to bring in a bill to settle the question without interfering too much with the existing state of things, even if the session in which that work is done, is otherwise unproductive it will have been productive of a very great deal of good to the commercial interest of Australasia generally. There is no question which should command our more undivided attention, and none which ought to be dealt with at an earlier period. I hope during the recess that the Standing Committee, presided over as I hope it will be by my hon. friend the member for Queensland, will take this subject into its serious consideration, with a view of seeing whether the difficulties cannot be overcome, and whether we cannot show to the Australasian world at large something which will be beneficial to them as a result of the establishment of this Council.

The President: I would like to say a few words on this important measure before putting the question. The colony which I have the honour to represent has taken a very great interest in this question, and has moved me on more than one occasion to deal with it, especially in connection with the Federal Council. I am sure that the idea of not passing into law a measure to deal with this question during the present session is somewhat of a disappointment to myself, and will be felt as a disappointment to Victoria. At the same time I admit very freely the cogency of the arguments passed by the hon. member for Queensland; first that there are difficulties surrounding the whole question, of that there can be no doubt; and in the second place, owing to the fact that the interests of some of the colonies not yet in the union are involved. From that point of view we are justified in walking with very great caution. The objection from the very beginning has been not to touch the other colonies not with us upon any feeling; but on the contrary to endeavour to draw them together, by not only the consideration that the important interests connected with their own colonies would be advanced by the action of the Federal Council, in respect of this and other measures of a similar character, but by that kindly feeling which, as I have said, we have always endeavoured to bring into play in dealing with this subject. There is no doubt, as has been distinctly shown, that suppose this bill came into operation in and was adopted in Victoria at the next meeting of the local Legislature, it would give a great advantage to the people of Victoria over the people of New South Wales, and, to a lesser extent, over the people of South Australia. I say to a lesser extent, inasmuch as the people of that colony are not so much interested, and there are not so many companies, I believe, registered in South Australia of which branches are in existence in the other colonies. But in Victoria and New South Wales there are a large number of companies which have registered originally in these two colonics, or one or other of them, which, for example, have branches in Queensland; and there is no doubt that supposing Victoria were to adopt this law, it would give her an advantage in respect of this over New South Wales. Victoria is not one of the colonies that remitted the question to the Federal Council for decision. One reason was that it was at a very late stage in the progress of this movement that the matter was first brought under notice of the Victorian Government. The Queensland Government took the initiative in inserting a clause in their Adopting Bill, remitting this question to the Federal Council for decision (under sub-section i., section 15, of the Imperial Act). They were followed by Tasmania, and so the subject is fairly, properly, and legally before the Council. The reason Victoria did not follow suit was not because there was any difference of opinion as to the advisability of referring to the Council, or any difference of opinion as to the desirability of passing an enactment on the subject, but it arose entirely from what I may call "Parliamentary reasons." The subject came on at the close of the session, and if it had been introduced at that time it would probably have created a debate, and probably led to the loss of a night, which, at that period of the session, could not well be spared, and I was, personally, under the impression that the two colonies of Queensland and Tasmania, having remitted the question to the Federal Council, the thing could be dealt with and the bill could be adopted, as it would be certain to be, by the Victorian Parliament at the next session. Several remarks made by the hon. member for Queensland, Mr. Griffith, have shown me that it is not desirable to pass this bill which is before us on the present occasion. To begin with, we do not wish Victoria or any of the colonics in the federation to steal a march on the colonies yet outside. At all events, before we do so, those colonics ought to have fair notice, and that notice, I presume, will be given them by the mere fact of this Council reading this bill a second time, without going on with it; the meaning simply being that the Council affirms the principle of the bill, and will be prepared to go on with it another session. It is quite in- page 93 tolerable and hostile to the constitution of the Council that the bodies represented in this Council, or rather the representatives of the local Parliaments of those colonies within the union, should refrain for any serious length of time from passing such legislation as would be advantageous to themselves, even if it were obvious that that legislation would place them in a more than advantageous position with regard to the other colonies, and they could not expect more fair, just, or generous treatment than that this Council should give notice of their intentions; and if next session a bill of this sort becomes law, I do not think that in any of the now federated colonies they would be so unreasonable as to blame this Council for having proceeded to enact that law, for the principal object of this Council is to co-operate, and co-operation would naturally be productive of mutual advantages. But, still, it should be one of the leading views of our action, both whilst this Council is in session and afterwards, and also one of our duties to endeavour to show that this Council will be an advantage to the whole of the colonies, and to present every possible inducement to them to come in and share with us in these advantages, which, though they in many respects will accrue to the federated colonies, yet of which we shall never reap the full advantages until all the colonies come in and join with us. I very much sympathise with the views that have been expressed on this subject, though the colony I represent would desire, as a colony, to see this passed into law. I am quite prepared to accept the view put forward by the hon. member, and agree to let it stand over. If no other member has anything to say on the subject I will proceed to put the question.

The bill was read a second time, and the committal made an order of the day for Friday.