Andaloro v Wyong Co-Operative Dairy Society Ltd

[1966] HCA 61

HIGH COURT OF AUSTRALIA

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

ANDALORO v. WYONG CO-OPERATIVE DAIRY SOCIETY LTD.

(1966) 119 CLR 278

14 October 1966

Milk (N.S.W.)

Milk (N.S.W.)—Milk Board—Powers—Dairyman holding certificate of registration from Board—Milk supplied for consumption or use—Right of Board and its agent to refuse to accept milk from dairyman—"Supply"—"Accept"—Milk Act, 1931-1965 (N.S.W.), Pt III, ss. 22, 25-28, 31, 36, 37.

Decisions

October 14.
The following written judgments were delivered: - BARWICK C.J. The appellants are milk producers in the Erina milk producing district of the State of New South Wales. They have at all material times been the holders of a certificate of registration as dairymen, issued pursuant to s. 25 of the Milk Act, 1931-1965 (the Act), authorizing them

"to produce raw milk Grade B to be supplied for consumption or use within a milk distributing district by means of delivering the same to the Milk Board at the factory of The Wyong Co-operative Dairy Society Limited (the Co-operative) at Old Maitland Road, Wyong". (at p279)

2. It appears that the Co-operative under industrial pressure from the Transport Workers' Union endeavoured to compel producers of milk in the milk producing district to employ a carrier nominated by an unofficial group of such producers to transport the milk from their dairy premises to the factory. The appellants, not desiring to employ this carrier, partly because of the charges made by him and partly for their own convenience, insisted on carrying the milk produced by them to the factory in their own vehicle. This the Co-operative decided not to allow. By its servants, who included the manager of the factory, the respondent Allan Frame, it sought physically to prevent the appellants completing the delivery there. Further, the Co-operative clearly notified the appellants that it would not allow any delivery of milk to be made by the appellants at the factory unless the milk was transported by the nominated carrier or unless the appellants, having carried the milk in their own vehicle, paid such carrier the cartage he would have charged the appellants had he, the carrier, carried the milk. The Board's attitude to these actions on the part of its agent, the Co-operative, was, to put the construction most favourable to the Board upon it, equivocal. (at p280)

3. The appellants commenced a suit in equity in New South Wales against the Co-operative, its manager and the Milk Board in which they asserted in substance that in default of a quota fixed by the Board pursuant to s. 27 (2) of the Act, the Board and its nominated agent were bound to allow them to deliver at the nominated factory all the milk they produced as registered dairymen for consumption or use in a milk distributing district and in which they sought injunctions to restrain the defendants from refusing to take delivery of such milk from the appellants. (at p280)

4. The trial judge made declarations to the effect that the Board and its agent were bound to receive delivery of such milk from the appellants transported to the Co-operative's factory by their own vehicle and granted injunctions to restrain the defendants from refusing to receive that milk. (at p280)

5. On appeal, the Full Court of the Supreme Court by majority reversed the trial judge's decision and dismissed the appellants' suit, holding in substance that the Board was under no obligation to receive any milk from the appellants: Andaloro v. Wyong Co-op. Dairy Society Ltd. (1965) 66 SR (NSW) 466; 83 WN (Pt 2) 66 . (at p280)

6. The fate of the appellants' appeal to this Court from the decision of the Full Court depends, in my opinion, upon the view which the Court takes of the meaning and operation of the Milk Act and of the scheme of control and regulation of the supply and distribution of milk for consumption or use which it embodies. But before turning to the construction of the Act it will be convenient to relate the situation in the Erina milk producing district which had been brought about at the relevant time by the acts of the parties, though, as I think, not always in conformity with the statutory scheme. (at p281)

7. No quota fixed by the Board pursuant to the power given to it by s. 27 (2) of the Act was operative in relation to the milk producing district restricting the quantity of milk which producers in the district, including the appellants, might deliver to the Board. But by the form of the certificate of registration given to the appellants, and presumably also to other registered dairymen in the milk producing district, the Board had determined the place at which milk produced in pursuance of the certificate would be accepted by it, namely, at the factory of the Co-operative: s. 27 (2) (d). The Board in exercise of its power under s. 23 of the Act had determined the minimum price to be paid to a dairyman for milk. In each annual period the Board had notified each producer of milk in the milk producing district, including the appellants, of a quantity of milk expressed in pounds weight which was styled a "base quota" in respect of his production: but in its notification the Board, having in mind, as I would think, the possibility of exercising its power under s. 27 (2) of the Act, had said that the communication of such "base quota" did not represent any guarantee of a minimum quantity which it would receive from the producer in the period. (at p281)

8. The Board, by a written agreement, had appointed the Co-operative its agent for a period of years, current at the time of the events giving rise to the litigation between the parties, to receive at its factory on its behalf such quantities of milk supplied for consumption or use in a milk producing district as it, the Board, should from time to time nominate. All the milk produced by the appellants was received by the Co-operative and immediately placed in common vats with all other milk received by the Co-operative from other producers of milk in the milk producing district. The total amount of milk thus received by the Co-operative generally exceeded the amount of milk which the Board required from the milk producing district for human consumption as raw milk in the related milk distributing district. Consequently, a mechanism had been worked out for arriving at that part of the total intake of milk by the Co-operative which would be regarded as the milk to be distributed for human consumption in the milk distributing district, and for dealing with the surplus of the intake of milk over the quantity thus required by the Board. The practice was that the Co-operative, as a registered milk vendor under the Act, distributed the milk which the Board desired to be distributed for human consumption in the Erina milk distributing district. The procedure was for the Co-operative to inform the Board of the quantity of the milk which it expected to be able as a milk vendor to sell in the milk distributing district in the ensuing week, and for the Board thereafter to instruct the Co-operative, usually but not invariably, at the beginning of the week's operations, to receive those quantities on its behalf. The Co-operative then took over on its own behalf the milk in excess of this quantity and sold it to the United Dairies under a written contract. United Dairies, as the agreement contemplated, used such milk in the metropolitan milk distributing district in the production of milk products for human consumption. But no physical segregation of the milk received by the Co-operative according to its destination took place until delivery to the intended recipients of it was set in train. (at p282)

9. The amount receivable per pound by the Co-operative from the United Dairies for such surplus milk was considerably less than the minimum price fixed by the Board to be paid to dairymen for the grade of milk delivered to the Co-operative for consumption or use in the milk distributing district. We are told that the Co-operative attributed a proportion of this surplus milk to each of the producers who delivered milk to it in the ratio which each producer's "base quota" bore to the total of the "base quotas" of all producers who delivered milk to the Co-operative in the relevant period. It attributed the amount sold by it as a milk vendor for human consumption in the milk distributing district to the individual producers in like proportions. In the result, the producers delivering milk to the Co-operative received from the Board the fixed minimum prices for a ratable part of the milk delivered by them to the Co-operative and sold by it, as a registered milk vendor, in the milk distributing district and a price related to the price received by the Co-operative from United Dairies for the balance of their deliveries to the Co-operative. Because of this practice, the producers in the milk producing district, including the appellants, who were all members of the Co-operative, came to realize at all relevant times that all the milk received by the Co-operative did not go into consumption as raw milk in the related milk distributing district and they did not expect to be paid the minimum price fixed by the Board for all the milk they delivered to the Co-operative. But the rights of the parties in the suit depend upon the Act rather than upon these consensual practices. (at p283)

10. The matter raises an important question - namely, whether the appellants, as registered dairymen producing milk for consumption or use in a milk distributing district, are entitled to deliver to the Board, or its nominated agent, the milk they produce for that purpose up to the extent of any quota properly fixed by the Board under the Act. A subsidiary question may need to be answered, if the major question be answered affirmatively, namely, whether having regard to the terms of the Act, particularly s. 28 (2A), the appellants have any equity entitling them to the relief sought. (at p283)

11. The first question turns upon the proper construction of the bracket of sections in Pt III of the Act aided by certain definitions in s. 4 of the Act. There can be little question that the purpose of the Act is to provide for the regulation and control of the supply and distribution of milk for consumption and use within milk distributing districts as proclaimed: see particularly s. 22. The principal purpose of such control and regulation, in my opinion, is to ensure a sufficient supply and to avoid an oversupply of milk of proper quality for human consumption in the more densely populated cities and towns of the seaboard of the State and to secure the payment of a proper sum to the producer of such milk and its adequate distribution at proper prices. (at p283)

12. But opposing views are placed before the Court as to the meaning and operation of those sections by which the Act seeks to attain these objects. The appellants submit on the one hand that the Act vests in the Board in default of a quota duly fixed under the Act all milk produced in pursuance of the dairyman's certificate so soon as it can be said to be "supplied" for sale, as defined, for consumption or use in a milk distributing district and imposes a duty upon the producer thereafter to deliver the milk to the Board and upon the Board to receive it. On the other hand, the respondents argue that, whilst the Act makes provision through licensing for authorizing dairymen to produce milk for consumption in a milk distributing district, it leaves the dairyman free to tender the milk he produces to the Board or to its agent or to dispose of that milk in any other fashion that the Act allows and the Board free to accept or reject all or any of the milk tendered to it by a producer. On this view the operation of the Act in relevant respects depends on a consensus between the dairyman and the Board, the dairyman choosing to deliver and the Board to accept the milk thus offered to it; no vesting of the milk in the Board takes place until this consensus is complete and the Board has accepted the milk: no right to payment arises in the dairyman until that time. It will be seen from this recital of the two points of view that the decision of the case is likely to have wide-ranging consequences. (at p284)

13. A Milk Board is set up with a duty to regulate and control the supply and distribution of milk (s. 22). No person may occupy any land or premises used for or in connexion with the stalling, grazing, feeding, or milking of cattle for the purpose of producing milk which is to be sold, or sent forward for sale for human consumption or use within a milk distributing district unless he is authorized to do so by a certificate of registration issued by the Board: s. 36 (1), s. 4, definitions of "dairyman", "dairy premises", "milk" and "to sell". The Board may issue certificates of registration as a dairyman in the prescribed form: s. 31. The form is prescribed by By-law No. 7 made under the Act and provides that the named person is registered under and subject to the Milk Act and regulations and by-laws made thereunder as a dairyman in respect of described premises for the purpose of producing milk of a stated grade which is to be supplied for consumption or use within a milk distributing district by means of delivering the same to the Milk Board at a named factory. The form also provides for conditions, to which the certificate is expressed to be subject. (at p284)

14. Section 37 (1) empowers the Board to refuse to issue a certificate of registration as a dairyman or to cancel any such certificate upon the ground, inter alia, that (c) . . . in the opinion of the Board the applicant, in the case of an application for a certificate or for its renewal, or the dairyman, in the case of a cancellation, has unsuitable dairy premises, milk store, vehicle, or equipment or (d) . . . in the opinion of the Board the business carried on or proposed to be carried on is an unnecessary agency. This gives the Board a wide discretion to determine the potential supply of milk by a milk producing district by limiting the number of producers of milk for consumption in a milk distributing district. The extent and purpose of this discretion has had judicial discussion in Ex parte Debrincat; Re Milk Board (1934) 34 SR (NSW) 581, at pp 588-590 . (at p284)

15. Section 27 requires the delivery to the Board in accordance with the provisions of that section of all milk "supplied" for consumption within the milk distributing district; but, by sub-s. 2 (a) of that section the Board is given the power to fix a quota of such milk which may be supplied to and accepted by the Board in any milk producing district. By the exercise of this power the Board is able to determine from time to time the total quantity of milk which may be supplied by the milk producing district and, to anticipate the view I shall shortly express, which it may be called upon to receive from the milk producing district. The power given by sub-s. 2 (b) of that section enables the Board to fix quotas for individual dairymen and thus to determine the quantity of such milk which may be delivered to it from time to time by each registered dairyman. (at p285)

16. Section 27 (3) forbids any dairyman, except to the extent that he retails directly on his own behalf any milk produced by him, to supply, sell, or deliver milk for consumption or use in a milk distributing district to a person other than the Board. The right to retail on his own behalf, which was originally preserved by s. 26 (5), has been substantially reduced by the amendment of s. 26 (5) effected by s. 2 of the Milk (Amendment) Act, 1964. The result of s. 27 (3) is that a registered dairyman cannot supply, sell or deliver milk produced in pursuance of his certificate of registration to any persons other than the Board, except where he retails that milk on his own behalf within the limits of s. 26 (5) as amended. In most cases, this must mean in reality that the producer of milk for human consumption or use in the milk distributing district, by virtue of the Act, can only deliver the milk to the Board. The certificate of registration of a dairyman seems to be drawn on the assumption that this is so in all cases. (at p285)

17. Section 26 provides that from and after the appointed day which was notified by proclamation as 5th March 1932, "milk supplied for consumption or use within" a milk distributing district or sub-district should "become vested in and be the property of the Board" freed of all encumbrances and the rights and interests of any person in such milk are converted into a claim for payment for such right or interest in such milk. (at p285)

18. No provision is made by the Act, other than by s. 31 in the case of encumbrancers and s. 28 (2A) in the case of the registered dairyman, as to the person or body who is to make such payment or as to the manner of making or of quantifying any such claim. Presumably the Board was intended to make the payment but unless it be considered as an "expense of administration by the Board of the Act" under s. 28 (2) there would seem to be no express power given to the Board to make it. (at p285)

19. The purchase of milk is not included in the duties and powers of the Board though purchase of personal property is included in its corporate capacities in s. 12 (1). In listing the expenditures which the Board may make out of its receipts from the disposal of milk, which apart from loan funds is the source of its income, no provision is made for expenditure in the purchase of milk: s. 28 (2). The delivery of milk to the Board is deemed to be a sale by the dairyman to the Board but only for the purpose of the Pure Foods Act, 1908: s. 28 (1A). But provision is made for payment to the dairyman for milk delivered by him to the Board: s. 28 (2). Such payments are to be in accordance with s. 28 (2A) which gives the Board a discretion as to when the payment shall be made but fixes the rate of payment at the minimum prices by the Board and applicable to the milk delivered by a dairyman. This rate will take account of the grade, quality and description of the milk so delivered: s. 23 (2) (b). For the purpose of ascertaining the amount to be paid to the dairyman for milk delivered by him, the Board's decision as to grade, quality and description, and as to the quantity or the conditions of . . . supply or delivery are made final and conclusive: s. 28 (3). (at p286)

20. If, as a result of a consideration of these various provisions of the Act, it is concluded that the dairyman is entitled to deliver to the Board at the place the Board has nominated milk produced by him in pursuance of his certificate of registration, no question arises in this case as to the amount of milk which may be so delivered by the appellants, for no determinations of quantity have been made by the Board under s. 27 (2) (a) or 27 (2) (b). (at p286)

21. The appellants first sought to derive a right to deliver their milk to the Board from the terms of their certificate of registration. But, in my opinion, if such a right is not given by the Act, it cannot be and is not given by the certificate. This was issued pursuant to that part of s. 25 (a) which empowers the Board to issue certificates to dairymen specifying the grade of milk which the dairyman is authorized to supply. Sections 36 and 25 read with the prescribed form apparently contemplate that the certificate may limit the purposes for which the dairymen may lawfully produce milk. The function of the certificate, in my opinion, is to authorize the production of milk of the stated grade for supply for consumption or use in the milk distributing district. Apparently it is also intended to nominate the manner in which, and the place at which, such supply can and should take place. Thus, whatever the meaning of "supplied" in ss. 26 and 27 of the Act and whether or not the Board by the terms of its certificate could narrow its denotation in any particular case, tender of delivery by the appellants to the Co-operative's factory was, in my opinion, a "supply" for the purposes of the statute. No exception is made by the certificate from the generality of its terms to accommodate its authority to the exceptions made in ss. 26 (3) and 27 (3) relating to the sale by retail by the dairyman of his own production. Thus, whatever practices may have grown up in the Erina milk producing district, the appellants, in my opinion, were only authorized to produce milk for supply to the Board for consumption or use. (at p287)

22. It was suggested in argument that, because of the definitions of "milk" and of "sale" in s. 4, the Act only applies to milk supplied for human consumption or use: and this may well be so. However, it was further submitted that the use of milk in the manufacture of milk products for human consumption was not a relevant use of milk and that milk supplied for such use fell outside ss. 26, 27 and 28. With this I am unable to agree. In my opinion, the supply of milk for use in manufacture of such milk products is a supply for use within the meaning of those sections. Consequently, apart from difficulties which must in any event arise from an inability to identify any part of the milk supplied by a dairyman to the Co-operative as milk solely supplied for any particular purpose, the whole of the milk supplied by the appellants to the Co-operative was milk supplied for consumption or use within a milk distributing district. Thus, whether the purpose of the supply be derived from subjective or objective considerations, or a combination of those considerations, the whole of it fell within the description of milk delivered to the Board within the meaning of milk delivered to the Board in s. 28 (2A). I shall later deal with an argument that nonetheless acceptance of the milk by the Board was a pre-requisite to the entitlement of a dairyman to payment. (at p287)

23. Some endeavour was made to rely upon the condition expressed in the certificate and the practice of the Co-operative in receiving all the appellants' milk in the past as a requirement or requisition by the Board upon the appellants to continue to deliver all their milk to the factory. The condition was expressed in the certificate as follows:

"Conditions: That the dairyman named herein will whenever required by the Board so to do, deliver to the Board all milk produced by him at the abovementioned premises or so much of such milk as the Board may from time to time require." (at p287)

24. It is difficult to understand the purpose of the "conditions". It is noticeable that the condition refers to "all milk produced" by the licensee. The licence is limited to milk to be supplied for consumption or use within a milk distributing district. There was no need for a licence by the dairyman to produce any other milk. The condition could scarcely be regarded as an attempt by the Board to condition its licence for the production of milk to be supplied for consumption or use within a milk distributing district upon the delivery at the request of the Board of all other milk which the dairyman might produce-- i.e. milk not for human consumption or use. For such an action the Act gives the Board no authority and in any case it would be a highly unlikely course for the Board, which is handling milk for human consumption, to take. (at p288)

25. It may be that, if the condition is confined in its operation, as I think it should be, to milk produced in pursuance of the certificate, it evidences an attempt to accommodate the certificate of registration to the situation where a district or an individual quota had been fixed by the Board pursuant to s. 27(2). It may have been thought that the certificate, if qualified by such a condition, might have enabled the dairymen to dispute the effect of the quota set by the Board. But in that event the words "whenever required by the Board so to do" are misplaced and ought really to be inserted between the words "or" and "so" in the second last line of the condition. (at p288)

26. But it is quite clear, to my mind, that, whatever the purpose of the condition, if the producer was not entitled to deliver milk to the Board there cannot be found in the statute any authority in the Board to bind the producer to deliver to it all or any of the milk he produces in pursuance of the certificate. If, on the other hand, the Act entitles the producer to deliver milk to the Board, at least up to the amount of any properly fixed quota, then the condition can have no operation to cut down that statutory right of the producer. In my opinion, unless it be read as related, as I have suggested, to the existence of a quota fixed under s. 27, the condition is unauthorized; consequently, the licence would in law be unqualified by it. (at p288)

27. It is now necessary to aggregate as briefly as possible the relevant provisions of the Act. In effect, it prevents anyone but a registered dairyman producing any milk to be sold for consumption or use within any milk distributing district: s. 36 read with definition of "dairy premises" in s. 4. It empowers the Board to authorize the production of milk for the sole purpose of its supply to the Board: s. 25, By-law 7 and form 6. It prevents the registered dairyman delivering milk once it is "supplied" for that purpose to anyone but the Board, unless sold by retail by the dairyman if the certificate of registration permits him to do so: s. 27 (3). It gives the Board power to determine how many dairymen shall be allowed to produce such milk and how much of such milk may be delivered to the Board either in total by all or a number of dairymen or by any individual dairyman. It gives the dairyman a right to be paid for the milk he delivers to the Board at the place it nominates, and it enables the Board to determine what he shall be paid, using in the calculation the appropriate rates fixed by the Board for payment to a dairyman for the milk of the quality, grade and description which he in fact delivered. The Act does not give the Board any express power of rejection of any milk produced pursuant to a certificate of registration of a dairyman: and, in my opinion, does not do so by implication. The healthiness of the dairyman's cattle and the cleanliness and suitability of his premises and methods of storage etc. are dealt with by the proviso to s. 25 (a) and action under ss. 25 (b), 36 (4) and 37 (1) (c). Section 25 (e) is directed to the use, not to the supply and delivery, of milk for human consumption and is inappropriate, in my opinion, to found a right of rejection of a dairyman's milk. It is true that in s. 27 (2) and (4) reference is made to acceptance by the Board of milk supplied, or milk delivered to it, as will later appear. But, in my opinion, the sections are referring to the counterpart of delivery, receipt by the Board, and not to the acceptance of the milk as conforming to standards or requirements. The Act, in my opinion, provides for the case of substandard milk delivered to the Board by a dairyman by giving the Board the absolute and final decision as to what shall be paid to the dairyman for his deliveries having regard to quantity, quality or description: s. 28 (3). That milk, unfit for human consumption, will not be disposed of by the Board nor should the dairyman be left with it. (at p289)

28. It is in the light of these circumstances and of the purpose of the Act, as I conceive it, to ensure a supply as well as to regulate the distribution of milk for human consumption and use, that the construction of ss. 26 and 27 must be considered. Before considering these sections, I should refer to s. 26A. For want of a proclamation made pursuant to s. 26A (2) the section is not in operation. Its terms, in my opinion, afford no assistance in the construction of ss. 26 and 27. (at p289)

29. Section 27 (1) deals with all milk supplied for consumption within the milk distributing district. It does not in terms include milk supplied for use within the milk distributing district. But having regard to sub-s. (3) and to the terms of s. 26, bearing in mind the definition of "milk", s. 27, in my opinion, embraces milk supplied for use as well as milk supplied for consumption. (at p289)

30. Section 27 (1) is expressed to operate from and after the publication of a proclamation pursuant to s. 26 (2) which will have operated to vest in the Board as the absolute and unencumbered owner all milk "supplied" for human consumption or use within a milk distributing district. The proclamation under s. 26 is ambulatory operating at the point of time at which any milk can be said to be "supplied" for the stated purpose. Placing on one side for the moment the determination of that point of time, it is, to my mind, quite clear that s. 27 (1) is placing upon the dairyman the obligation to deliver to the Board milk which this section conceives to have already become its property. It presupposes some act of the dairymen which, in the circumstances, amounts to a "supply" of the milk so as to have attracted the operation of s. 26. Section 27 (1) cannot be read, in my opinion, as merely providing that if a dairyman desires to tender milk to the Board for its acceptance or rejection, he must do so in the quantities, at the places and at the times which the Board by the exercise of its powers under s. 27 (2) may have fixed. With due respect to those who think otherwise, I am unable to read it "as directed to a condition of the supply of milk for consumption in a milk distributing district rather than as a command to the dairyman to deliver milk to the Board". To my mind, so soon as it can be said that the milk he has produced for consumption or use within a milk distributing district has been supplied by him for that purpose, the section places upon the dairyman the obligation to deliver that milk to the Board. Having taken control of his production, having closed most, if not for practical purposes, all avenues of disposal of his production, the Act, as part of the plan to secure a supply for the milk distributing district, thus, in my opinion, places upon the dairyman an obligation to deliver to the Board what he would supply for sale for human consumption or use in a milk distributing district. Of course, having regard to the terms of the Act and of their certificate of registration, the appellants could only decide not to supply their milk for the stated purpose if they chose to destroy it or consume it themselves. (at p290)

31. Two arguments were put against this conclusion as to the meaning of s. 27. First, it was said that milk is not "supplied" within the meaning of the Act until it is both delivered and accepted. It is said that the presence of the word "accepted" in ss. 27 (2) (a) (c) and (d), 27 (4), 28 (2A) (b), 28 (4) indicates that some act on the part of the Board beyond receipt of the milk is necessary to complete its "supply" and incidentally to entitle the dairyman to any payment. But if this were so, it would follow that s. 27 (1) is requiring the dairyman to deliver to the Board the milk which he has not merely already delivered to, but which he has had accepted by, the Board. Such a construction of the section, in my opinion, has merely to be stated to be rejected: and this I do. (at p290)

32. Also, such a construction would mean that in relation to milk produced by a registered dairyman, the only effect produced by s. 26 is to extinguish any encumbrances upon the title to the milk and to convert the rights of the encumbrancers into claims for payment "therefor" - which I assume refers to the value of the encumbrances after the milk has been delivered to and accepted by the Board. In my opinion, s.26 is intended and is aptly expressed to effect a vesting of the property in the milk it describes without the concurrence of any act either on the part of the dairyman or on the part of the Board. The need for any such concurrence cannot be derived, in my opinion, from a construction of the word "supplied". Rather, the denotation of that word is affected by the purpose of s.26 and the dependence of s. 27 upon its operation. (at p291)

33. In my opinion, the expression "delivered and accepted" in the Act refers to the one event, looked at from opposite sides. The dairyman delivers and the Board receives. In my opinion, an illustration of the use of "accepted" in this sense is found in ss. 27 (2) (c) and 28 (2A) (b). The expression "supplied and accepted" in s. 27 (2) (a) covers, in my opinion, somewhat more than the expression "delivered and accepted" in s. 27 (2) (b) and (d). The former expression occurring in s. 27 (2) (a) would cover a tender of delivery or other act amounting to a "supply" within ss. 26 and 27 (1). Thus a limit fixed under s. 27 (2) would prevent a vesting under s. 26 of milk in excess of the amount fixed: it would also prevent an obligation arising to deliver such milk. But in the place where it could be expected to be found if it meant acceptance in the sense the word is used of a purchaser free to reject a delivery the word "accepted" is noticeably absent. I refer to that portion of s. 28 (2) which places an obligation upon the Board to pay the dairyman. That obligation is in respect of what is delivered - not in respect of what is accepted. (at p291)

34. Whilst I reject the idea that the use of the word "accepted" in the sections with which I have been dealing indicates that a supply cannot relevantly take place until there is a consensual acceptance by the Board, I recognize the difficulties inherent in the word "supplied" in ss. 26 (1) and 27 (1). Clearly enough the draftsman did not choose the point of production as the occasion for vesting the milk in the Board. Various difficulties would have been encountered if that course had been taken. For one thing, the dairyman may not have committed the milk at the point of production to the purpose of sale for consumption or use in a milk distributing district. For another, the exception covered by s. 26 (5) would have been difficult to accommodate. On the other hand, it was not the draftsman's purpose, in my opinion, to allow the vesting to depend upon acceptance by the Board. For one thing, the Act had as one of its purposes the protection of the dairyman, e.g. ss. 23 (1) (2) and 24 (2); and, for another, the property in milk not produced by a registered dairyman and in milk not being offered to the Board is vested in it by s. 26: see Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd. (1939) 62 CLR 116 . Consequently, it seems to me that the draftsman has chosen that point of time at which the milk is committed to the purpose of sale for consumption or use within a milk distributing district. I respectfully agree with the view which Starke J. expressed in the abovementioned case (1939) 62 CLR, at pp 139, 141 . Milk may be "made available" for the stated purpose before its delivery, e.g. if it be placed on offer for sale or, if it be tendered for delivery, with a view to effecting the stated purpose. As I read the judgments in that case, most of the Justices regarded the Act as completely restrictive of the freedom of action of the dairyman in respect of the milk he desired to place or have placed into consumption in a milk distributing district: Latham C.J. (1939) 62 CLR, at p 130 , Evatt J. (1939) 62 CLR, at p 147 , McTiernan J. (1939) 62 CLR, at p 156 . The supply in that case, in my opinion, was at a point inside New South Wales en route to a consignee for purposes of sale in a milk distributing district. It was unnecessary in that case for the Court to advert to the precise time at which the milk had vested. It was sufficient that it had done so before action brought. But had the Milk Board (N.S.W.), the plaintiff in that case, physically intercepted the milk before its receipt by the Metropolitan Cream Company, I apprehend that, consistently with the view of the Court in that case, the plaintiff would have been simply reducing its own property into possession. It seems to me that it is quite consonant with a scheme to ensure a supply for the milk distributing district that the milk should vest in the Board so soon as it is committed to the purpose of sale for consumption or use in the milk distributing district. It is not, in my opinion, consonant with such a scheme to allow the vesting to depend on a consensus of the producer or possessor of such milk and the Board. The identification of that point no doubt has its inherent difficulties: and the facts of each case may need examination. Consequently, no determination of the point of availability of milk for the stated purpose can be made of universal application. But, in my opinion, s. 27 (1) is drafted upon the view that the milk can properly be described as supplied for consumption or use before it is delivered to and received by or on behalf of the Board. At that time it vests in the Board, though the dairyman has no right to payment for it till he has delivered it to the Board or at its direction. (at p293)

35. In the present case it is enough that at the time the appellants brought the milk to the factory of the Co-operative with the purpose of delivering it there, intending it to be sold for human consumption or use in a milk distributing district, there was a relevant supply of that milk: see before and the terms of their certificate of registration. At the latest it then vested in the Board and at that time, if not earlier, the appellants came under an obligation to deliver it as the Board had directed. It follows that they were entitled to do so. (at p293)

36. Earlier I described the current practices followed in the Erina milk producing district. It will be apparent from conclusions at which I have arrived as to the meaning and operation of the Act, that these arrangements are not in conformity with the statute. Rather than exercise its statutory power of imposing limits upon the amount of milk which may be delivered to it by the distributing district or by the individual producers, the Board has sought, by means of its agreement with the Co-operative and action taken thereunder, to prevent milk supplied for consumption or use in a milk distributing district vesting in the Board and to allow such milk to become the property of the Co-operative by a consensual dealing between the Co-operative and the dairyman. This, in my opinion, the statute does not authorize or allow. No doubt the Board may dispose of milk which has vested in it to the Co-operative but the statutory vesting and the statutory obligation to deliver may only be restricted in relation to quantity by an exercise of the power given by s. 27 (2). (at p293)

37. What I have so far said relates to the entitlement of a dairyman to deliver milk to the Board at the place it has fixed for the receipt by it of milk. Some question was raised in argument as to the position of the Co-operative, having regard to its contractual relations with the Board. But it seems to me that, if the dairyman is, as I think he is, entitled to deliver his milk at the factory of the Co-operative, the Co-operative or its servants may not in the prevailing circumstances lawfully prevent that delivery. That their contractual arrangements with the Board may be thought to be inappropriate to the situation thus created, in my opinion, is an irrelevant consideration. The Co-operative does not profess to prevent delivery because it is not the Board's agent in the district or because its factory is not or has ceased to be the place for reception of milk delivered to the Board. Of course, if the Co-operative were dissociated from the Board, the dairyman could not claim as against it a right to deliver milk at its premises, whatever the Board may have done in nominating those premises as a place for the reception of milk. But that is not this case. The Co-operative has indicated its willingness to receive the milk from the appellants if the conditions it lays down are fulfilled. It seems to me that in that situation the Co-operative and its manager are properly included in the suit and in the declaration and orders made in it. (at p294)

38. So far as the Board is concerned, it may properly have been inferred that it would support the Co-operative for the future in the stand which it had taken. The Board has maintained that it is free to refuse to receive all or any of the appellants' milk produced pursuant to their certificate of registration and brought by them to the Board for the purpose of sale for human consumption or use within a milk distributing district. There is enough material in the case, in my opinion, to support an injunction to restrain the Board from refusing to receive from the appellants milk falling within the abovementioned description. (at p294)

39. There remains the question whether the appellants had an equity to the order of injunction which the trial judge gave them. As to the deliveries which the appellants were prevented from making, it was said that they had a claim to payment and no claim to an equitable remedy. But their right to payment depended upon delivery, s. 28 (2A): there may be a question as to whether some part of the milk which had at least been tendered for delivery had not been in fact delivered. But there is no need to pursue such a question as the Co-operative had clearly threatened to prevent delivery for the future if the milk is not transported to its factory in accordance with the conditions it laid down. The appellants, being entitled to deliver the milk, in my opinion, had a claim in the circumstances to equitable relief by way of injunction. (at p294)

40. Consequently, for these reasons, I am of opinion that the appellants were entitled to the declarations and orders made by the learned judge of first instance, these declarations and orders being taken to refer to all milk produced by the appellants pursuant to their certificate of registration as dairymen and tendered for delivery for the purpose of sale for human consumption and use within a milk distributing district, up to the quantity from time to time determined by the Board pursuant to s. 27 (2) of the Act and otherwise in conformity within any determinations made by the Board within that sub-section. (at p294)

41. I would allow the appeal. (at p294)

McTIERNAN J. In my opinion this appeal should be allowed. I agree with the manner in which the Chief Justice has construed the provisions of the Milk Act, 1931-1965 (N.S.W.) and his conclusions. I hold that the appellants have a right pursuant to s. 27 of the said Act to deliver the milk supplied by them, but which was rejected by The Wyong Co-operative Dairy Society Limited as agent for the Milk Board. (at p295)

TAYLOR, MENZIES AND OWEN JJ. Regardless of the particular way in which the plaintiffs/appellants' case was framed and presented, its success was, we think, dependent upon establishing that the defendants/respondents were under a duty to accept the milk which the appellants attempted to deliver at the premises of the respondent, The Wyong Co-operative Dairy Society Limited. (at p295)

2. Clearly enough, the general law imposed no such duty and arguments based upon what, in the course of argument, was described as the right of the appellants to supply, or deliver, or proffer for delivery, milk which they had produced under their certificate of registration as a dairyman, failed to distinguish between a right carrying with it a correlative duty and a liberty or privilege to do something not unlawful. See Hohfield, Fundamental Legal Conceptions (1919), p. 36 et seq. Any true right carrying with it a correlative duty on the part of the defendants, or one of them, must, in the circumstances here, be either contractual or statutory. As no contract was either alleged or proved, the appellants had perforce to find the right, which they asserted, and the defendants' correlative duty in the Milk Act, 1931-1965 (N.S.W.), or the Regulations and By-laws made under it. (at p295)

3. In the course of argument, counsel for the appellants did explore a number of other prospects, but their argument finally rested upon s. 27 (1) of the Milk Act as the provision which, in the circumstances, conferred upon the appellants the right to deliver milk and imposed an obligation upon the respondent Milk Board to accept delivery of milk made available by the appellants at the premises of the respondent Society. (at p295)

4. Section 27, sub-s. (1), and the relevant part of sub-s. (2) are as follows:-

"27. (1) Upon and after the date of the publication of any proclamation under section twenty-six of this Act, all milk supplied for consumption within the milk distributing district or sub-district thereof specified in the proclamation shall be delivered by the dairyman producing the same to the Board in accordance with the provisions of this section. (2) For the purposes of this section the Board may from time to time determine - (a) the quantity of milk per week which may be supplied to and accepted by the Board in any producing district or part thereof or at any place appointed by the Board at which milk will be accepted; (b) the quantity of milk or the number of milkings per week either morning or afternoon which may be delivered by any dairyman to and accepted by the Board; (c) the places at which milk will be accepted by the Board; (d) the periods during which milk may be so delivered and accepted. . . ." (at p296)

5. It is also necessary to refer to the plaintiff's certificate of registration as a dairyman, granted under s. 25 of the Milk Act. This, at the relevant time, was in these terms:-

"Form 6 Milk Act, 1931-1942. CERTIFICATE OF REGISTRATION AS A DAIRYMAN (1963) Registration No. D4620

Name and Postal MR. SALVATORE ANDALORO & Adress of Dairyman MRS. GLORIA ANDALORO

P.O. Box 96, WYONG.

Premises Address OLD MAITLAND ROAD, WYONG. Milk Delivered at Wyong Co-op. Dairy Soc. Ltd., Wyong.

This is to certify that subject to the imprint of the Cash Register appearing hereon and to any conditions endorsed hereon the person, firm or company named above is hereby registered under and subject to the Milk Act, 1931-1942 and the Regulations and By-laws thereunder as a dairyman in respect of the dairy premises shown above for the purpose of producing Raw Milk Grade 'B' which is to be supplied for consumption or use within a Milk Distributing District by means of delivering the same to the Milk Board at the factory shown above. Conditions: That the dairyman named herein will, whenever required by the Board so to do, deliver to the Board all milk produced by him at the abovementioned premises or so much of such milk as the Board may from time to time require. This Certificate remains in force, unless sooner suspended, cancelled or surrendered, until the 31st day of December, 1963. Milk Board, Sydney. Secretary TRANSFERS

Transfer of this Certificate can only be effected by the Milk Board's approval of an application submitted on the prescribed form." (at p296)

6. It appears, therefore, that the plaintiffs were registered as a dairyman in respect of particular premises "for the purpose of producing Raw Milk Grade 'B' which is to be supplied for consumption or use within a Milk Distributing District by means of delivering the same to the Milk Board" at the factory of The Wyong Co-operative Dairy Society Limited at Wyong. (at p297)

7. It is important to observe (1) that it is an offence to produce milk to be supplied for consuption or use within a milk distributing district without the authority of a certificate of registration (see s. 36 and the definition of "dairyman", "dairy premises", "milk" and "milk distributing district" in s. 4); and (2) that the effect of a certificate is to authorize what, without it, would constitute a breach of the law. The certificate under consideration here also specified the place for the delivery of the appellants' milk to the Board. In so far as a specification of this sort requires statutory authority, it was treated by the parties as a determination under s. 27 (2) (c). Whether or not that assumption is correct we leave as an open question. Should it be so, however, the certificate cannot be regarded as imposing upon the Board an obligation to accept whatever milk the appellants might take to the factory at Wyong for consumption or use in a milk distributing district. The certificate confers upon the appellants the freedom to do something; it would be foreign to its true character to treat it as requiring the Board to do anything. It is to be observed that the certificate also contains a condition and there was some dispute about its lawfulness, but that question too we leave undecided. It may be that the condition can be justified as providing machinery to enable the Board to make effective determinations under s. 27 (2) (a) (b) and (d). For present purposes, it is sufficient to say that we have reached the conclusion that the condition cannot aid the appellants because it contemplates a statement of the quantity required communicated by the Board to the dairyman, and it is common ground that, despite the fixing of what was described as a "base quota", there was here no such specified requirement. This absence may tell against the appellants because, there being no quota for the appellants determined under s. 2( (2) (a), there is nothing to afford any basis for deciding that, if there were an obligation upon the Board to accept milk from the appellants, the obligation was other than one to accept all milk which the appellants might supply for consumption or use in a milk distributing district. It is common ground, however, that the course of practice was to treat but part of the appellants' milk delivered to the factory of The Wyong Co-operative Dairy Society Limited, and accepted, as so supplied and as therefore becoming milk vested in the Board. It seems to us, however, that little that is of significance can be gathered from the course of dealing which the evidence disclosed because it cannot be assumed that the course of dealing was strictly in accordance with the provisions of the Act. The only sound basis upon which to proceed is simply that the appellants were authorized by a certificate of registration to carry on the business of a dairyman, and to produce raw milk, Grade "B", to be supplied for consumption or use in a milk distributing district by delivery to the Board at the factory of The Wyong Co-operative Dairy Society Limited. (at p298)

8. A good deal of argument was directed to the point at which milk is supplied for consumption and use within a milk distributing district so that it vests in the Milk Board pursuant to s. 26. Although it may not be strictly necessary to determine this question for the purpose of deciding this appeal, it does appear to us material to determine whether, when the milk brought by the appellants to the factory was refused, that milk, or any part of it, had become the property of the Board so that what was rejected was something already vested in the Board - that is, that the rejection was not of the appellants' milk but of the Board's own milk. It might be thought unlikely that the Board would have an unlimited power to refuse to accept delivery of milk actually vested in it. The conclusion which we have reached as to this point is that the milk which The Wyong Co-operative Dairy Society Limited refused to accept from the appellants was milk belonging to the appellants and none of that milk belonged to the Board. In our opinion, milk is "supplied" for the purposes of s. 26 of the Act upon accepted delivery for consumption or use within a milk distributing district. It is true that it is not possible to reconcile exactly all the provisions of the Act referring to the "supply", "delivery" and "acceptance" of milk but it seems to us that the various provisions of s. 27 fit into a workable scheme if the word "supplied" in s. 27 (1) is read as the equivalent of "being supplied" - and this is how we would read it. In other words, the delivery of milk in accordance with provisions of s. 27 is something done in the course of supplying milk for consumption within a district. The supply is not, however, completed before the milk falls within the description to be found in s. 27 (4), namely, "milk so delivered to and accepted by the Board". Whereas we do not find in s. 27, or elsewhere in the Act, any indication that "supply" is something which precedes "delivery", we do find clear indications in the Act that "supply" comprehends "delivery". Although we have no doubt that the right to payment for milk which, upon some unspecified unilateral act of a producer prior to delivery, has become vested in the Board, could be made to depend upon a subsequent "delivery" of the milk, we consider that the scheme of the Act supports the reasonable conclusion that the right to payment and the passing of the property are contemporaneous and each involves the acceptance of milk delivered. Particular provisions of the Act which we consider support this conclusion are s. 27 (2), particularly sub-s. (a) and the concluding sentence; the reference in sub-s. (3) to a dairyman who "supplies . . . to a person other than the Board"; s. 28 (1A) which constitutes delivery by a dairyman as a "sale" for the purposes of the Pure Food Act; the recognition in s. 28 (4) that a dairyman has an interest that is a proprietary interest in the milk which he delivers; and the reference in s. 31 to persons other than the delivering dairyman "claiming to be the true owner of the milk, as against the dairyman who delivered the milk". These provisions seem to us to treat the dairyman who delivers milk as the owner of that milk at the point of delivery. This opinion is not only in accord with that of the judges of the Full Court; it is, we think, in line with what was said by members of this Court in Crothers v. Sheil (1933) 49 CLR 399 and Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd. (1939) 62 CLR 116 . In the latter case, which was not concerned with s. 27, cream which had been delivered to, and accepted by, a person other than the Board for distribution within a milk distributing district was regarded as "supplied" for the purpose of s. 26. Our understanding of what is involved in the "supply" of milk is consistent with that decision and we have found nothing in the reasoning of the members of the Court to indicate any view that the cream in question became vested in the Board before it was delivered to Metropolitan Cream Pty. Ltd. The receipt of the cream by that company was, we think, regarded as completing the supply of the cream. See Latham C.J. (1939) 62 CLR, at p 136 , Starke J. (1939) 62 CLR, at p 139 , Evatt J. (1939) 62 CLR, at pp 147, 148 and McTiernan J. (1939) 62 CLR, at p 156 . (at p299)

9. In these circumstances, it appears to us that the application of s. 27 (1) of the Milk Act did not oblige the Board to accept any milk which the appellants might take to the factory for delivery or, indeed, any milk for consumption and use in a milk distributing district so taken to the factory. (at p299)

10. Myers J. at first instance also expressed the view that milk is not supplied by a dairyman until there has been a change of possession. His Honour's judgment in favour of the appellants depended, however, upon his view that, although the Board itself could reject milk which a dairyman seeks to deliver, an agent for the Board could not because, were the agent to do so, it would prevent "the Board exercising its right to accept what milk it thought fit". It seems to us, however, that once it is determined that the Board can, in the absence of any contract or quota, reject any milk brought to it by a dairyman, no basis is to be found for inferring any statutory duty upon an agent to accept delivery of milk. The effect of the Board fixing a quota is a matter not requiring consideration here. (at p300)

11. If some basis could be found for finding that the Society, as agent of the Board, was obliged to accept the milk which the appellants brought to the Society, it would, in the circumstances of the case, seem to be necessary to confine relief in some way to milk which the Society, as agent of the Board, was bound to take in order to give the Board a chance to accept or reject it. The obligation could not relate to milk which was delivered to the Society but was not supplied for consumption within a milk distributing district and it seems to be common ground that not all the appellants' milk which was tendered was intended to be supplied for the purposes of such consumption. The circumstance that we have found no ground for making a division between milk so supplied and other milk delivered is an added reason for thinking that, in this case, the Society cannot be treated as having some particular obligation to accept delivery of part of the appellants' milk. Furthermore, the Board's instructions to the Society seem to give the Society ample power to reject milk and to do so on behalf of the Board. Accordingly, we find ourselves unable to accept the distinction which commended itself to the learned trial judge. (at p300)

12. We agree with the decision of the Full Court and would, therefore, dismiss the appeal. (at p300)

Orders

Appeal dismissed with costs.