Airlines of NSW Pty Ltd v New South Wales [No 2]

[1965] HCA 3

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Kitto, Taylor, Menzies, Windeyer and Owen JJ.

AIRLINES OF N.S.W. PTY. LTD. v. NEW SOUTH WALES (No. 2)

(1965) 113 CLR 54

3 February 1965

Constitutional Law (Cth)

Constitutional Law (Cth)—Trade and commerce power—External affairs power—Inconsistency of Commonwealth and State laws—Air navigation—Extent of Commonwealth power to control intra-State air transport operations—Licensing of intra-State services—Permits to use Commonwealth aerodromes—Permits to fly in controlled air space—The Constitution (63 &64 Vict. c. 12), ss. 51 (i.), (v.), (vi.), (xxix.), (xxxix.), 52 (i.), 109, 122—Air Navigation Act 1920-1963 (Cth)—Air Navigation Regulations (Cth), regs. 6, 198, 199, 200B, 320A, 320B—Chicago Convention on International Civil Aviation and annexes thereto—Air Transport Act, 1964 (N.S.W.).

Decisions

1965, February. 3.
The following written judgments were delivered:-
BARWICK C.J. The plaintiff is an airline operator conducting public air transport services both of passengers and of goods between the Kingsford Smith airport, Sydney, and a number of places in the State of New South Wales. Prior to 12th October 1964 it held licences issued to it by the Commissioner for Motor Transport (the Commissioner) under the provisions of the State Transport (Co-ordination) Act, 1931-1956 (N.S.W.) (the Transport Co-ordination Act) in respect of all its aircraft used in these intra-State air transport services. (at p72)

2. Until 2nd October 1964 the operation of the Air Navigation Regulations (the Regulations) made under the provisions of the Air Navigation Act 1920-1961 (the Commonwealth Air Navigation Act) did not extend to intra-State air navigation: reg. 6; Airlines of New South Wales Pty. Ltd. v. New South Wales (1964) 113 CLR 1 . But the substance of the Regulations was made applicable to intra-State air navigation in New South Wales by the terms of s. 4 of the Air Navigation Act, 1938-1947 (N.S.W.) (the State Air Navigation Act). By s. 6 licences granted under the Regulations in their applications under the Commonwealth Air Navigation Act are made operative in the State as if granted in pursuance of the Regulations in their application by virtue of the State Air Navigation Act. As contemplated by s. 30 of the Commonwealth Air Navigation Act, the Director-General of Civil Aviation (the Director-General) exercised the powers given to the Director-General under the terms of the Regulations as thus made applicable as laws of the State to intra-State air navigation. (at p73)

3. On 2nd October 1964 the Regulations were relevantly amended by adding to reg. 6 (1) a paragraph (f) which, in the context of the other paragraphs of that regulation as amended, purports to make the Regulations as a whole apply to intra-State air navigation; and by adding a regulation, reg. 200B, which purports to authorize a person holding an airline licence under the Regulations to conduct, in accordance with the licence and with the laws of the Commonwealth, the public air transport operations to which the licence refers. Two other amendments were made to the Regulations by the addition of two new regulations 320A and 320B, which relate respectively to landing and to taking off on or from Commonwealth-owned aerodromes without the permission of the Director-General and to flight in controlled air space without the like permission. If the amendments to reg. 6 validly applied all the Regulations to intra-State air navigation, the result would render the State Air Navigation Act, at least in so far as it "adopted" the Regulations for intra-State air navigation, inoperative. (at p73)

4. On 12th October 1964 the Commissioner, following upon earlier notice to the plaintiff of his intention of so doing, cancelled the licence under the Transport Co-ordination Act which up till that time the plaintiff had held in respect of the aircraft used by it for the carriage of passengers and of goods between Sydney and Dubbo, a place within the State of New South Wales. (at p73)

5. On 16th October 1964 assent was given to the Air Transport Act, 1964 (the Air Transport Act), passed by the Parliament of the State of New South Wales. Its relevant provisions were to operate on and from an appointed day which for present purposes is 26th October 1964. This Act amended the Transport Co-ordination Act by making that Act no longer applicable to aircraft and thus no longer applicable to carriage by air of passengers and goods. (at p74)

6. The Air Transport Act, by s. 3, provides that a person shall not, on or after the appointed day, carry by an aircraft between places in New South Wales any passengers or goods unless - (a) the aircraft is licensed under the Act; (b) that person is the holder of the licence; and (c) the route over which the goods or passengers are carried is the route (if any) covered by the licence. By definition "carry" here means carry for reward or for any consideration or in the course of any trade or business. (at p74)

7. By s. 6 of the Act the Commissioner is authorized to grant or to refuse, or to grant upon conditions, any application for a licence under the Act. By s. 6 (3) the Commissioner, in considering an application for such a licence, is confined to five matters: (a) the needs of the public of the State as a whole, and of the particular area or district to be served by the proposed air operation, for such proposed air services; (b) the extent to which such needs are already or are likely to be served by public air transport services; (c) the allocation of air routes within the State between applicants for licences so as to foster as far as possible more than one airline operating in the State and to discourage development of any monopoly of public air transport services; (d) the character, suitability and fitness of the applicant to hold a licence, or in the case of a corporate applicant, the character of the persons managing the corporation and the suitability and fitness of the corporation to hold the licence; (e) the extent to which the particular area or district is or is likely to be served by other forms of public transport. (at p74)

8. By s. 18 it is said that nothing in the Act shall relieve a person of an obligation to hold or effect any licence or registration which he is otherwise by law required to hold or effect. This provision has no operation with respect to the Commonwealth law but perhaps may indicate the intention of the State Parliament if some question of the construction of other provisions of the Act should arise. The need for a licence under Commonwealth law flows from that law and in no sense from State law, though it may have an operation under State law because of s. 6 of the State Air Navigation Act. (at p74)

9. Section 4 of that Act, as amended by the Air Transport Act, provides that a licence under the Regulations as applied to intra-State air navigation by the State Air Navigation Act shall not be issued until a licence has been issued under the Air Transport Act, where such a licence is necessary. (at p75)

10. After 26th October the plaintiff duly applied to the Commissioner for the appropriate licences under the Air Transport Act in respect of its aircraft used in its commercial air transport operations between Sydney and Dubbo: its applications were refused. Apparently the Director-General was unwilling to issue an airlin licence under the Regulations to some person of the State's nomination in relation to a public air transport service between those places. In the event, the former public air transport service between Sydney and Dubbo ceased. (at p75)

11. The plaintiff thereupon commenced this suit seeking - (i) a declaration that a number of sections of the Transport Co-ordination Act, and the provisions of the Air Transport Act were invalid or inoperative by reason of their inconsistency with the Regulations; (ii) a declaration that the plaintiff, so long as it duly complies with the Regulations, is entitled to carry passengers and goods by air between Sydney and Dubbo without being required to hold a licence under either the Transport Co-ordination Act or the Air Transport Act; (iii) an injunction to restrain the defendants from enforcing the powers of the Transport Co-ordination Act in so far as it relates to aircraft, or those of the Air Transport Act, against the plaintiff or its officers and from otherwise preventing or hindering the plaintiff from carrying passengers and goods by aircraft for reward between Sydney and Dubbo. (at p75)

12. Upon the hearing of an application for an injunction to restrain the defendants from enforcing those provisions of those Acts, pending the hearing of this suit, an application which was refused, it was ordered that the following questions be referred to the Full Court - 1. Whether the provisions of reg. 6, reg. 198, reg. 199, reg. 200B, reg. 320A and reg. 320B of the Air Navigation Regulations, in so far as they purport to relate to regular public transport operations as defined by the Regulations solely within the State of New South Wales, are valid laws of the Commonwealth. 2. If so, whether such laws are inconsistent with the provisions of ss. 12, 13, 14, 15, 16, 17, 18 or 28 of the State Transport (Co-ordination) Act, 1931-1964, or with the provisions of the Air Transport Act, 1964. (at p75)

13. The plaintiff's inclusion in its statement of claim and in the questions submitted to the Full Court of the references to the Transport Co-ordination Act were based upon an erroneous view that, if the Air Transport Act were held to be inoperative for inconsistency with the Regulations, the provisions of the Transport Co-ordination Act which had been repealed by the Air Transport Act might revive so as to expose the plaintiff to the need for a licence under the Transport Co-ordination Act. During the hearing of the matter by the Full Court, however, it was ordered by the Justice who referred the questions to the Full Court that all reference in question 2 to the Transport Co-ordination Act be deleted. (at p76)

14. The plaintiff seeks an affirmative answer to each question. It supports such answers by submitting, in the first place, that the regulations enumerated in the first question (the said regulations) were all validly made under the power conferred by s. 51 (xxix.) of the Constitution - the external affairs power, the plaintiff asserting that the Convention on International Civil Aviation concluded at Chicago in December 1944 and ratified by Australia with parliamentary approval in 1947 (the Chicago Convention) was, or brought into existence, an external affair of Australia which attracted that power and that each of the said regulations was properly made in performing the obligations laid upon and accepted by Australia, or in securing the benefits given to Australia, by that Convention. (at p76)

15. The plaintiff secondly submitted that the said regulations are all valid as an exercise of the legislative power conferred on the Commonwealth by s. 51 (i.) of the Constitution - the power with respect to inter-State and foreign trade and commerce. (at p76)

16. The plaintiff next submitted that the said regulations were all validly made under a combination, or perhaps I should say a series of combinations, of the powers given by pars. (i.), (v.), (vi.), (xxix.) and (xxxix.) of s. 51 of the Constitution, and by s. 52 (i.) and s. 122 thereof. (at p76)

17. And finally, as to reg. 320A, the plaintiff submitted that it is a valid exercise of the power given by s. 52 (i.) of the Constitution. (at p76)

18. The defendants were prepared to concede that some of the regulations which had been made by the Commonwealth to carry out the terms of the Convention and of its annexes validly operated upon intra-State air navigation, including in that concept commercial air transport between termini within the State; but they submitted that none of the said regulations if construed in the sense for which the plaintiff contended is valid as applied to intra-State air navigation, and that, in that sense, none of them was supported by any one of the powers to which the plaintiff sought to refer them nor by any combination of any two or more of those powers. The defendants further submitted that in any case there was no inconsistency between any part of the Air Transport Act and the said regulations or any of them when properly construed. (at p76)

19. The Commonwealth and the States of Victoria, Tasmania, South Australia and Western Australia were each given leave to intervene and each both filed written submissions and addressed the Court by counsel. (at p77)

20. The Commonwealth supported generally the submissions of the plaintiff and the intervening States supported those of the defendants. (at p77)

21. It is not my purpose to discuss in any detail all the various submissions put before the Court, whether in writing or orally. But, I feel that some general observations should be made before I turn to discuss specifically what seem to me to be the critical matters in the case. (at p77)

22. On the one hand, the plaintiff and the Commonwealth, by their submissions, in substance, though perhaps not in terms, claimed that by reason of the provisions of the Chicago Convention, its width, the complexity and range of the matters dealt with by its annexes, and by reason of the extent to which air operations in Australia have become intermingled or, as it was put, "integrated", so that the distinction between intra-State air navigation and inter-State air navigation or, expressed in terms of trade and commerce, between intra-State and inter-State trade and commerce so far as carried on by means of air transport, had become in a practical sense impossible to maintain, the Commonwealth now had plenary power with respect to intra-State commercial air transport as being one aspect of intra-State air navigation, and of intra-State trade and commerce. (at p77)

23. This proposition so far as it is placed upon the power given by s. 51 (i.) is demonstrably insupportable. It is a claim that the Commonwealth has in some circumstances power to make laws with respect to some aspects of intra-State trade and commerce as themselves topics of legislative power. But the Commonwealth has not and, without constitutional amendment, cannot obtain such legislative power with respect to any aspect of such trade and commerce, including intra-State commercial air transport as an aspect of intra-State air navigation. No so-called "integration" of inter-State and intra-State air navigation or air transport, commercial or otherwise, no intermingling or commingling of the two to any degree, however "complete", can enlarge the subject matter of Commonwealth legislative power in the relevant field. It remains a power to make laws with respect to inter-State and foreign trade and commerce. This Court has never favoured, in relation to Commonwealth power, the more extensive view of the commerce power under the Constitution of Congress which has at times found expression in decisions of the Supreme Court of the United States. (at p78)

24. To say this, however, is not to deny that there are occasions - and the safety procedures designed to make inter-State and foreign trade and commerce, as carried on by air transport, secure, are a ready instance - when it can be no objection to the validity of the Commonwealth law that it operates to include in its sweep intra-State activities, occasions when, for example, the particular subject matter of the law and the circumstances surrounding its operation require that if the Commonwealth law is to be effective as to inter-State or foreign trade and commerce that law must operate indifferently over the whole area of the relevant activity, whether it be intra-State or inter-State. But this involves no change in the subject matter of Commonwealth power. The power is not enlarged by circumstance though what may be validly done in its exercise may be more extensive because of the factual situation. Some decisions of the Supreme Court of the United States on close examination really place the matter in relation to the commerce power of the Congress, no higher. The total validity of a law which operates on more than inter-State or foreign trade and commerce and which is sought to be justified by reference to s. 51 (i.) of the Constitution, will be determined by resolving the question whether the law as so operating is in substance a law with respect to inter-State or foreign trade. This is indicated in various decisions of this Court and very clearly by Dixon C.J. in Wragg v. State of New South Wales (1953) 88 CLR 353 where his Honour says: "The distinction which is drawn between inter-State trade and the domestic trade of a State for the purpose of the power conferred upon the Parliament by s. 51 (i.) to make laws with respect to trade and commerce with other countries and among the States may well be considered artificial and unsuitable to modern times. But it is a distinction adopted by the Constitution and it must be observed however much inter-dependence may now exist between the two divisions of trade and commerce which the Constitution thus distinguishes. A legislative power, however, with respect to any subject matter contains within itself authority over whatever is incidental to the subject matter of the power and enables the legislature to include within laws made in pursuance of the power provisions which can only be justified as ancillary or incidental. But even in the application of this principle to the grant of legislative power made by s. 51 (i.) the distinction which the Constitution makes between the two branches of trade and commerce must be maintained. Its existence makes impossible any operation of the incidental power which would obliterate the distinction" (1953) 88 CLR, at pp 385, 386 . (at p79)

25. The plaintiff also founded its claim to Commonwealth plenary power over intra-State air navigation upon the external affairs power. But, whilst that power itself is plenary, its relevant subject matter is the external affair, in this case the obligation accepted by Australia under the Convention. Even if, by reason of the nature and extent of that obligation, laws made to carry out the Convention may operate upon intra-State air navigation, there is still no plenary power with respect to such navigation. The content of the Treaty will set the limits of what may be enacted and the extent to which laws so made may affect intra-State air navigation. (at p79)

26. On the other hand, the defendants in developing their submissions appeared to me to have been prone to resurrect the exploded view of the so-called reserve powers of the State and to have approached the questions of Commonwealth power and of inconsistency by first laying emphasis on the interests of the State which its laws were designed to effect and pointing out how different those interests or purposes were from any which the Commonwealth had to advance in the present connexion. But the nature and extent of State power or of the interests or purposes it may legitimately seek to advance or to protect by its laws do not qualify in any respect the nature or extent of Commonwealth power. On the contrary, the extent of that power is to be found by construing the language in which power has been granted to the Commonwealth by the Constitution without attempting to restrain that construction because of the effect it would have upon State power. (at p79)

27. Commonwealth laws validly passed under any power as so construed will render inoperative any inconsistent law of the State no matter upon what subject that law is passed or what policy or purpose, valid for the State, the State law is intended to carry out. If the Commonwealth law is valid and the State law inconsistent, it is nothing to the point that the Commonwealth has no concern with those matters of policy, of purpose or of circumstance which the State properly had in mind when making its law, or that the considerations, whether of policy, of purpose, or of circumstance, which led to the passing of the Commonwealth law did not take account of, or include, or were in fact different from, any of the matters which were of concern to the State in making its law. All inconsistent State law must yield because of the paramountcy of all valid Commonwealth law. This is as much a basic feature of the Constitution as is the distribution of legislative powers between the Commonwealth and the States: it is indeed a concomitant of that distribution. (at p80)

28. In determining that there is inconsistency between the State law and the Commonwealth law the Court is not limited to those occasions on which there is a direct collision between a State law and a valid Commonwealth law: but according to the settled constitutional doctrine of this Court if the Commonwealth law properly construed shows that it was passed to be the law on the matter with which it affects to deal, there will be no room for any State law to operate in respect of that matter. This is figuratively expressed by saying that when it can properly be concluded that the Commonwealth has intended by its law to occupy some particular field, there is then no room for any State law to be, or to remain, operative within the same field. But, however the doctrine is expressed, the result is that if the Commonwealth has power to make the law in question it has the power to make that law the only law with respect to the matter with which it deals and thereby prevent any State law operating with respect to that matter. (at p80)

29. In my opinion, the proper view of this case in relation to the respective powers of the Commonwealth and the State, lies between the two opposed, extreme and untenable submissions of the parties. As will be seen in what follows, in my opinion, the Commonwealth has power to determine exclusively both by what aircraft and by whom all commercial airline services, including intra-State commercial airline services where they can be operated under State law, shall be operated but the Commonwealth cannot authorize the inception or carrying on of an intra-State airline: it cannot give a franchise to carry passengers or goods by air between places within the State. Only State law by express statutory provision or by the common law operating within the State in the absence of some superseding statutory provision can do that. The State can determine that there shall be no airline between places within the State, and can also determine the frequency with which such a service may be maintained, if the State permits its inception or continuance. There are also no doubt many other aspects of the carriage of goods or passengers by an airline within the State which are within the State's competence and beyond that of the Commonwealth. But the State cannot, in my opinion, determine by what aircraft or by which operator such carriage of passengers or goods by air within the State which it permits shall be effected, so long as the Commonwealth exercises its power exclusively to determine those matters. (at p80)

30. As to the carriage of passengers or goods by air between places within the State, no question of inconsistency of laws can arise: for the State has power, and the Commonwealth none in respect of that matter. It is otherwise in connexion with the use of aircraft between places within the State, even when such aircraft is carrying passengers or goods. (at p81)

31. Having made these general observations, I should then say that the first question to be resolved in this case is whether the said regulations are, or any of them is, valid. As part of the determination of that question the said regulations may have to be construed and assigned a meaning. The second question will be whether the State law is in any respect inconsistent with any of the said regulations which according to their proper interpretation is valid. In this case, reg. 200B apart, it seems to me that the second question involves two matters of great difficulty, and each in my view crucial to the result of the case, namely, first, can it properly be said that the Commonwealth has passed such of the said regulations as are valid as the only law to operate relevantly, and second, what is the matter with which the Commonwealth law thus deals, what is the precise field it thus intends to occupy. (at p81)

32. Before turning to deal with the question of the validity of the said regulations, I should mention that the present parties were in litigation at an earlier time before the amendments which I have described were made to the Regulation. Their litigation resulted in the decision by this Court in Airlines of New South Wales Pty. Ltd. v. New South Wales (1964) 113 CLR 1 . In that case the plaintiff claimed that, upon their true construction, sought by it to be derived to some extent from the nature of their subject matter and to a large extent from the comprehensiveness of their provisions, the Regulations in their then form applied to intra-State commercial air transport and that the licensing provisions of the Transport Co-ordination Act as applied to aircraft, were inconsistent with the relevant regulations. The defendants in that case did not attack the validity of any of the Regulations in their then form. They contented themselves with the submission that the Regulations did not then apply to intra-State air navigation except in relation to controlled air space and that therefore no inconsistency arose. This Court decided that upon their true construction the Regulations as they then stood did not apply to intra-State air navigation, except in relation to flight in controlled air space: and that therefore there was no inconsistency between the relevant provisions of the Transport Co-ordination Act and the Regulations. The restricted operation of the Regulations was reached because of the terms in which reg. 6 was then expressed though the history of the Regulations was also relied upon to some extent. (at p82)

33. It is noticeable that the Court in that case did not take the course of saying that if the then Regulations did apply to intraState air navigation, there would be an inconsistency between the Transport Co-ordination Act in relation to aircraft and the Regulations. But the Court's concentration upon the restricted construction of the Regulations as the direct means of answering the suggested inconsistency, should not be read as implying that but for that construction, any of their Honours would have found inconsistency to be present. (at p82)

34. Dixon C.J. said that "A study of the Schedule" (the Convention) "suggests that obligations are placed upon the Commonwealth which extend over the whole territory of Australia and that in almost all respects the legislative power which arises from the need of carrying out the Convention given by s. 51 (xxix.) of the Constitution would suffice to support laws made with a complete disregard of the distinction between inter-State and intra-State trade; it would follow that no reliance upon s. 51 (i.) by the Commonwealth would be necessary" (1964) 113 CLR, at p 27 . I do not read his Honour as there saying more than that laws which are properly passed to carry out the Convention may operate throughout Australia and that the nature of the matters dealt with by the Convention would entitle the Commonwealth in performing its obligations with respect to them to make laws which ignore the distinction between intra-State and inter-State trade in so far as it is carried on by commercial air transport. I do not take his Honour as departing in any respect from the view which he had expressed in earlier cases where he pointed out that the nature of what may be done in carrying out a convention or treaty is limited by the nature or extent of the obligation accepted by Australia through the Convention or treaty: The King v. Burgess; Ex parte Henry (1936) 55 CLR 608, at pp 669, 674 . In my opinion, unless the plaintiff can establish that the Commonwealth came under some liability by reason of the Convention, to the discharge of which the new regulations are approprite, it obtains no assistance in this case from the words of Dixon C.J. which I have quoted. (at p82)

35. The Court's decision in the earlier case upon the Regulations in their then form does not in my opinion resolve, or provide a basis for resolving, the present case. (at p82)

36. The said regulations which the plaintiff claimed to be valid and with which it says that the Air Transport Act is inconsistent fall conveniently into four categories for the purpose of discussion and judgment. There is, first of all, reg. 6 which purports to determine the ambit of operation of the Regulations as a whole. Secondly, there is a group of regulations in Pt XIII of the Regulations which contains what has been compendiously and conveniently referred to in argument as the licensing system in relation to commercial air transport operations. They are regs. 191, 192, 193, 194, 197, 198, 199, 200 and 200A. Then there is reg. 200B which, although it could conceivably be included in the second group of regulations as part of the licensing system, needs separate treatment. The plaintiff construes this regulation as giving paramount legal sanction to the airline licence granted under the said regulations so as to authorize the operator to carry passengers and goods by the public air transport service to which the licence relates, subject only to compliance with its terms and with the laws of the Commonwealth: in other words, as granting a right or franchise to operate a commercial airline. And lastly, there are regs. 320A and 320B which respectively deal with the use of Commonwealth-owned aerodromes and with flight in controlled air space. (at p83)

37. The Commonwealth Air Navigation Act authorizes the making of regulations for the purpose of carrying out and giving effect to the Chicago Convention and in relation to air navigation within or to and from a Territory of the Commonwealth, or between States or to or from foreign countries or in relation to air navigation where its regulation would fall within any power of the Commonwealth. Thus, the validity of the said regulations can be tested directly against the constitutional power, there being no additional statutory limitation to be satisfied, though formally the question is whether the said regulations are authorized by the Commonwealth Air Navigation Act. By sub-s. (2) of s. 26 of the Act, express power to make regulations for the licensing of air transport operations is given but only where such a course would fall within the ambit of the regulation-making power given by the earlier part of the section. (at p83)

38. I should like to deal with these groups of regulations in the inverse order to that in which I have listed them. (at p83)

39. Regulation 320A is a provision with respect to places acquired by the Commonwealth for public purposes. The acquisition of areas for aerodromes and their maintenance as such is clearly such a purpose, if for no other reason than that the Convention imposes upon the Commonwealth an obligation to create and maintain aerodromes: art. 28 of the Convention. Section 51 (i.) therefore gives legislative power with respect to these areas so acquired. I am prepared to accept the view that both the prohibition of landing and of taking off on and from Commonwealth-owned aerodromes and the authority of a permit to do so are effective notwithstanding any law of a State: but I am unable to agree that the Air Transport Act in forbidding the carriage of passengers and goods by aircraft between places within the State at which there are Commonwealth-owned aerodromes, even though they may be the sole means of the taking off and the landing of commercial flights at those places, is in any respect inconsistent with reg. 320A. In this connexion, the State Act does not purport to prevent permitted take-off or landing of aircraft but only the commercial carriage of passengers or goods by aircraft between places within New South Wales. (at p84)

40. In my opinion reg. 320B is valid in relation to the use of controlled air space by aircraft in intra-State flight. The need for total and undifferentiated control of this air space was not, and indeed in my opinion could not be, challenged. But I am unable to see that there is any inconsistency between the Air Transport Act and reg. 320B. $P As to these two regulations therefore, in my opinion, the Commonwealth is both able to determine as a legislator and not merely as an owner of the land on which the aerodrome is located who shall and who shall not land or take-off on or from the aerodrome and to authorize such landing or take-off so that no State law may prevent such landing or taking off. It is also able to determine who should use controlled air space in Australia. But, as I have said, I do not think that the operation of either of the regulations has any relevance to the matters in difference in this suit. (at p84)

41. I have now to consider the validity of reg. 200B in so far as it is applicable to intra-State air navigation by virtue of reg. 6 (1) (f). In my opinion this regulation is not a mere redundancy in the licensing system set up by the earlier regulations but does purport to give a quality or effect to an airline licence under the Regulations which but for its presence in the Regulations that licence would not have. Both the terms of other regulations in Pt XIII and of the licence itself, refer to the use of aircraft in public air transport operations. Regulation 200B, so far from purporting merely to authorize the use of specified aircraft in public air transport operations, affects to authorize those operations themselves. I accept the purported operation of reg. 200B in relation to intra-State air navigation (reg. 6 (1) (f)) to be that by virtue of it, the holder of an airline licence in respect of an intra-State public air transport operation would be lawfully entitled to carry on those operations, carrying passengers and goods, on the route and by the use of the aircraft specified in the Commonwealth licence notwithstanding any State law which would otherwise prevent him doing so. The regulation with this construction and operation is supported by the plaintiff both upon the external affairs power and upon the power of the Commonwealth with respect to inter-State and foreign trade and commerce. If the plaintiff were right in these contentions and reg. 200B valid as so construed, there could be no question in my opinion of the consistency of the Air Transport Act with the said regulations. The Act would plainly be inconsistent. But in my opinion, neither the external affairs power, nor s. 51 (i.) will support reg. 200B with such an operation in relation to intra-State commercial air transport. (at p85)

42. I find no need in this case for any general discussion of the external affairs power. Some exposition of it is to be found in Burgess' Case (1936) 55 CLR 608 and in The King v. Poole; Ex parte Henry (1939) 61 CLR 634 . Suffice it now to say that in my opinion the Chicago Convention, having regard to its subject matter, the manner of its formation, the extent of international participation in it and the nature of the obligations it imposes upon the parties to it unquestionably is, or, at any rate, brings into existence, an external affair of Australia. (at p85)

43. In thus enumerating matters which in this case point to the Convention being or creating an external affair of Australia, I would not wish to be thought to say that all these features must in every case be present if a treaty or a convention is to attract the external affairs power, but I would wish to be understood as indicating that in my opinion, as at present advised, the mere fact that the Commonwealth has subscribed to some international document does not necessarily attract any power to the Commonwealth Parliament. What treaties, conventions, or other international documents can attract the power given by s. 51 (xxix.) can best be worked out as occasion arises. (at p85)

44. Once it is decided, however, that some treaty or convention is, or brings into being, an external affair of Australia, there can be no question that the power under s. 51 (xxix.) of the Constitution thus attracted is a plenary power and that laws properly made under it may operate throughout Australia subject only to constitutional prohibitions express or implied. In particular, laws properly made under this power may operate throughout Australia without regard to the distinction between inter-State and intra-State trade and commerce to which observance must be paid in other connexions: see Burgess' Case (1936) 55 CLR 608 and Poole's Case (1939) 61 CLR 634 . (at p86)

45. But where a law is to be justified under the external affairs power by reference to the existence of a treaty or a convention, the limits of the exercise of the power will be set by the terms of that treaty or convention, that is to say, the Commonwealth will be limited to making laws to perform the obligations, or to secure the benefits which the treaty imposes or confers on Australia. Whilst the choice of the legislative means by which the treaty or convention shall be implemented is for the legislative authority, it is for this Court to determine whether particular provisions, when challenged, are appropriate and adapted to that end. The Court will closely scrutinize the challenged provisions to ensure that what is proposed to be done substantially falls within the power. As Dixon J. (as he then was) said in Burgess' Case (1936) 55 CLR 608 what the legislature does in such a case must be no more than "a faithful pursuit of the purpose, namely, a carrying out of the external obligation" (1936) 55 CLR, at p 674 or, as I would respectfully add, the securing of the benefit which the treaty or convention gives. See also per Starke J. in the same case (1936) 55 CLR, at p 658 and per Evatt and McTiernan JJ. (1936) 55 CLR, at p 688 . (at p86)

46. What is said by the plaintiff in the present case in its support of reg. 200B is that there has been cast upon the Commonwealth by the Convention an obligation to promote the efficiency and regularity of air navigation as well as to secure its safety, and that a law conferring a right upon an operator to conduct an air transport service is an appropriate means of promoting the efficiency and regularity of air navigation. For the principal support for its submissions the plaintiff relies upon the terms of art. 37 of the Convention, seeking at the same time to derive some assistance from the wide ranging scope of the Convention and of the annexes which the International Civil Aviation Organization has adopted. (at p86)

47. An examination of the Convention clearly shows in my opinion that the relevant obligation cast upon Australia is to endeavour to achieve "uniformity of regulations, standards, practices, procedures and organization in relation to aircraft personnel, airways and auxiliary services in all matters in which such uniformity will facilitate and improve air navigation". While the object of achieving this uniformity is the safety and orderly growth of civil aviation throughout the world, there is no general obligation expressly imposed by the Treaty upon its adherents to achieve the safety or, for that matter, the convenience of air navigation to any particular degree or in any particular aspect outside and beyond the observance of the annexes to be adopted by the International Civil Aviation Organization set up under the Convention and of such further arrangements as emerge from international co-operation under the Treaty. But I do not think the Convention should be read narrowly, and I think that there is to be found within its terms an obligation upon the Commonwealth to secure uniformity of regulations, standards, practices, procedures and organization in air navigation throughout Australia as a step towards uniformity as between Australia and the other contracting States in relation to regulations, standards, practices, procedures and organization in civil air navigation. In my opinion the Commonwealth can carry out this obligation in advance of uniformity being achieved by other contracting States either within their own territories or with one another's territories. (at p87)

48. But an obligation to secure uniformity in the matters which I have described in the language of art. 37 and to do so in conformity with the annexes which have been adopted by the International Civil Aviation Organization in performance of the terms of that article and in conformity with the aims and objects set out in art. 44 will not carry the plaintiff to the conclusion which its counsel and the counsel for the Commonwealth have pressed upon the Court. There is no obligation imposed upon the contracting parties to promote efficiency and regularity of air navigation (particularly in the sense which the plaintiff attributes to these words) as objectives in themselves. In my opinion, the highest obligation flowing from the Convention is to secure in Australia uniformity of standards, practices, procedures and organization to the extent mentioned in art. 37, and where annexes have been relevantly adopted to achieve uniformity according to the standards, practices and procedures which they do adopt. All regulations which are appropriate to securing such uniformity in those respects can, in my opinion, operate throughout Australia, and where they affect commercial air transport can do so in disregard of the constitutional dichotomy of trade and commerce into intra-State and inter-State trade and commerce but not, of course, in disregard of constitutional prohibitions such as s. 92 to which s. 51 (xxi), like all other legislative powers of the Commonwealth, is subject. (at p87)

49. No doubt one of the aims or objectives of, as distinct from the obligations imposed by, the Convention is the promotion of international air navigation, see preamble and art. 44 in its opening words and in pars. (c), (d) and (i.) of that article. In a sense, in a real sense, the growth of air navigation by the commercial transport of people and goods within Australia, must tend to increase the volume of international air navigation. Intra-State commercial air transport feeds inter-State and to some degree international commercial air transport. But these commercial realities do not warrant the legal conclusion that even if there were an obligation cast upon Australia by the Convention to stimulate international air navigation, a law encouraging or stimulating air navigation within Australia or within any State of Australia would be a law validly made in pursuance of a power to implement the Convention. (at p88)

50. I have also examined the annexes to the Convention to see whether there is any particular obligation cast upon Australia by reason of their terms which would support the plaintiff's contention. The annexes cover a wide band of standards, procedures and practices which, if observed, must contribute greatly to the safety of air navigation in the areas where they are observed. That visiting aircraft should understand and observe them will increase the safety of air navigation in that area. But I do not find any part of any annex, or any combination of annexes or parts of annexes, which places an obligation on the Commonwealth to encourage air transport operations or to authorize or enfranchise persons to carry them on. In my opinion therefore, nothing in the Convention or in the annexes would attract to the Commonwealth the power under s. 51 (xxix.) to make reg. 200B operate in the sense I have mentioned in relation to intra-State air navigation. (at p88)

51. It seems to me that these considerations also dispose of the argument that s. 51 (i.) would support reg. 200B. It is one thing to say that the safety of inter-State and international commercial air transport cannot be secured without including intra-State commercial air activities within the operation of the safety measures: it is quite another to say that the stimulation or authorization of intra-State commercial air services is in any sense a safety measure. The non-existence of a commercial air transport service does not endanger the air operations of those who do operate commercial air transport services. Nor does the fact that inter-State air navigation profits by or to a significant extent depends upon the existence of intra-State air navigation warrant the conclusion that in fostering inter-State and foreign trade, the Commonwealth may stimulate and encourage intra-State trade. Consequently, reg. 200B in its operation upon intra-State air navigation derives no support from ss. 51 (i.) or 51 (xxix.). In my opinion in its purported operation in respect of intra-State commercial air transport it is invalid. (at p88)

52. I will now turn to the group of regulations in Pt XIII of the Regulations, which set up the system of issuing airline licences. There is no need for me to set out these regulations in detail. Those in particular dispute are regs. 198 and 199 and each needs to be read with reg. 6 (1), particularly reg. 6 (1) (f). (at p89)

53. It was submitted to the Court by the plaintiff that, quite apart from reg. 200B, a licence granted under this system of licensing amounted to the grant of a right or authority to carry passengers and goods in the public air transport operations to which the licence related despite any law of the State which would otherwise prevent those operations being carried on. The reasons which I have given for thinking that reg 200B is invalid in relation to intra-State air navigation would lead to the conclusion that so read this licensing system in relation to intra-State commercial air transport would be invalid. But in my opinion, the said regulations do not purport to grant any such right or authority. Indeed, it would be difficult to conclude that they did in their present form, having regard to the presence of reg. 200B. (at p89)

54. The licence issued under the Regulations does not purport to be and is not the source of authority to carry the goods and passengers by air. This is so, whether the named places are within a State, or in different States, or in different countries. In the case of inter-State and foreign public air transport operations, the right to carry passengers and goods, but for reg. 200B, would be derived from the common law operating in the Commonwealth, there being no prohibition by Commonwealth law of the carriage of passengers and goods by air. The right to carry inter-State and to foreign countries is not derived in those cases from the airline licence alone but now from reg. 200B operating upon the licence (at p89)

55. Some examination of the particular regulations in the licensing scheme is necessary for a full appreciation of what that licensing system seeks to achieve. (at p89)

56. Aircraft are classified according to the type of operation in which they are being employed at any given time and may only be used in the class of operation if the particular type of aircraft is authorized and approved by the Director-General for such use: s. 8, regs. 192 and 193. (at p89)

57. One of the classifications of use of aircraft is "regular transport operations" which are defined by reg. 191. Regulation 198 forbids the use of an aircraft in regular public transport operations except under the authority of and in accordance with a licence called an "airline licence" issued by the Director-General. Regulation 199 provides for the application for and the grant of an airline licence, dealing with a licence for an inter-State service on a special basis because of constitutional considerations. In the case of an application for an airline licence for a service which is not an inter-State service the Director-General is authorized to grant or to refuse the licence or to grant it upon such conditions as he considers necessary. But the amendment of 19th October 1964 provides, in substance, that in such a case the Director-General, in considering whether or not to grant an airline licence and in determining the conditions upon which a licence should be granted, should have regard only to matters concerned with the safety, regularity and efficiency of air navigation. (at p90)

58. In my opinion, this regulation, on its proper construction here refers to the safety, efficiency and regularity of air navigation generally and is not limited in its meaning to international or inter-State air navigation. Also, in my opinion, the regulation is referring in the expression "safety, regularity and efficiency" to air navigation, not to the efficiency and regularity with which an airline operator conducts the commercial aspects of his business generally, as I think the plaintiff was inclined to read it. But the manner in which the applicant carries out these business operations will in some respects closely affect the efficiency and regularity of air navigation, a word which is not defined but clearly includes commercial air transport. The word "regularity" has, it seems to me, in this context the sense of "propriety" - conforming to standards, regular because conforming: such standards including punctuality of operation and the meeting of schedules, an aspect of its meaning which is clearly significant in relation to the safety of air navigation. See reg. 106C, reg. 94 (1) (b) and (d). (at p90)

59. The form of licence is that by it the Director-General licenses the use by the named operator of aircraft of a specified type in regular public transport operations conducted in accordance with approved fixed schedules between specified fixed terminals subject to compliance by the licensee and the aircraft used in the operations with the provisions of the Commonwealth Air Navigation Act and the Regulations. As the decision to grant the licence is grounded solely on considerations of safe, efficient and regular air navigation, the use of the aircraft considered safe to be used by the particular operator when it is carrying goods or passengers upon the particular routes is covered by the licence. (at p90)

60. A material distinction, in my opinion, must be made between the carriage by aircraft of passengers and goods between places and the use of an aircraft when it is carrying passengers or goods between places. The distinction to my mind is critical to the resolution of the problem which this case presents. As I have already indicated, the Commonwealth can neither prohibit nor authorize the carriage of passengers or goods between places within a State under any power presently relevant: but, in my view, it can prohibit or license the use of an aircraft which is so carrying passengers or goods. (at p91)

61. The distinction and the limited nature of the licence under the Regulations can be illustrated by taking the case of an aerial work licence covering agricultural operations. The licence under the Regulations authorizes the use of an aircraft when engaged in such operations but it does not authorize those operations. It presupposes that those operations are lawful where or when carried on: and if they are not, the licence to use aircraft in them is ineffective to make them so. (at p91)

62. I turn now to express my view as to the basis upon which the validity of the licensing system under Pt XIII of the Regulations, particularly in relation to intra-State air navigation, should be put, for in my opinion regs. 198 and 199 are valid as applied by reg. 6 (1) (f) to intra-State air navigation. (at p91)

63. I do not find any obligation laid upon the Commonwealth by the Convention or by the provisions of any of the annexes to set up and maintain such a system of licensing as is set up by the said regulations; nor can I see that any such system could be said to be necessary for the performance of any obligation which is laid upon Australia, or to secure any benefit obtained by Australia, by or under the Convention. But there is nothing in the Convention or its annexes inconsistent with the inception and maintenance of such a system. However, though it cannot be justified by reference to any express or implied obligation so to do, the setting up and maintenance of such a system is in my opinion an appropriate means of securing the observance of those regulations which are properly made in carrying out the Convention, i.e., regulations to produce uniformity of air navigational procedures and practices in Australia as contemplated by the Convention or laid down in its annexes. Therefore, in my opinion, to the extent that it is merely a means of securing that observance, the licensing system could be justified by reference to the external affairs power. (at p91)

64. However, I prefer to refer the validity of this group of regulations, including their operation upon intra-State commercial air transport operations to the trade and commerce power: s. 51 (i.). This power, in my opinion, will fully support them on a wider basis than will the external affairs power. (at p91)

65. The power given by s. 51 (i.) includes power not merely to protect but to foster and encourage inter-State and foreign trade and commerce. Thus, in relation to inter-State and foreign commercial air transport, both as itself commerce and as a vehicle for commerce, the power extends to the making of laws both to secure its safety and to encourage its growth. (at p92)

66. The plaintiff placed before the Court a great deal of evidence descriptive of the use and control of aerodromes, flight paths, controlled air space, navigational aids, systems of communication, and a number of other matters from which the clear conclusion must be drawn that the safety of air operations in Australia does not admit of any distinction being drawn between aircraft engaged in intra-State and those in inter-State or international air operations in connexion with all those matters which go to make up what I can compendiously call safety precautions and procedures. These extend over the detailed, inter-related and complex, often technical matters to which the Regulations address themselves, the determination of the airworthiness of aircraft, the suitability of particular aircraft for particular work, including their suitability for use on a particular route by a particular operator, the maintenance and overhaul of aircraft, the inspection and preparation for flight, the manning and equipment of aircraft, including its communication and emergency equipment, the movement of aircraft on the ground, the course, flight path and conduct of aircraft in the air, their times of departure and arrival, their loading limits and the like. (at p92)

67. I think the conclusion from the evidence is little, if anything, more than what I would think is within the common knowledge and understanding of all who for one moment contemplate the situation. The speeds at which aircraft move in the air, the narrow - and narrowing - margins of time in which consequences of error or malfunction may be avoided or reduced, the increasing density of air traffic, the interdependence of the safety of one aircraft upon the performance of other aircraft, the hazards of weather and the variable performance of aircraft leading to diversion and re-routing of aircraft in flight, the need for the use of common facilities for communication or navigation and the centralizing of air navigation in Australia tending to increasing congestion around the metropolitan airports all combine to demonstrate that all air operations irrespective of destination or of their particular nature must be subject to the same control if the air is to be safe for inter-State and foreign commercial air transport: and, if inter-State and international commercial air traffic is to be encouraged more than minimal standards of safety are required. Consideration of these factors coupled with the extreme consequences of air accidents leads also to the conclusion that the range of precautions to prevent such accidents must be extremely extensive. (at p93)

68. In addition, the timely and reliable arrival of passengers and goods carried by air is a potent factor in the development of inter-State and foreign commercial air transport. Thus, the efficiency and regularity with which air operations are conducted in Australia have two aspects in relation to inter-State and foreign trade and commerce carried on by air. Efficiency in maintenance of aircraft on the ground and in their operation in the air bears directly upon the safety of the air operation itself and also upon the likelihood of the maintenance of schedules. The regularity of air operations, in the sense of conformity to the requisite procedures, clearly conduces to air safety. So also does the maintenance of schedules; for example, the holding of aircraft around a congested aerodrome because of delayed arrival or departure of other aircraft exposes the held aircraft to hazard. But as well, such efficiency and regularity is an encouragement to the development of inter-State and foreign commercial air transport. (at p93)

69. The expression, "safety, regularity and efficiency of air navigation" is to be found in art. 37 of the Convention and is repeated in reg. 199 (4). But, in my opinion, it derives no significance in that regulation from the Convention. Yet, whatever the draftsman may have had in mind in its use in that regulation, in my opinion, the expression does cover matters to which Commonwealth laws in relation to air navigation may properly extend; as used in that regulation it does not include any considerations which the Commonwealth could not validly authorize the Director-General to have in mind when considering the grant of an airline licence under the said regulations. (at p93)

70. It is thus in my opinion within the competence of the Commonwealth under s. 51 (i.) to make laws to secure and promote the safety of the air, including the efficiency and regularity of inter-State and foreign air operations, as a means of protecting and fostering inter-State and foreign trade and commerce. Because of the intrinsic factors connected with flight and of the factual situation in which air navigation takes place in Australia, such laws may validly in my opinion include within their operation intra-State air navigation. (at p93)

71. I now turn to an aspect of the system of licensing which is to my mind of great importance in this case. It may well be that in some situations, authorities having power to secure the safety of the air will be satisfied to endeavour to achieve their purpose by a series of prohibitions, either absolute or qualified. But the view may reasonably be held that because of the high penalties to be paid for unsafe or inefficient flight and of the discouragement to commerce of air accidents and delays, it is not enough to rely upon a series of substantive rules or prohibitions even though severe penalties are provided. Although the safety rules and procedure made and laid down with respect to air navigation may be most detailed and cover as many situations as can be conceived as likely to arise, there must remain a substantial area within which the well-intentioned judgment of the individual airline operator and his capacity as such will be at least important if not at times critical to the safety, efficiency and regularity of the air operations. In Div. 2 of Pt XIII will be found a number of instances in which matters of safety, mostly matters of degree, are left to the judgment of the airline operator. The standard of selection of personnel which carry on, and of the organization which supports, the air operations, the will, as well as the ability to observe the Regulations, are all factors which directly and intimately bear on the safety of the air operations of the operator, and therefore upon all the air operations upon which those operations inevitably have an impact. The marshalling of all those various elements in the interest of the safety of the air is effected by the system of licensing, in which the suitability of the operator as well as that of the aircraft for use by him on the specified routes is considered from the point of view of the safety, efficiency and regularity of air navigation generally. The system of licensing under Pt XIII of the Regulations is thus, in my opinion, itself a substantial safety procedure, and not merely a means of ensuring the observance of the other substantial safety rules and procedures which the Regulations lay down. Because of the inevitable impact of unsafe, inefficient or irregular air operations of an intra-State airline operator upon the safety of the air for inter-State and foreign trade and commerce by air, and upon the development of that trade and commerce, the Commonwealth system of licensing, as itself a safety procedure as well as being a means of ensuring observance of other safety measures, in my opinion, can validly include in its operation intra-State commercial air transport operations and operators. A prohibition coupled with a licensing system in which, except as to inter-State commercial air operations, the Director-General has a discretion to grant or refuse a licence, having in mind only the considerations of the safety, efficiency and regularity of air navigation, is in my opinion clearly within Commonwealth power. (at p95)

72. Some discussion took place in the course of the argument of the case as to whether or not the licence issued under the Regulations was but the relaxation of a prohibition or was an authority. Because a distinction between the carriage of goods and passengers by air and the use of an aircraft when carrying goods and passengers was not made, it was apparently thought that the choice was between regarding the licence as merely removing the restrictions imposed by reg. 198 and regarding it as an authority or franchise to carry goods and persons on the specified routes. But as I have already pointed out, whilst reg. 200B sought to give this latter effect to the licence, the licence itself does no more than authorize a named operator to use specific aircraft upon the specific route, the actual flight path being dictated by air control to which the licence is subject. But to say that the licence is but the relaxation of the prohibition of the use of an aircraft in regular public air transport regulations is in my opinion an inadequate analysis. Where an authority having power to prohibit an act licenses the doing of that act, the licence may properly be regarded as no more than permission to do that so far as the grantor's control of the matter extends. But where the licence is granted under the paramount law of a legislature which has full control of the particular activity, the licence assumes the aspect of an authority to do the act in question. (at p95)

12. The conclusion to which I have come is that the States' submissions must be upheld and if reg. 200B is beyond power to the extent I have mentioned, as I think it is, there is no inconsistency between the Air Transport Act and the Commonwealth laws. The result may be - as has occurred in this case - a state of deadlock. Both Commonwealth and State are willing that there should be a service between Sydney and Dubbo. The State will permit it only if it is operated by East-West Airlines Ltd., the Commonwealth only if it is operated by the plaintiff and it is not the function of this Court to resolve that conflict. (at p168)

13. I would answer the questions asked by saying that regs. 6 (1) (f), 198 and 199 are valid. No attack was made upon the validity of regs. 320A and 320B and they are plainly within power. Regulation 200B in so far as it purports to enable the holder of an airline licence from the Commonwealth to operate an intra-State service without also holding a licence from the State under the Air Navigation Act is invalid and, that being so, the State Act is not inconsistent with Commonwealth law. (at p168)

Orders

The Court answers the questions referred to it as follows:

Question 1. Whether the provisions of regs. 6, 198, 199, 200B, 320A and 320B of the Air Navigation Regulations, in so far as they purport to relate to regular public transport operations (as defined by the Regulations) solely within the State of New South Wales, are valid laws of the Commonwealth.

Answer: Regulation 6. There is no need for any further answer in relation to this regulation than is given in the answers in relation to regs. 198, 199, 200B, 320A, 320B.

Regulations 198, 199, 320A, 320B.

These regulations are all valid in so far as they apply by virtue of reg. 6 to intra-State air navigation.

Regulation 200B.

This regulation is invalid in so far as it purports by virtue of reg. 6 to apply to intra-State air navigation.

Question 2. If so, whether such laws are inconsistent with the provisions of the Air Transport Act, 1964.

Answer: No provisions of the Air Transport Act is inconsistent with such valid regulations.

Order that the plaintiff pay the defendants' costs of the reference to the Full Court.