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

[1990] HCATrans 123

•

~

,

•

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 ~.ARGARET NORMAN

Second Defendant

PACIFIC MALTING COMPANY PTY Lir":ITED

Third Defendant

Removal pursuant to section 40(1)

of the Judiciary Act 1903

lv'rASON CJ

BRENNAN J

Barley(2)

DEANE J
DAWSON J
TOOHEY J
GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 5 JUNE 1990, AT 10.17 A.~

Copyright in the High Court of Australia

ClT 1/1/DR 1 5/6/90

MR R.J. ELLICOTT, QC: If the Court pleases, I appear with

MR C.C. HODGEKISS for the Board. (instructed by

Grahame Goldberg Partners)

MR P. O'CALLAGHAN, QC: If the Court pleases, I appear with

my learned friend, MR J. LARKINS, for the

respondents. (instructed by Dobson Morrow)

MR J.J. DOYLE, QC, Solicitor-General for the State of

South Australia: If the Court pleases, I appear

with MISS C. SARRE for the Attorneys-General for

the States of South Australia, Western Australia

and Victoria to intervene in support of the

plaintiff. (instructed by Crown Solicitor for

South Australia)

MR K. MASON, QC, Solicitor-General for the State of New South

Wales:  I appear with my learned friend, MR R. SACKVILLc,

for the Attorneys-General for New South Wales and

Tasmania. (instructed by Crown Solicitor for

New South Wales)

MR G.L. DAVIES, ~C, Solicitor-General for the State of

Queens and:  May it please the Court, I appear with

my learned friend, MISS R.G. ATKINSON, and

MR B.T. DUNPHY,for the Attorney-General for the State of Queensland, to intervene also in support of the

plaintiff. (instructed by Crown Solicitor for Queensland)

MASON CJ: 

Mr Ellicott.

MR ELLICOTT: 

Your Honours, may I begin by handing up seven

bundles which contain an outline of our submissions,
copies of the 1927 MARKETING OF PRIMARY PRODUCTS

ACT of New South Wales and of the MARKETING OF PR.J1IA,_CZY PRODUCTS
ACT 1983 - the 1983 Act being the relevant Act -

and copies of the relevant second reading speeches.

I can hand those up in suitable bundles and I will

also hand up, if I may, some extra copies of the
submissions.

MASON CJ: 

Thank you.

(Continued on page 3)

ClTl/2/DR	2	'j/6/90
Barley(2)

MR ELLICOTT: If Your Honour pleases. As Your Honours will

have gathered this case statec relates to

the validity of sections 56 and 58, f the

MARKETING OF PRIMARY PRODUCTS ACT New South Wales

1983, in the light of section 92 of the CONSTITUTION.

It is, indeed, I think. the first marketing case that

has come before the Court having regard to the new

principles that the Court has laid down in

COLE V WHITFIELD. In times past, of course, there

have been many cases dealing with compulsory schemes

for marketing of primary products and, by and large,

it can be said that in those cases the High Court,

after a series of per ambulations, came to the view

that if the Act had descended on what was truly

interstate trade and connnerce then to that extent

the vesting provisions were invalid, 1hose cases,

however, do not stand to be reviewed in this Court

on this occasion, and I do not propose to take

Your Honours back to them except, perhaps, in passing

because it will be apparent that under the new
principles laid down in COLE V WHITFIELD, those

cases are not necessarily decisive of this case.

The most recent, of course, was COARSE GRAINS and

that case is directly relevant, however, to this

case because under the Queensland legislation there

considered by the C·ourt, it was held that the barley

came into existence when it was harvested. Now, we

do not want to contend otherwise in this case, and so
the decision of the court in COARSE GRAINS, in that
respect, is not contested. Another aspect of COARSE

GRAINS was that the conoact there related to the

barley that was in the course of being grown; the

contract was entered into, in other words, prior to

harvest and it was held that the contract was a

contract entered into in the course of interstate

trade, even though the contract provided for the

delivery of the barley after harvest to somebody in

Queensland because that somebody was going to take

the barley, as they intended, to Victoria.

(Continued on page 4)

ClT2/l/JL	3	5/6/90
Barley(2)

MR ELLICOTT (continuing): That contract was said to be an

inseparable part of interstate trade. We do not

want to contest that here; indeed, what is

desired in this case is a decision of the Court
as to whether this marketing Board - and it may

affect other marketing boards as Your Honours

will have gathered from the galaxy of other marketing boards either in barley or in

relation to other marketing products and we are

not here to contest that it is not interstate

trade and commerce under the contract that

Your Honours will consider here.

What happened, just very shortly, is that

the first and second defendants entered into a

contract on 18 November 1988 with the third

defendant. The first and second defendants, the

Normans - if I may call them that - they own a property at Jerilderie and they grow barley and

they entered into a contract with the maltster in
Victoria - the third defendant - to sell 400 tonnes
of barley at a price, at a stage when the barley
was still in the paddock and had not been harvested,
and the provisions of the contract, unlike the one
in COURSE GRAI~~S, provided for delivery by the

Normans to the third defendant in Victoria so there

was an additional aspect to make it clear that it
was interstate trade and commerce that was involved.

What happened then was that the solicitors for the No~mans indicated that they were doing this and

indicated that to my client, the plaintiff Board,

and thereupon the plaintiff obtained an ex parte

injunction to restrain them from selling the barley

according to that contract because previously it

had the benefit of a proclamation which it said

vested the barley in the Board. Now I will not

trouble Your Honours with the rest of the litigation

because I think that is enough to indicate that

there is a serious point for consideration as is

indicated in the case stated. The reason for the

solicitors writing was in effect to invite, I should

imagine, some sort of litigation which would bring

to a head this question.

(Continued on page 5)

ClT3/l/LW	4	5/6/90
Barley(2)

MR ELLICOT (continuing):  Your Honours, may I take you to

the Act itself, and quickly indicate the provisions;
that is the MARKETING OF PRIMARY PRODUCTS ACT, 1983?

Your Honours may recall that the Act generally

provides for the growers within an area - and an
area can include the whole of New South Wales - to

vote as to whether there will be a, in effect, scheme

under the Act, and if they do so vote, and a certain

majority are in favour of it, then the scheme can

in effect be declared and subsequently there can

be a vesting order under proclamation, vesting

the whole of the commodity in the particular

Board.

Section 4 contains a number of definitions

which are relevant:

"area" means New South Wales or an area of or

locality in New South Wales .....

"commodity" means a primary product, or a

variety, grade or class of a primary

product .....

"Primary product" includes -

(a) any grain -

et cetera. "Producer" is defined as:

a person by whom or on whose behalf any of

the product is actually grown -

and there is a definition of "sell".	Section 4(8)
says that:

A power conferred by this Act to declare a

primary product to be a commodity includes a
power to declare a variety, grade or class

of a primary product to be a commodity.

Sections 7 and following provide for the poll

necessary to constitute a board - section 7(1) and

section 7(3) - subsection (3) says:

Where the Minister -

(a) is satisfied, on representations made by

petition to the Minister by producers of 2 or

more primary products within one or more areas,

that a substantial number of producers of each

product within the relevant area desire that

a board should be constituted for such of

those products within that area ..... the

Governor may,by proclamation, direct that a poll

shall be taken.

ClT4/l/FK	5	5/6/90
Barley(2)

MR ELLICOTT (continuing): And then, a provision is made

for the constitution of board, the Governor

having power to appoint electoral districts.

Section 10:

After the first election of persons

for appointment as members of a board, the

Governor may, by proclamation -

(a) declare that section 11 applies for the

purpose of constituting a board, with a

specified corporate name, for a specified

primary product and in relation to a

specified area;

(b) specify the number of elected members and

nominated members constituting the board;

and

(c) declare that the product is a commodity for the purposes of this Act.

(2)      The primary product and area to be specified

in the proclamation shall be those for or in

relation to which the poll was taken and the

first election was held, and the number of

elected members to be specified in the

proclamation shall be that specified in the

relevant proclamation under section 8 for the

first election.

Section 11 provides for the constitution of the board.

It is constituted as:-

a corporation under the corporate name -

et cetera. Subsection (7) has some relevance:

The Governor may, by proclamation, specify

the objects of a board referred to in the

proclamation, and the board shall, as far as

practicable, have regard to those objects in

the exercise of the functions conferred or

imposed on it by or under this or any other Act,

but nothing in this subsection authorises or
requires the board to contravene any provisions
of this Act or of any other law.

Section 44. I think I need not trouble Your Honours with the other provisions, because they simply

provide for amalgamation and winding up and similar

matters that are of no relevance here.

CITS/1/CM	6	5/6/90
Barley(2)

MR ELLICOTT (continuing):  Section 44(1):

A Board may market or arrange for the

marketing of the commodity vested in or

develivered or to be delivered to it,

and do all acts -

et cetera -

expedient.

(2) It is the duty of a board, 1n exerc1s1ng

its functions under this Act, to ensure,

as far as practicable, the wholesomeness and

purity of the commodity in the interests of

public health.

Section 45 provides for voluntary deliveries of the

commodity. The Board may deal in the commodity.

Under section 47 it may establish grades, ct cetera, of the commodity and fix the price at which a grade,

et cetera, may be sold. Section 48 provides for

manufacturing and processing of the commodity. The

Board under section 49 can deal in other products.

Section 50 -

A board may, by order in writing, appoint any person to be an authorised agent to act as the

board's agent for the purpose of exercising,

in such circumstances as may be specified in the order, such of the functions of the board as may be so specified.

Under section 51 it can appoint authorized buyers.

An authorised buyer is, subject to and in accordance with the relevant order referred to in subsection (1), authorised to purchase, on

the authorised buyer's own account, from a

producer of the commodity or any other person

any of the commodity which that producer or

other person is entitled to sell.

(Continued on page 8)

ClT6/l/PF	7	5/6/90
Barley(2)

MR ELLICOTT (continuing):

(3) Where a board appoints an authorised buyer

under subsection (1) for the purpose of

exercising any functions, those functions may

be carried out by any employee -

et ~etera. That section becomes relevant because

those buyers are utilized by the Board in this case.

Under sections 52 and 53, the Board may act as

marketing agent, as purchasing agent and section 54

provides the following functions:

board may -

(a) make such arrangements -

they are really powers -

as it deems necessary with regard to sales of the commodity or any other product with which the board is associated -

with. They can -

(b) enter into insurance contracts -

et cetera. In other words, there is a very wide range

of powers that is given to the Board and under

section 55 there are further provisions relating to

functions. The strictly relevant provisions are to

be found in Division 2, section 56 on page 32.

Section 56:

Where a product has been declared a commodity and a board has been constituted in respect of

the commodity, the Governor, by proclamation,

may -

(a) declare -

(i) that the commodity shall forthwith, upon the

date of publication of the proclamation in the
Gazette or on and from a later date specified

in the proclamation, or upon fulfilment of such

conditions as are specified in the proclamation,

be divested from the producers thereof and
become absolutely vested in and be the property

of the board; and

(ii) that upon any of the commodity coming into

existence within a time specified in the
proclamation or in any subsequent proclamation

it shall become absolutely vested in and be

the property of the board -

and that is where COARSE GRAINS becomes relevant

in relation to the words "coming into existence".

ClT7/l/DR	8	5/6/90
Barley(2)

(b) make such further provison as will enable

the board effectively to obtain possession of

the commodity as owner and to deal with the

commodity as may be deemed necessary or

convenient in order to give full effect to the

objects and purposes for which the board is
constituted.

(2) Upon the date of publication of the

proclamation under subsection (1), or on and
from the date specified in the proclamation, or
upon fulfilment of the conditions specified in

the proclamation, as the case may require,

the commodity is absolutely vested in and is

the property of the board.

There there is a provision that says it does

not apply to voluntary acquisitons, in effect, then

section 56(5) provides:

A proclamation may -

(a) apply generally or be limited -

Exemption by the Board - section 57:

A board may, in such manner, in such cases

and on such terms and conditions ..... exempt .....

from the operation of section 56 -

(a) such small producers of the commodity as

the board thinks fit;

(b) sales of the commodity direct from producers

to consumers, processors, merchants or retail

vendors;

(c) such portion of the commodity as the

producer may require for the producer's own

use -

et cetera -

(d) such other sales and purchases or receipts

of the commodity as may be prescribed.

(2) The board's decision ..... is final.

Section 58 - it is the other relevant provision:

Every contract, whether made before or after the

commencement of this section, or provision in any

such contract, so far as it realtes to the sale

of a commodity the subject of a proclamation

under section 56(1), whether or not the

commodity ; .. as come into existence

when the contract was made,

C1T8/l/DR	9	5/6/90
Barley(2)

is and shall be deemed to have been void and of
no effect as from the date upon which the contract

was made.

Now, that section was, indeed, amended into

that form in 1985 and that was by Act No 82 of 1985.

Previously, instead of the words, "the subject of

a proclamation under section 56 (1), whether or not the

commodity has come into existence when the contract

was made", it had the words:

vested in a board by section 56(2) -

so that the purpose of this was to catch pre-harvest

contracts - this amendment was to catch pre-harvest

contracts. Now, if I may just tell Your Honours

this, that if Your Honours look at the second reading

speech of 1985, Your Honours will find that there

was some concern about people avoiding their

responsibilities by selling product across the

borders. That is the only reference to any interstate

aspect that we would think was relevant in those

second reading speeches but I have handed them up

to Your Honours but when Your Honours look at that

one for 1985 it will show that it was prompted to
some degree by that consideration.

In any event, of course, when enacted it drew no distinction between interstate trade and

intrastate trade but it suffices for present

purposes that section 58 is in its present form

and it operated in relation to the contract which

was the subject of these proceedings.

DEANE J: When did the property pass in the present case,

Mr Ellicott?

MR ELLICOTT:  The property would pass on harvest.

DEANE J: After harvest?

MR iLLICOTT: Yes, irmnediately it came into existence.	(Continued on page 11)
ClT8/2/DR	10	5/6/90
Barley(2)

DEANE J: There would be a query whether section 58 would

apply if property passed before harvest, in other words, it then would not be a sale of the commodity?

MR ELLICOTT:  No, but it is couched in terms of the future

so that it is talking about a commodity when it

comes into existence. But it is also, obviously,

talking about something which is in a growth stage

where it has the capacity to become a commodity.

DEANE J:  But that is irrelevant if, in the present case,

the property passed on harvest.

MR ELLICOTT:  Yes. The property passed when it came into

existence - it passed to the Board, we would say,

when it came into existence. The grower would have
hoped that it passed to the purchaser.

DEANE J: Well, that was what I was asking you: when, under the contractual arrangement~ would the property

have passed to the third derendant?

MR ELLICOTT: Well, Your Honour, we would submit, when

Your Honours come to look at the contract, that

it did not pass until it came into existence because

it could not.	This is page 58 of the
case stated:

IT IS AGREED the Buyer will buy all the

barley harvested by the Sellers from the crop
presently growing at the Farm upon the

following terms and conditions.

And that seemed to us, Your Honour, to mean that what

happens irrespective of the question that we are

considering, what would have happened had section 56

remained in its other form and the contract had not

been invalidated because it was a pre-harvest contract,

on the face of the legislation, is perhaps a matter

that does not have to be debated here, but at the same

time we would want to submit, if it was necessary, that

if there is one point of time at which a vesting

order operates and at the same point of time the

property is to go to a purchaser from a vendor of

barley, then the vesting order would prevail.

But, we would submit, we do not have to get into

that complexity here because what we are concerned

about is the validity of section 58 which strikes down

the contract and which prevents any question of the

property passing to the purchaser in Victoria.

Sections 60 and following deal with delivery

of commodity:

C1T9/l/JL	11	5/6/90
Barley(2)

(1) The commodity vested in a board by

section 56(2) shall be delivered by the
producers to the board, or an authorised agent

or authorised buyer, at or within such times,

at such places, and in such manner as the

board may by public notice or in a particular

case in writing direct, or as may be prescribed

by regulation.

(2) A producer who supplies, sells or delivers

any of the commodity vested in the board by

section 56(2) to a person other than the board,
or an authorised agent ..... is guilty of an

offence against this Act.

There is the compulsion.

(3) A person -

(a) who buys or receives any of the commodity

that is supplied, sold or delivered in

contravention of subsection (2); or

(b) who buys by wholesale any of the commodity

at a price other than the price fixed in respect
of the commodity by the board,

is guilty of an offence -

another aspect of the compulsion under the Act.

(Continued on page 13)

ClT9/2/JL	12	5/6/90
Barley(2)

MR ELLICOTT (continuing): Then, there are certain provisions

in section 60 for defences. Section 61:

(1) A board shall not refuse to accept from

any producer any of the commodity which is

vested in it by section 56(2) and which

conforms to the applicable standards of

quality or grade and which is delivered to it

in accordance with this Act.

(2) A board may accept from any producer any

of the commodity that does not conform to the applicable standards of quality or grade, and may deal with it in such manner as it thinks

appropriate.

There is provision then for revesting if it is

not accepted and there is a duty to give notice of

encumbrances and, of course, when it does vest

in the Board it vests free of any such emcumbrances.

Sections 64 and following provide for payment.

In Part VI there is a provision for financial

accounts and the setting up of a finance agency.

I do not think I need trouble Your Honours with that.

There are provisions for public accountability of

the Board and in - - -

BRENNAN J: Essentially the barley that is supplied is pooled

for payment purposes, is that right?

MR ELLICOTT:	I am sorry, Your Honour.
BRENNAN J:	The barley that is supplied by producers to the

Board is pooled and sold by the Board and the payment is made as out of a pool?

MR ELLICOTT:  Yes, Your Honour, as out of a pool. It is

recall from wheat cases and other such cases that	strictly a pooling system and as Your Honour will
there is provision for first payments and second
payments and final payments. There is a
schedule 4 which I referred to for this reason that the Board itself was set up, not under the
1983 Act, but it was set up on 21 January 1972,
as appears from the stated case, paragraph 31. Schedule 4, section 2(1):

The following boards shall be deemed to have

been constituted as boards under this Act:

(a) The Barley Marketing Board for the State

of New South Wales .....

ClTl0/1/LW	13	5/6/90
Barley(2)

(2) The Boards deemed by subclause (1) to

have been constituted under this Act are

continuations of, and the same entities as,

the respective boards constituted under

the MARKETING OF PRIMARY PRODUCTS ACT, 1927.

(3) Anything done ..... shall have effect .....

(4) The reference in section 32(3) to the

constitution of a board pursuant to a

proclamation under section 10 or 23 shall,

in relation to a board referred to in subc lause ( 1) ,

be read and construed as a reference to the

constitution of the board pursuant to a

proclamation under the MARKETING OF PRIMARY

PRODUCTS ACT, 1927.

There are general savings provisions as to payment

for commodities. Those provisions are at pages

97 to 99 of the copy Act that I have handed up.

There are just some areas of fact that I

perhaps should indicate. As I said, Your Honours,

page 31 of the stated case, paragraph 11, the

plaintiff was established on 21 January 1972.

On 19 June 1985 a proclamation was gazetted by

the Governor, pursuant to section 11(7) of the Act

and that set out the objects and those objects

are to be found at pages 34 and 35 in paragraph 22

of the stated case.

(Continued on page 15)

ClTl0/2/LW	14	5/6/90
Barley(2)

MR ELLICOTT(continuing): Now,if I just remind Your Honours

of section 11(7):

The Governor may, by proclamation, specify the objects of a board referred to in the

proclamation, and the board shall, as far as

practicable, have regard to those objects in

the exercise of the functions conferred or

imposed on itby or under this or any other Act,

but nothing in this subsection authorises or

requires the board to contravene any provisions

of this Act or of any other law.

And a copy of the proclamation is included in the

documents that I have handed up to Your Honours.

Now those objects are there. I am reading from page 34 of

the stated case:

To develop an efficient marketing framework -

(b) To be an effective organisation capable

of adopting to a changing market environment by
regularly reviewing -

that should be "adapting"-

Board policy and functions.

(c) To develop and maintain efficient financial

management systems .....

(d) To establish efficient management and control

in co-operation with other related authorities

over all relevant matters .....

(e) To maintain acceptable standards of barley

quality .....

(f)	To encourage appropriate research. ....
(g)	To fulfil its responsibility to its
employees .....
(h) To fulfil the objectives -

of statutes that are set out there, no doubt
designed to ensure, as the politicians would think

it, the efficiency of these organizations.

Now the actual vesting order was made on

20 November 1985 and Your Honours will find that

at page 47 of the stated case, and it says,

in substance:

I do further hereby declare that upon any of

the commodity barley coming into existence

within the State of New South Wales between
1st December, 1985, and 30th November, 1995, it shall
beca:ne absolutely vested in and be the property of

The Barley Marketing Board for the State of New South Wales.

CITll/1/CM	15	5/6/90
Barley(2)

Now, it can be stated, Your Honours, that under

the 1927 Act there were provisions which would

have exempted interstate transactions and therefore

no doubt this questions, following cases like the

PEANUT BOARD case and other cases, the State

marketing authorities, as did the State legislatures,

settled down to the proposition that they could not

stop interstate trade in these commodities. The

1983 Act, however, contains no reading-down provision

such as Your Honour will be familiar with, nor did

it contain any exemption in relation to interstate

contracts or interstate trade and from 1985 onwards,

although the decision in COLE V WHITFIELD did not

come down until 2 May 1988, the whole of the barley

was vested in the Board as from 20 November 1985,

certainly as early as that.

(Continued on page 17)

CITll/2/CM	16	MR ELLICOTT, QC 5/6/90
Barley(2)

MR ELLICOTT (continuing): After that no doubt interstate

trade trade took place in barley, but after

COLE V WHITFIELD, the Board, pursuant to that

proclamation of 20 November 1985, made it clear

to the parties concerned with BARLEY that all
barley was going to vest, but that what was called

"feed barley" would divest, but "malting barley"

would not, and malting barley was to stay

the property of the Board. So far as feed barley

was concerned, that barley could be divested either

by the grower getting an exemption, or alternatively

by the Board enabling the buying agents that were

apointed under that section that I referred to, to

acquire the barley - that is the feed barley -

from growers directly and to deal in it. So

that the effect of the proclamation in operation

was that malting barley remained vested in the

Board and the Board dealt with it and the Board

disposed of it in the course of trade, both

intrastate and overseas and interstate trade, to

the extent that which it saw fit to do so.

Now, it gave notice of all those

matters of its intention in that regard, in a

nubmer of documents that are set out from pages 48

to 53 of the stated case.	I do not propose to read
those in full, but they are there.	They are

surnarized in the stated case in paragraphs 14 to 16,

appearing on pages 31 to 33 of the stated case,
and if I may just quickly read those to give
Your Honours the background in relation to it.

Paragraph 13 at page 31:

Pursuant to Section 56 of the Act .....

a vesting order ..... was made by his Excellency .....

on 20th November -

and that is referred to. Paragraph 14:

On or about 23rd September, 1988 a notice .....

was sent ..... to the Maltsters and Brewers

listed below whereby the Plaintiff notified

such persons that from 1st October, 1988, the

Plaintiff would not divest "malting grade" barley.

Those people are mentioned and they are, of course,

in a number of States, including New South Wales.

On or about 23rd September, 1988 the Plaintiff sent a notice ..... to all registered

New South Wales barley growers. This notice

set out, inter alia, the following matters:

(a) that frcr,1 1st October, 1988, the Plaintiff would

not divest 'malting grade" barley,

C1Tl2/l/FK	17,	5/o/9U
Barley(2)

(b) that such decision had been taken to

enhance the marketing of "malting grade" barley grown in New South Wales in order to increase the returns to all growers

across the State,

(c) that pursuant to Sections 60(1) and 138(4)(a)

of the Act, the Plaintiff directed that all

barley produced in New South Wales, save that

which the Plaintiff divested, be delivered to

the Plaintiff,

(d) that it was an offence to sell or purchase

"malting grade" barley other than under the

conditions set down by the Plaintiff.

16. On or about 22nd September, 1988, the Plaintiff

set a notice ..... to 167 Authorised Buyer/Agents

of which 149 were located throughout New South

Wales, 10 were located in Victoria and 8 were

located in Queensland. Authorised buyers/Agents
are appointed pursuant to Sections 50 and 51
of the Act ..... This notice set out, inter alia,

the following matters -

and they are much the same matters, but as to (d):

(Continued on page 20)

ClT12/2/FK	18/19 MR ELLICOTT, QC	5/6/90
Barley(2)

MR ELLICOTT (continuing):

that for any contracts entered into by agents

or any traders on behalf of Brewers and

Maltsters with growers to produce Clipper

"malting grade" barley ..... in New South

Wales for the 1988/89 season for delivery

interstate:

(i) the Plaintiff would offer to convert these

contracts to a Grower/Buyer arrangement,

(ii) that tonnages, growers liability to

supply and Agents (if any) obligation to store

and/or arrange trucking would be preserved,

(iii) that the Plaintiff would pay the Growers

on the basis of:

A. Pool delivered to the storage nominated

in contract,

B.	Pool ex farm direct to end user,
C.	a premium above Pool for Clipper variety

barley.

On the same date a notice was placed in the Land

newspaper.

BRENNAN J: Mr Ellicott, is there any further information in the

stated case with reference to the purpose (b), that is,

at the top of page 33 is one place where it appears?

MR ELLICOTT:  No, Your Honour.

BRENNAN J:  What are we to make of it, that the acquisition will

have that effect?

MR ELLICOTT:  Perhaps if I take Your Honour to the actual document

it may assist Your Honours in that regard. Page 48,

Your Honour.	Perhaps a better one to look at is 50
which is sent	to the farmer.

The Board has decided, that effective 1st October

1988, it will not divest Malting Grade barley.

This decision has been taken to enhance the marketing of Malting Barley grown in N.S.W. in

order to increase the returns to all growers

across the State.

,,

Under those sections "the Board will lawfully direct

Malting barley is described as all that barley

which meets the malting specification of the

ClT13/l/PF	20	5/6/90
Barley(2)

N.S.W. Barley Board and all barley that is

received by Maltsters or Brewers whether in

N.S.W or Interstate.

Feed Barley will be exempted (divested) by the

Board readily for all forms of trade upon

application by the producer to the Board.

We refer you to the enclosed information on

vesting of the crop in the Board and the payment

of Administration Fees and Commonwealth R-•search

Levies. As the barley is the property of the

Board, by vesting order, the Board will lay claim

to all Malting Barley produced and traded. It will be an offence to sell or purchase Malting Barley other than under the conditions set down

by the Board.

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 Barlcv

as they did in 1980. During the intervening seven

years (with exception of the 19R2 drought v,•3r,

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. Some grow0rs

also took a short term industry outlook by

accepting offers at harvest time which, until

recently, gave the consumers a cheaper landed price.

(Continued on page 22)

ClT13/2/PF	21	5/6/90
Barley(2)

MR ELLICOTT (continuing):

On the other hand the Malting and

Brewing Industry has been progressively

demanding a higher quality specification.

The result of this squeeze, between

static prices and higher quality requirements,

has been the swing by growers towards higher

yielding feed varieties away from the

malting varieties.

In order to put value back into the

growing of Malting Barley and so encourage

best interests of growers and the long term vaiability of the Malting Industry in N.S.W.

higher plant..ngs of malting varieties, the the

BRENNAN J: What is meant by "single desk selling"?

MR ELLICOTT: That is through the Board, there is only one

place where you can get it - one desk where you

can trade it:

The Board will be operating a Pool along

traditional lines. Pool payment levels will

be set in mid October.

In addition, for Malting Barley,

"Pool-Ex-Farm" can be arranged through the

Board's Regional Office. This sytem is contingent upon available storage space at the

end user and availability of carriers. These

deliveries are subject to quality final at

destination including variety purity and

pesticide residues. Crop samples must be

submitted for assesment to Regional Managers

for physical .characteristics and pre testing

by the buyer, before delivery. The Board is also considering a "Cash Out"

of Pool equity this year and, in future years,

the options of contract varietal growing and an

Grower to Buyer system.

Your Honour, I think that is the reasoning that lay behind this decision to, in effect, hang on to the malting barley and to deal with it itself rather than to allow, for instance, interstate trade to go

ahead in the product. Now, none of that, of course,

when I come to what we say, had anything to do with

imposing a protectionist burden on interstate trade and to that I now come. I do not think I need take

Your Honour further to the facts except perhaps to

indicate this; Your Honours may have read it in the

ClT14/l/JL	22	5/6/90
Barley(2)

stated case, and that is that there are, and it is

apparent from the appearance of Solicitors-General, there ara boar.ds - barley boards - in other States,

and Your Honours will learn something of those from

the Solicitors-General, but they, in a broad sense,

cover, first of all, Queensland which has its own

board. There is a joint board called the Australian

Barley Board that operates in relation to Victoria

and South Australia and is the by-product of the

Australian Barley Board that was set up during the

war, and New South Wales dropped out of it, but it

continued, apparently in relation to South Australia

and Victoria. Broadly speaking, those boards have

similar provisions and vesting provisions. Their
existence does not directly affect the question in

this case and so I have not troubled to take

Your Honours directly to them, but Your Honours should

be aware that there are barley boards in other States;

that they do compete on the export market; that they

do meet occasionally to discuss similar problems; but

that the boards do sell, for instance, malting barley

would be sold into New South Wales from Victoria on

occasions; on occasions New South Wales malting barley

will be sold into Victoria. In other words, there is

no impediment on intrastate or interstate trade as

between the boards. Any consideration of discussions

between the boards is not a matter that relates to

section 92.

(Continued on page 24)

ClT14/2/JL	23	5/6/90
Barley(2)

DEANE J:	Mr Ellicott, as the New South Wales scheme actually
works, does it preclude selling malting grade barley
as feed barley?
MR ELLICOTT:	Your Honour, inevitably, some barley which is

malting grade might get into trade as feed barley

but that would not be intended. In other words,

because of the specification it may well be that a grower decides to project his what might otherwise

be malting grade barley into the exemption system

and it goes off as feed grade barley but that may

not be a benefit to him and the ultimate benefit
would be -

DEANE J: Would that please or disappoint the Board?

MR ELLICOTT: Well, Your Honour, the Board's concern is that

the growers maximize their returns: in general,

from barley as a whole but, in particular, from

malting grade barley, and to ensure that the price

is as high as it can be consistent with market

conditions. Now, that is something which would

impel, one would think, the grower to put his

malting barley into the system if it was of the

specification. But I cannot say to Your Honour that

there is an inspection system that looks at every

grain of barley and that some might not go through

into a system of feed grade. But, whichever way

it goes then if a grower, for instance, first of all

sends in malting grade barley to the Board well, of course, it has gone in, the Board accepts it.

If, on the other hand, the grower decides that he

is going to sell it to somebody in Victoria then

that, conceivably, may be a different specification

but it is regarded as malting grade barley because

a rnaltster in Victoria is prepared to take it and,

therefore, it is treated by the Board as its product

and that is why you get this differing - two aspects of

the definition of malting grade barley in that

passage that I read at page·60 of the case stated.

Your Honours, if I may take Your Honours now to

the argument, and we have set out our submissions in the

outline, what I propose to do is not necessarily

to go through them or read them to Your Honours -

Your Honours have already read them - but to talk to

them, if I may. The test as we now comprehend it,

Your Honours, is, does the law, on its face, or

in effect, impose on interstate trade discriminatory

burdens of a protectionist kind? Now, that would

appear to be the test which one derives from the

three decisions that have come from this Court in

recent times. If it does not satisfy that test
then section 92 does not affect it.

Now, the very word "protection" obviously throws up the idea that you are protecting something from

something else and implicit in the test, as we

ClTlS/1/DR	24	5/6/90
Barley(2)

understand it, is that a law which protects domestic

trade from interstate trade is a law that offends

section 92. Needless to say, that embodies also the

notion of discrimination. Now, under the old test

which did not depend for its application on the

presence of a protectionist effect a law could be

invalid if it burdened interstate trad~ whether it

had a protectionist object or effect or not and,

of course, AUSTRALIAN COARSE GRAINS is an example.

(Continued on page 26)

ClT15/2/DR	25	5/6/90
Barley(2)

MR ELLICOTT (continuing):  We would say that that case was

decided that way. There was no protectionist

effect; there was no discrimination against

interstate trade in that sense but, nevertheless,

applying the old test, the Q)urt held that it was

a burden on interstate trade and, in effect, it

stopped interstate trade in the barley. Now, in

that case, the law was not for the purpose- in the

Queensland case	it: was not for the purpose of
protecting the domestic trade of Queensland	nor

was the interstate trade into Queensland, which

was the trade protected by section 92, but trade

out of Queensland. Now what I am seeking to submit

here is that under the test of protection, the

test itself, or section 92, I should say, is directed

at protecting the domestic trade of a State from

the interstate trade of another State. It is not
a notion which is applicable to a concept of protecting
the domestic trade of one State from the interstate
trade of that State, that is,the trade going out

of that State. That is not in any relevant sense

something that needs protection. A State is not

protecting itself from its own exports, to put it

another way, in terms of section 92. Section 92,

under this test, is concerned with protecting the

State - the trade, in this case, the domestic trade of New South Wales from the interstate trade co8ing

into it.

Now there was nothing in COURSE GRAINS in that

Act which was so directed and thac is not a

necessary part of our submissions, of course, but

we would say that is so, but we would say that is

so, but in relation to this Act there is nothing in

it that protects the domestic trade in barley in

New South Wales from interstate trade, because

interstate trade is free to come in. People can

trade barley into New South Wales and sell it into

New South Wales. They can trade malting barley to

a maltster at Thornleigh, or wherever that company

is and on a competative basis enter into contracts.

Therefore the MARKETING OF PRIMARY PRODUCTS ACT does not stand at the border and say. "We are going to

place an impediment on yourr - it does not stand

there in that sense- "if 7iou trade into New South Wales

with your malting barley. '

Now if an Act does not do that and if it does

not, either on its face or in operation or in

practical effect do that, then that should be the

end of the case so far as the application of section 92

is concerned if,as this Court has held, section 92

is concerned with avoiding discriminatory burdens of

a protectionist kind. Now, Your Honours - - -

CIT16/l/CM	26
Barley(2)
McHUGH J:	But why should section 92 be limited in that way? Supposing some State was incapable of producing
some mineral or some product and a State which
produced it, intending to prevent another State
from receiving that property, prohibited sales to that State of that property, why would that not come within section 92?

MR ELLICOTT: Well, because it is not concerned with protecting

the domestic trade of that State.

McHUGH J: Well I am assuming that there is also a protectionist

element in it as well.

MR ELLICOTT:  I am submitting, Your Honour, that section 92

would only operate where a law, which presumably

is the law of a particular State, is protecting the

domestic trade of that State from the interstate trade

coming from another State. But that is what it

is designed to do, that is what it is protecting

and that it does not otherwise apply, and so - - -

(Continued on page 28)

CIT16/2/CM	27
Barley(2)

McHUGH J: That is no doubt the classic case but, I mean,

in this case one of the purposes of this vesting

or refusal to divest the malting barley is

to protect the domestic price in New South Wales.

They say so in terms.

MR ELLICOTT:  Your Honour, that is not a protection from

the interstate trade.

McHUGH J: Well it may be another question but the fact is

that that is one of the purposes of this refusal

to divest the malting barley, that they want to

keep the price up for the domestic traders which

had been undermined by the interstate sales.

MR ELLICOTT:  Yes, Your Honour, but that is undermined by

the interstate sales out of New South Wales.

McHUGH J:	Yes, it is still interstate commerce.
MR ELLICOTT:	Yes, but Your Honour it is not protecting it

against it. If you are protecting

something, your domestic trade, against something

then, we would submit, that that domestic trade
has to be the trade coming into the State and not

the trade going out of the State and to protect -

McHUGH J: It was to protect domestic trade against

interstate trade. It does not matter where it

starts from.

MR ELLICOTT:	Yes, well we would submit that what COLE V WHITFIELD have said - and I would take Your Honours
to the passages - is that that is what it is designed
to do. It is to protect the domestic trade from
interstate trade, meaning trade from other States
and each of the cases that this Court has dealt with
to date, COLE V WHITFIELD,' BATH V ALSTON and the CASTLEMAINE TOOHEY case, have each been concerned
with trade coming into the State, whether it is
Tasmania or South Australia or Victoria. And it
was that that the law was being considered was
said, either not to or to be discriminatory in
a protectionist sense.

McHUGH J: That means that if you have marketing boards with

identical legislation in every State then you cannot

have any interstate trade.

MR ELLICOTT:  Yes, you still have interstate trade; it just

means that the interstate trade takes place through

the boards and that is seen to be - I mean, Your Honour,

if one wants to go back to the old test, then that

is fine, but that is fine in some other case or

in some other time, but under the existing

pronouncement of this Court I would submit that

that is not a shocking result. All that means is that,

C1Tl7/l/LW	28	5/6/90
Barley(2)

yes, there will be interstate trade and the

interstate trade shall come across the borders

of the States and it will be competitive as

between the boards but whether for the benefit
of the State as a whole or for the general

welfare of the State or for the benefit of the

producers of the State a marketing scheme is

set up, and it is set up in each State, then that

is the way in which it is seen to be appropriate

to market the product but it is not aimed at or

directed at,in a protectionist or discriminatory

sense, interstate trade as such because

the vesting order is actually operating on all

barley - the whole of the product - and in the example

Your Honour gives me, the vesting orders would

operate on all of the product irrespective of
whether they were to be traded in interstate trade

or intrastate trade.

DEANE J:	What if the barley were a scarce commodity and the
Board refused to sell to non New South Wales
purchasers? The position may be different then,
may it not?
MR ELLICOTT:	Your Honour, if they did that would be their

choice because they are the owners of the product.

There is no requirement that they engage in

interstate trade with their product.

(Continued on page 30)

'

C1T17/2/LW	5/6/90
Barley(2)
DEANE J:	But what if the whole purpose of the scheme was

to keep the barley for New South Wales and to

prevent it going into interstate trade where

interstate brewers could purchase it?

MR ELLICOTT: Well, I would submi~ Your Honour, that although

the example is far removed from this case, but to do

with it, Your Honour, I would submit that that would

not offend section 92 because, really, those
considerations are more relevant to matters arising
under, say, the TRADE PRACTICES ACT or, in other
words, the methods of trade that are adopted rather

than to the question of freedom of trade that

section 92 is concerned with, because nobody's

freedom to trade -looking at the example Your Honour

gives me - nobody's freedom to trade is impaired,
but if there are collusive arrangements between
boards, or if the States put their heads together
and the Commonwealth is able to legislate in respect
of it, it may be a trade practices matter and

section 51, of course, of the TRADE PRACTICES ACT

exempts these boards at the moment.	But there are
relevant issues around	as to whether that exemption

should continue but all I am saying is that,

Your Honour, the sort of matter that Your Honour

is directing to me is more concerned with those

issues of freedom of competition in the sense that

the TRADE PRACTICES ACT deals with it; restrictive

arrangements, collusive arrangements, et cetera, or

monopolization, rather than the issue of freedom to

trade that section 92 is concerned with.

DEANE J:  Except that question may lead to the ultimate

question, whether under COLE V WHITFIELD one

should, as it were, take a narrow view of what

is discrimination and protectionism in the sense
that the example I gave you might involve

discrimination and protectionism in relation to the

New South Wales brewing industry.

MR ELLICOTT: Well, Your Honour, unless it was the practical

effect of the law then we would submit that

section 92 would haverothing to say to it.

BRENNAN J: Or of the exercise of statutory powers?

MR ELLICOTT:  Your Honour, I am not sure what comes before -

BRENNAN J: In other words, section 92 does not necessarily

stop its effect upon legislative action, it

extends to executive action?

MR ELLICOTT:  I am sorry, yes, Your Honour. It does affect

executive action, I am not seeking to say otherwise.

BRENNAN J: And so it would affect decisions as to where to

sell?

ClT18/l/JL	30	5/6/90
Barley(2)

MR ELLICOTT: It could, but it throws up a threshold question

and that is, whether the power, whether it is an

abuse of power as such, that is to say whether it is

within the object and purpose of the power or whether

it is truly something to which section 92 applies.

What I mean by that is this, is the Act to be.,and the powers under it, to be confined by section 92 and therefore one has to answer the question, at an earlier

point, and ask, "What is the nature of the power?",

because it could be assumed that a State legislature

would not intend the power to be exercised ·for a

purpose which offended section 92. But if the power

itself does not offend then we would say that that

is a different question. It may involve similar

considerations but it truly is a different question.

It is a question of keeping the body within its powers

as distinct from whether the legislation itself is

valid, and here we are concerned with the validity of the legislation and the validity of the stated powers

which it has to, in this case,	take the barley
and deal with it.

(Continued on page 32)

ClT18/2/JL	31	5/6/90
Barley(2)

MR ELLICOTT ~mntinuing):  But if, in some way, it offends,

by r,11he exercise of power, what this Court might

re.prd as the tenets of section 92, then that

mayfall to be dealt with as an abuse of power

a'S ~.mstinct from a lack of power in the

1.~lature to pass the legislation.	Now, could
I ·take Your Honours to the decision in

CA:REMAIIBTOOHEYS, and also to COLE V WHITFIELD?

CQ'fi.'E V WHITFIELD is in 165 CLR and CASTLEMAINE TOOHEYS ism 90 ALR 371. There are a number of relevant p.aua.ges in COLE V WHITFIELD, but the ones that

I 'ED.ted to refer to are partly found in CASTLEPiAINE

l'O"BYS, so I will just read the additional passage

th.at I want to refer to in COLE V WHITFIELD at

394 and 395, towards the bottom:

The task which has confronted the

Court is to construe the unexpressed; to formulate in legal propositions, so far as

the text of s.92 admits, the criteria for
distinguishing between the burdens (including

restrictions, controls and standards) to

which interstate trade and commerce may be

subjected by the exercise of legislative or

executive power and the burdens from which

interstate trade and corrnnerce is immune. The

history of s.92 points to the elimination of

protection as the object of s.92 in its

application to trade and corrnnerce. 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 corrnnerce of the same kind. The general

hallmark of measures which contravene s.92 in

this way is their effect as disciminatory against

interstate trade and commerce in that

protectionist sense. There can be no doubt

that s.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. Indeed, the
reference in each paragraph of the section

to uniform duties ..... is directed to fiscal

charges and burdens. This impression is

reinforced ..... All these provisions deal with

fiscal charges ..... But the section cannot be

easily confined to such matters because

protection against interstate trade and corrnnerce

can be secured by non-fiscal measures.

In relation to both fiscal and non-fiscal

measures, history and context alike favour the

approach that the freedom guaranteed to interstate
trade and corrnnerce under s.92 is freedom from
discriminatory burdens in the protectionist sense

already mentioned.

ClT19/l/FK	32	5/6/90
Barley(2)

Now, that is discriminatory against interstate

trade in the protectionist sense and conferring

protection on intrastate trade and commerce

of the same kind. Now, in CASTLEMAINE TOOHEYS

at pages 379 and following, at about line 10:

Speaking with reference to a State law,

the court observed .....

"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 conunerce, interstate and

intrastate alike, it is less likely to

be protectionist than if there is discrimination

appearing on the face of the law. But where

the law in effect, if not in form, discriminates

in favour of intrastate trade, it will nevertheless

offend against a 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 conunerce in pursuit of that

object in a way or to an extent which warrants

characterisation of the law as protectionist,

a court will be justified in concluding that it

none the less offends s 92."

(Continued on page 34)

•

ClT19/2/FK	33	5/6/90
Barley(2)

MR ELLICOTT (continuing):

So it was in COLE V WHITFIELD that the

limitation on the size of crayfish that might

be sold or possessed in Tasmania, acknowledged

to be a burden on the interstate trade and

commerce in crayfish caught in South Australian

waters and sold in Tasmania, was not a
discriminatory burden of a protectionist kind.

As the prohibition applied alike to crayfish

caught in Tasmanian waters and those that were

imported, no discriminatory purpose appeared

on the face of the law. Nor did it appear that

the object or effect of the law was relevantly

discriminatory. The object of the prohibitions

was to assist in the protection and conservation

of the stock of Tasmanian crayfish ..... Although

the legislation operated in this way to protect
the Tasmanian crayfish industry by conserving

the natural resource, it was not a form of

protection that gave the Tasmanian industry a

competitive or market advantage over imported

crayfish. In a significant statement, the

court went on to say:

"And even if the legislation were to give an

advantage to the local trade by improving the

competitive qualities of mature Tasmanian

crayfish by eliminating undersized imported
crayfish from the local market, the agreed facts
make it clear that the extension of the

prohibitions against sale and possession to

imported crayfish is a necessary means of

enforcing the prohibition against the catching

of undersized crayfish in Tasmanian waters."

Now, Your Honours, we would say that here the vesting of the barley in the Board was a necessary
means of enforcing the scheme, that is to say, the

orderly marketing of barley in New South Wales so

that all barley went into the scheme indiscriminantly

whether it was destined for intrastate or interstate

trade. Now, this next passage, we submit, is

important to the proposition I am seeking to put to

Your Honours:

COLE V WHITFIELD established that a law which imposes a burden on interstate trade and commerce

but does not give the domestic product or the
intrastate trade in that product a competitive
or market advantage over the imported product or

the inter-State trade in that product, is not a

law which discriminates against inter-State

trade and commerce on protectionist grounds.

That passage, we submit, is saying, on its face,

what I was putting to Your Honours and that is to

say that what section 92 is concerned with is

protection of domestic trade against incoming

ClT20/l/DR	34	5/6/90
Barley(2)

interstate trade and that if it is not protectionist

in that sense then it is not a law which discriminates

against interstate trade and commerce on

protectionist grounds.

DAWSON J:  Why cannot it be protection against outgoing

interstate trade if that is where the competition occurs?

MR ELLICOTT:	Your Honour, that is not what this - - -
DAWSON J:	No, this is ~omprehending a different situation but

why does not a different situation - - -

MR ELLICOTT:  I wonder whether it is because it is drawing a

conclusion that a law which does not do that - and

this is my point and I may be seeking to understand

what the Court has said in CASTLEMAINE - - -

McHUGH J: But, what about the second limb that talks about

"a competitive or market advantage over the imported

product or the inter-State trade in that product"?

MR ELLICOTT:  Yes.

McHUGH J: Well, what about the limb.

MR ELLICOTT:  Well, that is the :imported product in the Stat:e or the intersta_tE

trade in that product - that is, in that imported product - that is tr

product corning into the State. Now, I do not have

a statute here and I am not trying to interpret a
statute, I am not even seeking to understand; I am

making a submission that on that passage that what

the Court has said, that section 92 is concerned

with trade that is corning into the State and

consistent with all the facts in all those other cases, as in this case, we would say, we are not

concerned with the trade going out of the State,

we are concerned with the trade corning into the

State and the question to ask is whether the law is protectionist in a discriminatory way - - -

DAWSON J:  But that is because, of course, the normal situation

is that the competition is between trade corning in

against trade within the State and it really would

only be in a marketing board situation that you would

be wanting to protect yourself against trade going

out of the State but it is, nevertheless, maybe for the
purpose of protecting the intrastate trade, in this

case, of New South Wales.

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

not what that passage is directed to and that the

passage purports to say that a law which does not

qualify, in that sense, is not - - -

ClT20/2/DR	35	5/6/90
Barley(2)

DAWSON J:  But that is because it is not dealing with a

marketing board situation.

MR ELLICOTT: Well, it may not be dealing with it but it is

purporting to lay down a test. It says:

that a law which imposes a burden on

interstate trade and commerce but does

not give the domestic product or the

intrastate trade in that product a

competitive advantage over the imported

product, is not a law -

et cetera.

(Continued on page 37)

C1T20/3/DR	36	5/6/90
Barley(2)

MR ELLICOTT (continuing):  Now, if that does not mean that,

well that does not assist that proposition, but

we would -

DEANE J:  I have lost the paragraph, I am sorry. Can you

point it out to me again.

MR ELLICOTT:  I see Your Honour has the Law Journal there.

It is the bottom of page 150 and it is against B

in the second column on page 150, Your Honour.

DEANE J:	Thank you, Mr Ellicott.
MR ELLICOTT:	Now if I may just continue reading in the

Law Journal on page 150, between Band C in the
second column; at the top of page 380 in the

Australian Law Reports:

The present case stands on a different footing

because the facts recited in the special case

show that the Bond brewing companies were

disadvantaged in the two respects already

mentioned which gave the South Australian brewers a competitive or market advantage.

The passage that we have quoted did not

assert that, in order to enable a law which

protects intrastate trade by subjecting

interstate trade to a competitive or market

disadvantage to be characterised as relevantly

non-discriminatory, it must appear that the

burdens imposed by the law on interstate trade

are a necessary means for achieving the

conservation of the natural resource -

And further down there is a reference to:

The plaintiffs contend that a long line of

decisions of the Supreme Court of the United

States on "the negative commerce clause doctrine"

provides support for their case. According to

that doctrine, legislative provisions whose
practical effect is to interfere with the national

economic union brought into existence by the

Constitution or the free market forces in that

union so as to protect the domestic producer or

trader against the out-of-State producer or
trader are invalid. Yet the Supreme Court has

recognised that, in a variety of circumstances,

legislation may be valid, notwithstanding that

it subjects the out-of-State product to greater
disadvantages than the domestic product, so long

as it is directed to the protection of legitimate
local interests.

Now there is then a reference to the American cases,

and I do not want to take Your Honours through that - -

CIT21/l/CM	37	5/6/90
Barley(2)

DEANE J:  But would that not catch the example I put to you

and that is where the whole purpose of the scheme

was to prevent any interstate trade in malt grade

barley and keep it all for New South Wales brewers?

MR ELLICOTT:  Yes, well, Your Honour,vis-a-vis New South Wales,

then that particular scheme would be seen to be

protectionist; that is the New South Wales legislature,

so far as it was party to it, or if it was done within some power properly, would be seen to be

protecting their intrastate trade from interstate trade

from other States and likewise Victoria would be seen

to be protecting its domestic trade from the interstate
trade from other States and, in that sense, it would
offend the provision and one would not need to go to
the considerations, and Your Honour may not have
been intending to refer to the American cases, but
one would not need to go to the American cases, but

I am afraid I did not fully understand the proposition Your Honour put to me at first and I

apologize for that, but I apprehend it now and on

that basis we would submit that it is doing no more

than what we say offends. That is to say it is

New South Wales and that example protecting its

own domestic trade against the interstate trade of

other States.

(Continuing on page 39)

CIT21/2/CM	3 8
Barley(2)

MR ELLICOTT (continuing):

At page 382, after dealing with those American cases, and at page 152 in the first column between Band C

there is a paragraph beginning:

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

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. 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 trade 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.

That passage would seem to be saying that the old notions

of whether a law was regulatory or not has now been

subsumed into the test. That is to say, that there is

no need to consider whether it is, for instance, the
only practical means of achieving an object in the

marketing sense, or whether it is reasonably necessary

in order to achieve the object as discussed in

UEBERGANG, that the question of regulation is now

subsumed in the test. Although the American cases cannot be treated

as an accurate guide to the interpretation of

section 92, they identify in a useful way

considerations which may be relevant in the process

of characterisation which an Australian court

is called upon to undertake. So, the fact that

a law regulates interstate and intrastate trade

evenhandedly by imposing a prohibition or
requirement which takes effect without regard

to considerations of whether the trade affected

is interstate or intrastate suggests that the

law is not protectionist.

That sentence, we would submit, quite apart from the

submission I was putting to Your Honours earlier about

whether it was only directed at trade coming into the

ClT22/l/PF

39   5/6/90

Barley(2)

State, the law here, on its face, deals evenhandedly

with interstate and intrastate trade. And in operation

it deals with interstate and intrastate trade

evenhandedly and, therefore, that is a pointer within

that statement that the law is not protectionist.

Indeed, it may well be the end of the matter.

Likewise, the fact that a law, whose effects

include the burdening of the trade of a

particular interstate trader, docs not necessarily

benefit local traders as distinct from other

interstate traders, suggests that the purposes

of the law arc not protectionist.

Now, it goes on:

On the other hand, where a law on its face is

apt to secure a legitimate object but its effect

is to impose a discriminatory burden upon
interstate trade as against intrastate trade,

the existence of reasonable non-discriminatory

alternative means of securing that legitimate

object suggests that the purpose of the law is

not to achieve that legitimate object but rather

to effect a form of prohibited discrimination.

The only effect here that can be pointed to is that
the law in question would prevent a grower or producer

in New South Wales from trading his barley interstate.

That is the effect of the proclamation. That is, first

of all, an incidental effect, that is to say, it is

something that happens because the whole of the barley

is vested in the Board. But the grower, irrespective

of whether he wishes to trade it in intrastate or

interstate trade, is prevented from so trading. And

there is no discrimination in the law or in its effect

as to whether the trade that he wanted to deal in was

intrastate or interstate.

(Continued on page 41)

•

ClT22/2/PF	40	5/6/90
Barley(2)

MR ELLICOTT (continuing):  But it is true to say that as a

result of the law the grower, the producer, will

not be able to trade his barley interstate.

Now, if that is to be looked at as a burden,

we would say, first of all, it is not a discriminatory

burden - it is clear enough; we would submit it

does not discriminate against interstate trade

as such. It is just a burden under the old test

and it would have been struck down because of it

but it is not a discriminatory burden; it is not

aimed at or directed at interstate trade as such.

And quite apart from that, even if it was a

discriminatory burden on interstate trade we would

submit that it is the only reasonable way of

achieving the legitimate object. And what is the

legitimate object? The legitimate object is

being able to deal with the whole of the marketing

of barley in New South Wales, produced in New

South Wales, for the benefit of growers and for

the general welfare of New South Wales through a

marketing board and the only way of doing that

in a reasonable sense is to have a vesting
provision that works because, obviously, if you

cannot vest the whole of the barley in the Board

then the object will not be achieved and, therefore,

to - even if you did regard it contrary to our

submission as a discriminatory burden, nevertheless

it would be a means of achieving the object which,

in a practical sense, was the only reasonable way

of achieving that object.

BRENNAN J:  The assumption is that that object is itself

legitimate.

MR ELLICOTT:  Yes, the assumption is that the object is

legitimate. It would have to be.

BRENNAN J: Well now, if one looks at COLE V WHITFIELD

one sees the defined purpose of section 92 is

"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", and

one way, of course, in which that is done

when there is competition within a domestic market

is to impose discriminatory prohibitionist

burdens but it is not perhaps the only way in

which a free trade can be interfered with

throughout the Commonwealth. In other words, in

COLE V WHITFIELD and the other cases the question

was anti-competitive provisions within a domestic

market. That is not the problem here, is it?

C1T23/1/LW	41	5/6/90
Barley(2)

MR ELLICOTT: Well, Your Honour, the problem here as I

perceived it was whether the test laid down by

this Court in COLE V WHITFIELD applied.

BRENNAN J:  But the test in COLE V WHITFIELD was applied

with reference to a particular kind of interference

with free trade, namely, the kind of interference

that occurs when there is a prohibition upon the

entry of goods to a domestic market. As you have

pointed out here, there is no such problem in

this case. This is a different problem. It is

a question of looking at it from the producers'

viewpoint not from the point of view of those

engaged in a market competition. Now is it
contrary to free trade? Leave aside as it were

prohibition, is it contrary to free trade to have

a marketing scheme of this kind?

MR ELLICOTT:  Your Honour will not think me rude if I say

in answer to that that that is not the question.

But I say that simply because reading COLE V
WHITFIELD and the pronouncement of this Court in

COLE V WHITFIELD one is lead to a conclusion,

perhaps wrongly, that it is laying down now the

test which shall be applied in considering whether

legislation or legislative action, pursuant to

legislation, offends section 92 and that one does

have to find a discriminatory burden of a

protectionist kind and if you do not have it, well

that is it.

(Continued on page 43)

ClT23/2/LW	42	5/6/90
Barley(2)

MR ELLICOTT (continuing):  Now, if it was intended in

COLE V WHITFIELD to leave other areas open to some other test then one is thrown back into the whole

cauldron of indecision that this Court was concerned about in COLE V WHITFIELD, and to look for the test. Now, if a law - I have to concede that in accordance

with the old test, that this Court, but for

COLE V WHITFIELD, would have applied the same

approaches it did in AUSTRALIAN COARSE GRAINS and say

that this is stopping trade - interstate trade or
trade across State borders - and therefore it is bad.

We probably would not be here were it not for

COLE V WHITFIELD but COLE V WHITFIELD, we would

submit, has taken the Court away from those old

notions and has located the Court with an approach
which does look for discriminatory burdens of

a protectionist kind. Now, if that is not the test,

then I can only say that my reading of COLE V WHITFIELD

has led me astray and I have not come to the right

conclusion in relation to it.

McHUGH J: The first statement of a principle is rarely a final

statement of it?

MR ELLICOTT:	No.
McHUGH J:	I mean under the pressure of cases exceptions have
got to be made.

MR ELLICOTT: Well, all that means, Your Honour, is that the

Court is back where it was. I thought the Court had

seen itself as going - Your Honours, forgive me for

saying it this way but reading COLE V WHITFIELD

one can be forgiven for thinking that the Court thought:

enough of that indecision of the past; let us get down

to a test that people can understand and apply; it

will have its difficulties in particular cases but this

is the test.	Now, if that is so, then the test is
within the context of what this Court said in

CASTLEMAINE TOOHEYS, in that ~assage, however you

interpret it.	I might be trying to put too much into
it or	restrict it too much, but however you interpret

it,it is looking at discriminatory burdens of a

protectionist kind.	Now, if COLE V WHITFIELD is only
dealing with one situation, then it	posits the

question, "Well, how are you going to apply section 92
in other situations, Are you going to go back to the
'Wheat case; are you going to pull in JAMES V COWAN;
are you going to have another look at the BANK case

and whatever?" But, we would submit that this Court should now stand where it stood in COLE V WHITFIELD

and for the sake of certainty in the law apply that

test, and apply it exclusively, otherwise section 92

will find itself in another cauldron. An aspect of

ClT24/l/JL	43	5 /6 /90
Barley(2)

Coo..£ V WHITFIELD, which perhaps is not discussed

there but, we would submit, is implicit in it, is

the notion that section 92 is not intended to
prGtect individual traders; that it is a provision

that is there in the public interest and that one is

coo.cerned about interstate trade, in that sense, and

that what the individual trader gets out of it is

an incidental benefit; that that is not the main

thrust of section 92 and that really when the Court

in COLE V WHITFIELD talked about discriminatory

burdens of a protectionist kind it was emphasizing

the public interest aspect of section 92 and putting

aside the rights of individual traders. Now,

my friendwere to succeed in this,one gets back to the

notion that section 92 is designed to protect the

grower and his right to trade in interstate trade

across borders into Victoria, in this particular case,

and that would be to the contrary of COLE V WHITFIELD.

McHUGH J: Thisis asimple prohibition of interstate trade. Is

there anything in COLE V WHITFIELD that says

simple prohibition of interstate _trade is consistent

with section 92?

(Continued on page 45)

ClT24/2/JL	44	5/6/90
Barley(2)

MR ELLICOTT:  Your Honour, there is a passage that, perhaps,

I should have referred the Court to because it is

the beginning of this - it is pages 408 and 409,

at the foot of 408:

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.

Now I must refer Your Honours to that because

that is an escape route for anybody who wants to

escape out of COLE V WHITFIELD, but it was not

dealing with that, but there is a tone about

those words. It says:

And acquisition of a commodity may still

involve -

it is rather saying, "Well these acquisitions" -

and this is against the background of CLARKE KING

and UEBERGANG and - I was not proposing to take

the Court to those cases, but Your Honours will

be familiar with them. This is against the background

of UEBERGAND and CLARKE KING and the finding of
the Court that the wheat legislation was valid in

CLARKE KING: the finding of the Court - the division

in the Court really - in UEBERGANG as to whether

evidence was admissible or not and if so, the basis

on which it was admissible. But this sentence is

rather against the background that the Court was

moving towards saying these acquisition schemes -

although there were limitations in relation to

State marketing schemes - that these acquisition

schemes which vested the whole of the product

did not offend section 92, as I think Mr Justice Mason

then put it - if it could be shown that it was

reasonably necessary to do so, or as others would have

said, it was the only practical means of doing so,

but the Court was prepared to conceive that vesting

schemes could operate within the confines of

section 92, and those words "may still involve"

rather reflect the idea that unless there was something

discriminatory about a particular marketing scheme,

then one might think, consistent with the principles

enunciated in COLE V WHITEFIELD in the previous

pages, that those marketing schemes would be valid,

but they may still be invalid, the Court said.

ClT25/l/FK	45	5/6/90
Barley(2)

Now, what was the Court referring to?

I cannot say that, but I can posit one instance -

take NORTH-EASTERN DAIRY, for instance, that was

to be presented to be pasteurized in

a vesting scheme - that was a marketing scheme. had

New South Wales otherwise it could not be sold and the Court struck it down and the Court said

that that was, in that case, not a reasonable

regulation because there were other ways of doing

it and therefore it offended section 92. But

I would submit that it is quite likely that if

NORTH-EASTERN DAIRY came before this Court now it would be found the same way because it would

then be said to be characterized at

protectionist; as discriminatory and of a

protectionist kind, and it w~s in that sense,

maybe, and I have to say "maybe" - - -

MASON CJ: Well, some of the judgments said it was protectionist	in that sense.
MR ELLICOTT:	Yes, that is right, and therefore it would be

decided in the same way, and that is what that

sentence is referring to and I cannot state that

positively but - - -

McHUGH J:	Except it talks about acquisition of property.
MR ELLICOTT:	I beg Your Honour's pardon.
McHUGH J:	The sentence talks about acquisition of property.
MR ELLICOTT:	Yes, may still involve the potential

for conflict if it is not in the context -

McHUGH J:  NEDCO was not an acquisition of property case.

MR ELLICOTT: Well, it was in the sense that the milk vested

in the Board in New South Wales - if it was available

for consumption - once it was available for

consumption then it vested in the Board, and the

vesting provision was one that was related to the

pasteurizing provision and therefore it was said,

as Your Honour the Chief Justice reminds us, that

it was, according to some of the judgments, of a

protectionist kind.

ClT25/2/FK	46	5/6/90
Barley(2)

:t1R ELLICOTT (continuing):  But that, we would submit, is

what that sentence is really referring to because,

consistent with the whole of the argument and

reasoning in COLE V WHITFIELD, a marketing scheme

which was non-discriminatory, did not, on the face

of it, offend, and should not, in its application,

offend, unless there was some provision of it,

such as in NEDCO, which did so offend.

MASON CJ: Yes, that sentence does not tell you very much, because, as you say, it may be plainly directed

to acquisition of commodities coming from another

State. But I was going to say to you, Mr Ellicott,

coming back to the question that was raised at a

more general and abstract level, based on the

sentence that commences in the last paragraph

commencing on page 391, a sentence to which

Justice Brennan drew attention:

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.

If one looks at the subsequent development of the

reasoning in the judgment, there is then identified

what were then regarded as the enemies of free trade- -

MR ELLICOTT:  Yes, a traditional

MASON CJ:	And then the judgment proceeds to deal with what
might be described as those activities which were
hostile to free trade as known and identified at
that time and you then come to page 399 where the
judgment points out that it is not -

every departure from equality of treatment -

that will involve a conflict with section 92 and	it is at that point that the judgment identifies
protectionist measures of a discriminatory nature.

MR ELLICOTT:  And, Your Honour, we would submit, identifies

them as the sole enemy of section 92. That there

is no other enemy of section 92, such as a burden

on the interstate trade, according to the old test.

What it is designed to do is to strike down

protectionism and protectionism, according to

traditional means, just to go back to the judgment

at 393, were:

tariffs that increase the price of foreign goods,

non-tariff barriers such as quotas on imports,

differential railway rates, subsidies on goods

produced and discriminatory burdens on dealings with imports ···

CIT26/l/CM	47	5/6/90
Barley(2)

now those are all iirected towards trade coming

into the State,those who are standing at the border

and saying, "If you come in here,this is what is

going to happen to you - you better stay away".

For instance, just taking a differential

railway rates, there could not be anything wrong

with, in our submission, or offensive to section 92,

in a railway rate that said to exporters of a

particular product, "Well, the railway will give

you a free ride to Albury so that you can then

take it into Victoria". We would submit that that

is not offensive to section 92.

MASON CJ: It is very difficult to conceive that any

legislative provision prohibiting the export of

goods or commodities from a State could have any

purpose or effect other than the protection of

domestic trade or domestic industry.

(Continued on page 49)

CIT26/2/CM	48
Barley(2)
MR ELLICOTT:	Your Honour, a law such as this one here

would not do that in a discriminatory way. A law

which is directed, if Your Honour means a law

which says there will be no interstate trade in

barley - - -

MASON CJ: There will be no export trade in barley.

MR ELLICOTT:  Yes, if there is no export trade in barley

then, Your Honour, that may or may not be there to protect domestic trade. It may be there for the purposes, for instance, of providing sufficient

product for the consumption of people in New South

Wales, for the general welfare of people in New

South Wales, but it would not thereby be said to be

directed at protecting the domestic trade.

In other words, the law has to be, we would submit,

if a law relating to trade out of the State,

contrary to my submission, is to be treated as

a law which can be offensive to section 92

then at least it has to be seen as being protective

of domestic trade.

DAWSON J: Protectionism is a word that can expand and contract.

It is no doubt a marketing scheme is protectionist

in the sense that it is protecting the growers
against competition amongst themselves but that is

not the sort of protectionism we are talking about

and it may be that if that is your aim to protect

them against competition because it deflates the

market then that is not protection as at the border

which is the sort of protectionism you are talking

about.

MR ELLICOTT:  And that protectionism does not exist under

this particular scheme. It does not purport to keep

anything out of New South Wales. It is not concerned

about protection against the interstate trade from

Victoria or from Queensland or South Australia.

Its only concern is for the public welfare of

New South Wales and, obviously, for the benefit of

the growers in New South Wales to give them a higher

price than they might otherwise get. But it does

not inhibit trade because the Board itself trades;

it trades interstate. In other words, it is rather

saying that all trade in Barley henceforth shall

go through the Board.

DAWSON J: It certainly inhibits trade but not at the border.

MR ELLICOTT: It inhibits trade in the individual sense and

that is why it is important to bear in mind that

section 92 in not designed to protect the individual

trader. Section 92 has a public aspect and what

the law is doing is saying that in the public

ClT27/1/LW 49 5/6/90

Barley(2) (Continued on page 49A)

interest all trade interstate, overseas, intrastate,

shall henceforth be either done by or regulated by

the Board, and that may not allow a particular

trader to trade interstate or overseas but that

is not to the point. It is not a law which is

protecting the intrastate trade from interstate

trade.

BRENNAN J:  Mr Ellicott, I understand that point as you have

made it, I think, quite clearly but I could just take

a point that Justice Dawson raised with you: why

is this not a scheme which prohibits interstate

trade in New South Wales barley? That is, it takes
the boundaries of the State as the area of its
operation and says no barley grown in those

limits is to be traded interstate unless the Board

chooses to allow it and that through the single

desk system.

MR ELLICOTT:  Your Honour, our answer to that is that it does

not do that.

(Continued on page 50)

ClT27/2/LW	49A	5/6/90
Barley(2)

MR ELLICOTT (continuing): What it says is that,"Henceforth

all trade in barley shall pass through the Board".

It does not say, "There shall be no interstate

trade in barley", it just says, "Henceforth any

interstate trade in barley should go through the

Board". It says to growers - - -

BRENNAN J: Well, we are not concerned with the criterion of

operation, we are concerned with the practical

effect here, are we not?

MR ELLICOTT:  Yes. And that is how it operates and the Board,

in effect, is saying, "We have the malting barley
and we will deal with it henceforth for the

benefit of growers and the public interest of New

South Wales by selling it as the market demands.	We
will have some that we can sell overseas;	we will

have some that we can sell in New South Wales; and

we may be able to sell, depending on the seasons in

Victoria and South Australia and Queensland, we may

be able to sell some interstate.	But if anybody is
going to sell it we are going to sell it".	Now,

that is not directed against interstate trad~ it is

directed against growers selling, if one is looking

at what it does, it is saying to growers, "You cannot

sell your barley interstate", but that does not mean

that interstate trade in barley is being burdened
to protect intrastate trade in barley. It is not

doing that at all, it is simply doing it for the purpos~

of ensuring that the marketing scheme will be effective,

that is to say, that the object which is a legitimate

object, will be achieved. Now, quite clearly there is

no-reason legislatively why the State of New South Wales

cannot resume all the barley - compulsorily acquire

all the barley	in New South Wales at a given time.
They can do that.	Now, that is a proposition which is,

we would submit, undeniable and the only thing that

can cut across that is that at some anterior point of

time somebody has committed some of it to interstate
trade.	In other words, if they are shocking consequences

or they are inconvenient consequences, the fact is that

they are undeniably without offence to section 92,

the State legislature can compulsorily acquire all of

a particular product. Indeed, it can pay nothing for it

if it wishes,as we know, and to that extent it may have

an effect on interstate trade; it may, to a very large

degree, inhibit interstate trade, but that would not be

a law which would be struck down by section 92. And

in truth the only element that departs from that is this

notion that at some anterior point of time some grower

some where, as in Jerilderie,the Normans, have sold some

barley immediately it comes into existence across the

border, and the argument is, "Well that stops that

element of interstate trade". Now, we would submit

that if the law operates in a non-discriminatory way

ClT28/1/JL	50	5/6/90
Barley(2)

and if it cannot be seen to be, either on its

face as it clearly cannot, or in effect to be

protecting the domestic trade of New South Wales

intrastate, from interstate trade, then, we would

submit it cannot be struck down by section 92. It

certainly is not directed, and we would say this is

the end of the question, at trade coming into

New South Wales; if for some reasons Your Honours take

the view that section 92, in such circumstances, can

apply in relation to trade out of New South Wales contrary to our submission, then, we would submit again, it is not discriminatory because it applies

to a grower, however he wishes to dispose of his

product under whatever contract under section 58;

whether it is into intrastate trade or interstate

trade; and secondly, it is not protecting the

domestic trade, that is not what it is doing against

interstate trade - the outgoing interstate trade - what

it is doing is simply to achieve the legitimate

object. That is to say, the legitimate object

which the New South Wales legislature sees, in

acquiring the whole of the barley crop, for the purposes

of benefitting growers and the public generally.

(Continued on page 52)

ClT28/2/JL	51	5/6/90
Barley(2)

MR ELLICOTT (continuing): Therefore, within this sentence

which I was reading - at the top of page 383, if

I can just read it, in CASTLEMAINE TOOHEYS - it

is the opposite of what the sentence states that

I am seeking to apply here:

On the other hand, where a law on its face is

apt to secure a legitimate object but its

effect is to impose a discriminatory burden

upon interstate trade as against intrastate

trade, the existence of reasonable non-

discriminatory alternative means of securing

that legitimate object suggests that the

purpose of the law is not to achieve that

legitimate object but rather to effect a form

of prohibited discrimination.

Now, we say the opposite of that. We are saying

the legitimate object is the acquisiton of the barley
crop for the benefit of growers, et cetera, and the

adoption of this marketing scheme to get a - - -

DAWSON J:  When you say "for the benefit of the growers" that

is really to hide what it is really for. It is to

keep up prices or, at least, to keep them stable.

MR ELLICOTT:  Yes.

DAWSON J: But, I suppose you would say, "Well, it is to do that

towards the intrastate buyer and the interstate buyer

alike".

MR ELLICOTT: Well, Your Honour, to ensure that the barley

growers of New South Wales get the most out of the

market situation and to be able to -for instance,

small growers, if they can operate collectively

through the Board, they are more likely to get a
higher price, for instance overseas or perhaps

locally, than they are if they are left to their

own devices and the Board is designed -

DAWSON J: That goes against Victorian buyers. I mean, you

do not hide that fact.

MR ELLICOTT:  Yes, but the ultimate aim, Your Honour, is to

benefit the growers. That is the whole purpose of it.

DEANE J:	But do you not need to confine it to that? I mean,
if you say it is valid to have such a scheme so that
it all stays in New South Wales, you are overlooking the fact that the trade of the consumer or the
purchaser is as much protected by section 92 as that of the vendor and a scheme which is aimed at
restricting purchases to local purchase - if that be
what it is about - will be just as protectionist as a scheme that is aimed at protecting local vendors
against interstate vendors.

ClT29/l/DR	52	5/6/90
Barley(2)

MR ELLICOTT: Well, Your Honour, but not discriminatory in a

protectionist sense, vis-a-vis, the consumer.

DEANE J: But, if it is aimed at saying only New South Wales

consumers can acquire New South Wales barley - I

am not talking about a marketing scheme, I am talking

about the erid position which you keep seeking to

justify - - -

MR ELLICOTT:  Your Honour, I have never tried to justify that position. That is to say, that - - -

DEANE J: Well, I think that is what some of the questions have

been aimed at.

MR ELLICOTT:  No, Your Honour, I am not trying to justify the

position that the object of the scheme is to say

that all barley shall be consumed in New South Wales

to protect consumers in New South Wales. I have not

put that submission. My submission is directed to -

DEANE J:	Well, I thought that is what you. had suggested, it would be valid
if that were the object?
MR ELLICOTT:	Your Honour put to me a proposition which I would submit - - -
DEANE J: I was not suggesting just that.	It seemed to me

that you are putting it very widely in terms - not

of this scheme which is a legislative provision

under which a majority of producers of a particular

product can bring into operation an orderly marketing

scheme - but you seem to be putting it on the

basis that it does not matter how wide it is or

whether it is compulsory acquisition of every

product and so on which seems to me to take us far

beyond this case.

(Continued on page 54)

ClT29/2/DR	53	5/6/90
Barley(2)

MR ELLICOTT:  Well, Your Honour, I sought to argue at the beginning,

and if what Your Honours have said literally in

COLE V WHITFIELD is to be read as only relating to the particular circumstances, then so be it. But I sought

to argue based on that sentence that this was not a

case that was concerned about trade coming into New

South Wales, that the law was not designed to do that.

Now, if Your Honours reject that notion and say,

well, yes, section 92 can still opera~~ in a situation

where the trade in question, that is, t~e interstate

trade is out of New South Wales, and that can still
in perceived circumstances be regarded as offensive to section 92, or discriminatory in a protecttonist

sense, then it is our submission that this law, this

very law - I am not talking about any other law - is
neither discriminatory nor protectionist in any sense

because it applies alike to interstate and intrastate

trade and it is not designed to prevent in any way

any interstate trade in the product. The interstate

trade still goes on. It is not trying to keep the
product in New South Wales. It is not aimed at enabling
the consumers of New South Wales to alone have the right

to the product. It is neither that on the face of the

law nor in its operation.

If in answering questions I have given the impression that it would cover such cases, then I was

certainly not intending to because that may raise other

questions. Once one says that a law can be offensive

to section 92, even though it is concerned with the
trade going out of the State as distinct from the trade

coming ·into the State, it is not part of our argtiment.
We do not need to argue it, that section 92 is not
designed to assist consumers as well as vendors.

It is just not part of our argument because it is not

a relevant circumstance to the marketing scheme that

operates here. The marketing scheme operating here

is one that is perceived to be for the public benefit

of New South Wales, for the benefit of growers, and it

is, that is to say the particular matter that is pointed

contracts is truly the method and indeed, the only

to as a burden, we assume, namely the fact that

individual growers cannot sell interstate, out of the

reasonable method that could be adopted for achieving

the object, because without it the legitimate object

could not be fulfilled.

DAWSON J:	Mr Ellicott, it becomes more complicated the way you
put it. Would it be wrong to say that the whole scheme
is designed to protect growers against maltsters
whether they be New South Welsh or Victorian, picking
them off one by one and thereby in an ill-organized
way depressing the price?
MR ELLICOTT: Well, Your Honour, it can be put that way.	But you

will not find that in the legislation.

ClT30/l/PF	54	5/6/90
Barley(2)

DAWSON J:	But is that not the effect of it?
MR ELLICOTT:	The effect of it, as it operates, is to

enable the malting grade barley to be sold through the Board in a competitive way to maltsters in New

South Wales, and if need be or if competition allows,

to maltsters in Victoria or elsewhere.

DAWSON J:	But this is not against you, incidentally, but the
reason ~eing - - -
MR ELLICOTT:	I know it is not, Your Honour, but I am anxious that

the Court directs itself to the question, and the

q u e s t i on i s , r,1h a t doe s the 1 e g i s 1 a t i on do ?

DAWSON J:	Mr Ellicott, the reason being for all this that if
you allow individuals to contract the market becomes ill-organized to the disadvantage of the grower.
And that is the reason that you do not allow them, if I can use the term, the purchasers to ''pick them
off one by one''.  And in that scheme it does not m3Lt0r
whether they are Victorian, Western Australian or
New South Welshmen.

(Continued on page 56)

ClT3O/2/PF	55	5/6/90
Barley(2)

MR ELLICOTT: And it is a legitimate object.

DAWSON J: It is protectionist, but, you would say, not in

a discriminatory way and certainly not at the

border.

MR ELLICOTT:  Well that is what we say, Your Honour,and

Your Honour may think it has taken me a long while

to say it or that I may not have said it or that

Your Honour may have said it for me, but that is

what we say.

DAWSON J: Yes.

MR ELLICOTT:  Your Honours, for those reasons we would ask

Your Honours to find that the provisions are valid.

MASON CJ: Yes, Mr Solicitor.

MR DOYLE:	If the Court pleases, I must admit, my friend having
said that it has taken a long time,  I did not
realize he was about to stop, so Your Honours might
have to pardon me for a moment while I organize my papers. Your Honours,we have provided the written
outline of our submissions.  I do not know if
Your Honours' associates have it and also a book
of material to which we wish to refer in the course of our submissions.
MASON CJ:	Yes.
MR DOYLE:	If the Court pleases, the way in which we seek to put our submissions is by,first of all as the
outline indicates, putting some general propositions;
then by looking and making reference to the book of
materials we have supplied in a little more detail
at the operation of the scheme, because perhaps as
that final question from Your Honour Justice Dawson
indicated, the scheme can be turned around in various
ways and, in our submission, it is important to
look quite carefully at the actual operation of the
scheme and while the Court cannot engage in a kind
of industries assistance commission inquiry, in
our respectful submission, it is necessary for the
Court, in considering the validity of the law, to
identify the apparent recipients of benefits and
the apparent location, if I can call it that, of the burdens of the scheme and that is the second part
of our submission and then, in other words, to look
at the operation of the barley industry; not in
great detail, but in a little more detail than my
learned friend did; and then, thirdly, to apply the general propositions to the facts in the light of that examination of the operation of the industry.
CIT31/l/CM	56
Barley(2)

And, Your Honours, at the outset, I would like

to put some submissions going to some matters

which were raised with my learned friend this

morning. We do submit, Your Honours, at the outset,

as we say in paragraph 1 of the outline,that it is

a question of whether there are discrimatory burdens

of a protectionist kind and we submit what the

Court has said, that means is, discrimatory burdens

which do confer protection on intrastate trade of

the same kind. In other words, which confer

protection on intrastate trade, either interstate

trade of the same kind and, in our respectful

submission, those words "of the same kind" are

important.

McHUGH J: Well, Mr Solicitor, that means, does it, that if

New South Wales prohibits the export of say coking

coal to protect its steel industry, then there is

no breach of section 92?

MR DOYLE:	No, Your Honour, and that is the one really
significant qualification which I have made in
very brief terms in paragraph 2.  We accept quite
readily that that test will not be suited to all
situations and I do not want to read from the
PHILADELPHIA case, but Your Honours may recall that
was the case in which the State law said that, in effect, only local rubbish could be deposited in
empty landfill, and we accept that the conserving
of a local resourse or a local conunodity for local
use may well be protectionism, even though that
would not necessarily fall within the general
submission in paragraph 1.

(Continued on page 58)

CIT31/2/CM	57	5/6/90
Barley(2)

MR DOYLE (continuing):  What we submit is that for the

present case the general submission in
paragraph 1 is an appropriate test because, as

the facts indicate in this case, we submit

there is no hint here that barley is being kept

for New South Wales users, and there is no hint

that the object of the scheme, alternatively, is

to make barley available to New South Wales

users on better terms.

DEANE J:	But if you prohibited the export,why would that
not be protecting the intrastate trade of the purchasers from the interstate trade of
interstate purchasers in a protectionist and
discriminatory sense?
MR DOYLE:	It might be, Your Honour, but could I postulate

two different situations? First of all, where

there is, what I call, an overall shortage of the

corrnnodity, there is not enough to go round

Australia, and the object of the scheme is to make

sure that people in New South Wales get as much

barley as they want before it goes anywhere

else. Now that has nothing to do with terms, it

simply makes sure that New South Wales users

have preferred access and, as a matter of interest,

in the case of DUNCAN V QUEENSLAND, which again I

do not want to read from, when one looks carefully

at Justice Isaacs's judgment, that dealt with the

restraint on the disposition of beef during the

first world war, there are indications in his

judgment that that is really what he saw in that

scheme: it was making sure that there was enough

beef for Queenslanders.

But anyhow, that is the first situation -

not enough to go around and the law makes sure that

the people in the legislating State get first go at

the corrnnodity which is in short supply. The next

situation, which may indeed be a situation where

there is more than enough, but we can put that aside,

is the situation where the legislation aims to make

sure that the users in the local State get it on

better terms. It may be a lower price, but in

our case, in our submission, what the facts

indicate is the converse, namely that if anything

what the scheme is doing is ensuring that buyers

of barley in New South Wales, and incidentally

elsewhere, are paying more for the barley than they

otherwise would, and there is no hint in this

scheme, in our respectful submission, of that
sort of protectionism, in other words, making
sure that New South Wales buyers get it on better

terms than buyers in other States. It is, in

fact, the converse and, in our submission, the·

facts also bear out the further proposition, that it

makes sure that all users pay a higher price than

they otherwise would, regardless of their location.

ClT32/l/FK	58	5/6/90
Barley(2)

And so, in our submission, what one then has to turn to - and I want to come to it as part

of these general submissions, is the ~uestion put

by Your Honour Justice Dawson, which I would, in
due course, come back to, but - well, should it

be analysed as the law protecting a grower in

New South Wales who would sell his barley within the

State against competition from a grower in

New South Wales who would sell his barley

interstate. Now, that has to also be looked at

but, in our respectful submission, that is again

a different situation, it may require a different

analysis, but I do begin with the general
proposition that first of all we accept what

Your Honour Justice Deane was suggesting earlier this morning, that a law which simply preserves a

scarce commodity for use locally may well be

protectionist even though that might not fall

within our general submission 1, but we submit that
because there is no hint of that type of

protectionism in the present case, general

submission 1 is an appropriate test to consider in

the present case.

Then we go to the second stage and say there

is no hint here that barley is being made available
to users in New South Wales on better terms than

it is made available to users elsewhere, therefore

we can put that aspect of protectionism aside, and
then finally we come back to the aspect which I put

a moment ago in terms of the question that

Your Honour Justice Dawson put.

(Continued on page 60)

ClT32/2/FK	59	5/6/90
Barley(2)

DEANE J: Except your wording of 1 almost looks as if it is

aimed to open a door to evade section 92 which

your wording of 2 is then designed to close.

I mean, why open the door in the first place by

bringing in things such as "of the same kind"?

MR DOYLE: Well, partly I advance the same plea as my learned

friend, Mr Ellicott, did. That is how the Court

put it, in particular, in CASTLEMAINE TOOHEYS, and
while I accept that the Court was there dealing
with a different situation than one which may be
categorized as an incoming commerce or incoming
trade situation, in my respectful submission,

it is probably not going to be possible to devise

a universal test for protectionism and what I am

submitting to the Court is that if we find it is
not in the area of ensuring preferred access to
a scarce commodity, if it is not in the area of

ensuring better terms for local acquirers, then

we still must look back to the position of local

producers but then we come and have to face the

central issue, what really is protectionism all

about and, in a sense, this can perhaps be answered

in part by going to the first of the questions

this morning that I wanted to touch on and that

was one from Your Honour Justice McHugh. Your Honour

said, "Well is not the object of this scheme to

protect the domestic price and to keep the domestic
price up?", meaning, presumably, the New South Wales
price. Well, in a sense, it is but, in our

respectful submission, one has to analyse it more

closely than that because if one said, "Well, yes,

that is the object of the scheme and yes that is

protectionism", then presumably any attempt to

legislate for a minimum price for a commodity within

a State would be protectionist, and yet, in my

respectful submission, the kind of intuition

suggests protectionism is not as wide as that and

so if one accepts as a premise that section 92

does not prevent all minimum prices, then that

suggests that the question Your Honour puts does not

appropriately identify the issues before the Court.

(Continued on page 61)

ClT33/l/LW	60	5/6/90
Barley(2)

MR DOYLE (continuing): Now, again I have to qualify what I

said because it would not be part of our submission

to deny that a minimum price can ever be protectionist,

because if a minimum price was set at such a level

that an incoming commodity that lost its

competitive8'IV'a,p:t:ages because it could have been sold

cheaper than the local commodity, but because of the

minimum price now has to be sold at the same price.

McHUGH J: But this, really, is a scheme to protect the

domestic producers from the lower prices offered,

and apparently accepted, by the interstate maltster

buyers?

MR DOYLE: Well, indeed it is, Your Honour, but the question is,

"Is that protectionism and is that the sort of thing

that section 92 is striking at?". So, I do not deny

for one moment that cast one way, it can be said,

that is the object of the scheme, in terms of

Your Honour Justice Dawson's question, to protect

the grower in New South Wales who would sell his barley

to a buyer in New South Wales from the price effects,

if I can call them those, of the grower in New South

Wales who would sell his barley to a buyer interstate.
But perhaps if I could go to that now, Your Honours.

What we would submit ,as to that is, there are two

ways of saying, "That is not protectionism within

section 92". First of all, at the heart of

protectionism is the notion of discrimin::i.tory treatrrent

and when we look at what is happening here we find

that .all growers of barley in New South Wales are being

treated the same way. Now, that may not be the end of
the issue but surely that is a significant factor that

all growers are being treated the same way and when we

turn it around so are all buyers, all buyers of barley

in New South Wales are under this scheme getting the

same treatment as buyers in other States. They are

all met, in effect, with the minimum price which the

Board seeks to establish. So, that is the first

significant thing. Then, in our submission, you do

have to say, "Is there a competitive advange being

given to the local product?". Now, that formulation of

the question may be said to be tendentious because I

go on to say in answer to it, "There is no competitive

advange given to the New South Wales grower who would

sell his barley within his own State".

(Continued on page 62)

ClT34/l/JL	61	5/6/90
Barley(2)

:MR DOYLE (continuing): In fact, in a sense, quite the reverse.

He is being forced to sell at a higher price but,

in truth, there is no competitive advantage being

given to him. What he is being provided with is a

legislative scheme which enables him to exact or

obtain a better price from users but, in my submission,

one cannot, in ordinary parlance, say that he is

being given a competitive advantage over the grower

next door who would like to sell to the present
defendants, the maltsters in Victoria. That is just

not something that we would ordinary call "a

competitive advantage". It is certainly a benefit

and it is undeniably a local benefit - a benefit to

people in New South Wales - but I submit it is not

a competitive advantage and that that, namely

"competitive advantages", is what section 92 is,

not necessarily exclusively, directed at but primarily

directed at and if we find that that is not present

here and also that there is no discriminatory
treatment when one looks either at growers or at
buyers, our submission is that there is no

protectionism of the sort to which section 92 was

directed.

Could I approach it in a slightly different

way, turning to the question Your Honour Justice Brennan

posed. Your Honour said, "Well, does this

law prohibit trade interstate - or interstate trade -

in New South Wales barley unless the Barley Marketing

Board permits it - unless the Barley Marketing Board

says it may occur?". Well, in our respectful

submission, again, the answer is yes, the scheme can

easily be analysed or cast that way but, in our

respectful submission again, that is not indicator

at all of protectionism. First of all one might

find - and it is a bit unrealistic in relation to

barley but I will stick with the same commodity -

there might be a particular disease in New South

Wales barley and for purely health reasons the Nev1 South

Wales legislature might have enacted that no barley in New South Wales will be sold other than by the	Board and the Board will check the barley to see if
it has got the disease and only if it is found to be
disease free will the Board permit sales of barley.

(Continued on page 63)

ClT35/l/DR	62	5/6/90
Barley(2)

MR DOYLE (continuing):  Now again, first of all, that is

quite general; it is not discriminatory, but
again, equally, there will be no trade interstate

in New South Wales barley unless the Board

permits it. In our submission,that example

indicates the fact that the trade will occur only

if the Board permits is not in any sense indicative

of protectionism. One has to ask further and say,

in effect, what is going on here; what is this

scheme all about? And, in our submission, if one

found that the reason why the trade was being

organized that way was a health ground, one would

say immediately, well, thac is not a protectionist

scheme, even though it produces the identified

result that there will be trade interstate

only if the Board so permits. If, on the other

hand, and now I go back to the earlier

illustrations, one found examining the facts that

the real reason was there was not enough of the

commodity to go around Australia, and this was

the way of making sure there was enough in New South

Wales, it would be protectionist. Likewise, if

one found that it produced a lower price for users

in New South Wales. Now, all that demonstrates,

in my submission, is that the answer to

Your Honour Justice Brennan's question does not

answer the problem; it tells us that something is happening which may be protectionist, but then we

have to look further and more closely at the thing

which is happening aid we submit, when one does so,

one finds the absence of discriminatory treatment

and again the absence of competitive advantage,

and we submit that the fact that there is a local

advantage, and an advantage only to locals, is

not protectionism. The protectionism is

rooted in the concept of the competitive advantage
except for the qualification I make - or in
these submissions - of the situation where the

scarce cornmodity is being preserved for local use,

because undoubtedly within protectionism there is	also,in our submission, the concept of preventing
what the Americans have called economic
isolationism. We accept that it will also strike
at attempts to isolate markets.

Your Honour Justice Brennan also, referring,

I think, to COLE V WHITFIELD, said, "The purpose of

section 92 is to create a free trade area, and can

not this law" I take it Your Honour was saying,

"by implication", "be seen as impeding that purpose,

because how can it be a free trade area if, in effect

there will be interstate trade only if the Board

so permits?"

ClT36/l/FK	63	5/6/90
Barley(2)

MR DOYLE (continuing): Well, as to the latter part, I have

already given my answer that one has to look further

and consider what it is the Board is doing and why.

But, in my respectful submission, one also has to

qualify the premise because while, as the Court

said in COLE V WHITFIELD, the purpose of section 92

was to create a free-trade area, all it did was

prevent protectionist impediments, if I can call

them that. In other words - - -

McHUGH J:  You have got to read it with section 90 as well,

have you not, because section 90 takes away from

the States the power to give bounties on the

production and export of goods and, read with

section 92, it seems to indicate an intention to

create a free-trade area throughout the Conrrnonwealth?

MR DOYLE:  Yes, Your Honour, precisely and I am indebted to

Your Honour because that, perhaps, enables me to

put it more clearly. The group of sections referred

to in section 92 were clearly directed towards

creating a free-trade area but the more limited

function of section 92, in particular, was the

prohibition of protectionist burdens and, in our

respectful submission, one has to be careful - and

I am not suggesting Your Honour Justice Brennan

did this, but one has to be careful not to glide
from the overall purpose of this group of sections
to saying that something which would inhibit, in a

broad sense, a free-trade area is offensive to

section 92. It may be offensive to some other

section in that relevant group or it may offend

none of them and,even though it inhibits the development

of a broad free-trade area, escape any kind of

sanction. But, in our respectful submission, it is

important to bear in mind that section 92 is

focused wholly on protectionist burdens and while

the underlying purpose of section 92 is to assist in the creation of a free-trade area., it is not, in a sense, the right question to ask and to say,

"Well, now, is this a law which inhibits the creation

of a free-trade area?".

The answer to that question might cause one to say, "Well, I should think about section 92", but

the two questions, in our submission, are quite

different.

(Continued on page 65)

ClT37/l/DR	64	5/6/90
Barley(2)

MR DOYLE (continuing): Just apropos of that, Your Honours, I do

not want to read from any these, but in paragraph 3

of the outline I have referred to some paragraphs

from Halsbury where, in a reasonably concise and

convenient fashion, the position under the European

community law is summarized and it can be seen by way of contrast that there you do have a group of

provisions which, in effect, together, combine to

create a genuine free trade area and, furthermore,

another but distinct principle, the principle of

free movement of goods, and that is another qualifier

which we would, respectfully, make. In our submission,

section 92, while one might say in a broad sense is

directed towards achieving the free movement of goods,
it is not right to say that something which impedes

the free movement of goods, within Australia, is

offensive to section 92. Free movement of goods is
a related concept but a wider one than the concept

embodied in section 92.

So, Your Honours, in our respectful submission,

coming back to the outline, it is proper to approach

this case in the light of the proposition set out in

paragraph 1, and proper to approach it on the basis

that in the end, however you analyse it, you do look

to see whether in some sense local trade is being

given a competitive advantage over interstate trade

in the same commodity or of the same type because,
again, I do not want to suggest that one ignores
questions of product substitution or that one defines

the relevant commodity too narrowly and so, while

we acknowledge the qualification that has to be made

for preservation of scarce resources and perhaps

some other situations, we submit that this is the
appropriate way to approach the present case.

So, could I go then, Your Honours, to the balance of the submissions, having made those

general points.

MASON CJ:	Mr Solicitor, if it is convenient we will adjourn
now and resume at 2.15.

AT 12.46 PM LUNCHEON ADJOURNMENT

ClT38/l/JL	65	5/6/90
Barley(2)

UPON RESUMING AT 2.16 PM:

MASON CJ: Yes, Mr Solicitor?

MR DOYLE:  If the Court pleases, just two other points before

I move on. Just, again, apropos of the point

Your Honour Justice Dawson made that this may be

protection of the grower who would sell within his

State against the grower who would sell to another

State, in my submission, while it can be said that

is an aspect of the scheme, we would submit that

when you look at the scheme as a whole what it is

doing is, as I think Your Honour may have said a

little later, protecting all growers against the

market force of buyers and while there is no point

ignoring the aspect that Your Honour referred to,

in our submission, it would be wrong to describe
the scheme as one to protect one category of grower
against another category, it is a scheme designed

to give all growers certain strength in the market,

vis-a-vis buyers.

Your Honour Justice Mason made the point that prohibition on exports, the purpose for that would

usually be a protectionist purpose. We would

respectfully agree that usually it would be but that

in the end you have to analyse the workings of the

scheme and the apparent objects of it and one should

not infer that the prohibition on exports is always

protectionist.

Your Honours, going on then to the legislation

itself. That has been dealt with by my learned

friend and could I just make two or three very short

points about it. First of all, as was implicit in

what he put but we submit it is important to bear

in mind, the Board can only compulsorily divest

the commodity from a producer in New South Wales.

It has no power to divest or acquire barley being

brought into the State so that is a feature of some

marketing schemes which is completely absent here
and, in our submission, it is clear that it can

only divest from a person who is producing within

the State when one looks at the definitions,

in particular, of "commodity" and "primary product".

It is clear that it relates only to the commodity

produced in that State and not, if I can put it

differently,	the commodity if found in that
State.	I would refer in particular, as I mentioned,

in section 4 (1) to the definitions of "commodity"

which is defined as:

a primary product ..... declared to be a commodity

by a proclamation -

ClT39/l/LW	66	5/6/90
Barley(2)

And then the definition of "primary product"

which says:

includes -

(a) any grain, cereal -

et cetera -

or other product of agriculture ..... in New

South Wales -

and in my submission those words "product" and

"in New South Wales" properly govern the whole

definition.

(Continued on page 68)

ClT39/2/LW	67	5/6/90
Bar1ey(2)

MR DOYLE (continuing):  I would also refer to section 4(5)

which says:

Except as prescribed, a declaration of a

primary product as a commodity for the purposes

of this Act shall be deemed to be limited to so much of the product as is produced within the area of the board or committee to which

it relates.

And while again there is potential for an exception, the reference td'the area of the board'seems to

make it clear that it is intended to operate on

produce produced within New South Wales. It

seems inconceivable that a board would have an

area beyond the boundaries of the State. So first

of all, that it is limited to barley produced in

New South Wales; secondly that there is no

restriction in this Act on people in New South

Wales acquiring barley from other States. Again

that is a feature often found in marketing schemes

but not present in this one. And so, in our

submission, it follows that the only relevant

restriction is that a New South Wales grower is

not at liberty to dispose of his barley as he

chooses. There is a restriction on him.

BRENNAN J:  Why is there not a restriction on an out-of-New

South Wales consumer of a relevant kind? After all,

if one posits for a moment a scheme in which the

New South Wales scheme alone operates in Australia,

a maltster in Victoria can acquire his supplies from

any part of Australia except New South Wales and

New South Wales supplies are forbidden to him except

through the Board. Is that not discrimination of

a protectionist kind, the protection being in favour

of the New South Wales growers?

MR DOYLE:	Could I answer that in stages, Your Honour? First
of all, and this is in answer perhaps to my
general point, the converse of the restriction on
the grower is a restriction on people who would
buy from the grower bu4 of course, in the present
case that restriction is non-discriminatory because it applies equally to would-be buyers in
New South Wales and in other States, so I certainly
do not deny that the restriction on the grower has
its converse and can be described in terms of
restrictions on purchasers.

(Continued· on page 69)

CIT40/l/CM	68	5/6/90
Barley(2)

MR DOYLE (continuing):  As to the example Your Honour gave,

in my respectful submission, if the New South Wales

scheme was the only scheme in Australia, one could

not tell on the facts Your Honour gave whether the

scheme was protectionist or not. We would know

that a maltster in Victoria could not go direct to

a grower in New South Wales; we would know,

assuming the Act is the same; nor can a maltster

in New South Wales go direct to grower in

New South Wales. So we would find a restriction

which was not discriminatory and, in my respectful

submission, to decide whether it was protectionist

you would have to ask the sorts of questions that

I was posing and endeavouring to answer before lunch. You would have to say: now, who is benefitting from this and in what way? and: where are the burdens falling, and in what way? And, if you find that

the burdens are falling equally on would-be buyers

in New South Wales and in other States, that suggests

it is not protectionist. If you find also that

New South Wales barley is not given a preferred

position in the New South Wales market, there is
another indicator of protectionism gone.

If you find that New South Wales buyers of

barley are not given better terms, or are not
getting preferred access to a connnodity of which
there is not enough, there is another indicator of

protectionism gone and, in our respectful submission,

you would still come back to the point to which I

came before lunch and the submission that if all you

find in the end is that New South Wales growers

through·the scheme are able to get a better price

from buyers generally than they would get in the

absence of the scheme, you have not found the

protectionism, and if you try to break it open,

as it were, and say, well, you are at least protecting

the New South Wales grower who is interested in

selling within his State from the New South Wales

grower who is interested in selling outside his

State, we would submit that is not protectionism
of the type at which section 92 is aimed.	You are

not giving the former grower any sort of competitive

or market advantage, you are simply looking at a

scheme which, in truth, is intended to give all

growers the same benefit, and the relevant benefit

is, in fact, a better price from all buyers.

So, in the end, in my submission, even if

it was the only scheme in Australia, you go through

the same series of issues.

ClT41/l/FK	69	5/6/90
Barley(2)

MR DOYLE (continuing): Your Honours, reference has been

made to the schemes which exist in other States and

we have prepared a very short table which endeavours,

version, an indication of the nature of the other	in a very compressed form, to give the Court in precis information, so Your Honours can see that there are
statutory schemes which are broadly similar in other
States although, we submit, and acknowledge that the
fact that there are other marketing schemes is neither here nor there. If this scheme is protectionist
in the fact that other States are doing it cannot help; if it is not protectionist then the fact that
they are doing it is neither here nor there.

We just make the point, Your Honours,though

that when you look at the second to last column

on the right:

Buyers from the marketing body -

we find in some State Acts, again, a feature which

might be indicative of protectionism, but is

not in this Act, and I take the South Australian Act

as an example, as it says there:

In marketing barley, Board must have regard to reasonable requirements of

persons requiring barley for use or

consumption in S.A.

That is section 18(2) of the South Australian Act,

which I will not read to Your Honours - we have

provided a copy of the Act. Again, that is a

type of restriction which may have a protectionist

effect because it may indicate, and I underline

the"may",that the object of the scheme is either

wholly or as a substantial part preferring local

consumers. But, again, we make the point that is

a feature which is apparently quite lacking from

this scheme.

Could I go, then, Your Honours, to the objects of the scheme because, in our submission, while it

may seem very obvious, it is important to look at

the objects because that is one of the first

enquiries, namely, what are the objects of this

scheme and are they objects which are indicative of

protectionism, and for that purpose I seek to go

to the materials which we provided to the Court

bound up in book form headed:

Operation And Effects of the Legislation -

which is int.J:roduced by, in effect-, a written submission and
there are four accanpanying appendices to vvhich I will refer
while making further submissions.

C1T42/l/JL	70	5/6/90
Barley(2)

MR DOYLE (continuing): This is provided, if the Court pleases,

by us on the basis that it is important for the Court to be informed, we would submit, in a broad way as to

the operation of the scheme. And I have to make it

clear that although my learned friend, Mr O'Callaghan,
does not object to us referring to it as part of my

submissions, it, of course, does not go forward, as

it were, as agreed facts. It is material which, we

submit, is relevant and should be brought to the

Court's attention. And I will not, Your Honours,

in all cases refer to the material in the appendices
as in some cases the point made in the written

submission is self-evident.

Could I just tell the Coti~t first of all in brief

what the a~pendices are. Appendix 1 is a report

prepared by the Centre for International Economics,

and while as its title page indicates, it is concerned

with the impact of trade practices legislation on

New South Wales agricultural marketing boards, a

matter with which the Court is not concerned, in the course of the report there is a useful discussion of

some aspects of the barley industry in New South

Wales, and I will come back to that in a moment.	And
so we have selected from that report pages which

simply deal with the operation of the Barley Marketing

Board in New South Wales.

Append i ~ 2 is simply a fairly short article fran an

economist's point of view analysing the way in which

organized marketing of agricultural products in

Australia operates, and we put it before the Court

as simply giving an economist's perspective of the

operation and mechanisms of such schemes.

Appendix 3 is a report of a wor1.~ing party appointed t:o

review barley marketing in South Australia and Victoria.

There is the one board for those States constituted by

similar legislation in each.of those States, and

probably as the table of contents indicates the main

of the scheme and whether it should be more or less	purpose of the review was in terms of the efficiency
regulatory - again, a matter with which the Court is
not concerned, and so we have not included proposals
for change and matters going purely to efficiency, but
as part of that process the working party looked at the marketing of barley in brief terms in Australia as
a whole, and in particular, in the two States, South
Australia and Victoria.

ClT43/l/PF	71	5/6/90
Barley(2)

MR DOYLE (continuing): Appendix 4, Your Honours, is one

chapter, chapter 17, from a book, "Agriculture in
the Australian Economy" and, in particular, the
introduction to that chapter, again, provides a
useful examination from an economist's point of

view of the workings of compulsory marketing schemes under the headings of "Introduction"

and then "Orderly Marketing" and the balance of

the chapter examines the working of particular

schemes not before the Court and that is really

included purely for the purposes of completeness

but our main purpose in including that chapter

is for the analysis, pages 326 through to 330,
the first three or four pages.

So, Your Honours, starting with the objects

of the scheme and the question of whether they
are protectionist and turning to the written

submission, when one looks as these materials and

at also the legislation a number of different

objects can fairly easily be identified.

DEANE J:	Mr Solicitor, is the Board subject to the TRADE PRACTICES ACT?
MR DOYLE:	No, Your Honour, I think the purpose behind the

report,	appendix l,is really consideration of
whether it should be.	My understanding is that it
is not at the moment.

DEANE J: Which means there would be nothing to prevent it

using its monopoly power in the area to selectively
undercut any interstate vendor - - -

MR DOYLE:	In effect, a form of predatory pricing, yes.
DEANE J:	- - - which is often one of the aspects of these
local marketing schemes. You find the prices are
much lower in the border areas where there is competition from interstate producers?

MR DOYLE:  Yes .. Well, Your Honour, all I can. say is I believe

there is nothing in law to stop it. It may well

be that the submissions I will make as I work through

this material will indicate that in the light of

the way the relevant industry works it is unlikely

that would happen becaus~without jumping too far

ahead, it appears that the malting industry within

Australia is dominated by just two groups and - - -

(Continued on page 73)

ClT44/l/DR	72	5/6/90
Barley(2)

DEANE J: And very few purchases.

MR DOYLE:	Yes, there are very few purchases and those two
groups seem to be represented throughout Australia
and so probably that sort of predatory pricing
would just be self-defeating.  So, Your Honours,
as to objects.  First of all, 1. 2 increasini
or stabalizing prices; and these are just different ways in which the different objects have been
identified in the literature;  1.3 providing
counterveiling power for producers, and that is really counterveiling power against buyers; greater
marketing efficiency; improved market information;
the ability to promote export sales and then
research and promotion.  Now, in our respectful
submission, if one looks at them as objects, there
is nothing at all protectionist about them; one
finds nothing in them which hints at, in effect,in some way preferring the local product over the
competing product from interstate or the local consumer over consumers from other States and those
objects can broardly be described as improving the return to local agricultural producers and, in our submission, that, as such, is not a protectionist object and there is nothing in the history of section 92 to indicate that at least the pursuit of that broad object was, in any sense,
protectionist. That is not to deny that at times
the pursuit of it may not have involved protectionist means, but, in our submission, the starting point,
what are the objects of a scheme like this, indicates
nothing which hints at protectionism.

If one then turns to the way in which the scheme

operates, as one must, and under the heading of

"Mechanisms" as we have put in the submission,

paragraph 2.1:  a commonly used mechanism in such

schemes is the diversion of supplies from the home

market to the export market and the operation of what is called a "home-price scheme" which gives	a price in the domestic market which is greater
than export parity. And, just on that, because that
seems to be a central feature of this scheme, could
I refer very briefly to appendix 4 at page 326. And
Your Honours, I have not $eparately paged this book
and so the page numbers I give are the pages of the
original work. In the third paragraph on that page,
the second-half of the paragraph:

The favourite device of marketing boards, and of orderly marketing schemes in general, is the

home consumption price scheme, whereby, through

the diversion of supplies to the export market

(combined with various forms of protection

designed to control imports), a price greater

than export parity is established in the domestic mar.:<.et.

CIT45/l/Cl1	73	5/6/90
Barley(2)

And then the authors go on to say that:

Marketing institutions in Australia are to

a large extent the result of the methods chosen

by agricultural producers and governments to

increase or stabilize agricultural prices.

Also at page 329 at the top of the page:

Price discrimination as practised by

marketing boards generally takes the form of the
diversion of supplies from the domestic to the

export market.

And they go on to expand on that a little and

also appendix 2, page 1, the article by Mr Lewis

at the very beginning:

The story of agricultural marketing policy

in Australia is for the most part one of the

efforts of primary producers to organize

themselves and governments for the purpose of

obtaining higher prices for their products.

He then refers to improved marketing efficiency

which, he says, has not been so central and at

about the middle of the page, the last sentence

of the second paragraph:

Marketing policy has been viewed primarily

as a device for price support and not as the

framework for a co-ordinated programme to

improve the performance -

And then:

(Continued on page 75)

CIT45/2/CM	74	5/6/90
Barley(2)

MR DOYLE (continuing):

The chief instrument of agricultural

marketing policy in Australia is the home

consumption price system under which

supplies of export products are diverted

to overseas markets in order to raise

domestic prices above export parity.

So, and in our respectful submission, when we	come
to the facts in a little more detail, it will	be
seen that that is really what this scheme is.	It is
a scheme under which, with a view to raising
domestic price, the domestic price supplies are

diverted to export markets and a home price is
obtained which is abo\e the export price and the only
way to obtain that is to have a fair degree of

control over the supply of the commodity coming

on to the market because if there is no such control,

subject to certain limits, despite your diversion
of the product overseas, you may find competing

supplies bringing the price down.

So, Your Honours, that is really the central

mechanism here and, again in our respectful

submission, if one looks at the central mechanism,

there is once again nothing in the nature of it

which speaks of protectionism, the object is

increasing the return to the local producer.	The
principal mechanisms are diversion to overseas

markets of the commodity and, secondly, control

of the flow of the commodity coming on to the

market, but again nothing, in our submission, hinting

at protectionism and it would seem, looking at it

in that very general way, that the burden is in

the direction of those who acquire the barley
generally, not at any particular type of acquirer,

or a person located in any particular place.

If one turns then, Your Honours, to look a

little more closely at the workings of this

scheme - section 7 of our outline - could I just

then go through paragraphs 3 through to 10. First

of all, barley is produced, it seems, in all States

of Australia, and perhaps implicit in what I have

put there but I have not spelt out, that because
barley growers can switch into and out of

production relatively easily, supply is relatively elastic and it is difficult to control production.

From State to State the proportion of feed and malting barley varies, Could I add, Your Honours,

there at paragraph 3.2 a reference to appendix 3,

also to pages 21 and 27.

Then paragraph 3.3, it is the case that

marketing boards seem to be responsible for much

of the marketing of barley sold in Australia. That

appears, in particular, from appendix 3 at page 26. That is a table, Your Honours, table 4 of:

ClT46/l/FK	75	5/6/90
Barley(2)

Receival and Exports by Australian Barley

Marketing Authorities,

and, as the footnotes indicate - the footnote which

has three stars, the:

Figure in parenthesis is the percentage of

total State production delivered to the

relevant Board.

And Your Honours will see that while the percentages

vary from State to State, and from year to year,

it seems clear that nevertheless a substantial part

overall of barley within Australia is being marketed

by marketing boards.

In paragraph 3.4, an understanding of the uses

of barley, although my learned friend has touched on

this but, by and large, it is either retained for

use on the producing farm, sold for stock feed and

feed barley - that is, barley suitable for stock feed

is sold both for domestic use and for export, and

it is sold for making into malt by maltsters and

that malt, in turn, is both sold on the domestic market and exported, and th~t seems to cover the

potential uses, apart from the simple sale of barley as

malting barley.

Could I refer, in particular, on that point to appendix 3, pages 27 to 29, and especially table 5,

while I would invite Your Honours to look in due

course at those pages, table 5 shows how the industry

is broken down under the heading of "Domestic disposals".

(Continued on page 77)

ClT46/2/FK	76	5/6/90
Barley(2)

:t-1R DOYLE (continuing): There is the disposal of domestic

malt, for "Expo+t malt" which means that it is

sold to a domestic maltster but he then exports

the malt. Then there is "Feed" and then "Sundry"

sales which are insignificant and then as "Exports",

"Malting barley" and "Feed barley" and, again,

a very small amount for "Food".

Your Honours, as far as pricing goes, what

this material indicates, paragraph 4.1, is that

a premium is usually obtained from malting barley

over the export parity price, and could I refer

to appendix 1, pages 76 to 78.	Under the
heading "Price discrimination":

While the four barley boards ostensibly compete

it is said that each of them sets higher

prices to maltsters for malting barley sold on

the domestic market. For barley exported

as malt, the board calculates the quantity of

barley -

that is turned into malt -

used in exported malt and sets prices at export

levels for that barley.

So it is quite a discriminating scheme in the sense

that although the malt is sold to local maltsters,

if they turn into malt sold within Australia they

pay the premium price; if they turn it into malt

sold overseas they pay a price which is the same

as export parity for malt. And the report then goes

on to canvass the issue of, in effect, how is it

in reality that they can get this premium which,

in our submission, does not in its detail concern

the Court.

Over the page, at page 77, they make the point

that:

There are two main malting companies -

and this is picking up my answer to Your Honour

Justice Deane -

Joe White Maltings Ltd and Barret Burston

Australia Pty Ltd. Joe White supplies the Bond Group of breweries and Barret Burston supplies Carlton United Breweries.

Collectively these two groups control

90 per cent of the malt made in Australia and

there are only a few other maltsters and a

few other brewers. While the. board vests barley

for sale to the two maltsters, from time to time

maltsters are allowed by the board to contract

directly with farmers.

ClT47/l/LW	77	5/6/90
Barley(2)

And dealing with "Feed barley" at the same page

they refer presumably to a company or a firm

"Bunges" I assume:

Bunges is a big buyer of barley. There are,

however, a large number of other buyers of

feed barley -

and because those buyers have the scope to switch

grains, in other words, substitute products according

to price - well, they say they have the:

scope to switch grains according to price and

nutritional content -

so obviously it is implicit in that that there is

no home price there; it is simply the market price

because they can switch to other products if the

price is too high. They make that point at the

very bottom of that page where they say, going over

the next page:

this means the price of feed barley is determined more these days by domestic market considerations

and not by export possibilities.

Also on the pricing, Your Honours, at appendix 3,

at page 28, paragraph 5.2.2, indicating that this

appears to be a general approach:

The price of malting barley for the manufacture of malt for local consumption is equal to the export price plus a premium in recognition that the maltsters or brewers have first call on available supplies. Costs are added to cover

interest and storage costs -

And:

(Continued on page 79)

ClT47/2/LW	78	5/6/90
Barley(2)

MR DOYLE (continuing):

The offer price of barley for the

manufacture of export malt is based on

the price at which the ABB can sell malting
barley for export at the time of offering

to the maltsters.

And in the next paragraph:

The price of feed barley for local

consumption is set on a daily basis,

taking into consideration the availability

and price of substitute grains.

So, turning back to the written submission,

Your Honours, paragraphs 4.1 and 4.2, in effect, what we find is that premium for malting barley

over the export parity price and feed barley
at market prices, paragraph 5,apointI have already
covered, that the malting market appears to be

dominated by two groups: the market for feed

barley comprises a large number of buyers; 5.3
the maltsters in New South Wales can purchase

barley from growers in other States, and so that

imposes a restraint to some degree on the ability

of the New South Wales Board to maintain a home

price. On that point, can I just add a reference,

Your Honours, without reading it, to appendix 3,

pages 19 and 29, and then the point that the price

for feed barley appears to depend entirely on

market factors. And paragraph 5.5 -if one says,

"Well, then where is the cost of this scheme

apparently falling?", because if most barley is sold

at market prices and the premium is for malting

barley paragraph 5.5, the premium paid for malting

barley consumed domestically seems likely to be

reflected mainly in the price of beer sold by the

breweries which consume the malt, and just on that

point, appendix 1 at pages 76 to 77- I referred to

these pages earlier, but at the very bottom of

page 76:

The people who pay for any price raising effect seem to be domestic consumers of beer and not

overseas consumers.

And to the same effect, appendix 3 at page 29,
and it is really, Your Honours, I guess I suppose

an inference from what is there at page 29 that

when one looks to see who uses the malt domestically,

one finds from the text there that it is brewers.

So, paragraph 6 of the written submission,

Your Honour, I do not seek to elaborate on it.

As my friend said, "It is a pooling system", in

terms of payments to growers and i~ is also a

ClT48/l/JL	79	5/6/90
Barley(2)

system under which feed grade barley is quite

frequently allowed to be sold directly from

producer or agent.

So, when one looks at that, Your Honours,

again overall, what we find is that New South

Wales growers of barley seem to get a better

price for malting barley used to produce malt

for domestic consumption, because a premium is

charged to local maltsters and it would seem

that the domestic price is maintained, in part,

by the ability of the Board to dispose of barley

overseas and, in part presumably, by its control

over supplies. But the point is when one looks at

it so far one finds no indication of looking at

the buyers of barley - no indication of any

protectionism there, nor so far, in our submission,

does one find any hint of protectionism as between

New South Wales barley and barley elsewhere. It

is all simply directed at getting the better price

through control of the flow of the commodity on to

the market.

If one then looks, going back to the written

submission, at where are the benefits and where are

the burdens, and could I just touch on that generally,

paragraph 7.1, the benefits appear to accrue to

New South Wales producers although there may be some

benefits for domestic maltsters; and paragraph 7.2,

that the amount of that benefit presumably depends

upon, first of all, the ability to obtain the premium
over the export parity price and the ability to sell

barley overseas; and paragraph 7.3 one would think,

as a matter of logic, it must also depend on the

comparative cost of the Barley Board doing this, as

against other mechanisms but that seems to be the

benefit under the scheme.

(Continued on page 81)

ClT48/2/JL 80 5/6/90

Barley(2)
MR DOYLE (continuing): When one looks to see what are the

burdens and where do they fall, paragraph 8.1 -
agents and users in New South Wales and elsewhere

are unable to purchase directly from New South

Wales producers unless the Board divest itself of

the relevant barley. So, there is a burden but that

is one which is placed equally on local and

interstate participants in the trade. So, it is

not discriminatory in its operation and, in our

submission, nor is there any discriminatory

purpose emerging from that.

There is no legal restriction of agents - and I use that term as just roughly meaning "middle

men" - and users in New South Wales who wish to

purchase barley from another State and bring it

into New South Wales for use or sale or consumptiJn

there. So, there is no burden at all on participants

in the trade in New South Wales who wish to deal in

barley from other States. So, simply, no burden at

all if one looks at that aspect of interstate trade.

If the Barley Board succeeds in generating better

returns for New South Wales producers it does so

by obtaining a higher price through the premium

charged and through diversion of supplies and that

higher price will either be absorbed by the
intermediaries or passed on to consumers but, once

again, there is nothing to indicate that the

location, in terms of within Australia, of the

intermediaries or consumers is, in any sense,

relevant. So, it is borne by them regardless of

the State where they are and nothing about the

structure of the industry to suggest that although

the legislation does not pick people out in terms of

where they are, that the natural structure of the

industry does that for the legislation.

Then, finally, paragraph 8.4: the diversion of supplies to the export market is achieved by

preventing agents and end users from buying directly

from the grower. That burden falls on all buying

participants.

McHUGH J:	Mr Solicitor, one burden you have left out in this
summary, though, is that the schemes effect and very
purpose is to burden interstate buyers of malt by
requiring them to pay higher prices than they could
get in a free market.
MR DOYLE:	Your Honour, with respect, that is an accurate but,

in our submission, significantly incomplete description.

The purpose and object of the scheme, if one wants to

put it this wa~ is to burden all buyers of malt by

obtaining a higher price from them and it does so

without reference to the State in which they are
located. In our submission, that is the significant

thing and to describe it as burdening maltsters in

ClT49/l/DR	81	5/6/90
Barley(2)

States other than New South Wales is to leave out

of the picture the significant fact that it equally

burdens maltsters in New South Wales and while, if

one found that, in truth, all maltsters were in

another State, one might start to wonder whether it is protectionism that does not, as it were, need to declare itself because the industry structure is

such that it can do this. The material indicates

quite to the contrary that there are two main

malting groups and nothing to suggest that they are

located primarily in States other than New South

Wales.

So, in our submission, if one looks for burdens

one finds they are being distributed, in our

submission, in a non-discriminatory fashion. If

one looks at the benefit, while that is certainly
a local benefit and that is the only reason one

would do it, it is not achieved in a way, again, which involves discriminatory treatment. So, in

our submssion, you can look at it either way: how

is the benefit achieved; or, where is the burden

imposed? But, in neither case do you find

discrimination, in our submission, and while that

is not necessarily the be all and end all, in our

submission, that suggests very strongly that this

is not a protectionist scheme.

Your Honours, finally, in paragraph 9, the

point which I touched on this morning that there is
no evidence that the scheme is used to benefit
New South Wales users or consumers by getting them

a lower price than their equivalents in other

States and no evidence that the scheme is used to

retain barley to ensure that New South Wales's

demand is satisfied and compare that for instance

with the South Australian section,to which I

referre~which could conceivably fall under that

category.

We submit that when you look at the way in

which the industry operates it is not difficult,

in a general way without requiring the Court to make

precise factual findings, to identify the nature of

the benefit and where the burdens fall and how
that is achieved and that none of those things

appear to have the hallmarks of protectionism.

(Continued on page 83)

ClT49/2/DR	82	5/6/90
Barley(2)

MR DOYLE (continuing):  So, if in that factual context one then

comes back to the law and asks, first of all, does it

on its terms discriminate against interstate trade

in favour of intrastate trade, our submission is that

on its terms there is no such discrimination in this

law. A grower wishing to sell barley is restricted

regardless of the destination of the proposed sale.

A buyer who, on these facts, will appear to be either

a maltster, or an agent or a feed mixer, is likewise
restricted whether he is located in New South Wales

or elsewhere. It is exactly the same restriction

on him as on the local equivalent.

Could I make one other point? It might be said,

well, in other schemes such as the South Australian

scheme and Victorian scheme there is, in fact, a

section enabling sales to take place free of the scheme

to other States. In our submission, while that may as

it were alter the picture, we have to, for present

purposes, focus on the New South Wales scheme and one

cannot say that the New South Wales scheme becomes

discriminatory because it does not contain an exemption

clause or an exemption section which is found in other

Acts.

So, we submit, when you look at the law on its

terms one finds no signs of discrimination or
protectionism, and then again if, in that factual

context you come back to the operation or effect of the scheme, we submit that in relation to producers

it operates in practice on them without regard to where

they are proposing to sell. And in relation to

maltsters and other buyers it operates on them regardless

of where they are located.

Now, Your Honours, it might be suggested that there

is one other aspect of the matter that I have not

touched on so far, and it could be said, well, the

Board itself is preferred as a purchaser and in relation

to would-be purchasers of barley what we have here is

a scheme which creates a New South Wales buyer, the

Board, and then prefers it, admittedly over other

buyers, but in particular over buyers from other States

and because this Board is located in this State, there

you have a form of protectionism. In other words, if

one, to make it simpler, took the pre-existing market

situation it might be said that this is similar to

legislation which says entity X, which already exists

and trades in New South Wales, is now to have preferred

rights of access to New South Wales produce. Now, that

might conceivably give rise to protectionism.

But we submit in this case again it cannot be said

that there is protectionism for these reasons. First

of all, once again without wanting to be unduly laborious,

there is no discriminatory operation in this scheme,

ClT50/l/PF	83	5/6/90
Barley(2)

no discriminatory term. The burden is, in truth,

imposed equally on market participants in New South

Wales and in other States.

Secondly, the scheme is still giving no competitive

advantage to the local product, that is, giving no
competitive advantage to New South Wales barley over

other barley.

And thirdly, in our respectful submission, it

would be unrealistic to describe this as a scheme

which is intended to be protectionist of the New South

Wales Barley Marketing Board because that Board is nothing more than a means to an end, the relevant end being the obtaining of the better price by New South

Wales producers from all buyers of barley. We submit

it would be quite unrealistic to say that this particular

feature of the scheme turns it into a protectionist

scheme, because although it would probably be impractical

in theory, the same end could be achieved, we would

submit, by the New South Wales legislature legislating

a minimum price for barley sold for malting and a

lesser, perhaps minimum price, for barley sold by

feed it could, in theory, do it without creating the

intermediary. In our respectful submission, to focus

on the mere creation of the intermediary as the device

and to say that that produces protectionism is an

unrealistic approach to the matter, and we would submit

the scheme should not be analysed in that way.

(Continued on page 85)

ClT50/2/PF	84	5/6/90
Barley(2)

MR DOYLE (continuing)~ And the other answer to that

particular analysis, in our respectful submission,

is that if one accepts the submissions made already

and says that the objects of the scheme are not

protectionist and again focuses purely on the
position of the Board, it might be said, "Well,

but along the way, one of your means involves an

element of protectionism". Well, as to that, we

would submit that the approach to be taken is

that which the Board took in theCASTLEMAINE TOOHEYS

case of saying, "Well, if the objects of the scheme

are not protectionist, and if the means which are

adopted are not disproportionate to their

achievement, then you do not pick on the means and

say,' .'lhese have, in truth, become the object of

th~ scheme;"if you find, as the Court found, in

that case, that the means were disproportionate to the environmental objective, you may then conclude that in truth the objective of the scheme is the

means, and so in truth its objective is protectionism.

But, in our respectful submission, it would be

quite unrealistic in this case to say, "Well, the

object of this scheme is really preferring the

position of the Barley Marketing Board of New South

Wales, because, that is, to look at it in a very incomplete and fragmented fashion."

Your Honours, just finally on that aspect of the matter and going back to some matters which

I recall Your Honour Justice Deane raised during

the argument in the COLE V WHITFIELD case, it may be

different if the entity benefiting under a scheme

such as this were say,BHP; if the legislation

provided -assuming BHP makes steel in New South Wales,

if the legislation provided that all New South Wales

steel makers had to pass their steel on to BHP	and
that only BHP could sell in the New South Wales

market then, really, however one put that into a

wider scheme, it would look very much like protectionism

of BHP because it would be clearly an independent

participant in that market in its own right and one

could hardly describe that as a mere means to some wide

· L.:_and non-protectionist end. But, in our respectful

submission, the differences between the position

of the Barley Marketing Board and BHP in examples

like that,and one can vary the facts in degrees,

indicate that it would be unrealistic to treat the

Barley Marketing Board itself as the beneficiary of

protectionism.

And so, finally looking at the facts in terms of discriminatory burdens, our respectful submission is

as I have already indicated that, however again one

analyses it, the burdens are not discriminatory; that

the burdens are imposed without regard to place of

CIT51/l/CM	85	5/6/90
Barley(2)

origin and so, in our submission, one tends to

come back to the matter the way Your Honour

Justice Dawson formulated it this morning,"Can it

finally be called protectionism of growers in

New South Wales who are proposing to sell locally,

against growers who would trade or would sell	their barley interstate? 11and we submit that is
not the right way to analyse it; it is,properly
analysed, a scheme intended to provide a
benefit to all growers and it is one which operates on and regardless of where they are proposing to
sell and that to talk of it as benefiting one group
of growers at the expense of the other group, in
our respectful submission, is to fasten on the mere
fact that there may be a difficulty in controlling that other group and then to say, 11Well now, you
are really doing it at the expense of that group".

In our respectful submission, the realistic

answer is, "You are doing it at the expense of

the group as a whole"and some members of that group

may not want this benefit and may prefer to trade

separately but, in our respectful submission,it is

unrealistic to treat it as protectionism in that

one group of New South Wales growers is protected

at the expense of or at the cost of another group.

Finally, Your Honours, jus.t with reference

to the American cases, could I, without reading from
them, make the point that, as the Court has pointed
out already, the principles in the American cases

are different. They do embody what I have called	11 the concept of economic protectionism" and I have
used those words in paragraph 10 of the outline and
they, in fact; come from the case cited there which
was the case dealing with restrictions on dumping
of rubbish in landfill.

(Continued on page 87)

CIT51/2/CM	86
Barley(2)

MR DOYLE (continuing): It is interesting when one looks at

the American cases that one finds that in those

cases the Court has not been troubled by the fact

that it is a purely local benefit which has been

obtained, and what the court looks for is that

discriminatory treatment,and identifying a benefit

which is wholly local is not of any particular

significance. And, Your Honours, without reading

from the cases, could I just mention the last two

which I have cited on page 5 of the outline.

In the PEERLESS OIL case, a minimum price was fixed

for, I think it was natural gas, obtained in the

relevant State, and even though most of that gas was

being sold interstate so that the cost, in effect,

went outside the State, and even though the benefit

of the minimum price went as it must to those who got

the gas out of the ground in the legislating State,

the court said, "That is not of any particular

significance. There is no discriminatory treatment

here", and so it upheld the legislation, and perhaps

a more striking example, the very last case,

COMMONWEALTH EDISON V MONTANA, in that State the

facts indicate is found most of a relevant type of

coal which is obtained in the United States of America,

and that State imposed what was called a severance

tax on that coal. So, it meant that this commodity

which was mainly, in fact almost entirely exported,

I think it might have been 98 per cent exported, was

subject to a severance tax the cost of which, again,

necessarily fell outside the State, but the court

said, ''Well, this is not discriminatory in any relevant

sense, even though the benefit is local and the burden

falls outside the ~tate".

And, finally, Your Honours, could I ask the Court

in due course to look closely at the facts in

PARKER V BROWN, the second of the cases cited. That

was a raisin marketing scheme dealing with the marketing

of raisin in California, and to all intents and purposes,

it appears from the statement of facts to be identical

to the scheme in the case before us. There was a

committee established which had control of the commodity;

growers were allowed to sell a small percentage of their
produce themselves, but the rest of the produce was

handled by the committee and it was, in effect, a

home price scheme. And once again, the court said

there was nothing discriminatory about this and
although the judgment deals with a number of different
aspects of American doctrine it deals with the commerce
clause and in the texts and the later cases it has

stood without any disapproval, even though it contains

features which relevantly are identical to the features

found in the present scheme.

ClT52/l/JL	87-	5/6/90
Barley(2)

So, in our respectful submission, for those reasons, if the Court pleases, the Court should

conclude that this scheme is not protectionist.

May it please the Court.

(Continued on page 89)

ClT52/2/JL	88	5/6/90
Barley(2)
MASON CJ:	Thank you, Mr Solicitor.	Mr Solicitor for

New South Wales.

MR MASON:	I hand up our written submissions.
MASON CJ:	Yes.
MR MASON:	Your Honours, much of it has been said before.

Two sections in the Act, if I could iust draw attention to - the first is section 11(6), which provides

that:

A board does not, for any purpose, represent

the Crown.

I say that, in one sense, simply to justify my

own separate appearance here, and secondly, 164,

which addresses specifically section 51 of the

TRADE PRACTICES ACT and endeavours to latch upon

the options that are inherent in section 51 of

that Act. Your Honours, at the concluding portion

of paragraph 1 of our submissions there are two

references to statements which, in our submission,

support the initial submission of my learned friend,

Mr Ellicott, that the purpose of section 92 is

the protection of domestic industry, that is,

State domestic industry against foreign, and that is

interstate competition.

Yo.ur Honours, I pass over to paragraph 6 of

our submission, and there reference is made to

two paragraphs of the case stated which refer to

the sale by the Board of barley interstate. The

paragraphs are a little equivocal and what I would.

wish to do would be to tender a portion of the

annual report of the Board for 1988/89 where there

is more unequivocal statement to the effect that

the Board itself sells barley in other States. I

do not perceive the principal thrust of the case
against validity to depend upon the activities of

the Board interstate, rather upon the restrictions

nevertheless I would seek to tender copies of that upon the private activities of growers but report.

MASON CJ: Are you handing this up on the same footing that

the Solicitor for South Australia handed up his

material?

MR MASON: Well, I fear it is a little bit more than that

in so far as it is directed at establishing the

fact that the Board does sell interstate, so it

is tendered to prove that fact.

MASON CJ:  What do you say, Mr O'Callaghan?

ClT53/l/FK	89	5/6/90
Barley(2)

:t1R O'CALLAGHAN:  Your Honour, we have only naturally _iust

received this document -

MASON CJ:	Yes, I appreciate that.
:t1R O'CALLAGHAN:	- - - and our prima facie reaction, sir, is

that we would object to the agreed facts being

supplemented - - -

MASON CJ: Well, I do not think that is the suggestion so

much. The real question is, do you object to the

tender of the document?

MR O'CALLAGHAN:  I have difficulty in saying so until I

have read it, Your Honour.

MASON CJ:  Yes.

:t1R O'CALLAGHAN: Perhaps if I could leave it for the time

being and reserve my position in respect of it,

Your Honours.

MASON CJ:	Yes.
MR MASON:	Your Honours, the next proposition we make is one

that is not covered in our written submissions

because there is nothing further I wish to say in

relation to what is in the written document. The

defendant's case here attacking the validity of the
legislation, or alternatively the validity of the

activities of the Board, presumably on the grounds

that they are in effect ultra vires the legislation

when read consistently with the CONSTITUTION,

naturally, in our submission, draws upon the defendant

an onus, both an evidentiary onus and a persuasive
onus of establishing infringement of the CONSTITUTION

or ultra vires activity, and I wish merely to give

Your Honours a reference to a very short passage
in 153 CLR, BERNARD & CO PTY LTD V LANGLEY, (1980)

153 CLR 650, at 658. In the judgment of Mr Justice Gibbs

Acting Chief Justice, with whom the other Justices

of the majority agreed - it is the passage at

about six lines down from the top of the page:

(Continued on page 91)

ClT53/2/FK	90	5/6/90
Barley(2)

MR MASON (continuing):

Nothing was pleaded to suggest that the

manner of inspection or the circumstances

in which the certificate of inspection is

given, or the necessity to give twenty-four

hours notice, in fact created burdens

which the words of the provisions themselves
would not suggest exist. There was of

course no evidence directed to any of these

matters. Accordingly, to use the words of

Dixon, McTiernan and Fullagar JJ the plaintiff

has not put before the Court material that

would enable it to understand "the real

significance, effect and operation of the
statutes" and has confined its case to

"dialectical arguments and considerations

appearing on the face of the legislation".

We, of course, do not know on what basis the defendant will draw its attack but in so far as

it is a question of asking the Court to draw

inferences from facts which are capable of bearing

an innocent explanation consistent with an absence

of protectionism then the point about the onus is

a relevant and significant one, in our submission.

Your Honours, the evidence that there is bears
out the conclusion, in our submission, that the

object of this scheme is to force up prices payable

by maltsters everywhere by the creation of what

Galbraith called "counterveiling power" - a divided and large market of sellers against a united and small group of buyers of a particular product.

Your Honours, picking up on something that was

raised this morning, we would accept, in point of

principle,	the proposition that the New
South Wales · law	which prevented trade froCT

New South Wales to interstate may infringe section 92

not because it infringes some broad notion of an

Australia-wide free-trade zone but because such a

law may, in an appropriate case, protect some other

local product from the winds of interstate

competition. If one took the coking coal example

that was raised this morning: if the purpose of

the legislation restraining the taking of coking

coal outside of New South Wales was to protect the

New South Wales based steel industry then it would

be capable of falling foul of section 92, and

whether or not that purpose was to keep the price of
coal to BHP down or simply to keep up supplies

needed for BHP, then the legislation could, nevertheless,

in that sort of situation infringe section 92

although it struck at the movement of one good outside

of New South Wales.

ClT54/l/DR	91	5/6/90
Barley(2)

Your Honours, a State-wide pooling scheme for barley might infringe section 92 if it operated to

protect local maltsters through stopping local
barley from being sold either by producers or the

Board. But, there are at least three reasonB why

that is not the facts in this case. The first is

that the present scheme is, in the words that one can
borrow from another context, "intractably neutral" -

and here the onus point, again, we would submit,

is ultimately critical. It is intractably neutral

both facially and factually with respect to the

sales permitted or the sales prohibited. It allows,

in one sense, sales anywhere but only through the

agency of the Board.

It does destroy the private right of sale of the producer but destroys that right everywhere and,

in any event, individual rights are not the focus

of protection by section 92. The second reason is

that the scheme is intractably neutral with respect
to the maltsters who are disadvantaged, be they

foreign, interstate or intrastate. The third point

is that, in one sense, the scheme burdens intrastate

trade more than it burdens interstate trade because

intrastate maltsters who have premises right next

door to a local producer are denied the capacity to

offer a lower price to an individual grower who is

operating on their doorstep.

(Continued on page 93)

ClT54/2/DR	92	5/6/90
Barley(2)

MR MASON (continuing): Your Honours, we would respectfully

agree with the submissions of my learned friend,
the Solicitor for South Australia, with one

exception. In paragraph 7.1 of his booklet of

submissions, he suggested:

The benefits of the scheme appear to

accrue to N.S.W. producers, although

there may be benefits also for domestic

maltsters, in quality control and

assurance of supplies.

We would submit, that those benefits are equally

available to maltsters anywhere and there is
nothing in the evidence to suggest that there has
been a differential or protective or any sign of
favouritism based upon any factors, with reference

to New South Wales maltsters. Even if there were,

one would have to ask whether that favouritism was

born of protective functioning or from economic
benefit - pure economic benefit.

Your Honours, the final submission we would make, it is this: that if any of the defendants,

ta effect, succeed in this case it must, as it were,

by working backwards, in our submission, be as a

result of the fact that they have been placed in

a privileged and preferred footing because of the

interstate transaction embodied in the contracts

upon which they rely, and as the reasoning of this

Court in COLE's case, particular at 402 and 404-405 makes plain, in our submission, that is the very thing

which the new dispensation with respect to section 92

is intended to put an end to. If the Court pleases.

MASON CJ: Thank you,Mr Solicitor. Mr Solicitor for Queensland.

MR DAVIES:  May it please the Court, may I hand up some copies of

our outlines?

MASON CJ: Thank you. Yes, well it seems there is similar

refrain.

MR DAVIES: Yes, Your Honour. Your Honour, what we said in

paragraph 2 was also, of course, based upon our

interpretation of what this Court said as to the

effect of COLE V WHITFIELD in CASTLEMAINE TOOHEYS.

In the light of what has been said today, can I

amend what we say there by saying that the test

which is stated in CASTLEMAIN TOOHEYS is a definitive

test where the question is whether the scheme is

protectionist of producers or vendors in the State,

because in that event it can only be protectionist

against interstate producers or vendors.

ClT55/l/JL	93	5/6/90
Barley(2)

But assuming that a scheme is protectionist

in a relevant sense, if it protects domestic

consumers by preventing or impending goods going

out of the State, then that just is not this case.

This is a case of the other kind, a scheme designed

to assist producers in New South Wales. The way

in which it is set up, as has already been mentioned,

shows that and the objects which are stated in the

proclamation which is made pursuant to section 11(7)

of the Act and which appears in paragraph 22 of
the agreed facts, indicates that.

Your Honours, in our respectful submission, a

scheme which is designed to advance the cause of
local producers does not contravene section 92

because it prevents those for whom it is designed

to benefit from selling other than to the Board,

even though that might include a prohibition against

selling interstate as well as selling locally,

because the purpose is to assist the majority even
though, in some cases, that may be to the prejudice
of a few in the minority and perhaps, as in this
case, a large minority grower who might be prepared
to take the benefits of research which the scheme
provides, but not to accept the restriction which it

imposes in the interest of the majority.

(Continued on page 96)

C1T55/2/JL	94	5/6/90
Barley(2)

MR DAVIES (continuing):  And, of course,

as has been said before in argument, section 92

is not concerned with individual rights. Can I

take Your Honours back to what Mr Justice Evatt

said in this resnect in the PEANUT BOARD case,

48 CLR-266. His Hortour dealt

with the scheme and its purpose at page JUl. At

about point 8 on that page in the middle of that

paragraph, His Honour said:

The real purpose of the action taken by

Queensland was to set up for the growers

themselves a representative selling authority

or agency, with expert backing, in order to

enable them to reap a greater benefit from the

marketing of their product in whatever locality

a demand for it might arise.

No doubt, co-operative marketing, when

enforced by the compulsion of a minority of

producers, can be described and characterized as

interference with freedom of trade. So it is,

in the sense that the individual's complete

liberty of action in respect of his method of

sale will disappear. And it may be conceded

that, but for the statutory scheme, some farmers

might have desired, or been persuaded, to sell

their products in States of the Commonwealth

other than Queensland. In this sense a certain

amount of trade "among the States" might, as a

result of the Queensland scheme, not eventuate.

But such a result would be, in my opinion, a

mere incident in the scheme of organizing the

selling agency, and in no way essential to

its working.

That the State lends its powerful aid,

commands pooling, and goes so far as to make the

producers' body the owner of the crops grown

during a long period of years, is not, in my

opinion, sufficient to prove any forbidden

hindrance to inter-State commerce.

Can I take Your Honours then down to the bottom of the page where he quotes from Mr Justice Piddington,

a statement which His Honour made when Chairman of

the Inter-State Commission. Mr Justice Piddington said:

When the CONSTITUTION was framed one of the great political parties in every State had, as

is well known, for its avowed programme, 'The

nationalization of the means of production,

distribution, and exchange.' That expropriation

CIT56/l/CM	95
Barley(2)

upon payment of compensation is one

recognized method of reaching this goal

was taken for granted in SLATYER V DAILY

TELEGRAPH. Is it reasonable to suppose that in section 92 there is latent an indelible proscription against the realization of this

or any similar political creed by the electors

in their Cormnonwealth Parliament so far as

the power of the Cormnonwealth extends, or in

their State Legislatures in respect of matters

left to them.

His Honour then goes on:

It is argued and with great show of logic

that a complete and absolute denial of the

right of selling inter-State is a greater

restriction upon the individual grower's liberty

than is involved in a licence to sell inter-State

up to a prescribed proportion of the output. But

in the latter case, the State's action is

obviously directed at inter-State trade for the

purpose of restricting it; it has passed a law

upon the topic of inter-State trade as such.

In the former case, the State has conferred upon

a selected authority the sole right of collecting

and disposing of the product either as agent

for the growers (where there is no expropriation)
or in the legally superior character of

statutory owner (in the case of a cormnodity board).

The distinction is between (1) a prohibition imposed

upon a grower, in his character as trader, or
upon a trader himself, solely for the purpose of

limiting and prohibiting marketing among the

States; and (2) the application of compulsion

to ensure marketing to the best advantage,

irrespective of the situation of the market.	In
the latter case, the individual grower's

proprietary right to s~ll his product is terminated

solely for the purpose of substituting another

and more efficient method of sale not concerned

in any way with inter-State trade.

In our respectful submission, that is their scheme.

(Continued on page 97)

CITS6/2/CM	96
Barley(2)
McHUGH J:	So the PEANUT BOARD is overruled by COLE V WHITFIELD,

that is what your submission comes to. Apart from

FOX V ROBBINS and NEDCO and VACUUM OIL COMPANY,

are there any cases that survive COLE V WHITFIELD?

MR DAVIES:  Your Honour, I think during the course of argument

the Solicitor-General for the Commonwealth ran

through them and gave some ticks to a few of them

but I cannot recall now which they were.

McHUGH J: Are they the only three out of the 140 cases that

survived?

DEANE J:	There were a few where section 92 did not prevail.
You can start with them.

MR DAVIES:  I could, Your Honour. Your Honours, the only other

submission I want to make relates to purpose -

that is contained in our outline in paragraph 3(b) -

I have men~ioned paragraph 22 of the agreed facts

and how that really sets out the objects specified

by the proclamation which is made pursuant to

section 11 ( 7). Can I submit, Your Honours, generally

the main purpose is stated in a sentence by

Your Honour the present Chief Justice in

AUSTRALIAN COURSE GRAIN POOL PTY LTD V BARLEY MARKETING

BOARD, (1985) 157 CLR 605, at 625 Your Honour said

with respect to the Queensland Act, at about point 4

on that page:

the object of the Act is to establish Commodity

and Marketing Boards and to promote orderly

marketing in the interests of growers.

That really is the main purpose of the scheme - the

"orderly marketing". But can I mention another

purpose which is not mentioned in the list of purposes

which the Solicitor-General for South Australia had

in his written outline and that is the promotion of

the growing of the commodity and it seems to apply

especially to commodities such as barley and

sorghum because the agreed facts indicate that

one of the purposes of having schemes with respect to those crops was the promotion of those crops as alternatives to wheat and indeed it is perhaps of

some interest that in the 1927 MARKETING OF

PRIMARY PRODUCTS ACT, the long title commences to

this effect:

An Act to promote primary production -

Your Honour, subject to those submissions, we

really adopt the submissions which our learned

friends, the other Solicitor-Generals, have made.

ClT57/l/LW	97	5/6/90
Barley(2)

MASON CJ: Thank you, Mr Solicitor. Yes, Mr O'Callaghan.

MR O'CALLAGHAN:  If the Court pleases. I hand to the Court

our outline of submissions.

MASON CJ:	Thank you.
MR O'CALLAGHAN:	The Court will forgive the advertisement on the

top of the outline which is a function of the fax

machine in Melbourne.

(Continued on page 99)

ClT57/2/LW	98
Barley(2)

MASON CJ:  Yes, Mr O'Callaghan.

MR O'CALLAGHAN: If the Court pleases, I would firstly like to take

the Court to the agreed facts because, in our

submission, they reveal that the object of the

legislation is, inter alia, to overcome the perceived

difficulties arising from the freedom of individuals
in New South Wales to deal with interstate purchasers
and likewise, the difficulties occasioned by the

freedom of those interstate purchasers to deal with

individual growers in New South Wales rather than a

State agency. The passages in the agreed facts which,

in effect, identify what was seen, we would submit, by the draftsman of the Act and the operations of the Act as the mischief to be attacked can be firstly noted

at paragraph 3. It is there shown that:

Twenty-two years ago the First Defendant and

subsequently the Second Defendant commenced

growing and producing barley which was suitable

for malting, a large part of which was sold -

interstate. The third defendant, that is the maltster,

Pacific Malting, carries on its business at Ballarat.

In paragraph 6, the history shows that there was

after the war a reversion to free trade and then the

case goes on to pick up the history of the Act, and I

now want to refer to paragraph 12, where it said:

Opposition was encountered by the farmer

organizations in relation to barley from Victorian

maltsters and other Victorian barley users who

had been purchasing barley from New South Wales

at prices cheaper than those at which they could
obtain barley from the Australian Barley Board
in Victoria. After the Plaintiff was established
the Victorian maltsters and other Victorian

barley users continued to obtain supplies from

New South Wales in purported reliance on

Section 92 of the CONSTITUTION.

In paragraph lS(b) it is said - this has been

referred to, but I will repeat it - that the decision

to send the notice:

had been taken to enhance the marketing of

across the State.

"malting grade" barley grown in New South growers

And that is similarly repeated in 16(b) on page 7.

At paragraph 23, it is said that:

ClT58/l/PF	99
Barley(2)

THE PURPOSE AND POLICY OF THE BOARD:

The maximisation of returns to all New South

Wales growers, given all the market forces is seen as a paramount policy objective of the

Plaintiff.

And at paragraph 24:

The purpose of the Plaintiff is to establish a

marketing structure for all of the barley in

New South Wales, for all of the growers in New

South Wales to the best perceived advantage and

financial return to all growers.

And finally at paragraph 50:

If the Third Defendant which carries on business predominantly as an exporter of malt was able to purchase "malting grade" barley by-contract from

growers in border areas of Southern New South Wales, it is likely that in most instances it would be able to purchase it and have it delivered

at its malthouse in Ballarat at prices less than

those at which it could purchase it and have it

so delivered by the Plaintiff.

(Continued on page 101)

ClT58/2/PF	100	5/6/90
Barley(2)

MR O'CALLAGHAN (continuing): It is in that factual context

that one sees the operation of the Act and it is, in

our submission, to be seen as expropriating from the

producers of barley previously interstate traders

and desirous of being interstate traders, their

produce. Likewise rendering void contracts which

they would enter into or have entered into and

creating in the Marketing Board, for relevant

purposes, a monopoly for the sale of malting grade

barley in New South Wales, and interstate, and

overseas and prohibiting the respondent maltster

and other maltsters from dealing with the respondent

growers and other growers and thereby engaging in

interstate trade and commerce. Likewise 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.

We understood our learned friend, Mr Ellicott,

to say that section 92 does not protect an attack

upon the export of goods from a State in distinction

to protecting the import of goods in the legislating

State. In our submission that is an entirely unjustified application of the principles of

COLE V WHITFIELD. We would submit, with respect,

that COLE V WHITFIELD laid down no such restrictive

principle as to the operation of section 92 and we

say that if a State, perceiving that price stability

is being affected b½ inter alia, the sales of

produce from that State to interstate sources,

prohibits that trade, it is doing so in order to

protect the local industry against the consequences of

a free-trade position.

In our respectful submission, it is untenable to suggest that - - -

DAWSON J: Against the consequences of a free-trade or a

free-enterprise position?

MR O'CALLAGHAN:	Of the freedom to trade interstate.
DAWSON J:	The freedom of the individual to trade interstate?
MR O'CALLAGHAN:	Freedom of the individuals to trade interstate; the

freedom that there be interstate trade not only by

the monopolist agency which is set up to stabilize

and increase the prices of barley in New South Wales.

Now, protectionism, as we ~ould see it, is a

concept that includes the shoring up of prices in an

industry so as to benefit the participants in that

industry. We say that that is a classic example of

protectionism and how that is achieved we say, in

this case, is, inter alia, and very substantially by

the cessation of trade, namely interstate trade,

which was - if I might say to Justice Dawson - the

ClT59/l/DR	101
Barley(2)

principal unstabilizing element in the price structures

of barley in New South Wales. We would submit, with

respect, that COLE V WHITFIELD in no way collides with

our submission that one would, therefore, identify

what is being done by the State as protecting the

barley industry of New South Wales and that the
actions taken by the State against interstate trade

out of New South Wales is palpably discriminatory.

MASON CJ: Well now, what authority or works of persuasive

influence do you have to support the proposition that

the shoring up of prices in an industry amounts to

protection of itself or that an acquisition scheme

covering the whole of a commodity produced in a

State, of necessity, amounts to protectionism?

(Continued on page 103)

ClT59/2/DR	102
Barley(2)

MR O'CALLAGHAN:  I have no specific authority, Your Honour,

as to the definition of "protectionism" other

than, if I might say, it is what,we would submit,

is its widely accepted meaning, that protectionism

is the antithesis of free trade, that where you have

a position of where you have control of trade so as to

stimulate or support an industry, that is the

protection of that industry.

As, we would submit, if the founding fathers

had been met with a suggestion that in order to

counter the text of section 92, as finally agreed

upon, that New South Wales was going to set up a

monopolistic agency through which it would control

all sales of the produce of New South Wales, both

intrastate and interstate. One, with respect,

would say that would be a clear indication that New South Wales was not going to be part of the compact

of an economic unit of free trade. New South Wales

would be seen, we would submit, to be setting itself

up as a separate economic unit and that, in the

context of barley is what has occurred.

Your Honour, with respect to the latter part

of your question, as to the acquisition of a

connnodity is, I think Your Honours words were

"necessarily seen as protectionism", we would say

this, Your Honour, that to adopt what Your Honour,

yourself, said this morning, that it is difficult

to conceive or to -of legislation, which has as its

objects and effect the acquisition of a connnodity

which takes out of the interstate trade that

connnodity as being anything other than protectionist.

MASON CJ: But I was speaking there of a legislative prohibition

against export.

MR O'CALLAGHAN: Yes, well, included in this legislative

prohibition, Your Honour, is the necessary effect

of a prohibition of export, because if there is a

prohibition of export except at the whim of the

agency, because the Board, if it elected to stockpile

barley for a number of years would be free to do so.

It is not as - and we would submit it would not matter

if it were, it is not as if the legislation says, "Well,

for purposes good to us, we are going to take the right

to trade from a group of individuals currently selling

specified quantities of goods and give that to someone

else, so that there will be no cessation of the flow

of interstate trade. It will be just the different

persons doing it".

Now, we say that even if that were so, it still

would contravene section 92, but in this case what the

change in the practical situation is consequent upon

ClT60/l/JL	103
Barley(2)

the coming into operation of the Act is, that the

Board can choose when, where and to whom it will

trade interstate and that, we submit, is in

marked contrast to what was occurring previously,

and the discrimination against the growers who

previously had that freedom, that is the Board of

growers, the Normans and others, is one of the

classes of interstate trade which is attacked by the

Act. But, in addition, one seems the Act impinging

on the freedom of interstate maltsters to acquire

product in the course of interstate trade, as they

had previously. They are driven - if at all, they

want to acquire it to the agency and, we submit,
when you look at those bundle of facts, the designed

result and the actual result is that the barley growing

industry in New South Wales is protected from,inter alia,
the winds of competition provided by interstate

trade and commerce, and we say, therefore, is

protectionist.

BRENNAN J: Would it make any difference to your argument if

this were a national scheme of marketing?

MR O'CALLAGHAN:  We submit not, Your Honour. We say that if

the Commonwedlth and the States, in effect, get

together and make a complementary system of

acquisition and prohibition in terms such as is

in this Act, then we would say that that is a

negation of the freedom provided by section 92.

It is as if the States and the Commonweal th, in concert,

are overcoming the freedom provided by section 92.

BRENNAN J:  Does that lead you then to espouse a view of

section 92 as a provision essentially designed to

preserve individual freedom to trade?

(Continued on page 105)

ClT60/2/JL	104
Barley(2)

MR O'CALLAGHAN:  To preserve the freedom to trade and to

provide to individuals engaging in that trade

the capacity and the opportunity to ignore or

have removed the restraints which legislation of

this sort would put upon them.

Now as we endeavour to submit, the Act is

clearly a commercial Act. It is not about licensing

of fitness and suitability of persons. It is not
dealing with health or safety in any relevant sense.

It is concerned with economics, with commerce and

with trade and what it does is to remove from

interstate trade and commerce a bundle of trade, if

you like, in conn:odities which are le_gitiroately the subject of

trade and commerce. Now some of our learned friends

have referred to laws which, for instance, would

prohibit the dealing in diseased cows or any number

of thing one can identify as being illegitimate

objects of interstate trade and commerce, but here there is no suggestion that trade in barley should

continue upon the terms dictated by the agency.	It
is an Act designed to limit and prohibit trade so

as to enhance the position of growers and the industry

generally in New South Wales.

We submit, and it will be perhaps a matter which

I can deal with tomorrow, that the principles of

COLE V WHITFIELD do not, as has been sought for by

our learned friends, in any way validate this Act

in a way that it would not have been validated, so

it is said,by cases such as COARSE GRAINS and so on.

To the extent that it is necessary for us so

to submit, we say that those cases are consonant with

the principles in COLE V WHITFIELu and I will, at a
later stage, return to an examination of some of

the passages in those cases, to make that submission

good. The emphasis which our learned friends have

placed upon the fact that the legislation acts

neutrally upon both intrastate and interstate trade,

in our submission, is no denial of the propositions

we have put, or no effective denial of those

propositions. Because you do something to interstate

trade which is invalid, it, in our submission, cannot

be made valid by including amongst the subjects of

that particular piece of legislation intrastate trade.

The references to the commonality of legislation

applying to intrastate and interstate alike is

relevantly to show that this may be a suggestion that

the Act is not protectionist, but that, in our
submission, does not alter the position which applies
here of looking at the effect of the legislation in

relation to interstate trade and commerce and when

you look at it and see that it prohibits it, it

prohibits the growers in New South Wales from

engaging in it and it prohibits buyers in other

States from dealing with those growers and no doubt

CIT61/l/CM	105
Barley(2)

places problems in respect of their dealings with

the Board, we say that it is an act of invalidity,

per se, and cannot be saved by referring to other

parts of the legislation which relate to intrastate

trade or, in fact, that legislation which applies

commonly to it.

We say that if it be the case that the impugned

Act applies equally to intrastate trade and

interstate trade, it is immaterial. In some cases,

such an equality of application and burden may

be indicative that the intent and purpose of the Act

is not protectionist. But an Act which not merely

burdens, but prohibits interstate trade and commerce

cannot, at least in the instant case, be saved by

pointing to the fact that a similar prohibition is

made on intrastate trade. We say that the power of

the State to prohibit intrastate trade does not

lessen the protection given by section 92 to those

who engage in interstate trade and commerce.

(Continued on page 107)

CIT61/2/CM	106
Barley(2)
:MR O'CALLAGHAN (continuing:	We would submit it would be

a novel proposition if it were held that because

an Act which, if it were limited to interstate

trade, would constitute discriminatory protectionism,

but because it applies equally to intrastate trade,

it can be said that position has changed. The point

of looking at the application of the legislation

to intrastate and interstate trade alike is that

that fact may show there is no discrimination or

protectionism in respect of interstate trade,

but it is by no means conclusive.

MASON CJ:  But you do have to face up, do you not, to the

circumstance that in COLE V WHITFIELD, when the

Court was talking about protectionism, it was

talking about protectionism in the context of

protection of domestic industries against foreign

competition and that means you have got to take

account of the requirement for discrimination as

well as, as it were, discrimination in a protectionist

sense?

:MR O'CALLAGHAN:  Yes, Your Honour. COLE V WHITFIELD was

necessarily talking about the matters you have

just described because of the facts of COLE V WHITFIELD,

but we submit that those facts were validly and

properly dealt with by the principle of COLE V
WHITFIELD, but that principle is equally capable
of application to the situation we have in the
present case of identifying as the protectionist
aspect of the matter, the protection of New South Wales
trade from the consequences of New South Wales

growers engaging in interstate trade. It would be, in our respectful submission, a surprising thing if

the operation of section._ 92 applied not to exports

but only to imports. That is, we submit that - - -

McHUGH J: Well, why is section 90 not against - tend against

that argument? I mean, it is arguable, is it not,

that section 90 is the source of protection for

production so far as the States are concerned? (Continued on page 108)

ClT62/l/FK	107	5/6/90
Barley(2)

MR O'CALLAGHAN: With respect, no, Your Honour. Section 90

provides that the States shall not tax the

production of goods but it - - -

McHUGH J:	And also cannot give any bounty.
MR O'CALLAGHAN:	Yes, but it does not give - the fact that

the Cormnonwealth has that power and the States

have not, in our respectful submission, does not

give the State the power to prohibit exports and

that is what this case is, that section 90 relates
to excise bounties and so on but it does not,

in our submission, cut across the proposition that

a person is guaranteed the freedom to trade by way

of exporting goods from his State and that a
prohibition upon those exports for the purpose of

enhancing the local trade is classically protectionist,

that it is as if New South Wales is saying, ''We do

not want qua the export of barley to be part of

the economic unit constituted by the Cormnonwealth.

We want to be our own choosers of when, where and

with whom we can trade in barley and we do so

because we want to ensure that our barley growers

get a high price for their barley".

We contrast the position in COLE V WHITFIELD

in the situation there that you had an Act which,

effectively, proscribed the possession of

undersized crayfish and that effectively prohibited

anyone dealing in undersized crayfish.

McHUGH J:  But the notion of discrimination runs through the

judgments in COLE V WHITFIELD. Sometimes the term

"discrimination" is used synonymously with

protection itself, as at 408 when the Court talks about:

The adoption of an interpretation

prohibiting the discriminatory burdening

of interstate trade will not of course

resolve all problems. (Continued on page 109)

ClT63/1/LW	108
Barley(2)
MR O'CALLAGHAN:	I am sorry, Your Honour, the passage you are

referring - - -

McHUGH J:  Page 408, the first sentence in the last paragraph.

MR O'CALLAGHAN:  Yes, Your Honour, the paragraph that you -

"indeed, the principal reason" was the passage

Your Honour was reading?

McHUGH J:  No, well, the one I had in mind was the last

paragraph on page 408:

The adoption of an interpretation prohibiting

the discriminatory burdening of interstate

trade will not of course resolve all

problems.

Throughout the whole judgment the emphasis is on

discrimination in a protectionist sense.

MR O'CALLAGHAN:  I accept that, Your Honour, but the - - -

McHUGH J: Well, where is the discrimination here and that is

the argument that is put against you that there is

no discrimination against interstate trade?

MR O' CALLAGHAN:  And it is put, Your Honour, simply, as I

understand it, because there is a like prohibition

against intrastate trade.

McHUGH J: Yes.

MR O'CALLAGHAN:  Now, as I endeavour to make clear, we say

that that could be a situation which is eloquent of

a lack of discrimination or an absence of

protectionism but it cannot be the simple solution

to governments wanting to overcome section 92 to

say that whatever discriminatory acts we take

will be offset or neutralized by the fact that we

will make the same acts applicable to intrastate

trade. Justice Deane's questions and, indeed,

some of your own, Your Honour, this morning, that

if there is a prohibition against the export of

coking coal from New South Wales, one sees that

that would be a denial of the freedom to trade in

coking coal.

(Continued on page 110)

ClT64/l/DR	109
Barley(2)

.MR O'CALLAGHAN (continuing):  Now, if you say, well that is

not a case of where there is any reference at all

to intrastate trade, it is simply a prohibition

on export, and it is, we would submit with respect,

easily seen as discriminatory.

McHUGH J: Discriminatory of what?

MR O'CALLAGHAN: Discriminatory of the export trade so as

to, no doubt, better in some way, or protect in

some way, the industry of the local legislature,

or the industry from where the local legislation

comes.

McHUGH J:  But to offend section 92 on the theory of

COLE V WHITFIELD, the law or the executive action

has got to discriminate against the interstate

trade as opposed to the intrastate trade.

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

contend that is not the case, that what the proper

reading, we would submit, of COLE V WHITFIELD is

that if you have an Act which is discriminatory

against interstate trade because it, for instance,

prohibits it so as to provide a protection to

the intrastate trade and complementarily with that,
the intrastate trade is also prohibited, we submit
that that must still be a discrimination against

interstate trade as a concept and, indeed, as the

passage that Your Honour referred to, the Court

went on:

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

now arise.

for conflict with s.92. That problem does not

Now, I do not want to add to the discussion,which

took place this morning, as to what that meant,

save to say that clearly the Court was not saying

in COLE V WHITFIELD that, what we would submit

with respect our learned friends are saying,

provided you acquire all the commodity of a State,

that is both interstate commodities, or commodities

interstate trade and commerce, and in intrastate,

then there can be no contravention of section 92

because a relevant discrimination has not occurred.

ClT65/l/FK	110
Barley(2)

MR O'CALLAGHAN (continuing): We submit that that is not the

reading of COLE V WHITFIELD, and if it were, that

the qualification or the gloss on COLE V WHITFIELD

would come from the circumstances of this case,

and indeed, the contemplation of the conflict which

the acquisition cases would have with section 92

which was a problem which did not arise in

COLE V WHITFIELD.

I was saying with respect to COLE V WHITFIELD that what happened was that no one could trade in

undersized crayfish. It was not, we would submit,

a legitimate subject of interstate trade and
commerce because it had been properly proscribed
by a legislature which was not discriminatory or
protectionist. One can multiply examples, as I

have said before, of where a State or the Commonwealth

could prohibit or regulate the passage of commodities

which have dangerous, noxious, or other features which

would allow them to be properly classified as illegitimate

subjects of trade and commerce.

But in the Act here, there is no suggestion, as

there could not be, that barley is not a proper subject

for interstate trade and commerce and, indeed, we say

that the Act contemplates that there will be such
trade, but says that such trade will only be engaged

in by a State appointed agency.

Now, the example which was discussed, and I understand

it arose from a discussion in COLE V WHITFIELD from

Your Honour Justice Deane and co~nsel in that case -

my learned friend the Solicitor-General for South

Australia referred to it - we would submit that there

would be no difference between the position of the

Board and the position of BHP if the State constitutes

them a monopoly for the sale interstate to the exclusion

of other persons otherwise engaging iP that trade and

commerce.

Is this a convenient time, Your Honour?

MASON CJ:	Yes, it is. Mr O'Callaghan, could I ask you how long you expect the balance of your argument will take tomorrow?
MR O'CALLAGHAN:	Your Honour, subject to finding some of those

authorities Your Honour asked me about, I would have
thought, Your Honour, at the most an hour and a half,

and I might be much less than that.

MASON CJ:  Thank you. The Court will adjourn until 10.15am tomorrow.

AT 4.14 PM THE MATTER WAS ADJOURNED

UNTIL WEDNESDAY, 6 JUNE 1990

ClT66/1/PF	111	5/6/90
Barley(2)