Cross v Barnes Towing and Salvage (Qld) Pty Ltd

[2005] NSWCA 273

Reported Decision: 65 NSWLR 331

Court of Appeal

CITATION:	CROSS v BARNES TOWING AND SALVAGE (QLD) PTY LTD & ORS [2005] NSWCA 273
HEARING DATE(S):	19 April 2005
JUDGMENT DATE:	18 August 2005
JUDGMENT OF:	Spigelman CJ at 1; Handley JA at 68; Beazley JA at 108
DECISION:	1 Appeal allowed with costs; 2 Orders of the Local Court at Lismore dismissing the following charges; (a) Charges that on 24 June 2002 the first defendant contravened s15 and s59 of the Tow Truck Industry Act 1998; (b) A charge that on 24 June 2002 the second defendant contravened s23(1)(c) of the Act ; (c) A charge that on 24 June 2002 the third defendant contravened s15, read with s88, of the Act; set aside; 3 Charges remitted to the Local Court for findings to be made that the offences were proved and for further hearing and determination according to law ; 4 Respondents to have a certificate under the Suitors' Fund Act 1951.

CATCHWORDS:	CONSTITUTIONAL LAW - freedom of interstate intercourse - freedom of interstate trade and commerce - test to be applied where interstate intercourse occurs in the course of trade or commerce - whether Tow Truck Industry Act contravenes S92 constitution - STATUTORY INTERPRETATION - proper interpretation of reg 69(1) Tow Truck Industry Regulation - meaning of "towing work"
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 (NSW) Commonwealth of Australia Constitution Act Crimes (Local Courts Appeal and Review) Act 2001 (NSW) Crimes (Sentencing Procedure) Act 1999 (NSW) Tow Truck Act 1973 (Qld) Tow Truck Industry Act 1998 (NSW) Tow Truck Industry Regulation 1999 (NSW)
CASES CITED:	Attorney General of the Commonwealth v Schmidt (No 1) (1961) 105 CLR 361 Australian Capital Television Pty Ltd v The Commonwealth (No 2) (1992) 177 CLR 106 Bourke v State Bank of NSW (1990) 170 CLR 276 Castlemaine Toohey Ltd v South Australia (1990) 169 CLR 436 Cole v Whitfield (1988) 165 CLR 360 Cunliffe v The Commonwealth (1994) 182 CLR 272 Finemores Transport Pty Ltd v New South Wales (1978) 139 CLR 338 Hospital Provident Fund Pty Ltd v Victoria (1953) 87 CLR 1 Hughes v Vale (No 2) (1955) 93 CLR 127 Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 Nintendo Company Ltd v Centronic Systems Pty Ltd (1994) 181 CLR 134 Princess Alice (1849) 3 W Rob 138, 166 ER 914 R v Smithers; Ex parte Benson (1912) 16 CLR 99 The Auguste Legembre [1902] P 123 The Baltyk [1948] P 1 W & A McArthur Ltd v State of Queensland (1920) 28 CLR 530
PARTIES:	Brian Clarence Cross Barnes Towing and Salvage James Michael Ruff John Anthony Dent
FILE NUMBER(S):	CA 40764/04
COUNSEL:	Mr Sexton SC SG (Plaintiff) Mr Kirk (Plaintiff) Mr Gageler SC (Defendants) Ms Richardson (Defendants)
SOLICITORS:	I V Knight - Crown Solicitor (Plaintiff) Mathews Folbigg Pty Ltd (Defendants)

LOWER COURT JURISDICTION:	Local Court
LOWER COURT FILE NUMBER(S):	S1739 56/04
LOWER COURT JUDICIAL OFFICER:	Magistrate Jacob

- 18 -

40764/04

SPIGELMAN CJ
HANDLEY JA
BEAZLEY JA

Thursday 18 August 2005

Brian Clarence CROSS v BARNES TOWING AND SALVAGE (QLD) PTY LTD & ORS

The defendant company carries on a specialised towing business in Rocklea, Queensland. After a semi-trailer overturned about 10km from Lismore, the owner’s transport manager engaged the defendant company in Queensland to recover the vehicle and tow it to Queensland. Under the Tow Truck Industry Act (NSW), a person must not carry on business as a tow truck operator in NSW unless the person is licensed under the Act. The defendant company held a license under the Tow Truck Act 1973 (Qld) but did not hold a license under the NSW Act. Criminal proceedings were commenced against the Defendants for contravention of the NSW Act. The magistrate dismissed all but one of the charges on the basis that the NSW Act contravened the protection of interstate freedom of intercourse found in s92 of the Commonwealth Constitution.

HELD

A (per Spigelman CJ, Handley JA and Beazley JA agreeing)

Where intercourse occurs in trade or commerce, the test for an impermissible burden should be the same as that applicable to the trade or commerce limb of s92. Aspects of trade and commerce capable of answering the description “intercourse” should not be given a broader protection than other aspects of trade and commerce. The relevant test in this case was the test propounded in Cole v Whitfield . [38]-[40], [45], [68], [94], [108]

Cole v Whitfield (1988) 165 CLR 360 applied. Cunliffe v Commonwealth (1994) 182 CLR 272; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; Australian Capital Television Pty Ltd v The Commonwealth (No 2) (1992) 177 CLR 106 considered.

B (per Spigelman CJ, Handley JA and Beazley JA agreeing)

The Act did not contravene the trade and commerce limb of s92 because it did not directly or indirectly impose discriminatory burdens of a protectionist kind on interstate tow truck operators wishing to undertake towing work in New South Wales. [68], [84], [108]

Cole v Whitfield (1988) 165 CLR 360 applied; Castlemaine Toohey Ltd v South Australia (1990) 169 CLR 436 distinguished.

C (per Handley JA, Beazley JA agreeing and Spigelman CJ dissenting)

The defendants did not fall within the exemption from holding a license under Reg 69(1) of the Tow Truck Industry Regulation for towing work that does not start in NSW because the towing work did not start outside of NSW. Travelling to an accident site for the purpose of towing is not “towing work”. [68], [76], [83], [108]

D (per Handley JA, Beazley JA agreeing)

By sending a recovery vehicle into New South Wales and towing the damage semi-trailer back to Queensland for reward the company carried on business as a tow truck operator in New South Wales. [88], [108]

ORDERS
1 Appeal allowed with costs.

2 Orders of the Local Court at Lismore dismissing the following charges:


(a) Charges that on 24 June 2002 the first defendant contravened s15 and s59 of the Tow Truck Industry Act 1998;

(b) A charge that on 24 June 2002 the second defendant contravened s23(1)(c) of the Act;

(c) A charge that on 24 June 2002 the third defendant contravened s15, read with s88, of the Act;


set aside.

3 Charges remitted to the Local Court for findings to be made that the offences were proved and for further hearing and determination according to law.

4 Respondents to have a certificate under the Suitors’ Fund Act 1951.

40764/04

SPIGELMAN CJ
HANDLEY JA
BEAZLEY JA

Thursday 18 August 2005

Brian Clarence CROSS v BARNES TOWING AND SALVAGE (QLD) PTY LTD & ORS

Judgment

1 SPIGELMAN CJ: The Plaintiff was the informant in criminal proceedings instituted in the Local Court against the Defendants. He was acting on behalf of the Tow Truck Authority of New South Wales, a statutory body with responsibilities under the Tow Truck Industry Act 1998 (“the Act”). In the proceedings each of the Defendants was charged with contravention of the Act. Magistrate Jacob dismissed all but one of the charges in the Local Court at Lismore on 15 June 2004 on the basis that the statute contravened the protection of interstate freedom of trade found in s92 of the Commonwealth Constitution.

2 By a summons issued in the Supreme Court the Plaintiff sought the following orders:

“1. Orders that the decision of Magistrate Jacob to dismiss the following charges, which decisions were handed down in the Local Court at Lismore on or about 15 June 2003 in the proceedings Cross v Barnes Towing and Salvage (Qld) Pty Ltd & Ors , be quashed:
(a) charges that on 24 June 2002 the first defendant contravened each of s.15 and s.59 respectively of the Tow Truck Industry Act 1998 (NSW) (‘the Act’);
(b) a charge that on 24 June 2002 the second defendant contravened s.23(1)(c) of the Act;
(c) a charge that on 24 June 2002 the third defendant contravened s.15, read together with s.88, of the Act.
2. Orders that the said charges be remitted to the Local Court at Lismore for determination according to law.”

3 A judge of the Common Law Division made an order by consent removing the matter to this Court in the following terms:

“1. That these proceedings be removed into the Court of Appeal to determine the following question;
‘Whether the Plaintiff is entitled to all or any of the relief claimed in the Summons’.”

4 The jurisdiction invoked by the Plaintiff is that contained in s56 of the Crimes (Local Court Appeal and Review) Act 2001:

“56(1) The prosecutor may appeal to the Supreme Court against:
…
(c) An order made by Local Court dismissing a matter the subject of any summary proceedings …
… but only on a ground that involves a question of law alone.”

5 The sole basis on which the Magistrate dismissed the charges was that the regulatory scheme contravened the requirements of s92 of the Constitution. His Honour concentrated on the protection given to “interstate intercourse”. The Defendants had relied, in the alternative, on the trade and commerce limb of s92, but it was unnecessary for his Honour to consider the alternative.

6 The Defendants seek to uphold the decision of the Local Court on a number of bases set out in the Notice of Contention, as follows:

“1. The Magistrate erred in law in holding that ‘towing work’ in cl 69(1) of the Tow Truck Regulation 1999 (NSW) (‘the Regulation’), is confined to the act of ‘towing’ and does not extend to the entirety of the job or undertaking directed to bringing about the act of ‘towing’.
2. On the proper construction of cl 69(1) of the Regulation, and on the facts found by or not in issue before the Magistrate, the ‘towing work’ in which the defendants were engaged started (or alternatively could only have started) with the dispatch of the first defendant’s heavy duty recovery unit from Rocklea in Queensland in consequence of which:
(a) the first defendant, by virtue of holding a licence under s 7 of the Tow Truck Industry Act 1973 (Qld) (‘the Queensland Act’), was exempt from the requirement of s 15 of the Tow Truck Industry Act 1998 (NSW) (‘the New South Wales Act); and
(b) the second defendant, by virtue of holding a driver’s certificate under s13 of the Queensland Act, was exempt from the requirement of s 23(1)(c) of the New South Wales Act.
3. The Magistrate erred in law in:
(a) failing to hold that ‘carry on business’ in s15 of the New South Wales Act is confined to a business carried on at a place in New South Wales; and
(b) treating as relevant the fact that 2-3% of the first defendant’s towing work was interstate.
4. On the proper construction of s 15 of the New South Wales Act, and on the facts found by or not in issue before the Magistrate, the conduct with which the first defendant was charged did not constitute (or alternatively could not constitute) carrying on business as a tow truck operator contrary to that section.
5. If and to the extent that the Magistrate may not have done so, on the facts found by or not in issue before the Magistrate, the Magistrate erred in law in failing to hold that the New South Wales Act infringed the ‘trade and commerce’ limb of s92.”

Background facts

7 On 24 June 2002 a semi-trailer comprising a prime mover and a tanker trailer was on journey from Walcol in Queensland to Lismore in New South Wales when it overturned about ten kilometres from Lismore. The Transport Manager of the owner of the trailer contacted the First Defendant (“Barnes”) and requested that Barnes recover the semi-trailer and return it to Queensland. Contact was made with the Second Defendant, a tow truck driver employed by Barnes, who immediately drove a vehicle referred to as a “heavy vehicle recovery unit” from his home in Rocklea Queensland to Lismore. The Second Defendant subsequently towed the semi-trailer back to Queensland delivering the trailer to the owner’s premises at Walcol and the prime mover to Barnes’ premises at Rocklea.

8 The Plaintiff also attended at the scene. He contacted the Third Defendant, a director of Barnes, informing him that Barnes was not licensed in New South Wales and could not undertake the towing work in relation to the semi-trailer. The Plaintiff also cautioned the Second Defendant on the basis that he did not have a tow truck drivers certificate or towing authority in New South Wales.

9 Barnes is a company incorporated in Queensland which carries on business from premises situated at Rocklea in Queensland. It held a licence under s7 of the Tow Truck Act 1973 (Qld) (“the Queensland Act”) to operate tow trucks registered in Queensland, including a heavy vehicle recovery unit, which uses a unique airbag system for the purpose. The Second Defendant was employed by Barnes at its premises at Rocklea and held a drivers certificate issued under s13 of the Queensland Act authorising him to operate a tow truck. He was, on the morning of 24 June 2002, “on call” for which purpose he had take the heavy vehicle recovery unit to his own home.

10 I will set out below the mischief that the new legislative regime was directed to, by means of an extensive extract from the second reading speech. The tow truck industry manifested a range of unsavoury and indeed criminal practices which the 1998 legislation was directed to remedying. However, nothing in the materials before the Court suggests that the particular segment of the market in which the First Defendant operated was affected by anything of that character.

11 On the evidence Barnes provided a highly specialised recovery and towing technique as part of the heavy transport industry. The evidence before the Local Court indicated that its specialised air-cushion recovery equipment and techniques were not provided by any other Australian company. More specifically, its focus on the heavy transport industry, of which semi-trailers are a significant component, indicated that it was not involved in any manner in the towing of smaller vehicles, the regulation of which the legislative scheme was primarily directed.

12 The Magistrate made the following finding of fact, which was not contested:

“The Barnes company is a tow truck company based in Queensland which uses specialised air-cushion recovery techniques and equipment for the recovery of tankers and prime movers. The evidence provided that they were the only company operating in Australia with that specialised equipment and technique. Two to three per cent of its business prior to this case was interstate work.”

13 The incident the subject of these proceedings involved, on the evidence, a contractual arrangement which came into effect by the dispatch of a vehicle from Queensland to New South Wales and the return of that vehicle to Queensland, depositing the trailer with the trailer owner and the prime mover at the Barnes premises. The single invoice generated for the whole of the activity was eventually divided equally between the insurers for the prime mover and for the trailer.

14 It appears that there was a degree of conflict at the site of the accident when the Barnes vehicle and personnel arrived at the scene. Mr Cross, as the representative of the Tow Truck Authority, spoke to the Barnes representatives on the site. He said words to the effect that only tow truck operators with a New South Wales licence could do the work. Mr Cross identified a particular company licensed in NSW and suggested it do the work instead. The transport manager of the owner of the trailer contacted this company and asked how the company intended to do the work. He was told that they had some big chains and a crane. When he asked how they intended to do it in the presence of the overhead power lines, the response was: “We’ll worry about them when we get there”. He informed Mr Cross on the site that as a transport manager of the owner of the trailer he had directed Barnes to do the work and that they would be there shortly.

15 When the Second Defendant arrived, the driver was informed by the Plaintiff that he could use the air cushions equipment, but only as a subcontractor to a New South Wales licensed tow truck operator. The Plaintiff informed the driver in the presence of the trailer owner’s transport manager:

“I will only let you use your air cushions as a subby to an NSW towy. I will not let you do the tow back to Queensland, I will only allow it to be towed into Queensland by the NSW towy because you’re not licensed.”

16 The Second Defendant indicated in forceful terms that he would proceed to do the job.

17 The Plaintiff relies in these proceedings on the practical implementation of the licensing scheme. He contends that it was not being conducted in a protectionist way. The evidence indicates that between 1990 and 2002, i.e. under both the pre-existing and the current legislative schemes, persons who had applied to the Tow Truck Authority for tow truck operator licences included eight from Queensland, nine from the Australian Capital Territory and 22 from Victoria. There was no record of any application having been refused. Similarly, in relation to the number of applications made over the same period for tow truck drivers certificates, there were 51 drivers from Queensland, 40 from the Australian Capital Territory, 57 from Victoria, one from the Northern Territory and one from Tasmania. All but two had been granted certificates and the two that had been refused were refused on grounds that were mandatory under the Act.

18 Five charges were lain under the Act:

(a) an offence by Barnes against s72(1) in that it did represent, cause or allow a representation to be made to the effect that it was a licensee;
(b) an offence by Barnes against s15 in that it did ‘carry on business’ as a tow truck operator without holding a tow truck operator’s licence;
(c) an offence by Barnes against s59 in that it did employ engage or otherwise use the services of a person (Ruff) who was not a certified driver;
(d) an offence by Ruff against s23(1)(c) in that he did drive or stand a tow truck on the road or road related area for the purposes of towing a motor vehicle for reward without being the holder of a driver’s certificate;
(e) an offence by Dent against s88 in that he did knowingly authorise or permit Barnes to contravene s15.

19 Barnes was convicted of the offence against s72(1) of the NSW Act. It had displayed on the side of the heavy-duty recovery vehicle a statement to the effect that it had a New South Wales licence. That was at one stage an accurate statement. However, the licence had been granted under the Tow Truck Act 1989 and had lapsed in 1994. The Court convicted Barnes of this charge, but proceeded to record no conviction against it under s10 of the Crimes (Sentencing Procedure) Act 1999. This charge plays no role in these proceedings.

The Legislative Scheme

20 The provisions of the Act, under which the relevant charges were lain, are:

“15 A person must not carry on business as a tow truck operator unless the person holds a tow truck operators licence that authorises the kind of towing work carried on by the person in the course of that business.
Maximum penalty: 100 penalty units or imprisonment for 12 months, or both.
59 A tow truck operator must not employ, engage or otherwise use the services of a person to do anything for which a drivers certificate is required under this Act or the regulations unless the person is a certified driver.
Maximum penalty: 50 penalty units.
23 (1) A person must not:
…
(c) drive or stand a tow truck (other than a licensed tow truck) on a road or road related area at any time for the purposes of towing a motor vehicle for fee or reward,
unless this person holds a drivers certificate.
Maximum penalty: 50 penalty units or imprisonment for 6 months or both.

88 (1) If a corporation contravenes any provision of this Act or the regulations, each person who is a director of the corporation or who is concerned in the management of the corporation is to be taken to have contravened the same provision if the person knowingly authorised or permitted the contravention.”

21 Of particular significance in the present proceedings is reg 69 of the Tow Truck Industry Regulation 1999 (“the Regulations”), which provides:

“69 (1) A person who holds a licence, permit or other authority issued under the law of another State or Territory that authorises the person to drive or operate a tow truck in that State or Territory is exempt for the requirements under the Act to hold a licence or drivers certificate.
(2) Such an exemption does not apply to or in respect of any towing work that starts in this State.”

22 Section 3 of the Act contains the following inclusive definition of “tow”:

“3 (1) In this Act:
tow includes:
(a) lift and tow, or lift and carry, and
(b) lift for the purpose of towing or carrying, and
(c) carry on a trailer, and
(d) place on a trailer for the purpose of carrying, and
(e) any other action prescribed by the regulations for the purposes of this definition,
but does not include any activity declared by the regulations not to be towing for the purposes of this Act.”

Section 3 also contains:

“ Tow truck operator means a person who conducts a business involving the operation of any tow truck for the purposes of towing motor vehicles.”

23 Division 1 of Pt 3 of the Act is concerned with tow truck operator licences. It outlines the classes of licences, makes provisions for application for licences and also contains, in s18, certain mandatory and discretionary grounds for refusing to grant an application for a licence. It also makes provision for a licence to be granted subject to conditions and for the payment of licence fees as determined by the Tow Truck Authority.

24 Relevantly s18(3) provides:

“18 (3) The discretionary grounds for refusing to grant an application for a licence are as follows:
(a) that the applicant is not, in the opinion of the TTA, a fit and proper person to hold a licence or is otherwise not competent to carry on the kind of towing work to which the proposed licence relates,
(b) that the applicant has not specified a place of business,
(c) that the applicant’s place of business is not, in the opinion of the TTA, suitable for keeping the records and documents required to be made or kept under this Act,
(d) that any place specified by the applicant as a holding yard intended to be used in the course of the applicant’s business is not, in the opinion of the TTA, suitable to be used as a holding yard,
(e) that the applicant is not the registered owner, or registered operator, of each tow truck specified in the application as a tow truck intended to be operated in carrying on the applicant’s business,
(f) that each such specified tow truck does not, in the opinion of the TTA, comply with the relevant requirements of this Act and the regulations or with any other relevant law relating to tow trucks,
(g) that the applicant does not hold the qualifications and experience prescribed by the regulations in respect of the class of licence sought by the applicant,
(h) that the applicant has not satisfactorily completed such training courses as may be approved for the purposes of this section,
(i) that any close associate of the applicant has, within the period of 10 years before the application for the licence was made:
(i) been convicted, or
(ii) been found guilty (but with no conviction being recorded),
by a court in New South Wales or elsewhere of an offence prescribed by the regulations, whether or not the offence is an offence under New South Wales law,
(j) that the granting of the licence would, in the opinion of the TTA, be contrary to the public interest.”

25 Division 2 of Pt 3 makes provision for tow truck drivers certificates including determination of classes of certificates, provisions for applications, restrictions on the grant of certificates, the imposition of conditions and the payment of fees. Relevantly s26(3) provides:

“26 (3) The discretionary grounds for refusing to grant an application for a drivers certificate are as follows:
(a) that the applicant is not, in the opinion of the TTA, a fit and proper person to hold a drivers certificate or is otherwise not competent to carry on the kind of towing work to which the proposed drivers certificate relates,
(b) that the applicant does not hold the qualifications and experience prescribed by the regulations in respect of the class of drivers certificate sought by the applicant,
(c) that the applicant has not satisfactorily completed such training courses as may be approved for the purposes of this section,
(d) that the granting of the drivers certificate would, in the opinion of the TTA, be contrary to the public interest.”

26 Each of the sections permitting the Tow Truck Authority to grant a licence or certificate subject to conditions, being s20 and s29 respectively, is expressed in general terms authorising the Authority to grant a licence or certificate “subject to such conditions as may be specified” in either the licence or the drivers certificate. In addition each section directly imposes a list of conditions the terms of which are not presently material.

27 Section 45 of the Act confers a right of appeal:

“45 (1) A person may apply to the Administrative Decisions Tribunal for a review of any of the following decisions:
(a) the refusal or failure by the TTA to grant a licence or drivers certificate to the person,
(b) a condition imposed by the TTA in relation to a licence or drivers certificate granted to the person.”

28 Clause 9 of Sch 2 Pt 4 of the Administrative Decisions Tribunal Act 1997 makes particular provision for the composition of the Tribunal in the case of appeals under the Act.

29 Furthermore, s49 of the Administrative Decisions Tribunal Act provides:

“49 (1) If an administrator makes a reviewable decision, an interested person may make a written request to the administrator for the reasons for the decision.
(2) As soon as is practicable (and in any event within 28 days) after receiving such a request, the administrator is to prepare a written statement of reasons for the decision and provide it to the person who requested the reasons.
(3) The statement of reasons is to set out the following:
(a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based,
(b) the administrator’s understanding of the applicable law,
(c) the reasoning process that led the administrator to the conclusions the administrator made.”

30 The Act and Regulations also contain provisions regulating particular conduct of the tow truck industry, as follows:

(a) s 61 – prohibiting ‘spotter’s fees’, ‘drop fees’ and towing inducements;
(b) s 62 – prohibiting the obtaining of an authority to repair at an accident scene;
(c) s 63 – prohibiting touting or soliciting for towing or repair work at an accident scene;
(d) s 64 – prohibiting a person from making threats at an accident scene;
(e) s 65 – imposing an obligation on a driver to clean up an accident scene;
(f) s 66 – requiring a driver to comply with a reasonable direction of an authorized officer at an accident scene;
(g) s 67 – imposing restrictions on passengers in tow trucks;
(h) s 68 – imposing restrictions on drivers standing at an accident scene;
(i) reg. 37 – prohibiting a person from engaging in towing work without a towing authorization in accordance with the directions of an authorised officer or police officer;
(j) reg. 39 – requiring a person to leave the accident scene once a towing authorization has been obtained;
(k) reg. 42 – prohibiting a person from recording anything in a towing authorisation that the person knows to be false or misleading;
(l) reg. 43 – requiring a person to both retain and give out copies of the towing authorization; and
(m) reg. 57 – prohibiting the incitement or encouragement of the commission of an offence under the Act or regulations.

31 Part 4 of the Act makes provision for the creation of a job allocation scheme. However, none was in force in the area relevant to these proceedings.

32 The provisions of the Act now under challenge were introduced following a report into the tow truck industry. When introducing the bill, the Minister for Transport outlined the mischief to which the bill was directed (NSW Legislative Assembly Hansard 14 October 1998 pp 8362-8363):

“[The report] … described an industry infiltrated by criminal elements and pervaded by fear of intimidation, physical harm and property damage. It was clear that the existing regulatory system was not providing the community and honest tow truck drivers adequate protection from thugs and that the Tow Truck Act 1989 was not able to discourage dangerous and illegal practices. The most significant incentive that has given rise to unscrupulous and dangerous practices is the high proportion of tow truck operators paid ‘drop fees’ by smash repairers. Drop fees are secret commissions that smash repairers pay to tow truck operators for bringing in smash repair work. These drop fess are then loaded into the vehicle repair cost. That means that motorists are paying higher insurance premiums than would be the case in an industry that is better regulated.
Drop fees and the structure of the industry encourage tow truck drivers to race to accident scenes and persuade drivers in car accidents to allow them to take their cars. It is usual for more tow trucks than are needed to arrive at the scene. Further, it has also become common for tow truck operators to have several tow trucks on the road at once to ensure that they can respond quickly to the report of an accident. That means that there are unnecessary cost burdens for tow truck operators that they must pay to enable them to compete for a relatively low number of accident tows.
All the trucks compete against each other for the job and in the process they often harass and intimidate drivers of damaged vehicles to get the business. There are also regular complaints of tow trucks placing other motorists and the public at risk while racing to an accident in an attempt to be first at the scene. Some tow truck drivers have even gone so far as to follow injured motorists into ambulances in order to get their signature to do the tow. Ambulance workers have also complained that they have been obstructed from helping those injured in an accident by tow truck drivers harassing the injured for approval to tow their car.
That is unacceptable. At the scene of an accident motorists are at their most vulnerable; they are often in a state of shock. It is a time when people need a clear process in place which protects the motorists’ rights as consumers and ensures that their vehicles are taken to repairers of their choice. It is also unacceptable that tow truck drivers race to an accident scene putting members of the public at risk. Fierce competition in the tow truck industry has also led to an escalation of violent behaviour by some operators and drivers towards their competitors. There have been many instances of competing tow truck drivers coming to blows over who gets the tow at an accident. Unscrupulous operators have also been conducting campaigns against competitors, including fire bombing and sabotaging their competitors’ trucks. Informal zones of operation have also emerged where tow truck operators claim an area as their own and any newcomers are kept out of the area by existing operators through threats, intimidation, physical harm and property damage.
The bill will overcome a number of these problems by improving the management of an accident scene. It is designed to prevent tow truck drivers from intimidating motorists, the public and other tow truck drivers. It will give additional powers to the police, emergency services workers and other authorised officers to better control the actions of unscrupulous tow truck drivers and operators. The bill provides that licensed tow truck operators and drivers will be allowed to attend an accident scene. That means that car owners will have more control and say over where their cars will be towed. There will be strong penalties for non-compliance of a range of offences to ensure that the public is protected.
Further, tow truck drivers and operators will have to meet much more stringent accountability requirements. They will be required to complete and maintain well-documented tow authorisations, which show that a vehicle has been towed to a destination authorised by the motorist rather than to a place where the tow truck operator wants the car to go. The Tow Truck Act 1989 has not dealt with the infiltration within the industry by criminal elements. The black market in drop fees that has existed in the industry for some time has attracted undesirable elements into the industry and this has contributed to the rise in violence and criminal activity. We need to get the cowboys and thugs out of the industry so that honest tow truck operators can go about their business without fear and so that the rights of the general public are protected.
Industry standards will be upgraded so that applicants who have been convicted of certain criminal offences or whose driver’s licence has been cancelled or suspended will not be able to enter the industry. Operators will have to keep records that show that they employ in their businesses only those who are licensed to work in the industry. An audit program will be implemented to monitor the records and activities of tow truck drivers and operators.
As well as strengthening the fit and proper requirements for applicants, the bill eliminates a major loophole in the current Act. Currently people of ill repute, particularly those with serious criminal records, have been able to avoid the ‘fit and proper person’ assessment by using a ‘front person’ who is able to pass the eligibility criteria for a licensed operator. This means that criminals and disreputable people have been able to stay in the industry by legitimising the business and retaining control of their tow truck business from behind the scenes.
The practice of using a ‘front person’ to legitimise businesses will no longer be possible under the new legislation, as greater controls will be placed on the industry. The bill makes it mandatory for tow truck operators to declare the involvement or interest of silent partners and any other ‘associated person’ with the management and operation of towing businesses. Associated persons will also be required to meet the ‘fit and proper person’ criteria. As all applicants and associated persons will have to pass a tougher character test, the bill will ensure that people who have committed certain criminal offences do not enter the industry.”

The Two Limbs of s92

33 The Magistrate determined this case on the basis of the intercourse limb in s92. The Defendants, whilst seeking to uphold that approach submit, in the alternative, that the same result would ensue on the basis of the trade and commerce limb.

34 Contemporary jurisprudence on s92 draws a distinction between the two limbs. (Cole v Whitfield (1988) 165 CLR 360 at 387-388, 393-394.) This appears to be based on fact that the concept of “intercourse” encompasses personal freedoms such as movement of individuals and communication of ideas. As the Court said at 393:

“… some forms of intercourse are so immune from legislative or executive interference that, if a like immunity were accorded to trade or commerce, anarchy would result.”

35 That personal freedoms are implicit in the creation of a single polity by the act of federation enshrined in the Constitution was recognised as long ago as R v Smithers; Ex parte Benson (1912) 16 CLR 99. In that case legislation prohibiting a convicted criminal entering a State was struck down by a four judge bench. Two of their Honours found that such legislation contravened the intercourse limb in s92 (Isaacs and Higgins JJ). The other two members of the court (Griffiths CJ and Barton J) found that protection of freedom of movement was necessarily implied by the act of federation itself.

36 In a Constitutional context, legislation impinging on personal freedoms should be subject to a process of strict scrutiny, to use a concept developed in the Constitutional jurisprudence of the United States. Such strict scrutiny is appropriate where personal freedoms are involved. (See Cole v Whitfield supra at 393; Nationwide News Pty Ltd v Wills (1992) 177 CLR 1 at 55-56; Australian Capital Television Pty Ltd v The Commonwealth (No 2) (1992) 177 CLR 106 at 194-195.)

37 The authoritative test for determining when a burden on trade and commerce is impermissible is whether it imposes a discriminatory burden of a protectionist kind. Such a test is not sufficiently strict where personal freedoms are involved. (See Nationwide News at 57; Cunliffe v The Commonwealth (1994) 182 CLR 272 at 307-308 and cf 301-307.) For that reason, the same result ensues, whether the analysis is based on the express freedom of intercourse in s92 or on an implied freedom of communication (as in R v Smithers) or an implied freedom of political communication (as in Nationwide News, Australian Capital Territory Television and Cunliffe).

38 The word “intercourse” is so broad that it could cover a substantial part of what would fall within the concept of “trade and commerce”. To give aspects of trade and commerce capable of answering the description “intercourse” a broader protection than other aspects of trade and commerce, where the incidents of characterisation differ so markedly, would be to prefer form over substance. This is precisely what contemporary s92 jurisprudence is designed to avoid.

39 Section 92 is a provision in which one word in the Constitution should be read down so that a limitation or restriction upon other terminology is not rendered otiose. (Cf Attorney General of the Commonwealth v Schmidt (No 1) (1961) 105 CLR 361 at 371-372; Nintendo Company Ltd v Centronic Systems Pty Ltd (1994) 181 CLR 134 at 160; Bourke v State Bank of NSW (1990) 170 CLR 276 at 285-286.) Although this issue has arisen in contexts involving the construction of a head of legislative power, it represents a principle of interpretation of general application.

40 The word “intercourse” in s92 should either be read down so as not to extend to matters within the trade or commerce limb or the test for an impermissible burden should be the same for acts of intercourse in trade or commerce, as that applicable to the trade or commerce limb. There is authority binding on this Court which states that the word intercourse encompasses both commercial and non-commercial intercourse. (See W & A McArthur Ltd v State of Queensland (1920) 28 CLR 530 at 549-550. See also Nationwide News at 59-60.) Although Cole v Whitfield appears to require a fresh approach, that does not appear to be open in this Court. However, there is no authority which would prevent the Court adopting the second approach.

41 This Court is not bound by a judgment of a single judge of the High Court which suggests the contrary (Nationwide News at 59-60 per Brennan J; ACTV per Dawson J at 192, 195-196).

42 I prefer the reasoning of Mason CJ who indicated support for the second approach when he said in Cunliffe at 307:

“Although the guarantee of freedom of interstate intercourse, not forming part of trade and commerce among the State, is not directed to preserving interstate intercourse from discriminatory burdens of a protectionist kind …” [Emphasis added.]

This suggests that intercourse which does form part of trade and commerce is subject to such a test.

43 Furthermore, as Deane and Toohey JJ said in Nationwide News supra at 84:

“It was submitted in the course of argument in the present case that, once it was recognized that the guarantee of interstate intercourse was not confined by the construction given to the guarantee of freedom of interstate trade and commerce, it is necessary to construe it as inapplicable to any intercourse in the course of trade or commerce. Otherwise, it was said, the Court’s insistence, in Cole v Whitfield, that s92 was not intended to operate and did not operate as a source of unfair and potentially divisive preference of interstate trade over intrastate trade would be unavailing. There is obvious force in that submission. Nonetheless, it goes too far. The true resolution of tension between s 92’s guarantee of freedom of interstate trade and commerce and the guarantee of freedom of interstate intercourse must ultimately be found, not in removing all intercourse which happens to take place in the course of trade or commerce from the reach of the guarantee of freedom of interstate intercourse but in the relevant characterisation of the particular law. Thus, in the present case, the relevant characterisation of s 299(1)(d)(ii) is that of a law with respect to the use or publication of words, regardless of whether that use or publication be in trade or commerce. For the purposes of s92, s 299(1)(d)(ii)’s prohibition is relevantly directed not to trade or commerce but to communication or intercourse. That being so, the fact that the words in the present case were used or published by Nationwide in the course of trade or commerce, that is to say, in the course of producing, distributing and selling a newspaper, would not affect the application or operation of s92’s guarantee of freedom of interstate intercourse.”

44 The resolution suggested by this passage between the two limbs of s92 is that it is not the nature of the activity, but the nature of the law that determines which test is applicable. A law which is directed solely towards the regulation of trade and commerce, such as the Tow Truck Industry Act, will be subject only to the trade and commerce test – regardless of whether or not it also impacts upon interstate intercourse in the process of regulating trade and commerce. But a law which operates more broadly, so that it regulates behaviour that may, but need not necessarily, be trade and commerce, will have to pass both tests. In this case, unlike the legislation at issue in Nationwide, the Tow Truck Industry Act does not purport to regulate any behaviour other than that which occurs in the course of trade and commerce. It would therefore, on their Honours’ formulation, only have to be assessed according to the trade and commerce limb of s92.

45 The present case involves an act of movement of a tow truck from one State to another, returning with a disabled vehicle. The service was provided for reward in trade or commerce. The legislation purports to restrict the conduct in trade or commerce of both the tow truck operator and its employed driver. The relevant test is that propounded in Cole v Whitfield.

Is there a Discriminatory Burden of a Protectionist Kind?

46 Regulation 69 authorises a person with an interstate licence or permit to operate, or drive, a tow truck within New South Wales by doing so into or through the State. That permission does not extend to such conduct which commences in the State. The consequence is that an operator or driver must have a licence or permit in order to perform such acts from one part of the State to another or from within the State to another State.

47 Regulation 69 focuses only on where a licence or permit holder received the licence or permit. It does not concern itself with where the person conducts business or resides. Nevertheless, since Cole v Whitfield, these issues must be determined as matters of substance. The former “criterion of operation” approach has been rejected. This Court should proceed on the basis that, as a matter of substance, interstate licence or permit holders are likely to be engaged in trade or commerce between the States.

48 Subject only to the operation of reg 69, the legislative scheme treats interstate and intrastate operators and drivers in the same way. This is not, however, determinative. The practical effect of a law may be discriminatory and protectionist, irrespective of its form.

49 As the joint judgment said in Castlemaine Toohey Ltd v South Australia (1990) 169 CLR 436 at 471:

“[T]he 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. Likewise, the fact that a law, whose effects include the burdening of the trade of a particular interstate trader, does not necessarily benefit local traders, as distinct from other interstate traders, suggests that the purposes of the law are not protectionist. On the other hand, where a law on its face is apt to secure a legitimate object but its effect is to impose 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. There is also some room for a comparison, if not a balancing, of means and objects in the context of s. 92. The fact that a law imposes a burden upon interstate trade and commerce that is not incidental or that is disproportionate to the attainment of the legitimate object of the law may show that the true purpose of the law is not to attain that object but to impose the impermissible burden.”

50 The Defendants submit that an interstate operator is unreasonably burdened by the requirements of the Act because the operator:

· Is put to the time and expense of applying annually for a licence under the Act in addition to any licence held under the law of its own State;

· Must effectively ensure that every driver it employs goes to the time and expense of applying annually for a drivers certificate under the Act (as it cannot know in advance which driver will need to be sent across the border);

· Must pay a fee based on the number of tow trucks it has irrespective of the extent of its operations or proposed operations in New South Wales;

· Must keep detailed log book records, plus a detailed record of the fees charged and towing authorisations obtained, and must retain these records for 5 years, in addition to the records the operator must already keep in order to comply with regulations in the operator’s own State;

· Must comply with various onerous provision of the NSW licensing regime, such as the requirement for a licensee to have a holding yard located with prescribed security fencing, lighting and alarms, to be located no more than 10 kilometres from the licensee’s place of business and to keep a holding yard register in the approved form and manner.

51 The Defendants submit that an interstate driver is unreasonably burdened by the requirements of the Act because the driver:

· Is put to the time and expense of applying annually for a certificate under the Act in addition to any certificate held under the law of its own State;

· Must pay a flat fee irrespective of the extent of his or her driving or proposed driving in NSW.

52 The Defendants further submit that:

· It is unnecessary to require all drivers and operators who are licensed under the law of another State to be separately licensed under the Act in order to achieve the legislative object;

· Regulation 61(2) is unreasonable because the Act does not concern itself with towing work which starts in another state but only concerns itself with towing work that starts in NSW and therefore has a potential economic value to be captured in New South Wales;

· The Job Allocation Scheme quota system makes it difficult for an interstate operator to participate in the tow truck trade in NSW.

53 The Defendants submit that the practical effect of the Act is therefore to impose a burden on interstate trade which is so disproportionate to the objects to be achieved as to amount to protectionism. They refer to Castlemaine Tooheys supra at 472. However, the passage relied on, which I have quoted above, does not apply a proportionality test to the trade and commerce limb. It states that the existence of a disproportionate burden may serve as a foundation for the conclusion that the object was to impose a discriminatory burden of a protectionist kind.

54 The matters relied upon by the Defendants do not, in my opinion, rise higher than establishing the proposition that a licensing regime imposes burdens on participants in the regulated industry. All participants are subject to the same burdens. There is no discrimination either in form or, on the evidence in this case, in substance. Nor, in my opinion, is there a basis for concluding that the burden is of a protectionist kind if, which I doubt, such could exist in the absence of discrimination.

55 The element of different treatment in this case is that a person with only an interstate license may not pick up in New South Wales. However, nothing in the structure or operation of the licensing scheme suggests that the requirement to obtain a license is discriminatory, let alone, protectionist.

56 Unlike Castlemaine Tooheys (at 472.5), in my opinion, there is no basis for a conclusion that the operation of the scheme “would be discriminatory and protectionist in effect”. A license is available and, on the evidence, readily so. The legislative scheme provides appeal rights to an independent Tribunal from a refusal to grant a license or certificate under the Act. The appeal lies on the merits. It is not limited to judicial review.

57 Authorities under pre-Cole v Whitfield s92 jurisprudence must be treated with care. The existence of widely expressed standards, such as those considered in Hughes v Vale (No 2) (1955) 93 CLR 127, are not sufficient to establish a discriminatory burden of a protectionist kind. Where, as here, a merits review is available and there is no apparent discriminatory result in effect, the contemporary test for s92 is not satisfied.

The Notice of Contention

58 One of the matters raised in the Notice of Contention, as set out above, is the proposition that the conduct does not satisfy the description of “towing work” that “starts” within New South Wales. Accordingly, the restriction upon their entitlement to rely on their Queensland license that is found in reg 69(2) is inapplicable and the exemption in reg 69(1) does apply.

59 As noted above there is a definition of “tow” in s3 of the Act. There is not, however, a definition of “towing work” nor any indication of what is meant by such work which “starts in” New South Wales.

60 The Defendants submit that there is a distinction between the word “tow” and the words “towing work”. They submit that the latter refers to the entire job or undertaking and not just to the work involved in actually lifting and carrying. The Defendants submit that the relevant undertaking or job commenced when the Defendant company was contacted at its base in Queensland, asked to despatch a heavy vehicle recovery unit to the scene and proceeded to do so.

61 The Plaintiff contends that the concept of “towing work” adopted in the Court below is correct on the basis that otherwise there would be no clear criterion for determining where “towing work” starts. Although the definition in s3 is a definition of “tow” it directs attention to the relevant conduct so that a cognate expression such as “towing” should have the same meaning and require something in the character of actual towing, i.e. some form of lifting and carrying. It was submitted that this construction was most consistent with the purpose of the statutory scheme, which was to improve regulation of tow truck activities at the accident scene and also to ensure the fitness and propriety of those who are involved in the industry.

62 On the Defendants’ submissions, reg 69(2) would be confined to the accident scene if that was the actual point of engagement for the tow. This, it was submitted, would satisfy the purpose of the regulatory scheme. The relevant undertaking or endeavour in the present case commenced in Queensland, to be conducted by an owner who held a license and a driver who held a certificate under the interstate scheme as contemplated by reg 69(1).

63 The phrase “towing work that starts in this State” must be construed in its context. The immediate context is reg 69 itself which commences with an exemption from all of the requirements of the Act in the case of a person who has a license or certificate to “drive or operate a tow truck”. The exemption expressed in reg 69(1) does not itself make use of the word “tow” as defined. Regulation 69(1) is more closely connected with the definition of “tow truck operator” which directs attention to the ‘conduct of a business’.

64 The words “towing work” appear in a number of provisions in the Act itself and there appears to be little doubt that it bears the same meaning in reg 69(2) as it has in the Act. The other references do not, however, focus on the point at which “towing work” can be said to ‘start’. They are concerned with the identification of the “kind of towing work” which may be ‘authorised’ in a license for a tow truck, or in a driver’s certificate or in the context of a job allocation scheme.

65 These references are sufficient to indicate, as can be confirmed by other aspects of the regulatory scheme, that the purpose of the scheme is not limited to controlling accident sites. It does extend to regulating the industry as a whole. That is not, however, in my opinion, the purpose of reg 69(2). That sub regulation does focus attention on where towing work can be said to “start”. The issue raised on the Notice of Contention is, in my opinion, concerned with the proper meaning of the word “starts” rather than the proper meaning of the words “towing work”. In this regard the definition of “tow” is not helpful.

66 The important part of the context is reg 69(1), which exists on the assumption that it is consistent with the regulatory scheme for a person with an interstate license to conduct towing work through or into the State. In this context, in my opinion, the word “starts” should be given a meaning which accepts that an interstate licensee or permit holder manifests sufficient compliance with the regulatory scheme in all contexts other than where ambulance chasing occurs when an engagement is made at the scene of an accident. Where, as here, the engagement has occurred by communication to a tow truck operator across the border, the relevant “towing work” should be seen as having ‘started’ in Queensland rather than in New South Wales.

Conclusion

67 The Notice of Contention should be upheld. Accordingly, the appeal should be dismissed with costs.

68 HANDLEY JA: In this appeal I have had the benefit of reading the judgment of the Chief Justice in draft. I agree with his Honour’s reasons other than those dealing with the defendants’ notice of contention.

69 The relevant point under the notice of contention concerns the true construction of the exception in cl 69(2) of the Regulation to the exemption in favour of tow truck operators licensed in another State or Territory. Clause 69(2) provides:

“Such an exemption does not apply to or in respect of any towing work that starts in this State.”

70 The company carries on a specialised towing business from Rocklea in Queensland. After a semi-trailer owned by Cement Australia Pty Ltd overturned about 10km from Lismore the owner’s transport manager asked the company to recover the vehicle and tow it to Queensland.

71 The company instructed the second defendant, one of its drivers, to undertake this task and he drove the recovery vehicle from Rocklea to the accident site, recovered the semi-trailer and towed it to Queensland. These activities gave rise to the subject charges and the question is whether they fell within the exemption under cl 69(1) or are excluded by sub-cl (2). That turns on whether the “towing work” started in Queensland or in New South Wales.

72 The company charged its customer for its time and the use of its equipment during the journey from Queensland to the accident site and back. It was performing its contract throughout this period and in particular during the journey to the accident site. Performance of the contract, which can fairly be characterised as a towing contract, undoubtedly started in Queensland. However it does not follow that towing work started in Queensland and was being performed during the southward journey.

73 “Towing work” is not defined in the Act or the Regulation but the Act (s 3) defines “tow”, “tow truck”, “operate” and “tow truck operator”. These definitions also apply to the Regulation (Interpretation Act s 11). “Tow” is defined as including:

“(a) lift and tow, or lift and carry, and
(b) lift for the purpose of towing or carrying, and
(c) carry on a trailer, and
(d) place on a trailer for the purpose of carrying, and
(e) any other action prescribed by the regulations for the purposes of this definition,
but does not include any activity declared by the regulations not to be towing for the purposes of this Act.”

74 The Regulation contains nothing relevant by way of inclusion or exclusion. This definition is not inclusive and the ordinary meaning of “tow” is also available. “Tow truck operator” is defined as meaning:

“… a person who conducts a business involving the operation of any tow truck for the purposes of towing.”

75 Section 7 of the Interpretation Act provides that where there is a statutory definition “other parts of speech and grammatical forms have corresponding meanings”. Towing is another grammatical form of “tow” and therefore has a corresponding meaning. The statutory definition of “tow” includes the preliminary activities at the accident site of lifting and placing for the purpose of towing, but not travelling to the accident site.

76 The defendants did not “tow” the overturned semi-trailer within the statutory definition while the recovery vehicle was travelling to the accident site and there was no towing, as defined, during that journey. This leaves for consideration the ordinary meaning of towing and the meaning of the composite expression “towing work”. The Shorter Oxford Dictionary gives the meanings of tow, as a verb, as to draw by force, pull, drag, to drag by a line, to proceed by towing or being towed. The Macquarie Dictionary gives the meanings as to drag or pull, the act of towing. It is clear that travelling for the purpose of towing is not towing. “Towing work” does not have a wider meaning because “towing” itself involves work.

77 Although the recovery vehicle was travelling under contract for fee or reward as soon as it left Rocklea on its journey to the accident site it seems to me, as a matter of ordinary meaning, it was not then towing anything or doing towing work.

78 The dictionary meanings cover towing on land and at sea. Towing at sea has given rise to much litigation, and there are textbooks on the subject including Bucknill “Tug and Tow” 2nd ed 1927, Parkes and Cattell “The Law of Tug, Tow and Pilotage” 3rd ed 1994, and Rainey “The Law of Tug and Tow” 2nd ed 2002.

79 Many of the tug and tow cases turn on the wording of towage contracts and are not helpful, but some consider the ordinary meanings of tow, towage and towing. In the Princess Alice (1849) 3 W Rob 138, 139-40 [166 ER 914, 915] Dr Lushington said, distinguishing towing from salvage:

“Without attempting any definition which may be universally applied, a towage service may be described as the employment of one vessel to expedite the voyage of another, where nothing more is required than the accelerating her progress.”

80 In The Auguste Legembre [1902] P 123, 128, a salvage case, Gorell Barnes J said:

“… although they went out in very bad weather, the vessel is built for the purpose, and after she got there there does not seem to have been any unusual risk in the towage, because it did not commence until the weather had moderated.”

81 Finally in The Baltyk [1948] P 1, 7-8 Pilcher J said:

“A contractual service of towage or assistance rendered by a tug to a ship is essentially one in which in practice the physical operation of towing or guiding the ship is rarely continuous throughout the performance of the whole service.”

82 Earlier he had said at 4-5, referring to the terms of the towage contract in that case:

“I have little doubt that technically the ‘hiring’ of the two tugs was completed on the telephone on July 13. It is clear that the two tugs entered on the performance of the agreed services at the latest when they commenced to tow or assist the Baltyk … The contract service was to tow and assist the Baltyk the whole way to Eastham and it would seem to follow that, having entered on the service contracted for the defendants are prima facie bound by the conditions of the contract …”

83 Although cases such as these must be used with care, they confirm the ordinary meaning of towing work and distinguish between hiring for towing and travelling for the purpose of towing on the one hand, and the commencement of towing, towage, or towing services on the other. I conclude therefore that the defendants have not brought themselves within the exception in cl 69(2) because the towing work commenced in New South Wales.

84 I agree with the Chief Justice that the Act does not directly or indirectly impose discriminatory burdens of a protectionist kind on interstate tow truck operators wishing to undertake towing work originating in New South Wales: Cole v Whitfield (1988) 165 CLR 360, 394, 395.

85 The problem, if there be one, arises from reg 69(2). Regulation 69(1) contains a general exemption in favour of persons holding licenses or permits issued under the law of another State or Territory. The company and its driver held appropriate licenses or permits under Queensland law and were entitled to the benefit of this exemption.

86 Before Cole v Whitfield the company could have invoked the prevailing doctrine that s 92 was a constitutional guarantee of the right of an individual to engage in interstate trade: Cole v Whitfield at 401. If this doctrine remained applicable the obligations on the company to become licensed under the Act, and pay annual licence and permit fees, would have been characterised as a burden on its freedom to undertake interstate towing work from New South Wales into Queensland. The difference is highlighted by Finemores Transport Pty Ltd v New South Wales (1978) 139 CLR 338 which involved a challenge to a non-discriminatory stamp duty of $115.15 payable annually on the certificate of registration of road transport vehicles. Barwick CJ said at 340:

“Transport for reward across State lines is part of that trade, commerce and intercourse which is constitutionally declared to be absolutely free … That freedom is invaded if that activity is inhibited or burdened by any act of any legislature or of any executive. Essential to the activity of interstate transportation is the use of the roads which lead to the crossing of State lines. A tax, as distinct from a recompense for services rendered or provided, exacted in connection with the registration of such vehicles so that they may be so used is such a burden … Interstate transportation is to be free of such burdens. That trade and commerce has been deliberately placed in what might be described as a privileged position. It is not to be relatively free, no more burdened than comparable intrastate activities: but absolutely free. Thus, as it has long been decided, s 92 cannot be limited to protection against discriminating burdens.”

87 Regulation 69(2) qualifies the exemption under sub-reg (1) by excluding from its scope towing work that starts in New South Wales. It discriminates between interstate towing work originating outside the State and such work originating within it. Its practical effect, if valid, is to capture towing work originating within the State for operators licensed under the Act and excludes interstate operators not so licensed. The question is whether reg 69(2) which creates this prohibition is invalid for infringing the constitutional guarantee in s 92. In Cole v Whitfield the High Court said at 399:

“… discrimination commonly involves the notion of a departure from equality of treatment. It does not follow that every departure from equality of treatment imposes a burden or would infringe a constitutional guarantee of the freedom of interstate trade and commerce from discriminatory burdens”.

88 As a result of reg 69(2) the company’s driver committed the offence under s 23(1)(c) of driving an unlicensed tow truck on a road, without having a driver’s certificate, as soon as he crossed into New South Wales and the company committed a related offence under s 59. The magistrate held, without serious challenge in this Court, that by sending its recovery vehicle into New South Wales and towing the damaged semi-trailer back to Queensland for reward the company carried on business as a tow truck operator in this State in breach of s 15. The prohibitions enforced by these offences undoubtedly burdened the company’s interstate trade, commerce and commercial intercourse.

89 The Act does not place such burdens on the interstate trade of tow truck operators in New South Wales and Queensland who hold licenses and whose drivers hold permits. The discrimination is not against tow truck operators in other States as such but against all operators who are not licensed under the Act including those whose business is centred in this State.

90 The company could avoid these burdens on its interstate trade by becoming licensed under the Act, paying the annual licence fees, and obtaining permits for its drivers.

91 In Cole v Whitfield the Court said at 408:

“In the case of a State law, … resolution … must start with a consideration of the nature of the law impugned. If it applies to all trade and commerce, interstate and intrastate alike, it is less likely to be protectionist than if there is discrimination appearing on the face of the law. But where the law, in effect, if not in form, discriminates in favour of intrastate trade, it will nevertheless offend against s 92 if the discrimination is of a protectionist character.”

92 The position under the Queensland legislation of an operator licensed under the Act, who undertakes towing work into Queensland, was not considered by the magistrate but information placed before this Court suggests that the operator has an exemption in Queensland.

93 The company could lawfully undertake this work if it complied with the regimes of both States. If a licensed New South Wales operator has the benefit of an exemption in Queensland, the company’s interstate trade originating in this State would bear a double burden compared with the single burden on a New South Wales operator.

94 The argument for the company which succeeded before the magistrate was based on the constitutional guarantee of the freedom of interstate intercourse. The almost unqualified freedom of interstate intercourse of a non-commercial kind is not relevant in this case, as the Chief Justice has held, and the freedom enjoyed by interstate commercial intercourse is no wider that that enjoyed by interstate trade and commerce.

95 The defendants did not attempt to prove that the compliance costs imposed by the Act created in practice a discriminatory burden of a protectionist kind on the interstate trade and commerce of Queensland operators. There was no evidence before the magistrate of the cost of licenses and permits under the New South Wales and Queensland Acts and the effect of the added costs of complying with the Act on the company’s interstate towing work that originated in this State. The only relevant evidence was that 2-3 per cent of its operations have been “interstate” (stated case book p 105). It is not clear whether this referred to towing work commencing in New South Wales, or to all towing work across the border.

96 Evidence of the direct costs of compliance with the New South Wales and Queensland Acts was placed before this Court in Appendix B to the National Competition Policy Review of the Act by the Tow Truck Authority of New South Wales of March 2004 and in a separate list of fees handed up by Mr Gageler SC who appeared for the respondents.

97 The economic impact of these fees on the company could only be evaluated in relation to its interstate business. The Court does not know its gross revenue for work originating in New South Wales and cannot assess the impact of the fees and other compliance costs imposed by the Act. Without such evidence there is no basis for a decision that the Act imposed a discriminatory burden of a protectionist kind on the company’s interstate trade, commerce or commercial intercourse.

98 The company owned specialised air cushion recovery equipment which no other Australian company had at the time (book p 100). This provided the only safe means for quickly recovering this overturned semi-trailer. A heavy mobile crane could not be used because of the low slung powerlines overhead (book p 103). The task was well beyond the capacity of the typical tow truck used to recover private vehicles.

99 The company had a practical monopoly in the use of this equipment for the recovery of heavy road vehicles within an unknown radius from Rocklea defined by the outer limits of economic operation. This has a double significance. It establishes that reg 69(2) was not intended to protect a New South Wales operator with similar equipment from interstate competition. It also suggests that the company had the capacity to raise its prices and pass on the compliance costs imposed by the Act.

100 In Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 the plaintiffs challenged State legislation which encouraged the use of refillable beer bottles, and discouraged the use of other bottles, for the ostensible purposes of litter control and the conservation of energy and other resources. It was agreed (447) that beer is a price sensitive commodity and a small increase in the price of a brand will result in a disproportionately large decrease in its sales. The introduction of a 15 cent deposit on non-refillable beer bottles and the obligations imposed upon retailers to accept their return and refund the deposit prevented the plaintiffs, while they used such bottles, from obtaining more than a minimal market share in the State and it was not profitable for them to establish a brewing plant there (448-9). If they sought to comply with the Act in other ways their prices would be uneconomic (449).

101 The plaintiffs who brewed their beer in other States and exported it to South Australia claimed that the legislation imposed a discriminatory burden of a protectionist kind on their trade. The High Court agreed and held that the legislation infringed s 92. The judgment of five Justices stated at 464:

“The practical effect of the 1986 Act and regulations and the notice … was to prevent the Bond brewing companies obtaining a market share in packaged beer in South Australia in excess of 1 per cent whilst their competitors used refillable beer bottles. It is uneconomic for the Bond brewing companies to convert their existing interstate plants to use refillable bottles.”

102 They continued at 471:

“… 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. Likewise the fact that a law … does not necessarily benefit local traders, as distinct from other interstate traders, suggests that the purposes of the law are not protectionist.”

103 The legislation was held invalid as discriminating in a protectionist sense in relation to the interstate trade of the plaintiffs because it subjected to them to serious competitive disadvantages (477). Such a finding is not open in the present case. On its face the licensing regime does not discriminate against out of state operators, and there was no evidence that it operated in practice to effect such discrimination. The prohibitions operated without discrimination on unlicensed operators local or interstate.

104 There was no evidence similar to that in Castlemaine Tooheys that the economic and practical effects of complying with the New South Wales regime made it uneconomic for the company to undertake interstate towing work that commenced in New South Wales. The evidence suggests that the company may have been able to pass on its compliance costs to its customers. It charged its customer’s insurer $6228.76 including GST for its services (book pp 85-8, 104) performed over 18 hours (104).

105 Mr Gageler relied on the reasoning in Cunliffe v The Commonwealth (1994) 182 CLR 272 on the freedom of intercourse limb of s 92. The case did not deal with intercourse which formed part of wider interstate trade and commerce (Hospital Provident Fund Pty Ltd v Victoria (1953) 87 CLR 1, 14-15) and the tests applied are not relevant to interstate intercourse of the type here relevant.

106 I conclude that reg 69(2) is not contrary to s 92 of the Constitution and the appeal must be allowed.

107 The following orders should be made:

(1) Appeal allowed with costs.

(2) Orders of the Local Court at Lismore dismissing the following charges:


(a) Charges that on 24 June 2002 the first defendant contravened s 15 and s 59 of the Tow Truck Industry Act 1998;

(b) A charge that on 24 June 2002 the second defendant contravened s 23(1)(c) of the Act;

(c) A charge that on 24 June 2002 the third defendant contravened s 15, read with s 88, of the Act;
set aside.


(3) Charges remitted to the Local Court for findings to be made that the offences were proved and for further hearing and determination according to law.

(4) Respondents to have a certificate under the Suitors’ Fund Act 1951.

108 BEAZLEY JA: I have had the benefit of reading in draft the judgments of the Chief Justice and Handley JA. I also agree with the Chief Justice’s reasons other than those that deal with the Notice of Contention. I agree with the reasons of Handley JA on the Notice of Contention.

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