James v The Commonwealth

The plaintiff, James, sued the Commonwealth for damages arising from the administration and enforcement of the Dried Fruits Act 1928-1935 and associated regulations, which had previously been declared invalid by the Privy Council. The plaintiff's claim comprised two main parts: general loss to his dried fruit trade due to the ongoing effect of the invalid legislation, and losses stemming from five specific seizures of his dried fruit during inter-State transportation. The case was heard in the High Court of Australia.

The court was required to determine several legal issues. Firstly, it needed to ascertain whether the Commonwealth incurred liability in tort for the general loss to the plaintiff's trade, particularly concerning the procurement of carriers to refuse transporting the plaintiff's goods. Secondly, the court had to consider whether the exercise of a supposed power to make regulations, purportedly conferred by Parliament on the Executive, could constitute a tortious act by the Crown. Thirdly, the court was tasked with determining the passing of property in the dried fruit for the purpose of the five counts of trover, specifically whether the plaintiff retained ownership at the time of seizure.

Regarding the general loss to the plaintiff's trade, the court held that the Commonwealth was not liable. It reasoned that applying the general law to governmental acts, Section 92 of the Constitution merely nullifies an alleged justification, it does not create a cause of action. The court found that acts injurious to trade, even if motivated by a desire to injure, do not give rise to a cause of action if accomplished by lawful means, unless there is a combination or conspiracy. Therefore, the mere procurement of shipowners to refuse carriage, without committing or threatening illegality, did not suffice. Furthermore, the exercise of a supposed regulatory power by the Governor-in-Council does not amount to a tort by the Crown. While the principle of inducing breach of duty applies, resorting to the courts or intimating a prohibition under law, even if later found to be invalid, does not constitute wrongful inducement if done honestly in the purported execution of duty.

Concerning the five counts of trover based on the seizure of dried fruit, the court considered the passing of property. It applied the principle that shipping a definite parcel of goods in performance of a contract for unascertained goods constitutes an appropriation, and property passes unless the seller reserves the right of disposal. The court found that where goods are shipped under bills of lading deliverable to the seller's order, the seller is prima facie deemed to have reserved the right of disposal. In this case, the plaintiff had forwarded bills of lading to his bank or agent for delivery to the buyer only upon payment or presentation of a bill of exchange, thereby reserving the right of disposal. Consequently, the property in the goods had not passed to the buyers before seizure in four of the five instances. The court ordered that the plaintiff succeed on four of the five counts of trover, with the Commonwealth succeeding on the fifth.