Castlemaine Tooheys Ltd v South Australia

[1986] HCA 58

HIGH COURT OF AUSTRALIA

Mason A.C.J.

CASTLEMAINE TOOHEYS LTD v. SOUTH AUSTRALIA

(1986) 161 CLR 148

3 October 1986

Injunctions

Injunctions—Public law—Restraint of enforcement of allegedly unconstitutional statute—Interlocutory injunction—Principles.

Decision

MASON A.C.J.: This is an application by the plaintiffs in the action for interlocutory injunctions restraining the defendant in the action from enforcing or causing to be enforced against the goods of the plaintiffs in interstate trade and commerce (1) ss.6 and 7 of the Beverage Container Act 1975 (S.A.) ("the 1975 Act") as amended by the Beverage Container Act Amendment Act 1986 (S.A.) ("the 1986 amending Act"), and (2) ss.6 and 7 of the 1975 Act. In the action the plaintiffs seek declarations of invalidity of the provisions already mentioned, as well as other provisions in the legislation, including certain regulations, and a notice under s.5b(2) of the 1986 amending Act on the ground that they contravene s.92 of the Constitution.

2. The first three plaintiffs, members of the Bond Group of companies, are brewers in Queensland, New South Wales and Western Australia respectively. The fourth plaintiff is their South Australian agent. The remaining four plaintiffs are beer retailers ("the Booze Brothers Group") in South Australia who order beer from the first three plaintiffs for trans-shipment to that State. The orders by the retailers are placed with the agent for transmission to the brewers, and are accepted and satisfied under the terms of an Agreement dated 24 April 1986, which provides that property in the goods ordered passes to the relevant retailer upon delivery to its premises in South Australia under a contract between the brewer and the retailer, the fourth agent undertaking to procure the transport of the goods to those premises. The plaintiffs' case is that, in consequence of these arrangements the three brewers, the agent and the retailers are engaged in interstate trade and commerce and that the protection given by s.92 extends to the first retail sale by the importer in South Australia.

3. The three brewers supply packaged beer to the South Australian market predominantly in non-refillable bottles and metal containers. Their share of the market in packaged beer is about four per cent. One of their major competitors Carlton and United Breweries Ltd., which brews beer in Victoria and enjoys a much larger share (about 19 per cent) of the South Australian market, supplies most of its beer to that market in refillable bottles. According to the evidence the bulk of the beer brewed outside South Australia is packaged in non-refillable containers. In South Australia it is different. Seventy five per cent of the packaged beer brewed there is marketed in refillable containers. This fact is central to the plaintiffs' claim to relief in the action. The plaintiffs' claim that the 1975 Act and, more particularly, the 1986 amending Act discriminate against non-refillable glass beer containers and that, by so doing, they effectively discriminate against the plaintiffs' interstate trade in beer.

4. The 1975 Act, the object of which was to deal with the litter problem created by the disposal of beverage containers, provided for the paying of refunds on certain containers. Section 6(1) prohibited a retailer from selling or causing to be sold a beverage in a container unless the container is marked in a form and manner approved by the Minister with a statement showing the refund amount applicable to that container. Section 7(1) prohibited a retailer who sells a beverage in a glass container of a particular description from refusing or failing:

(a) to accept delivery of empty glass containers of that

description marked in the manner referred to in s.6(1); and

(b) in respect of each such container, to pay to the person

delivering that container the refund amount applicable to that container.

By s.5(2) the Governor was authorized to declare by proclamation a class or kind of container not to be a glass container. Pursuant to the regulation-making power in s.17, reg. 5, made in 1977, declared that the 1975 Act did not apply to refillable glass beer containers. The prescribed amount for non-refillable glass containers was 5 cents per container. The prescribed amount for refillable containers was 4.25 cents, but there was no obligation to pay it by reason of reg. 5.

5. The 1986 amending Act, which was assented to on 20 March 1986 and came into operation on 1 October 1986, does not materially amend s.7 except to substitute a penalty of $2,000 for the original penalty of $200. The 1986 amending Act makes a more extensive amendment to s.6(1) by requiring, in addition to the requirement that the container be marked in an approved manner and form and with a statement indicating the refund amount applicable, that the container have, if so required by the Minister, some other approved mark or feature to indicate that a refund amount is applicable to that container. Again the penalty is increased from $200 to $2,000.

6. The 1986 amending Act contains a new s.5 which excludes from the 1975 Act all glass containers made for the purpose of containing wine or spirituous liquor except those made for the purpose of containing a low alcohol wine-based beverage. There is also a new s.5a which enables the Government by regulation to exempt containers of a specified description from the application of the Act, but the section does not apply to containers to which s.5b applies. Section 5b is then expressed to apply to glass containers made for the purpose of containing beer. By s.5b(2) the Minister may by notice published in the South Australian Government Gazette exempt glass containers of a specified description from the application of s.7 if he is satisfied:

"(a) that the containers are made so as to be refilled not less than 4 times;

(b) that the containers are marked in a manner and form approved by the Minister with statements indicating that they are refillable;

and

(c) that proper arrangements have been made for the re-use of the containers when returned to collection depots by refilling as referred to in paragraph (a) and by re-use of the glass of which they are made."

The Minister proposes to exempt refillable glass beer containers by notice under s.5b. It is not in dispute that the refillable glass containers used by South Australian brewers for the supply of beer satisfy the conditions in s.5b.

7. In addition a new reg. 7 has been made which also came into operation on 1 October 1986. This regulation prescribes the following refund amounts:

"(a) in relation to a container made for the purpose of containing a carbonated soft drink, water or mineral water and which is not designed to be refilled - 5 cents per container

(b) in relation to a container made for the purpose of containing a low alcohol wine-based beverage and which is not designed to be refilled - 15 cents per container

(c) in relation to a container in respect of which a notice has been published under section 5b of the Act - 4 cents per container or 48 cents per one dozen containers

(d) in relation to a container made for the purpose of containing beer within the meaning of the Liquor Licensing Act, 1985, not being a container in respect of which a notice has been published under section 5b of the Act - 15 cents per container."

8. According to the evidence, refillable glass containers are significantly stronger than non-refillable glass containers and are less likely to break. Consequently they present a smaller risk of injury to the public in the form of broken glass.

9. After the commencement in January 1986 of an advertising campaign by the three brewers which involved the expenditure of $600,000, directed at the South Australian beer market, the penetration of their beers packaged in bottles, increased markedly, more especially that of the first plaintiff, at the expense of the market share enjoyed by the South Australian brewers. On the other hand, immediately following the enactment of the 1986 amending Act there was a significant fall in the market share of the plaintiff brewers. Moreover, by letter dated 1 September 1986 the Booze Brothers Group informed the fourth plaintiff that the Group would not after 1 October stock the beer produced by the plaintiff brewers owing to the introduction of the 15 cents deposit. The letter asserted that the products would no longer be price competitive, that the rate of return by non-consumers would increase dramatically and that other sellers would direct customers to make claims for refunds on the Group notwithstanding that the Group had not sold the containers in respect of which the claim was made.

10. There are some difficulties associated with the plaintiffs' case for relief under s.92, to which the Solicitor-General for South Australia drew attention in his argument. Although the obligation to mark containers arises at the point of first sale by the importer, the obligation to accept delivery of the empty containers and to pay the refund amount arises at a point after the course of interstate trade has terminated. The Solicitor-General acknowledges that this does not dispose of the matter. But he points to the fact that the obligation to pay the refund at the higher rate is imposed on a trader who selects a particular type of container and not on the interstate trader or the interstate product as such. It is significant that the obligation does not attach to the refillable bottles of Carlton and United Breweries Ltd., the largest supplier of interstate beer to the South Australian market. This, he submits, makes it difficult to conclude that there is any discrimination against the interstate trade in bottled beer generally or the plaintiffs' interstate trade in that commodity, the more so as the differential position of the South Australian brewers is due to the exemption in favour of refillable glass containers, which, it seems, will also favour the largest interstate supplier. The Solicitor-General further submits that the legislative provisions and the action taken is justified (a) as permissible regulation of the litter problem, on the footing that refillable containers present a lesser problem than non-refillable containers, and (b) under s.113 of the Constitution.

11. The principles governing the grant or refusal of interlocutory injunctions in private law litigation have been applied in public law cases, including constitutional cases, notwithstanding that different factors arise for consideration. In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction.

12. Recently two members of this Court have held that the plaintiff must establish that there is "a serious question to be tried", to use the expression favoured in American Cyanamid v. Ethicon Ltd. (1975) AC 396, at p 407, in preference to the "prima facie case" test which was adopted in Beecham Group Ltd. v. Bristol Laboratories Pty. Ltd. (1968) 118 CLR 618, at p 622 (Australian Coarse Grain Pool Pty. Ltd. v. Barley Marketing Board of Queensland (1982) 57 ALJR 425; 46 ALR 398 (Gibbs C.J.); Tableland Peanuts Pty. Ltd. v. Peanut Marketing Board (1984) 58 ALJR 283, at p 284; 52 ALR 651, at p 653 (Brennan J.)). In my opinion that is the correct test to be applied at least in the majority of cases - see Mason J., "Declarations, Injunctions and Constructive Trusts" (1980) 11 University of Queensland Law Journal 121, at p.128; but cf. Administrative &Clerical Officers Association v. The Commonwealth (1979) 53 ALJR 588; 26 ALR 497. However, it may be that in some cases where the public interest would be adversely affected by the grant of an injunction the plaintiff may need to show a probability, even a distinct probability of success, in order to obtain an interlocutory injunction. The degree of likelihood of success in the action is a factor that is related to the balance of convenience in a way shortly to be mentioned.

13. Despite the difficulties pointed to by the Solicitor-General, I consider that there is a serious question to be tried. And, although the evidence does not give a comprehensive picture of the plaintiffs' trade and the manner in which it is likely to be affected by the new deposit regime, I am inclined to think that the new regime will affect the plaintiffs' interstate trade adversely and cause them loss for which they cannot be compensated adequately.

14. The balance of convenience presents other problems. In the past this Court has granted interlocutory injunctions to restrain defendants from enforcing statutes whose validity is challenged on constitutional grounds when the balance of convenience favours the plaintiff. So, in s.92 cases, interlocutory injunctions have been granted to restrain interference with and seizure of the plaintiff's goods under compulsory marketing schemes in order to protect the interstate trade in those goods where the grant of the injunction has not occasioned any significant detriment to the public interest (Clements and Marshall Pty. Ltd. v. Field Peas Marketing Board (Tas.) (1947) 76 CLR 401; Australian Coarse Grain Pool; and Tableland Peanuts). But even in cases of this kind the Court has been astute to ensure that any detriment to the public interest is avoided or diminished - note the Chief Justice's requirement in Australian Coarse Grain Pool that the plaintiff undertake not to dispose of its barley otherwise than to the Board. In other cases the Court has indicated its willingness to protect a plaintiff's alleged constitutional right by restraining the enforcement of a statute where the plaintiff would suffer irreparable injury without any countervailing detriment to the public interest (see, for example, R. v. Macfarlane; Ex parte O'Flanagan and O'Kelly (1923) 32 CLR 518, at pp 529, 539, 584). In none of these cases did the Court go so far as to restrain the defendant from commencing prosecutions for breach of the statute whose validity was impugned. Indeed, in Field Peas it was acknowledged that prosecutions had been launched yet nothing was done to restrain the continuation of them.

15. It is a different matter where it is suggested that the proposed restraint on enforcement of the statute would occasion a significant detriment to the public interest by preventing the defendant from enforcing a legislative scheme which is designed to protect the environment from pollution by litter. Then the need to protect the private interests of the plaintiff must be weighed against the public interest in avoiding injury to the environment.

16. In Canada the courts have taken the view that only in exceptional circumstances will an interlocutory injunction be granted to restrain enforcement of a statute challenged on constitutional grounds. In Morgentaler v. Ackroyd (1983) 42 OR(2d) 659, Linden J. said (at p 668):

"... the balance of convenience normally dictates that those who challenge the constitutional validity of laws must obey those laws pending the court's decision. If the law is eventually proclaimed unconstitutional, then it need no longer be complied with, but until that time, it must be respected and this court will not enjoin its enforcement. Such a course of action seems to be the best method of ensuring that our society will continue to respect the law at the same time as it is being challenged in an orderly way in the courts. This does not mean, however, that in exceptional circumstances this court is precluded from granting an interim injunction to prevent grave injustice, but that will be rare indeed."

This approach was subsequently applied in Ziegler v. Hunter (1983) 75 CPR(2d) 163, and Pacific Trollers Association v. Attorney General of Canada (1984) 1 FC 846.

17. It may be that the last sentence in the passage quoted from Morgentaler v. Ackroyd states the position too strongly against the plaintiff who seeks an interlocutory injunction in Australia. The decisions in this Court to which I have already referred demonstrate that there are a variety of situations in which the Court, on a proper balance of convenience, will restrain enforcement of a statute in aid of a plaintiff's constitutional right. In arriving at a balance of convenience the Court will take into account the seriousness of the conduct enjoined by the statute and the damage to the public interest that may be caused by restraining its enforcement. And in some cases the balance of convenience may be affected by the court's perception or evaluation of the strength of the plaintiff's case for invalidity. But, subject to these qualifications there can be no reason to doubt the correctness of the general thrust of the comments in the passage which I have quoted. In the absence of compelling grounds, it is the duty of the Court to respect, indeed, to defer to, the enactment of the legislature until that enactment is adjudged ultra vires.

18. In the ordinary course of affairs the courts should hesitate before interfering with the Executive Government's discretion to decide whether it should prosecute for offences against a statute, even a statute which is under constitutional challenge, more particularly when the statute is designed to protect and safeguard a recognizable public interest, such as the environment. It is perhaps undesirable that prosecutions should be commenced whilst the validity of the relevant sections is under challenge in proceedings pending in this Court. But there may be circumstances not readily to be foreseen by the Court which would justify the commencement of prosecutions in which event they would ordinarily be adjourned pending the determination of validity.

19. In the present case the balance of convenience does not favour the grant of an injunction restraining the commencement of prosecutions. Although the plaintiffs' share of the bottled beer market is small it is possible that non-compliance with the statutory requirements during the period which will elapse between now and the determination of validity will present a significant hazard to the environment in South Australia. If an injunction were granted the statutory sanction for the provision of the incentive for consumers, members of the public and commercial organizations to return the plaintiffs' bottles would be significantly reduced. Moreover, the grant of an injunction may also be seen, incorrectly, as constituting some sort of immunity or protection to retailers of the plaintiffs' beer against subsequent prosecution. The injunction sought is not confined to a restraint on enforcement of the Act against the plaintiffs. A further and significant factor is that the defendant, though maintaining the validity of its legislation, has not threatened to launch prosecutions.

20. The case against an injunction in a form which would prevent the defendant from investigating the possible commission of offences is even stronger. It might make it impossible for the defendant eventually to prove the commission of offences in the event that the validity of the legislation is later upheld.

21. There are in addition certain matters which I take into account as elements in the balance of convenience or as discretionary considerations telling against the grant of interlocutory relief. First, by letter dated 20 March 1986 the first plaintiff advised the Department of Environment and Planning that it intended to introduce a new refillable beer bottle to the South Australian market. To enable this to be achieved the first plaintiff requested that the legislative changes should not take effect until 1 October 1986. It seems that the Department had intended to introduce the new regime on 1 June 1986 or 1 July 1986, but postponed its introduction in response to the first plaintiff's request. The evidence does not indicate whether the plaintiffs still intend to market beer in a refillable bottle or whether they have abandoned this plan.

22. Secondly, instead of applying for an injunction at the beginning of May, after filing their statement of claim, at a time when the fall in their market share became apparent following the introduction of the 1986 amending Act, the plaintiffs have delayed their move for interlocutory relief until the eve of the commencement of the new regime. Had the plaintiffs moved earlier, proceedings in the action would have been further advanced. And finally, as it seems to me, the grant of injunctive relief might confer an undue advantage on the plaintiffs as against their competitors in what is essentially a commercial battle for a large stake in the South Australian market for packaged beer.

23. In the result I refuse the application for interlocutory injunctions.

24. I make the following orders on the plaintiffs' summons:

1. Application for interlocutory injunctions dismissed.

2. Order 4 as asked substituting "13 October" for "6

October".

3. Order 5 as asked substituting "27 October" for "20

October".

4. Order that the costs of this application be costs of the

defendant in the action.

5. Stand over the balance of the summons to a date to be

fixed.

Orders

Application for interlocutory injunctions dismissed.

Order that the plaintiffs file and serve any further affidavits on which they rely on or before 13 October 1986 and that the defendant file and serve any further affidavits on which it relies on or before 27 October 1986.

Further order that the costs of this application be costs of the defendant in the action and that the balance of the summons be stood over to a date to be fixed.