Barley Marketing Board for the State of New South Wales v Norman

[1990] HCATrans 124

~ ~~~

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl61 of 1989

B e t w e e n -

THE BARLEY MARKETING BOARD FOR

THE STATE OF NEW SOUTH WALES

Plaintiff

and

ERIC NEIL NORMAN

First Defendant

JANE MARGARET NORMAN

Second Defendant

PACIFIC MALTING COMPANY PTY LIMITED

Third Defendant

Removal pursuant to section 40(1)

of the Judiciary Act 1903

MASON CJ
BRENNAN J

Barley(2)

DEANE J
DAWSON J
TOOHEY J
GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 6 JUNE 1990, AT 10.17 AM

(Continued from 5/6/90)

Copyright in the High Court of Australia

ClT 1/1/DR 112 6/6/90

,.

MASON CJ: Yes, Mr O'Callaghan.

MR O'CALLAGHAN: If the Court pleases. In referring to the case stated yesterday I neglected to refer to one

page which is apposite to the point I was

endeavouring to make as to identifying from the

case stated the motivating reason - the predominant

motivating reason - for the scheme that is the
subject of this appeal. It is at page 50 - the

letter to the farmers - the paragraph which

commences:

By way of background to this decision, it

should be noted that in 1987 the Malting and

Brewing Industry paid the same price for

Malting Barley as they did in 1980.

During the intervening seven years (with

exception of the 1982 drought year, when
barley was transported from Western

Australia) the Malting and Brewing Industry

paid at/or below this price. The main

reason for these prices being kept so low,

was (1) the purchasing of barley across

borders by some Maltsters, (2) the

depressed world grain prices caused by

other producing Countries heavily subsidising

production and sales.

The point we make, Your Honours, is that there

is identified as the first problem in producing the

situation desired by the Marketing Board the

interstate sales. At the conclusion of yesterday

I was saying that there would be no distinction between. a constitution of BHP as a sole-selling agency and that one would not draw any relevant distinction if instead the agency is a State agency.

If it is destructive of interstate trade in the way

we submit it is then it contravenes the section. Similarly we would say that if a State

constituted a buying agency and prohibited all

State agency is, conversely, identical with the	imports save those which were purchased by the
situation we have here but we say would be
similarly in contravention of the section. I would now like to endeavour to deal with this definition of "protectionism" and also in doing
so to look at the principles of COLE V WHITFIELD
and endeavour to demonstrate that they are not in
collision with the principles of the COARSE GRAIN's
case and other cases we referred to in our submission and, secondly, and in any event that the
principles of COLE V WHITFIELD in no way validate
what is provided for in the relevant scheme.

ClTl/2/DR	113
Barley(2)

MR O'CALLAGHAN (continuing): With respect to protectionism,

and Your Honour the Chief Justice asked me yesterday

as to whether I had any authority or persuasive

influence of the meaning of protectionism in the

context of - I think Your Honour's words were, "shoring

up the prices of an intrastate industry", I will

come to some American cases later, Your Honour,

which do, in our submission, relate to that point.

Our submission is that, as a matter of principle,

protectionism embraces the concept of action which
is taken to protect, or to gain an economic advantage

for a local industry against competition and that

can be paraphrased in the instant case by saying that

protectionism, in the context we are here dealing with, means the obtaining of an economic advantage for a local industry by the burdening or prohibition

of interstate trade and commerce. If therelevant

Act of the legislature or the executive is to obtain

a perceived economic advantage for that State by the

burdening or prohibition of interstate trade and

commerce then, we submit, that section 92 is

contravened regardless of whether that legislation

or Acts applies equally to intrastate trade.

BRENNAN J: Well, you have just put two propositions: one is

a definition of protectionism which has as one of

its elements protection against competition; the

second, that protection of an industry, by prohibiting

or burdening exports from the State relevantly,

the two do not necessarily correspond, do they?

MR O'CALLAGHAN:  No, well, Your Honour, I think I would say

what I had endeavoured to do with the latter was

to paraphrase from my first defintion what we say

is the apt description of what is happening here.

Can I repeat, to this extent, that we say that

protectionism is not only the protection of a

local industry against foreign trade which means

imports. If protectionism were so limited, as a

definition, then we would say its meaning should be

taken to be as bearing an expanded meaning in

COLE V WHITFIELD, or in any event COLE V WHITFIELD does not deal with a situation produced by exports.

(Continued on page 115)

ClT2/l/JL	114
Barley(2)

MR O'CALLAGHAN (continuing): So if I say this: protectionism

or, call it, economic advantage is produced by a

restriction upon exports or imports and if that

is done or achieved by the burdening of interstate

trade and commerce then it contravenes the section.

McHUGH J:  But in your definition you referred to the important

element of protection or the gaining of an economic

advantage to local industry from competition, did

you not?

MR O'CALLAGHAN:  Yes.

McHUGH J: Well,where is the competition here in this particular

case?

MR O'CALLAGHAN:  The competition, Your Honour, is constituted

by the interstate maltsters purchasing from border

growers and thus both taking out of the State the

commodity and taking out of the State at a lower

price than would be achieved if you banned that

trade. It is the competition provided by the

purchasing power of interstate maltsters to
individual growers.

If I could now go to COLE V WHITFIELD, (1987-1988) 165 CLR 360, the first passage I wish

to refer to is at page 391, at the last paragraph,

Your Honours or the Court there said:

The purpose of the section is clear enough:

to create a free trade area throughout the

Commonwealth and to deny to Commonwealth and

States alike a power to prevent or obstruct the

free movement of people, goods and

communications across State boundaries. Free

trade was understood to give "equality of

trade", which Mr McMillan (of the New South

Wales delegation) asserted to be the "one

grand principle involved in the whole of our

federation".

Then at the foot of page 392 the Court said:

(Continued on page 116)

ClT3/l/LW	115
Barley(2)

MR O'CALLAGHAN (continuing):

Attention to the history which we have

outlined may help to reduce the confusion

that has surrounded the interpretation

of s.92. That history demonstrates that

the principal goals of the movement
towards the federation of the Australian

colonies included the elimination of

intercolonial border duties and

discriminatory burdens and preferences

in intercolonial trade and the

achievement of intercolonial free trade.

As we have seen, apart from ss.99 and 102,

that goal was enshrined in the various

draft clauses which preceded s.92 and

ultimately in the section itself.

The expression "free trade" commonly

signified in the nineteenth century, as it

does today, an absence of protectionism,

i.e., the protection of domestic industries

against foreign competition.

Now I would .interpolate there, Your Honours, that

that, in our submission, is not an exhaustive

description of protectionism, but if it is

relevantly then we would say that protectionism

should be given an expanded meaning in the sense to

which I have previously referred.

McHUGH J:  But I have some difficulty with this notion of

competition in which - derived from the fact that

buyers offer lower prices.	How is that competition
for local industry?

MR O'CALLAGHAN: It is competition, Your Honour, because if a

person offers a lower price it will provide a

competition against a person who would seek to charge a higher price. That is, for instance,

if you have a minimum price. if you legislate for

a minimum price, you preclude the competition

provided by a person offering a lower price and

competition,or the absence of competition may well be a

thing which keeps prices high, and as appears from

the letter at page 50, what the complaint was, that because of these purchases by interstate maltsters,

there was obviously an adverse effect upon price

stability and price rates. Can I add, Your Honour,

that I do not want to bind myself to competition.

What we say is that if the design of the legislation

and executive acts is to produce an economic

advantage to intrastate trade which it would

otherwise not enjoy because of the presence of interstate

trade, then that would satisfy what we would say

is protectionism.

ClT4/l/FK	116
Barley(2)

MASON CJ:	Mr O'Callaghan, I cannot help feeling at the moment
that we are stumbling round in the dark. Surely there are many treatises written by economists which reflect
profound discussion of concepts such as free trade,
competition, protectionism, economic discrimination.
Now, are you in a position to refer us to discussions
of that kind?
MR O'CALLAGHAN:	I must confess I am not, Your Honour, and I

apologize for the failure to do it. It was simply

a matter of not having access to any libraries last

evening, but - - -

MASON CJ:	One would have thought one would have been looking
for access to libraries long before last evening.
MR O'CALLAGHAN:	Well, Your Honour, quite frankly, with respect,

we would say that it is a self-evident proposition

that protectionism includes protection against the

export of goods as well as the import of goods.

That is, if a State, in order to protect its local

industries prohibits exports, that is protectionism,

we would say, as a self-evident fact.

MASON CJ:	Well, if it is self-evident I do not understand why we are listening to argument about it.
MR O'CALLAGHAN:	Perhaps I put that too strongly, Your Honour. I was perhaps providing some reason for not referring
to a treatise, but I will certainly come, Your Honour,
to cases which say that in the context of Federation and State relations that the prohibition of exports
is viewed in the same way as the prohibition against imports.
DEANE J:	Mr O'Callaghan, that sentence you place so much reliance on, the purchasing of barley across borders by some
maltsters, do you read that as referring to the
purchases by Victorian maltsters of New South Wales
barley?  (Continued on page 118)
ClTS/1/PF	117
Barley(2)

MR O'CALLAGHAN:  Yes, Your Honour, inter alia.

DEANE J: Well now, is that not then simply a failure to

enforce part of the scheme and, in that sense,

a bit of a bootstrap job?

MR O'CALLAGHAN: Well, Your Honour, I do not -

DEANE J:  I mean, say for example, they failed to enforce

the scheme to stop purchases intrastate by the

Tooheys brewery, obviously that would be a problem that would keep prices down, but it simply would

reflect a failure to enforce part of the scheme

and therefore a doubtful basis of attacking the

validity of the scheme as a whole.	Do you follow
the point that is concerning me?

MR O'CALLAGHAN:  Your Honour, what I perhaps should clarify

is that what I read the letter at page 50 as

referring to are legitimate interstate sales;

not illegitimate interstate sales; not the product

of a failure to enforce - - -

DEANE J:	But from 1984 the scheme effectively envisaged the
vesting of all New South Wales barley, but it
was not enforce~ as I understand it, in relation
to interstate sales.
MR O'CALLAGHAN:	More accurately, Your Honour, the Board

specifically divested itself; it had some

mechanism whereby, having vested the commodity or

having said the commodity was vested, it divested

it, so the scheme had no effective operation until

after the letter at page 50.

DEANE J:  But the point I am raising with you is this: if

a gap in the scheme created a problem which is

plugged, it is difficult to see that the fact that

the gap was plugged can be taken as an attack on

the scheme itself.

(Continued on page 119)

CIT6/l/CM	118	MR O'CALLAGHAN, QC 6/6/90
Barley(2)

MR O'CALLAGHAN: Well, with respect, Your Honour, that, we would

contest, is a description of "plugging the gap".

What happened, as our learned friend, Mr Ellicott,

described yesterday, was that the States generally,

before COLE V WHITFIELD, both specifically in

South Australia for instance and Victoria where the

section provides for it, permitted interstate sales

to occur. It was only after the judgment in

COLE V WHITFIELD that it was not to plug a failure

to enforce,it was to take advantage of what was now perceived as the opportunity to prohibit interstate

sale and to validly prohibit them.

Previously, one would readily infer that the divesting of the malting grade barley was a decision

made by the Board because of its then view of

section 92.

DEANE J:	Do not let me delay you, but it does seem to me that
you are adopting the approach that you can test the validity of the scheme as a whole by, as it were,
reference to the step involved in plugging a gap in
the scheme as a whole.

MR O'CALLAGHAN: Well, Your Honour, I can only reply to that

again by saying if "plugging the gap" means the

proscription of interstate trade which was previously

permitted,that plugging is the step which contravenes

section 92 - - -

DEANE J:  But that is the way you put it. But that is not an

accurate way. Is not the accurate way to say,
"plugging the gap" means to make the scheme apply

indifferently to intrastate and interstate trade

as distinct from being a scheme that discriminated

in favour of interstate trade?

MR O'CALLAGHAN: Well, that may be a way of looking at it,

Your Honour, but perhaps I can come back to it at a later point of time and I will do so with some examples

I will endeavour to put. The - - -

BRENNAN J: Have you not really got to approach it on the basis

that this is a scheme of resale price maintenance

which takes as its subject the total production of

barley in New South Wales and to say whether a scheme

having that objective and operating upon that

commodity by reference to its production within the

boundaries of ~ State is antithetical to section 92?

(Continued on page 120)

ClT7/l/DR	119
Barley(2)

MR O'CALLAGHAN:  Yes. Your Honour, taken,

we would sa~ that resale price maintenance is

on its face a protectionist - - -

BRENNAN J: Well, I appreciate that you would say that because

you must say that consistently with your argument,

but this is where the Chief Justice's question

arises, can we please see something that will tell

us why it is that that is so?

MR O'CALLAGHAN:	Yes, well, Your Honour, I certainly shall not repeat to you the explanations I gave to the
Chief Justice, but I can only crave the indulgence
of the Cour~  if I do discover the perfect
text,  to seek the Court's leave to submit it by way
of a memoranda, having shown it to my learned
friends. But, Your Honour, as I still say I will
come to the American cases which impinge on that.

But, Your Honour, it is,though,taking your

example, and we say it is an important example because

it demonstrates the character of the Act which we say

is an Act essentially related to commerce, it seeks

the section guarantees it. It is not

to control, inter alia, interstate trade and commerce. freedom which

a regulation of an activity in the States which comes

within the exceptions, we would say, to the freedom of trade and commerce such as noxious foods, things

of that nature. It strikes at the very heart of the

trade and commerce between the States and because it is

applied equally, we say that	cannot defeat the
freedom.

DEANE J:  Would you say that price control was likewise

contrary to section 92? It is hard to distinguish

between it and resale price maintenance.

(Continued on page 121)

C1T8/l/JL	120	6 /6/90
Barley(2)

MR O'CALLAGHAN:  We would answer that probably yes, Your Honour,

but it may produce a somewhat different situation

if you could relate the price control to an entirely

regulatory aspect divorced from purely commercial

or economic con$iderations.

Generally we would say it would fall in the same

category as this Act but there may be situations

which I do not readily advert to.

At page 394 the Court said at the foot of the

page, in the middle of the last paragraph:

The history of section 92 points to the

elimination of protection as the object of section 92 in its application to trade and

commerce. The means by which that object is

achieved is the prohibition of measures which

burden interstate trade and commerce and which

also have the effect of conferring protection

on intrastate trade and commerce of the same

kind. The general hallmark of measures which

contravenes section 92 in this way is their

effect as discriminatory against interstate

trade and commerce in that protectionist sense.

There can be no doubt that section 92 guarantees

absolute freedom of interstate trade and

commerce from all interstate border duties and

other discriminatory fiscal charges levied on

transactions of interstate trade and

commerce.

The position here can be, in our submission,

illustrated as follows. If one accepts that it

was the interstate sales which was causing the

undesired instability, "plugging the gap''if you like,

Your Honour, if the State had simply enacted

legislation prohibiting export sales, said,

"We simply prohibit export sales. All growers of

barley in New South Wales shall be entitled to

sell and sell only intrastate", that is the

essential effect of what this scheme does but if
such an Act were promulgated we would say it would

be easily identified as one which is contrary to

section 92. Why, rhetorically it is asked?

It is because it burdens, prohibits indeed,

interstate trade and commerce for some perceived

economic advantage to the State.

Our submission is a discrimination against a person previously engaged in interstate trade and commerce and desiring to continue so by making

him, if you like, equal with a person who previously
never had and never intended to engage in

interstate trade. In our respectful submission,

ClT9/l/LW	121
Barley(2)

if discrimination has to be demonstrated, then if

you see legislation which precludes a group of

persons engaging in which they had previously

engaged in, per se that is discrimination against

them because they are unable to carry on what
they had previously carried on.

In that context also and in the context of

the questions in the case stated as to the trade
and commerce of the respondents another aspect
of discrimination against the third defendant,

Pacific Malting, is that they are now unable to

buy from the border growers of New South Wales or,

indeed, any other growers in New South Wales

except the Board, but their maltster competitors

in New South Wales are free to buy from the

border growers of Victoria. They are not burdened

as the third defendant is burdened in consequence

of this legislation and thus in a true sense

the legislation discriminates against the third

defendant in favour of the purchasing entitlements

of the New South Wales maltsters and gives them an

obvious competitive advantage.

The next passage I wish to refer to is at

page 398.

(Continued on page 123)

ClT9/2/LW	122
Barley(2)

MR O'CALLAGHAN (continuing):  There the Court refers

to the relationship between sections 5l(i) and 92,

and says in the middle of the page:

The consequence of reconciling the two

constitutional provisions in that way is

to treat the legislative power conferred
by section 5l(i) as essentially peripheral
in character. In our view, any acceptable

appreciation of the interrelationship

between the two sections must recognize

that section 5l(i) is a plenary power on a

topic of fundamental importance. That being

so, the express conferral of legislative

power with respect to interstate trade and
connnerce lends some support for the view

that section 92 should not be construed as

precluding an exercise of legislative power

which would impose any burden or restriction

on interstate trade and conunerce or on an

essential attribute of that trade and connnerce.

Obviously, the provision conferring legislative

power and the provision restricting the

exercise of legislative power sit more easily

together if the latter is construed as being

concerned with precluding particular types

of burdens, such as discriminatory burdens of a protectionist kind. That is not to suggest

that, if section 92 were construed in that

more limited sense of being concerned with

discriminatory burdens upon interstate trade

and connnerce, the relationship between

section 5l(i) and section 92 would be freed from

all difficulty. Upon analysis however, the

remaining difficulty would be largely superficial.

Certainly it would not be any greater and it

might be less than the difficulty of the

relationship between section Sl(i) and

section 92 which is attendant upon other arguable

constructions of the constitutional guarantee. The above concept of discrimination connnonly

involves the notion of a departure from equality

of treatment. It does not follow that every
departure from equality of treatment imposes a

burden or would infringe a constitutional

guarantee of the freedom of interstate trade

and commerce from discriminatory burdens. Nor

does it follow that to construe section 92 as

guaranteeing the freedom of interstate trade and

conunerce from discriminatory burdens would mean

that interstate trade and connnerce was

rendered immune from any regulation which did

not affect like intrastate trade. Such regulation

might not constitute a burden at all.

CITl0/1/CM	123
Barley(2)

And we would, with respect, interpolate there

that, and with respect agreeing with that proposition,

but to say also that, if the burden which is placed

upon interstate trade is protectionist or, in

any event, contravenes the section, then the fact

that it is also applied to the intrastate trade,

cannot save it. I continue:

Even if it did, it might not be discrimi~atory

in the sense to which we have referred. In

that regard, experience teaches that

Commonwealth legislation is often directed to

the regulation of all trade within the

Commonwealth's legislative reach (e.g., the

TRADE PRACTICES ACT 1974) or to the regulation

of a particular trade to the extent that it is

within that reach. There is far less likelihood

that such regulatory legislation will properly

be characterized as imposing a discriminatory

burden on the trade and commerce with which

it deals than is the case with State legislation

which singles out interstate trade and corm:nerce

for particular treatment. That is not to deny

that a Commonwealth law which is regulatory on

its face may operate so as to discriminate

against interstate trade and commerce. Even a

law which.applies indiscriminately to all trade

and commerce within the reach of Commonwealth

legislative power might, in some circumstances,

impose a discriminatory burden upon interstate

trade and commerce. Plainly, however, the
construction which treats section 92 as being
concerned to guarantee the freedom of interstate
trade and commerce from discriminatory burdens
does not involve the consequence that the grant
of legislative power with respect to interstate
trade and commerce is deprived of its essential

content.

The concept of discrimination in its application

to interstate trade and commerce necessarily

operation. A law will discriminate against

embraces factual discrimination as well as legal

interstate trade or commerce if the law on its
face subjects that trade or commerce to a
disability or disadvantage or if the factual
operation of the law produces such a result.

(Continued on page 125)

CITl0/2/CM	124	MR 0 1 CALLAGHAN, QC 6/6/90
Barley (2)

MR O'CALLAGHAN (continuing): And over the page the Court

goes on:

Once this is recognized, it is difficult,

indeed impossible, to deny that a Commonwealth

law realing with interstate trade could operate

in such a way as to work an impermissible

discrimination against interstate trade, in

particular the trade across State borders

originating in a particular -

I think that should read "State" -

For reasons already given, we should not

venture into this topic in any depth.	However,
we would add two cormnents.	The first is that

the possibility of factual discrimination

by a s.Sl(i) law applying only in respect of

interstate trade or cormnerce may well be eliminated

in the context of a national scheme constituted
by complementary Cormnonwealth and State

law applying, by virtue of their combined

operation, to all trade or cormnerce of the
relevant kind. The second is that s.92 will

obviously operate to preclude discriminatory

burdens being imposed upon interstate trade or

cormnerce by Cormnonwealth laws enacted pursuant

to other general heads of legislative power.

We would say, with respect to that, that of course

it would all depend upon what the law was. If the

States and the Cormnonwealth decided that it would

be in the national interest and the States' interest

to prohibit all interstate trade and cormnerce in a

particular legitimate commodity, clearly that would

be simply abrogating to the legislature powers that the CONSTITUTION denies them, and having said that,

I respond really to what Your Honour Justice Brennan

asked me yesterday as to whether if it were the fact

that the Connnonwealth and .the States were involved

in a scheme, would that make the position different,

and I really repeat my answer that it may, but it

does not arise in this case.

BRENNAN J: Let me just ask you a further supplementary

question, as it were, on that. If this were an

Australia-wide marketing scheme, assuming there

be Commonwealth power to implement it which required

the delivery of barley or which vested all barley

grown within the Commonwealth in a marketing

authority for a signle desk sales, would you have

any argument that section 92 applied to it?

MR O'CALLAGHAN:  Yes, we would, Your Honour. We would because

it would be striking down and destroying the

freedom of persons engaging in interstate trade from

doing so.

ClTll/1/FK	125
Barley(2)

BRENNAN J: That was really the point of the question

because that gives to section 92 the operation

which, in COLE V WHITFIELD, the Court was

concerned to reject,wa.s it not, and that is that

section 92 was	a source of an individual
freedom to trade

MR O'CALLAGHAN:  Your Honour, in that context, and perhaps

it is convenient if I do now deal with that

because we say that whilst it does not

confer any rights or - I think of the words

juristic entity - upon anyone, ~~ say that

none the less it protects individuals from

engaging and continuing to engage in interstate

trade and cormnerce, and the section gives them

the power to validly ignore the impugned

legislation or the legislation, or to seek the

judicial remedy to protect it, and in that

context, Your Honour, I would seek to refer to

the COARSE GRAINS case and to refer to a passage

in Your Honour's dissenting judgment in that

case, but on this point, we would submit,

entirely in line with what the authority of

this Court has laid down,and the passage appears

in 649, and Your Honours at page 649:

(Continued on page 127)

ClTll/2/FK	126
Barley(2)

MR O'CALLAGHAN (continuing):

Where a legislative or executive measure

operates to burden a particular transaction,

an examination of the validity of the measure

calls first for an examination of the

character of the transaction: is it part

of interstate trade, commerce or intercourse?

Interstate trading transactions - "commerce"

and "intercourse" are not presently relevant

are the subject of immunity, not antecedent or subsequent transactions except where the

burden imposed on an antecedent or subsequent

transaction invalidly burdens the interstate
transaction ..... The subject of immunity is

trade, not persons, although a trader who

engages in an interstate trading transaction

which is immune from an invalid burden is

entitled to the benefit of that immunity.

I respectfully agree with what Your Honours

Justice Mason -

as he then was -

and Jacobs said in CLARK KING:

"It is true that s.92 protects the trade of

individuals. If there is imposed an invalid

burden on trade commerce or intercourse among

the States, an individual can ignore the

legislative burden and he and any other person

interested can invoke the judicial power to

prevent the application to their interstate

trade and commerce of the invalid law. In

this way s.92 confers rights on an individual.'~

The individual rights which s.92 confers are

no more than rights to invoke the jurisdication

of the courts to enforce the immunity which

s.92 creates. It creates no new juristic rights.

you asked me, if there is State or federal legislation Now, Your Honour, in the context of the question

which proscribes or prohibits interstate trade and

commerce, then the persons who engage in that are

entitled to the immunity which the section gives them

to take the steps referred to. It again poses the

question, of course, as to what is the object of the

legislation and the effect of the legislation in

question.

BRENNAN J: It is the scope of the immunity.

MR O'CALLAGHAN:  Yes, well that, if I might say, Your Honour, 1s

saying the same thing a different way.

C1Tl2/l/PF	127	6/6/90
Barley(2)

BRENNAN J: It is just that you do not start with saying that

this man cannot export across the border. You start

with saying is the prohibition against exportation

across the border something which is offensive to

section 92.

MR O'CALLAGHAN:  Yes, Your Honour, though, with respect, it is, I

respectfully submit,much the same to say that the

individual has the freedom to trade given him by

section 92 and which protects him against an Act

which, of course, contravenes it.

McHUGH J:	But Mr O'Callaghan, what your analysis leaves out 1s
the concept of discrimination, and where is the
discrimination in this case?  The legislation prohibits
the New South Wales producer from selling to the New
South Wales maltster. It precludes the New South Wales
producer from selling to the Victorian or interstate
maltster.  The legislation does not discriminate between
those two items of trade.  So where is the discrimination?
MR ·O'CALLAGHAN:	Your Honour, in the example you have posed, I

accept for the purposes of this submission that there

does not appear to be a discrimination in respect of

those matters you have referred to, in the sense that
the interstate trader is placed in the same position

as the intrastate trader, and therefore it is said

there is no discrimination.

But we say that that is the consequence of an

Act which is protectionist in its nature, and that

McHUGH J:	Yes, but according to the doctrine of COLE V WHITFIELD
it is only protectionist because it is discriminatory.
The legislative or executive Act has got to discriminate in a protectionist sense against interstate trade.
MR O'CALLAGHAN:	Well, Your Honour, can I answer it this way?

McHUGH J: That is why I have great difficulty in seeing how you

can rely on COLE V WHITFIELD.

MR O'CALLAGHAN:  Yes well, I will perhaps talk about COLE V WHITFIELD

in that sense, Your Honour. If COLE V WHITFIELD had

been a case in which the preamble to the Act or the

regulations had said that in order to better the economic

position of the local industry of crayfish, we propose

to render liable any person who possesses undersize

crayfish, and that applies to everyone, intrastate,

interstate alike. Now, that would be clearly a

protectionist law, but upon the example Your Honour has

posed, would not contain the "relevant discrimination".

ClT12/2/PF	128	6/6/90
Barley(2)

MR O'CALLAGHAN (continuing):  We would say, that if COLE V WHITFIEL8

said that you have to have that discrimination before

the law contravenes section 92 then, with respect,

it is wrong. But we do not take it that they are

saying that, we take it as saying that if there is

a protectionist object and effect of the law

in favour of local trade, or to be achieved. by local

trade, inter alia by the burdening or prohibiting

of interstate trade and commerce, then that contravenes

the section.

MASON CJ:	But you do have trouble in putting that interpretation
on COLE V WHITFIELD.  Now, to look at the question
that Justice McHugh has raised with you from a slightly different angle, look at the passage
at the foot of page 402, where the Court is trere
criticizing the old criterion of operation test,
and it is about nine lines from the bottom. You
will see the sentence commencing a little more than half-way down the commencement of that paragraph:

First, in some respects the protection which
it offers to interstate trade is too wide.
Instead of placing interstate trade on an
equal footing with intrastate trade, the
doctrine keeps interstate trade on a privileged

or preferred footing, immune from burdens to

which other trade is subject.

In other words, what is being clearly stated there is

that the purpose of section 92 is to secure equal

treatment for interstate trade and intrastate trade.

MR O'CALLAGHAN:  Your Honour, well, perhaps I should endeavour

to reply to Your Honour's - - -

MASON CJ: Yes.

MR O' CALLAGHAN: - - - putting to ~ aa to COLE V WHITFIELD, What

we would say, Your Honour, is that the discrimination

test in COLE V WHITFIELD may be,and in many cases

might be decisive of whether or not the law is

protectionist. But, we submit, that COLE V WHITFIELD

does not mean, or with respect, if it does mean,

then it should be not followed in this case, that

the equal application of a burden to intrastate and

interstate trade cannot legitimize protectionist
legislation, because to do so defeats section 92.

And I will endeavour to return briefly to that,
Your Honour, but I just wanted to go back to

Justice McHugh's question in relation to discrimination

and just repeat what I had previously said, that it

may well be able to be said that there are other

aspects of discrimination arising out of this

legislation which would come within the definition

ClT13/l/JL	129
Barley(2)

of discrimination in COLE V WHITFIELD and that,

as I said, was firstly, the discrimination between

Maltsters in New South Wales being given a

competitive advantage over the third defendant's

position in Victoria and, indeed, other interstate

maltsters.

McHUGH J:	But this legislation would only have an incidental effect on that, would it not - it is only
incidental?

MR O'CALLAGHAN: Yes, well, I am just describing the effect,

Your Honour, that it has in a discriminatory

sense. Whether you have incidental discriminatory

situations is, perhaps, another question, and the

other aspect, of course, of the discrimination,

we would say, is that it is a contradiction in terms

to say that you are not discriminating in legislation

by precluding one class of persons doing something

by saying, "Oh well, that is all right because another

class of persons who were not doing it are treated

equally and you are the same as them", and that is,

in essence, what this case is about. It is saying to

a group of individuals, "You are no longer entitled

to the innnunity that you had previously enjoyed and

you are the basis" - and this is clear, it appears

from our learned friend's submissions, "the basis

that you have been denied that freedom is because

your position has been made equal, or apparently

identical, to that of per~ons - intrastate traders".

In short, the legislation converts you from an

interstate trader to an intrastate trader and because

the Sta~e is full of those you cannot complain.

BRENNAN J: But Mr O'Callaghan, COLE V WHITFIELD was

a case of keeping the playing field even between

sellers in competition in a market. Now, in this

case, the statute abolishes the playing field

altogether. It says, "There is no competition

between sellers in a market.	We do not have to
protect one group against another. You shall all	sell to the Board". So, therefore, in this case,
by the statute the whole basis of COLE V WHITFIELD
is removed. There is no competition as between the sellers. What then has COLE V WHITFIELD got to do
with this case?

ClT13/2/JL	130
Barley(2)

MR O'CALLAGHAN: Well, I think I could answer that by saying

it may well have nothing to do with it and that the

case is governed by the COARSE GRAINS.' case. but if

I can further answer that, Your Honour, in this way, that to say that you change the playing field

or remove the playing field by saying, "All sellers

are now acquirees", in our submission,cannot

remove the operation of section 92 to continue the

immunity it gave those persons who were engaging

in interstate trade. What the legislation does is

to say, "You can all sell that way" or, "You can't

sell that way at all nor can you" - and this is

the point that we make - "sell out there". It

removes the playing field from Victoria, if you like,

so far as deliveries of interstate trade and commerce

is concerned and in that sense - - -

McHUGH J:  I am sorry, is what you are saying, that you can sell

intrastate to the Board but a producer cannot sell

interstate?

MR O'CALLAGHAN:  I must rephrase that, Your Honour, because

what has occurred is that the vesting provisions -

but the effect is the same, it is as if you are

being told you can sell only to the Board intrastate

and, as I said before to illustrate that, if you

had an Act which said, "Well, look, we will just

stop interstate trade from New South Wales and so

that the only place you have got to sell is

intrastate", -w: would submit that that would be

an Act which contravenes the section even though

the position of intrastate and interstate growers is not discriminated against except to the extent

that it is the subject of prohibition.

The other passage that I was going to refer to in COLE V WHITFIELD was at page 408, in the middle

of the page. It says:

In the case of a State law, the resolution of the case must start with a consideration of

the nature of the law impugned. If it applies

to all trade and commerce, interstate and

intrastate alike, it is less likely to be

protectionist than if there is discrimination

appearing on the face of the law.

Now, if I could interpolate there: if in fact the

law is protectionist in the sense I described in
the hypothetical paraphrase of COLE V WHITFIELD -

if you said that the crayfish legislation was

palpably designed to protect the State industry,

then we would say that would fit within that paragraph.

Then, when the Court goes on to say:

But where the law in effect, if not in form,

discriminates in favour of intrastate trade,

ClT14/l/DR	131
Barley(2)

it will nevertheless offend against s 92

if the discrimination is of a protectionist
character. A law which has as its real

object the prescription of a standard for

a product or a service or a norm of

commercial conduct will not ordinarily be

grounded in protectionism and will not be

prohibited bys 92. But if a law, which

may be otherwise justified by reference

to an object which is not protectionist,

discriminates against interstate trade or

commerce in-.pursuit of that object in a

way or to an extent which warrants

characterization of the law as protectionist,

a court will be justified in concluding that

it nonetheless offends s. 92.

Then, at the foot of the page:

The five traditional examples of protection

of domestic industry which we gave earlier

are by no means exclusive or comprehensive.

The means by which domestic industry or

trade can be advantaged or protected are
legion. The consequence is that there

will always be scope for difficult questions

of fact in determining whether particular

legislative or executive measures constitute

discriminatory interference with interstate

trade. And acquisition of a commodity may

still involve the potential for conflict with

s 92. That problem does not now arise.

We would submit that i£ the facts of this case are

such that COLE V WHITFIELD does not seem apt to

deal with them then we would say that the contemplation

in that paragraph of the matter being a new problem

should be dealt with by reference to the principles

we have endeavoured to espouse and regardless of

whether it conforms to the principle of COLE V WHITFIELD

or not, we submit that the legislation in this

situation contravenes section 92. (Continued on page 133)

ClT14/2/DR	132
Barley(2)
MR O'CALLAGHAN (continuing): If I could take the Court to	some of the American cases to which my learned
friend Mr Doyle, the learned Solicitor-General
for South Australia, referred. The first case I wanted to refer to is PHILADELPHIA V NEW JERSEY, (1978) 437 US 617. That was a case which, as you have been told, concerned the importation and the
prohibition against the importation of waste for
land fills and the passage to which I desire to
refer is at 627.
McHUGH J:	I do not think we have got copies of it,

Mr O'Callaghan.

MR O'CALLAGHAN:  I am sorry, Your Honour. I had assumed

that there were copies by reason of they being

on the list of my learned friend.

MASON CJ:  Well,we do not seem to have it, Mr O'Callaghan.

I do not know whether the Solicitor-General for

South Australia has copies that he intended to provide us with in the event that he referred to

the case.

MR O'CALLAGHAN:	Yes, he has not, Your Honour,and in those circumstances, Your Honour, I can only arrange for
the list to be provided.  I must confess I had
made an unwarranted assumption apparently because
my learned friend did refer to some of these cases yesterday.

The passage to which I will simply refer

and read from in the case of PHILADELPHIA V

NEW JERSEY which we would adopt as apt to the

submissions we have been making - - -

McHUGH J: What is the reference, Mr O'Callaghan?

MR O'CALLAGHAN:  The reference is to 437 US 617, at pages

627 and 628 and the passage I read is: The New Jersey law at issue in this

case falls squarely within the area that the

Commerce Clause puts off limits to state

regulation. On its face, it imposes on

out-of-state commercial interests the full

burden of conserving the State's remaining

landfill space. It is true that in our

previous cases the scarce natural resource

was itself the article of commerce, whereas

here the scarce resource and the article of

commerce are distinct. But that difference

is without consequence. In both instances,

the State has overtly moved to slow or freeze

ClTlS/1/LW	133
Barley(2)

the flow of commerce for protectionist reasons.

It does not matter that the State has shut the

article of commerce inside the State in one

case and outside the State in the other.

What is crucial is the attempt by one State

to isolate itself from a problem common to

many by erecting a barrier against the movement

of interstate trade.

And there are in the case of H.P. HOOD & SONS, INC

VDU MOND, (1948-49) 336 US 525 - - -

MASON CJ:	We do have a copy of that, Mr O'Callaghan.
MR O'CALLAGHAN:	Your Honours, I could firstly take the Court

to page 531 and there in reference to the milk

litigation:

In that case, New York placed conditions and

limitations on the local sale of milk

imported from Vermont designed in practical

effect to exclude it, while here its order proposes to limit the local facilities for

purchase of additional milk so as to withhold

milk from export. The State agreed then, as

now, that the Conimerce Clause prohibits it from

directly curtailing movement of milk into or

out of the State. But in the earlier case,

it contended that the same result could be
accomplished by controlling delivery, bottling

and sale after arrival, while here it says it

can do so by curtailing facilities for its

purchase and receipt before it is shipped out.

In neither case is the measure supported by

health or safety considerations but solely

by protection of local economic interests,

such as supply for local consumption and

limitation of competition.

(Continued at page 135)

ClTlS/2/LW	134
Barley(2)
:MR O'CALLAGHAN (continuing):	And over the page at 532,

in the first paragraph:

But it laid repeated emphasis upon the principle

that the State may not promote its own economic

advantages by curtailment or burdening of

interstate corrnnerce.

The Constitution, said Mr Justice Cardozo

for the unanimous Court, rtwas framed upon the theory that the peoples of the several states must sink or swim together, and that in the

long run prosperity and salvation are in

union and not division." He reiterated that the

economic objective, as distinguished from any

health, safety and fair-dealing purpose of the

regulation, was the root of its invalidity. The

action of the State would "neutralize the economic

consequences of free trade among the states."

"Such a power, if exerted, will set a barrier to

traffic between one state and another as effective

as if customs duties, equal to the price

differential, had been laid upon the thing

transported."

And over the page at 535:

BALDWIN V SEELIG, is an explicit, impressive; ..

recent and unanimous condemnation by this

Court of economic restraints on interstate

corrnnerce for local economic advantage, but it

does not stand alone. This Court consistently

has rebuffed attempts of states to advance

their own corrnnercial interests by curtailing the

movement of articles of commerce, either into or
our of the state, while generally supporting their

right to impose even burdensome regulations in the

interest of local health and safety. As most

states serve their o'Wtl interests best by sending

their produce to market, the cases in which this

Court has been obliged to deal with prohibitions

or limitations by states upon exports of

articles of corrnnerce are not numerous. However,

in a leading case, OKLAHOMA V KANSAS NATURAL GAS CO.

the Court denied constitutional validity to a

statute by which Oklahoma, by regulation of gas

companies and pipe lines, sought to restrict

the export of natural gas. The Court held that

when a state recognizes an article to be a

subject of corrnnerce, it cannot prohibit it from

being a subject of interestate commerce; that

the right to enga8e in interstate corrnnerce is

not the gift of a state, and that a state

cannot regulate or restrain it.

CIT16/l/CM	135
Barley(2)

And at page 536 and referring to WEST VIRGINIA,

the Court said:

"Much of the business is interstate and has

grown up through a course of years. West

Virginia encouraged and sanctioned the development

of that part of the business and has profited

greatly by it. Her present effort, rightly

understood, is to subordinate that part to the

local business within her borders. In other

words, it is in effect an attempt to regulate

the interstate business to the advantage of

the local consumers. But this she may not do."

At 537, the second-last paragraph:

The most recent case of this kind, TOOMER,

involved, among other things, a South Carolina

requirement that the owners of shrimp boats
fishing off its shores dock at a South Carolina
port and unload, pack and stamp their catch
with a tax stamp before shipping or transporting
it to another state. It was considered that
the effect of this section of the statute was to

divert to South Carolina employment and business

which might otherwise go to other states, and

the Court pointed out that "the necessary

tendency of the statute is to impose an

artificial regidity on the economic pattern of

the industry." It was held that the Commerce

Clause was violated by such a provision.

And at page 538,	approximately the middle of the
page:

This Court has not only recognized this

disability of the state to isolate its own

economy as a basis for striking down parochial

legislative policies designed to do so, but

it has recognized the incapacity of the state

to protect its own inhabitants from competition

as a reason for sustaining particular exercises

of the commerce power of Congress to reach
matters in which states were so disabled.

(Continued on page 137)

CIT16/2/CM	136
Barley(2)
MR O'CALLAGHAN (continuing):	And over the page on 539,

the top of the page:

What fantastic rivalries and dislocations

and reprisals would ensue if such practices

were begun! Or suppose that the field of

discrimination and retaliation be industry.

May Michigan provide that automobiles cannot

be taken out of that State until local

dealers' demands are fully met? Would she

not have every argument in the favor of such

a statute that can be offered in support of

New York's limiting sales of milk for

out-of-state shipment to protect the

economic interests of her competing dealers

and local consumers? Could Ohio then pounce

upon the rubber-tire industry, on which she

has a substantial grip, to retaliate for

Michigan's auto monopoly?

Our system, fostered by the Commerce Clause,

is that every farmer and every draftsman shall

be encouraged to produce by the certainty that

he will have free access to every market in the

Nation, that no home embargoes will withhold his

exports, and no foreign state will by customs

duties or regulations exclude them.

We submit that those passages are apt to make good

our submission that it is a protectionist act within

whatever definition of the word - or it is an act

securing economic advantage to do what is being done

here, and is equally protected by a situation of

exports, as it is by a barrier against imports.

If I could now take the Court to the COARSE

GRAINS case. The other cases which had been referred

to in our submission are the PEANUT BOARD case and

the NORTH EASTERN DAIRY case, and in our list of

authorities we have identified the page references

to which we would refer the Court, but I will not

take the Court to those authorities now, I have

said I would prefer, if I could, to go to COARSE

GRAINS.

MASON CJ: What are you going to COARSE GRAINS for? What

is the proposition you seek it to support?

MR O'CALLAGHAN:  I go there, Your Honour, to show that, in

our submission, it is consonant with the principles

of COLE V WHITFIELD. If it is not consonant with

the principles of COLE V WHITFIELD, then we say it

should be preferred in this case, rather than

COLE V WHITFIELD, but our primary proposition,

Your Honour, is that what COARSE GRAINS case does

is to identify, we say, the defects of this

legislation and scheme in the same way we submit

the Court should do in this case.

ClT17/l/FK	137
Barley(2)

MASON CJ: What did it decide? What is the proposition

that you are relying on?

MR O'CALLAGHAN:  The proposition that we are relying on,

Your Honour, is that for anobject, the legitimate

subject of trade and connnerce to be vested or

purported to be vested in a State agency at

the very moment that it is committed to interstate

trade contravenes section 92, and the passage

that I wish to refer to, and I will be fairly

brief, is in the decision of, firstly, the

judgment of His Honour Justice Dawson, and at

page 664, His Honour said at the foot of

the page:

Compulsory acquisition cases have

required this Court to decide upon a number

of occasions where interstate commerce

begins and ends. It is clear enough that

it may begin before the movement of goods

interstate. The view has long been

abandoned that the compulsory acquisition of

goods does not infringe s.92 because it
operates upon ownership and not upon any

transaction in the course of trade and

commerce. This notion lay behind the decision

in the WHEAT case, but in JAMES V COWAN it was

rejected in favour of the view that s.92 is

infringed if the effect of an acquisition

is such as to interfere directly with an

individual's freedom to deal with his goods in

the course of interstate trade. On the other

hand, it is not an individual's freedom to

choose his method of trade, intrastate or

interstate, which is protected by s.92.

Before the compulsory acquisition of goods

can be said to infringe s.92, it must be

apparent that the expropriation constitutes

an actual interference with some act or

transaction in relation to those goods which

forms part of interstate trade or commerce.

But once that can be shown, the protection of

s.92 may be invoked for, as Barwick CJ

observed in NORTH EASTERN DAIRY CO ..... goods

actually committed to an· interstate transaction

cannot be expropriated. And it matters not

whose act or transaction is impeded,

whether it be that of the grower or vendor or

that of the purchaser, so long as it is part
of the flow or course of interstate
trade -

and commerce.

ClT17/2/FK	138
Barley(2)

MR O'CALLAGHAN (continuing): At page 668, His Honour said:

GRANNALL V MARRICKVILLE MARGARINE PTY. LTD.

and BEAL V MARRICKVILLE MARGARINE PTY. LTD.

established that the manufacture or preparation
of goods within a State was not itself an
act of interstate trade or connnerce, even if

the goods were kept separate and intended for

interstate trade. The same is the case with

goods imported with the intention of using
them in interstate trade or connnerce; the act

of importation is not itself an act of

interstate trade or commerce and is not

protection by section 92.

Reliance was placed by the defendenant -

and His Honour goes on -

But the case upon its facts was regarded as

one in which the transport of the timber

and the racking of it was merely a preliminary

to interstate trade and that fact was not

altered by the probability, very high as it

was, that the timber would end up in

interstate trade. In this case the barley was
committed to interstate trade at the time of

harvesting both as a matter of commercial reality

and as a matter of contractual obligation.

Its delivery to the plaintiff in the course of that trade was therefore protected by section 92.

And, Your Honour, if I could also refer to the judgment

of Your Honour the Chief Justice, at page 637,

where Your Honour said:

The barley accordingly became the subject

of interstate trade -

and it is the middle of the page -	at the very moment when the Order in
Council sought to vest it in the Bo~rd.
The consequence, so it seems to me, is
that the Order in Council is ineffective
to vest the barley in the Board. The
barley, because it becomes the subject of
interstate trade as soon as it comes into existence, is immune from acquisition.

And we submit, Your Honours, that that case and in

conformity with the decisions of the Peanut Board

and NORTH EASTERN DAIRY case, are applicable to the

situation we have here.

C1Tl8/1/JL	139
Barley(2)

Our learned friend, the Solicitor-General

for South Australia, submitted some written
submissions and appendices, and he indicated to the

Court that we did not make object to him making	them part of his submission, but we simply confirm
that we do not accept that what is contained therein constitutes facts upon which this Court should act,
and in that context we simply say there is a
debate - a debate that this Court cannot be expected, in our respectful submission, to decide as to whether marketing boards are good things;
whether they achieve the objects they state they are designed to achieve or not, and in that
respect, at appendix 3 of the material put in,
there is a reference to a New South Wales issues
paper on Coarse Grain Boards, and the second paragraph reads:

The conclusions reached	by this review
have clear implications	for the possible
amalgamation of the ABB	with the Barley
Marketing Board of NSW.	The final report
is expected to be - - -

McHUGH J: What page is this in the - - -

MR O'CALLAGHAN:  Page 18, Your Honour, of appendix 3. This

is a fairly recent document in distinction to
another document which is in the appendices,

which is 1961, I think, but it says:

The conclusions reached by this review have

clear implications for the possible

amagamation of the ABB with the Barley

Marketing Board of NSW. The final report

is expected to be made available in April 1990.

(Continued on page 141)

ClT18/2/JL	140
Barley(2)
MR O'CALLAGHAN (continuing):	We have now obtained a copy of

that report, or extracts from that report, which I

would seek to hand to the Court and refer the Court

fairly briefly to some passages in it. The passages

that I want to fairly briefly refer to are, firstly

on page vi which is the first page after the index.

There is a synopsis saying that:

The recommendations in this report fall into

four categories.

And it says:

Removal of regulation where this is producing

inefficiency.

Such inefficiency is largely internal to boards

rather than costs imposed on the rest of the

economy. This is evidenced by trading losses

and excess costs which are .then covered by

compulsory levies on trade between growers and

private competitors to boards. This category

will require decisions by the Government, in

particular on whether to:

- remove the power to acquire the crop through

vesting (or, less desirably, severely constrain

the circumstances when it can be used - And further, the second-last paragraph:

- the focus of any remaining State course grains

boards to be entirely commercial and with

appropriate structures and incentives at board

and management level to achieve this.

At the top of the next page:

- the Barley Board and the Oats Board to merge

with the Australian Barley Board (but without

the power to vest) and eventually become part

of a national Australian Barley Board, if one is

set up.

And over the page, at page viii there is "key

conclusions":

The following are some of the key conclusions

extracted from the body of this report.

And 3 provides:

Vesting is no longer relevant. Boards should

instead finance their grain acquisition in ways

which share the risk appropriately among all

market participants.

C1Tl9/l/PF	141	6/6/90
Barley(2)

And over the page to x, paragraph 29:

The power to vest should be removed, with

compulsory levies for industry service functions

of a public good nature being collected through

a marketing order.

If the power to vest is removed, the current

exemptions from the TRADE PRACTICES ACT would

be unnecessary and should be removed.

At paragraph 36 on the next page there is a reference

to offering a choice of marketing methods. And in 38:

In the interests of maximising the size of the

national and state "cake" we favour the removal

of vesting, and option (b) with a grain marketing

organisation and the AWB allowed to trade in

grain and oilseeds in NSW.

Again, when you go over the page there is reference to removing the vesting powers or strongly constraining

the circumstances. A similar reference in paragraph 6,

and over the page in paragraph 10.

MASON CJ:	What does all this have to do with us though,
Mr O'Callaghan?
MR O'CALLAGHAN:	Your Honour, I may paradoxically say not much for

this reason, Your Honour. It is put and referred to so

as to negate any reliance which our learned friend would

seek to place upon the material which they they have
put before the Court in the context of saying that the

objects which are sought to be achieved are desirable, and that there is no other reasonable way of achieving

them. We say that it is a matter of debate as to

whether or not it is a good oi a bad thins to have marketing boards, and that this is something which this Court should not be required to or, with respect,

decide. (Continued on page 143)

ClT19/2LPF	142	6/6/90
Barley(2)

MASON CJ:	But I do not think anyone has ever suggested
that we should decide whether marketing boards
are a good or a bad thing.
MR O'CALLAGHAN:	No, but Your Honour it has been put in a

number of submissions that there is no other

reasonable way of achieving what is sought to be

achieved by this scheme and I simply want to make

it clear that we submit that that is a very live

issue indeed and it is not something which the

Court should have to or would want to decide.

BRENNAN J:  But you do not suggest it could be achieved by

any method which did not involve some kind of

State acquisition of a crop?

MR O'CALLAGHAN: Well indeed, I do, Your Honour, that is

precisely what this report is emphasizing,that

the vesting powers should be removed.

BRENNAN J: Yes, I should have put it another way: that the

object of the scheme is not to attack interstate trade, as such, but to maintain prices?

MR O'CALLAGHAN: Well, Your Honour, I hope I am not being

remiss in replying to that in this way, that the

object of the scheme is to raise prices by

proscribing interstate trade and cormnerce and we

say that is an object which is not a legitimate

object. There were references to what I will

describe as the onus of proof by, I think, our

learn·ed friend, the Solicitor-General from New ·

South Wales, and we would simply refer to the

NORTH EASTERN DAIRY case at page 608.	We refer
to the middle of the page:

The defendant's case was that it was for the

legislature to choose the method of regulation

which it thought necessary or desirable.

This is to disregard the constitutional

injunction as it has been interpreted by the

Court. It is for the defendant to show that

the regulation is permissible and, to do so,

it must satisfy the Court as a matter of fact

that the method of regulation selected, because
it protects public health, is a reasonable
regulation of interstate trade.

And at the foot of the page:

As the defendant has failed to show that the
discriminatory mode of regulation selected

is necessary for the protection of public

health, it is in my judgment not a reasonable

regulation of the interstate trade in

pasteurized milk.

CIT20/l/CM	143
Barley(2)

·.,Now.all we say here, Your Honours, is -i:-ha1: the evidence

here, in our submission, demonstrates that the

burdens which the legislation places upon

interstate trade and connnerce are in contravention

of the section and we would therefore ask the

Court to answer the questions in the case stated

in the light of that finding. I should mention

that looking at the material that has been put in

by our learned friends, it would seem, and we would

submit that they put it in on that basis that it can be

taken as the case, that approximately 47 per cent

of malt produced in Australia is produced in

Victoria, and a little bit less than 30 per cent

in New South Wales. The interrelationship of trade

in those two States and the interrelationship of

trade in barley, the prime ingredient of malt, is
therefore relevant and we say in the context of

the problems which the third defendant have and

in the context of whether or not such an effect on

him would be incidental and upon the other maltsters ·

in Victoria.

Your Honour, subject to our, if necessary,

seeking the leave of the Court to submit a memoranda

of any treatise which is relevant in the context that

Your Honour was discussing, they are our submissions.

(Continued on page 145)

CIT20/2/CM	144
Barley(2)

MASON CJ:  Thank you, Mr O'Callaghan. Mr Ellicott.

MR ELLICOTT:  Your Honours, although they may seem minimal at

the beginning, I just wanted to put in their proper

context some statements in my friend's submissions -

the respondent's submissions - because in the long

run they may reflect on the application of basic
principles. First of all, in the submission l(i):

the date of vesting of the product was 20 November 1985

not 1 October 1988.

MASON CJ: What is that date?

MR ELLICOTT:  20 November 1985 - that is the date when the

vesting took place. What happened in 1988, of course,

was that the Board made it clear that it was not

going to divest it. In l(iv), on page 2, it says:

prohibiting the respondent maltster and

other maltsters from dealing with the

respondent growers -

and then it says -

and other growers and thereby engaging

in interstate t~ade and commerce.

Well, that of course, ·as a broad statement, is not

correct. They still can engage in interstate trade

and commerce. What they cannot do is buy barley

from growers in New South Wales. The importance of

that I will emphasize later. Then, (v):

prohibiting a number of individuals including

the respondent growers from continuing to

engage in the interstate trade and commerce

they have engaged in for many years passed.

I pointed out to Your Honours, and I do not think the interstate transactions were accepted by

section 5(8) of the 1927 Act. On the question of

onus I would submit that the passage that my friend

just read is not relevant to the overall onus. It

is quite clear that in the Court those who contend

that section 92 strikes down legislation have the

onus and it is in that general sense that I would

have thought that those submissions had been put

and we support the submissions that have been put by the Solicitors-General in that respect but may I simply add that we would apprehend that this case

is not going to depend on questions of onus; that

the Court will be able to come to a conclusion based

on the material before it and we, of course, would

say that the Court would come to a conclusion in

favour of the validity.

ClT21/l/DR	145	6/6/90
Barley(2)

Your Honours, could I make these general statements about the respondents' submissions, that

their submissions are based on two hypotheses which

are no longer accepted. Those are that section 92

guarantees the individual ts freedom to trade in

interstate trade and commerce - and I emphasized this

in our submissions in-chief but it seems to have been

overlooked by my friend that that is a very basic

proposition that has been put aside and it is basic

to an understanding of the principles that have

devel9ped out of COLE V WHITFIELD.

Another aspect of it is this proposition which

has also been put aside: that interstate trading by

individuals - that is, by individual traders - is

a necessary part of the concept of interstate trade

and commerce under section 92 of the CONSTITUTION.

That is to say that it does not any longer follow

that because an interstate trader is impeded from

engaging in his interstate trade that that is

necessarily inimical to section 92. That proposition,

we would submit, has been put aside again as a result

of the decision in COLE V WHITFIELD.

McHUGH J:  But it never was correct as an absolute proposition,

was it?

MR ELLICOTT: Well, with respect - - -

McHUGH J:  I mean, the bankrupt and other people could be

excluded from trade.

(Continued on page 147)

C1T21/2/DR	146	6/6/90
Barley(2)

MR ELLICOTT:  Yes, but once it was found, for instance,

in COURSE GRAINS, that a person was engaged in

interstate trade and commerce and a law descended

on that interstate trade and corrrrnerce and prohibited

it, then the court decided under the old

principles that that was offensive to section 92

and an aspect of that was, we would submit, that

the court was really saying that the individual

trader has a right and once that right was

exercised in relation to a particular trading

activity, that that trading activity could not -

it might be regulated in some way but it could

not be prohibited. In other words, it could not

be the subject of a vesting provision that took

the product out of the reach of the interstate
trader if it purported to do so at a time when

it was corrrrnitted to interstate trade. That is the

sense in which I put that proposition and we

would submit that implicit in COLE V WHITFIELD,

as expounded in CASTLEMAINE TOOHEYS, is the

acceptance of the view that section 92 was concerned

with the public interest in interstate trade and

that the rights of individuals to trade in a

product may be taken away provided the law is

not discriminatory in a protectionist sense.

Now, the necessary rejection of these two

hypotheses can perhaps be best illustrated by the

views expressed by one of the great exponents of

that earlier view and that is the view as

expounded by Chief Justice Barwick in

UEBERGANG v AUSTRALIAN WHEAT BOARD, (1979)

145 CLR 266, and if I can take Your Honours to

some passages.

MASON CJ: What is the purpose of this, Mr Ellicott?

MR ELLICOTT: 

The purpose of this, Your Honour, is to remind

Your Honours that - and I am not suggesting
Your Honours need, and particularly Your Honour

the Chief Justice, to be reminded of -

MASON CJ: Is 

it reminder only that you have in mind?

MR ELLICOTT: 

Your Honour may not need to be reminded of these passages.

MASON CJ: 

No, I do not think I do.

MR ELLICOTT: 

But there are some aspects of the passage that

reflect the consequence of the view that the public
interest aspect of section 92 is the dominant aspect.

For instance, can I take Your Honours - the passage in general flo"WSfrom pages 287 to 293 and flows

with rhetorical splendour, may I say, but it refers

to Your Honour the Chief Justice's insistence that

ClT22/l/LW	147	6/6/90
Barley(2)

section 92 was concerned with public interest

matters but it then sought to expound what

was the effect of that view and I would submit

that the effect of it is properly expounded by

the former Chief Justice.	At the foot of page 291
His Honour said:

But, seemingly, what is meant in the

judgments to which I have referred is that

there is some public interest or that there
are public interests which surpass the

public interest in the maintenance of the

freedom of interstate trade, commerce and

intercourse between the States and that

such public interest or interests attract

legislative power which is paramount over any

right of the individual to ignore laws which

impair his freedom to trade or move or

communicate interstate. If the proposition is

true, it is true for each State as well as for

the Commonwealth. The public interest so

envisaged will include that of the individual

States and will not necessarily be the

public interest of the Commonwealth or that of

other States. To make the Point, a State could

on this view for the benefit of its wheat

farmers, as representing a public interest of the State, prohibit the sale out of the State

of locally grown wheat, particularly at a time

when foodstuffs in that State are in short

supply. Such a result would fly in the face of

the decisions of the Privy Council and those of this Court of which the Council approved.

That is in the context of a discussion which had

been going on, of course, in CLARKE KING and in

this case as to whether the wheat acquisition Acts

were valid or not; CLARKE KING having decided that

they were, this case having a further look at the

question, but in the context of whether any evidence

could be brought. (Continued on page 149)

ClT22/2/LW	148	MR ELLICOTT, QC	6/6/90
Barley(Z)

MR ELLICOTT (continuing):  But the notion that was involved

in the view that one could look behind the
embargo on interstate trade was that one could

see it as regulatory and, for instance,

Your Honour the Chief Justice and Mr Justice Jacobs,

at pages 306 and 307, developed a notion that

was different to that of the other members of the

Court and a notion which might be thought now

to be more consistent with what was said in

CASTLEMAINE. And, Your Honours said this:

The evidence which we would regard

as relevant in determining the validity

of the present legislation would be such

material as would enable the Court to

determine whether or not the restrictions

which the legislation imposes upon interstate
trade are no greater than are reasonably necessary in all the circumstances. For

example, it would be relevant to establish
what are the goals sought to be attained
by the restrictions; how these may be
weighed against those restrictions and
whether they can be attained by other means
which do not involve such onerous restraints

upon traders.

Now, that is the context of a Australia-wide wheat

acquisition scheme. Now, the translating that into

COLE V WHITFIELD and post-COLE V WHITFIELD, and

to what Your Honours said in the passage that I

referred Your Honours to yesterday in CASTLEMAINE

TOOHEYS, that is really the test which is now caught

up in the overall test, unlike in the United States,

That is now the test, we would submit, that this Court is saying it applies. In other words, one looks at the alleged burden and says, in

determining whether it is, for instance, discriminatory

in a protectionist sense, "What are the goals sought

by the restrictions; how these may be weighed

against those restrictions; and whether they can be

obtained by other means which do not involve such

onerous restraints", and that last part of the

sentence, of course, is very significant in the
context of post-COLE V WHITFIELD discussions of this

matter.

The same debate is to be found in NEDCO, at

an earlier stage, and it illustrates - - -

McHUGH J:  Mr Ellicott, these things are said in CASTLEMAINE.
Why is it necessary to go back to UEBERGANG and
NEDCO?

ClT23/l/JL	149	6/6/90
Barley(2)

MR ELLICOTT:  Your Honour, they are not said explicity in

CASTLEMAINE, so far as I could find. That is to

say, it was not said that the public interest factor as dominant was not said explicitly in CASTLEMAINE, but implicit in CASTLEMAINE and

implicit in COLE V WHITFIELD is the rejection of

those notions.

Now, I may be just telling the Court what it

already knows and what it already understands, but I

feel I have to say that to the Court to make sure

that that is a point of view which the Court

understands we are putting and if the Court should

not agree with it. I would apprehend the Court

does agree with it, but in the other case of NEDCO,

where the provision actually vested the milk once

it became available for human consumption - that was

section 12 - in the Milk Board, on the one hand, the

former Chief Justice looked as it as offensive to

section 92 because it vested the product in the

Board and destroyed the interstate trade, whereas Your Honour the Chief Justice saw it in terms of
regulation and protectionism or discrimination.

That only emphasizes, if it needs emphasis,

phase where those two propositions that I put to	that we have gone into a new -quite distinctly new fundamentally a flaw in my friend's argument that he
has not faced up to the fact that they have been
swept aside, and he seeks to go back to COARSE
GRAINS. We cannot go back to COARSE GRAINS because
COARSE GRAINS was still- although, it was decided by a bench which consisted of some of Your Honours and some of Your Honours may have formed a majority in
it, nevertheless it accepted the pre-COLE V WHITFIELD
view of section 92, and COARSE GRAINS cannot be now
cite4, as my friend sought to do it, in order to
justify the rights of individual traders.

(Continued on page 151)

ClT23/2/JL	150	6/6/90
Barley(2)

McHUGH J:  But analyse this case in terms of COLE V WHITFIELD.

If section 56 had said that all producers must sell their product to your client, surely that would

offend section 92. It would discriminate against

interstate trade, would it not?

MR ELLICOTT:  Well, if it says "must sell" as distinct from

"vest", Your Honour, I would submit that would be

very arguable, as to whether that did offend

section 92, provided it was not discriminatory

because discrimination has to lie at the whole

basis of the test, and if it is not discriminatory;

if it is saying "You shall not sell in any trade,

except to the Barley Board", then it is no
different in substance to saying, "All grains shall

vest in the Barley Board", but.if Your Honour sees

a difference, then it is not this case.

McHUGH J: Well no, I do not know that I do see a difference, and maybe if you look at it that way, then there is

discrimination, because it discriminates against
interstate trade; it prohibits it absolutely. It
says, you can continue on in intrastate trade, but

there can be no interstate trade.

MR ELLICOTT: Well, what it is saying is, you shall sell to
this Board irrespective of whether you would have

liked to have committed your barley to intrastate trade or interstate trade. It is not only saying

you shall not sell to the maltsters in Victoria,

it is also saying you shall not sell to the maltsters

in New South Wales, and in that sense it is

non-discriminatory and therefore it meets the
requirements of a non-discriminatory law within

the meaning of the decision in COLE V WHITFIELD.

McHUGH J: Well, that depends how you characterize it. I mean,

it allows you to make an intrastate sale; it does

not allow you to make any interstate sales.

MR ELLICOTT: Well, Your Honour, we would submit that has

caught up in it that proposition too much, because

what it is truly doing is saying,"You have many
options and in relevant senses you can commit your

barley to interstate trade, you can commit your

barley to intrastate trade. Now, henceforth you

shall sell to this Board." Now, that is simply

taking away all the options that you have except

one. Now, the fact that it happens to be an

intrastate transaction is, in our submission, not

to the point in determining the question of

discrimination, but in any event, we would submit

that in terms of vesting, it is abundantly clear

that, in this case, and we would submit my friend
has not satisfied Your Honours of this, the

vesting here is completely non-discriminatory.

ClT24/l/FK	151	6/6/90
Barley(2)

Now, in a sense, what my friend would contend

for would be that it was appropriate to discriminate

in favour of interstate trade, but of course the whole

approach in COLE V WHITFIELD was designed to

avoid this, that there would be no discrimination,

and, again we would submit my friend has failed to

establish that, in operation,it is discriminatory

in a protectionist sense. And might I just put

this: that the shoring up of prices by using the collective bargaining power of the Board is not

protectionist in the relevant sense. What it is

doing is this. First of all, what it is not doing:

it is not inhibiting interstate traders coming

into the State, that is clear. If it does anything

it makes the local producers better able to compete

through the Board. In other words, it improves
their bargaining power. That is the purpose of the

legislation and, of course, this collective

bargaining that they are able to bring to bear has

not been seen to be inimical to the trade practices

law and that is some indication of the view that

the legislature of the Commonwealth takes of the

public interest in relation to this; that these

marketing schemes have been exempted under

section 51(1) of the TRADE PRACTICES ACT.

McHUGH J: Well, not in terms have they. It is a result of 51.

I mean, 51 in terms does not exempt them, it just

exempts acts done under the authority of State

parliament.

(Continued on page 153)

ClT24/2/FK	152	6/6/90
Barley(2)

MR ELLICOTT:  Yes, Your Honour, I appreciate that, but one

hesitates to think.with the - - -

McHUGH J: In fact the Conunonwealth is not here, that might be -

MR ELLICOTT:  - - - interest in the Federal Parliament, that

they did not have in mind, amongst other things,
and very close to the top of the mind, primary

marketing schemes and one can, for what it is worth,

deduce from that that the Parliament does not regard

this collective bargaining as against the public

interest, otherwise, no doubt, it would have been

subjected to the provisions of sections 45 and

following of the TRADE PRACTICES ACT. Again, if

all the growers in southern New South Wales combined
to get a better deal from Victorian maltsters, as
being within an area and being able to set up a

board, there would be nothing inimical to section 92

in that. They would simply be exercising their

bargaining rights, their bargaining power, their

capacity together to demand the higher price. Again,

as an aspect of whether this is protectionist, the

inability of Victorian maltsters to buy barley from

New South Wales growers is not a discriminatory act, because, although my friend has said this a couple

of times -r submit it is not correct - New South Wales

maltsters cannot do so either. They cannot buy from·

New South Wales growers. They have to buy -if they

are going to buy New South Wales barley, they have

got to buy it through the Board. It is

non-discriminatory in that sense. So that the

combination of market power through a board, to get

the best price in interstate trade, is not
discriminating against it but enabling the parties
to it to compete in that trade more effectively and

not from positions of dominance or weakness, as the

case may be.

So really when one analyses what is happening

with the scheme, what it is doing is not inimical

to free trade, it is supporting it. It is putting

a small grower in New South Wales is not impeded in	the parties in a truly competitive position where
his trade, because he is facing certain large
institutions, four of them apparently.in the malting
industry when he wants to sell his barley. You
can imagine if these, as they do with wool - if
people from various corporations went around the individual barley growers, getting contracts, then
it would not be very difficult to force some of these growers into a position where they felt, because
they were growing their barley at Coonabarabran or
somewhere like that, in the middle of New South Wales,
force them into a position where they had to accept
some low price if they wanted to get rid of it.

CIT25/1/CM	153	MR ELLICOTT, QC 6/6/90
Barley(Z)

McHUGH J:	But ultimately the benefit is for the consumer;
that is the other side of the coin.

MR ELLICOTT: Well, yes, but the consumer, in this case, is

this large corporation.

McHUGH J: No, it is tho$e wh9 buy bottled bee~, which - - -

MR ELLICOTT: Well, if you buy a bottle of beer, it is ~oing

to cost you another four cents or something, per -

I am not sure whether is was a gallon or a litre,

I am not sure what it is, Your Honour - - -

McHUGH J:	A bottle, I think.
MR ELLICOTT:	- - - but it is tucked away somewhere in those

statements Mr Doyle put in, the Solicitor for

South Australia. But,in our submission, on analysis

it really is supportive of free trade; it is not

inimical to it.

BRENNAN J: Well that is, perhaps, an economic judgment and

if it is and if it be relevant to the formation

of a view as to the application of section 92, then

it may be necessary for us to acquire some

economic expertise.

MR ELLICOTT:  Yes. Your Honour, I would submit that there

are some areas of expertise in economics that are

within Your Honours' grasps.

BRENNAN J:	Or within our acquisition.
MR ELLICOTT:	Yes.
BRENNAN J:	The question is the manner of acquisition.
MR ELLICOTT:	But within Your Honours' mental capacities.

Not just by reading things but without going through

great tomes of economic literature to come to a

view about this on basic understanding of an economic	situation. For instance, what I have just described,	I would submit, is not a difficult economic proposition,
and I am not saying that Your Honours need - I am
really saying the opposite - I am really saying that
Your Honours are quite able to cope with this without any economic evidence. In fact, once the Court gets into it there may be dangers, but there may be
dangers in forming views based on what particular
people might write in relation to the subject and it
may lead to this Court ultimately saying, or the
courtssaying that when section 92 is around we have
to have a royal corrnnission into these r;tatters in order to come to a conclusion.

CIT25/2/CM	154	MR ELLICOTT, QC 6/6/90
Barley2)

MASON CJ:	I do not think there is any danger of that,
Mr Ellicott.
MR ELLICOTT:	I beg Your Honour's pardon?
MASON CJ:	I do not think there is any danger of the Court saying th
MR ELLICOTT:	I do not think there is either, Your Honour, but

it will be because common sense will prevail, and we

would submit that - - -

MASON CJ:	But common sense does not necessarily entail that
you shut your mind to anything outside.
MR ELLICOTT:	No, I do not suggest that, but I do suggest that

once you get particular economic theorists saying

things about matters and you have to form a judgment,
then the Court may be in an invidious position

because it forms a judgment which, at some stage, may

be the subject of reflection by some parliamentary

committee or some other academic which is able to point

to the fact that that particular view overlooked some

other proposition which is well held in economic theory.

I am only referring to this matter because I would submit

in this case the ultimate decision here does not need

that.	But I am not opposing Your Honours looking at
such material if Your Honours wish to.	I only potnt to.
what, l would submit, are some dan~ers.

BRENNAN J: Mr Ellicott, for my part, I am having difficulty at the

moment in appreciating whether or not it is consistent

with Australia being a free trade area for the purposes

of section 92 and the passages in COLE V WHITFIELD we

have already referred to, if the production of a

commodity within a State is made the subject of a

selling cartel. I simply do not know the answer to it.

MR ELLICOTT: Well, Your Honour, the answer, we would submit, has

to lie within the notions that this Court expounded

in COLE V WHITFIELD. Now, Your Honour referred to

the "playing field", and really, does COLE V WHITFIELD

have anything to do with this?

Well, we would submit that the playing field is

still there. It is just that the players have been changed in the sense that instead of all the barley

growers in New South Wales it is the Barley Board.

But the field is still there of interstate trade and

commerce, and if interstate trade and commerce is

a concept of trade and commerce and not the preserve

of individuals as the Court was minded to see it in

days gone by, then, we would submit, it can be readily

seen that free trade in the sense in which that was
discussed in COLE V WHITFIELD is not affected by a
scheme such as this because all it does is to empower
the Barley Board to do collectively what those other

growers could do individually, but gives them a greater

capacity to do it and to achieve it on the playing field.

ClT26/1/PF	155	6/6/90
Barley(2)

McHUGH J:	But is that right, because what it does is it prevents
the producers from engaging in interstate sales, and it enables somebody who is not a producer, but a marketing agent to sell?

MR ELLICOTT:  Yes. Now, immediately Your Honour says that, Your

Honour says something that might suggest that it is

discriminatory, and it prevents them from selling in

interstate and intrastate trade. And what lay at the

basis of the problem was the protectionist attitude

brought about by tariffs, et cetera, as Your Honours

have expounded it in COLE V WHITFIELD. And now that

that has been exposed as the real basis upon which

section 92 is supposed to have been developed, then

a non-discriminatory law is, on its face or in effect,
does not ex hypothesi affect this free trade area

because what was seen as the danger to it was

protectionism. And simply to say that henceforth

we, the growers, and after all they are the ones who
decide it under an electoral system, we the growers
will operate through a board in New South Wales -

to say that is simply to say we will do collectively

what otherwise we would have done as individuals.

And that is their choice. It gives them their market

power and their market strength.

McHUGH J:	But it is not their choice in a real sense because
some people are having the will of the majority imposed
on them.
MR ELLICOTT:	Yes, but that is - you could have a law which said

everybody had to agree, but that is simply a democratic

method which is appropriate, we would say, an appropriate

way of achieving the object of having - whether it is a

simple majority or a two-thirds majority or whatever

it is, of achieving a result that growers henceforth

will operate in this way. That is seen as in the public

interest, but also in the interests of the growers.

But it is not impinging on free trade.

(Continued on page 157)

ClT26/2/PF	156	6/6/90
Barley(2)

MR ELLICOTT (continuing): A trade goes on; interstate trade

and commerce is still there. It is no longer the

preserve of individuals; it is a public interest idea. The public, through its Parliament, and in

this case through its growers has decided that

henceforth interstate trade and commerce which is

still free shall be conducted with these players

on the field. That is to say, the Board - - -

McHUGH J:  Mr Ellicott, the problem I have is that it is a

different type of interstate trade.	It is now
interstate trade between a marketer	and buyers.
There can be no interstate trade under	this legislation
between producers and buyers.

MR ELLICOTT: Well, these things happen from time to time in

the market-place. People go in and go out; the players on the field change and the question is,

if they change by some economic circumstance -

clearly enough that is not an infringement of

section 92 - does it matter that they do so simply

because under a State law the growers, the previous

players on the field, decide that they will,

through their electoral system, henceforth play the

game collectively and for a very good reason? That

is to say, they can stand up to those four

corporations. They can demand a higher price;

that their position of weakness is removed and a

position of strength is gained.

Now, that idea of removing weakness is basic

to freedom of competition because it is not right

that dominance be used against the weak. That is

implicit in the TRADE PRACTICES ACT but it is

also, we would submit, an aspect which helps to

justify this as non-protectionist but to be seen as simply putting the growers of New South Wales

in a position, whether it barley or something else,

to have the market power to deal in their product

which they can gain by acting collectively. On

that basis anybody who, at the fringe, who might

otherwise sell interstate to get some quick early

benefit but yet to take the advantage of the research

and all the other marketing facilities, if that

person does want to sell interstate, to say to that

person, "You shan't for the common benefit of all"

is only incidental to the whole of the scheme.

It is not to be seen as the scheme. Hy friend

puts it forward as if the scheme is to stop people

from engaging in interstate trade. It is not that

at all. The scheme is, as we have already described

it, to enable the growers to get the best price

through a collective system.

DEANE J: But.does not that really make the point that what

COLE V WHITFIELD has done is to move section 92

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out into, as the economists put it, the real world

and away from legal formula. Now, that means

in a case such as this you must look at all the

aspects of it, difficult though it may be, and you

cannot give an unqualified answer in that if, for

example in this case, it emerged that the Board,
which is a State instrumentality, was selling the

barley to New South Wales brewers at half the price it was selling it to Queensland brewers to give the

New South Wales brewers an advantage, that executive

act could well bring down this whole scheme.

MR ELLICOTT:	Yes. Subject to the submissions I put yesterday, yes, Your Honour. That is to say that it is
protecting it against - - -

DEANE J: Which really means we have passed beyond the realm

of deciding these questions by reference to some

perceived legal formula. "Wh.etherit be criterion of

operation or even protectionist in a discriminatory
sense, it is what the thing is about that one has

to look at now.

MR ELLICOTT:	Yes, well, Your Honour, I am unable to accept the proposition as a counsel making submissions
that it is passed beyond COLE V WHITFIELD and
discriminatory in a protectionist sense because
that seems to be - - -
DEANE J:	I was not suggesting that that was not the precise
or the appropriate legal statement. What I was suggesting is that we would be really back in old
times if that was then adopted as a legal formula
which you then tried syllogistic expansions and
restrictions of. Ultimately you would end up with
something that was as unreal as what existed 15
years ago.
MR ELLICOTT:	Your Honour, it would mean, as somebody has said, that the text was no longer the test and that, of
course, would - - -

MASON CJ: That might attract another response.

(Continued on page 159)

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MR ELLICOTT:  Yes, Your Honour. One must not allow and

we would submit - not that this is necessary
to this case - but one must not allow the
formula in COLE V WHITFIELD to become a piece of
statute law otherwise it will not have the

necessary growth element in it to encompass

differing situations. If Your Honour is putting

that to me then I would not want to submit

otherwise. But because it is a legal test, in a

sense, one always has to put one's finger on the

discriminatory nature of what is haopening,

whether it is in the law, or in the operation of

the law and the protectionist character of it and

in one sense the most difficult aspect of

COLE V WHITFIELD is to understand what is meant

by protectionist and that is why at the outset of

our submissions we saw it as something that stood

at the border and said, •~e are trying to protect

you against interstate trade coming into the

State'', because that was the notion that lay behind

section 92. It was not thinking in terms of the

trade going out of the State. Now, if it is to

encompass both then so be it, but we would submit

that it is not this case. The notion that it stops the trade from southern New South Wales to the maltsters in Victoria is not inimical to

section 92 because when it is analysed it is

part of a scheme and that scheme is not protectionist

in a discriminatory way and is, we would submit,

not protectionist at all.

Your Honour, as to the American cases, we

have not referred to them. We had apprehended that

Your Honours had looked at them fairly closely in passages that I read yesterday and I refer in

particular to the conclusions which Your Honours

drew at pages 382 and 383 of CASTLEMAINE TOOHEYS

because - - -

MASON CJ: Yes, I do not think we looked at the export cases

though, Mr Ellicott.

MR ELLICOTT:  No, but nevertheless we would submit that the

exposition in those two paragraphs, pages 382 and
383, place the American cases in the context in
which they ought to be put, with respect, having

regard to this Court's decision in COLE V WHITFIELD

and, indeed, what they do is - perhaps if I could

middle of the page:  just quickly refer to them - at 382, in the

It is evident that the American approach

differs from that laid down by this court in

COLE V WHITFIELD. First, the American approach

may well involve the adoption of a rule that

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legislation which imposes a burden on interstate

commerce is invalid unless it serves a

legitimate State interest. According to

COLE V WHITFIELD, only legislation which imposes

a burden in the protectionist sense interferes

with the freedom guaranteed by section 92.

Now, one could argue that lingering in the American

cases is the old concepts that we had:

Secondly, the American balancing process is

carried out only after a law has been found to

be directed towards a non-discriminatory

purpose so that the burden on interstate

commerce is "incidental" to that legitimate

purpose. In contrast, we are concerned only

with the proper characterisation of the law

as protectionist or not, in the sense described
in COLE V WHITFIELD. Hence there is no place

for a secondary test to invalidate laws which

have been found to lack a protectionist purpose

or effect. Rather, the two tests are combined
as one inquiry into the characterisation of

the law as protectionist or otherwise.

Now we would add to that there is now no place, it ,-0uld

appear, for argument about whether something is

purely regulatory or not because that, itself, is

caught up in the test. That notion of regulation

that was a secondary aspect of the old test, that,

we would submit, has disappeared now because all

one asks is, does it impose a burden which is

discriminatory and protectionist and caught up in

that will be notions of whether it is the only way of

doing it or whether there are other means of

onerous on interstate trade. 0 .Arid .:that is where that	achieving the same object which would be less
passage from NEDCO, I think it was, that I referred
Your Honours to, the passage from Your Honour
the Chief Justice in UEBERGANG that I referred
Your Honours to. (Continued on page 161)

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MR ELLICOTT (continuing): Here, we would submit, as we have

already done, in the context of this law

there is no other reasonable way. This is the

only way of bringing everybody into the scheme

because once you have got an outlet of interstate

trade, well, the scheme would fall to the ground;

it would not work, and the result, particularly

with four maltsters, two of them outside in Victoria

and others in New South Wales, it just would not
work because it would quickly undermine the scheme,
and therefore it is, we would submit, on the face of

it the only practical way of dealing with the problem. Indeed, I can simply rest on the proposition that

my friend has not suggested any other practical

way that would be available which would not

involve the restriction on trade between southern

New South Wales, in practice, and Victorian maltsters.
So, Your Honours, for those reasons we would ask

Your Honours to uphold the validity of these provisions.

MASON CJ: Thank you, Mr Ellicott. The Court will consider

its decision in this matter and will adjourn

until 10.00 am tomorrow.

AT 12.26 PM THE MATTER WAS ADJOURNED SINE DIE

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