McCarter v Brodie

[1950] HCA 18

80 CLR 432

McCARTER AND ANOTHER

DEFENDANTS, BRODIE Constitutional Law-Freedom of trade, commerce and intercourse among the States-

Prohibition-Regulation-Validity of State Act-Commercial vehicles prohibited from operating on State highways unless licences obtained and fees paid Licences subject to discretion of Crown-The Constitution (63 &64 Vict. c. 12), March 6-10

S. 92-Transport Regulation Acts 1933-1947 (No. 4198-No. 5220) (Vict.),

The Transport Regulation Acts 1933-1947 (Vict.), Part II., provided that a commercial goods vehicle should not operate on any public highway unless licensed in accordance with the Act. The Transport Regulation Board was empowered to grant such licences, and it was provided that in granting or refusing licences the Board should have regard to the interests of the public generally and should take into consideration the advantages of the service proposed to be provided, its convenience to the public, the adequacy of the existing transportation, the effect on it of the service proposed to be provided, the condition of relevant roads and the character, qualifications and financial stability of the applicant. It was also provided that no decision of the Board granting or refusing a licence should have any force or effect until reviewed by the Governor in Council and the Governor in Council might approve or disapprove the decision of the Board or make any determination in the matter which the Board might have made. A fee was payable, that under the original Act being such as was determined by the Board but not exceeding £5 annually * The Transport Regulation Acts

which the 1933 Act is amended: (Vict.) include (among others not here

Transport Regulation Act 1935 (No. material) the Transport Regulation Act

4298), Transport Regulation Act 1939 1932 (No. 4100) (under which the

(No. 4663) and Transport Regulation Transport Board is constituted and

(Licences and Fees) Act 1947 (No. which otherwise is not here material),

5220). For convenience the Act of the Transport Regulation Act 1933

1933, as amended, is referred to above (No. 4198) and the following Acts by

as the Transport Regulation Act 1933-

80 CLR 433

but in 1947 it was provided that the fee should be £1 plus a further fee calcu- H. C. OF lated at an annual rate determined from time to time by relation to the load capacity of the vehicle in respect of which the licence was sought.

Held, by Latham C.J., McTiernan, Williams and Webb JJ. (Dixon and Fullagar JJ. dissenting), following Riverina Transport Pty. Ltd. v. Victoria, (1937) 57 C.L.R. 327, that the Act did not contravene S. 92 of the Constitution.

R. v. Vizzard Ex parte Hill, (1933) 50 C.L.R. 30, applied. Commonwealth v. Bank of New South Wales, (1949) 79 C.L.R. 497, considered.

APPEALS from a Court of Petty Sessions of Victoria.

In a court of petty sessions of Victoria, constituted by a stipen- diary magistrate, informations laid by Andrew James Brodie charged that Francis Clemes McCarter and Reginald Alfred Gough were respectively the owner and the driver of a commercial goods vehicle which operated on a public highway without the said commercial goods vehicle being licensed as a commercial goods vehicle under Part II. of the Transport Regulation Act 1933 (Vict.), contrary to S. 45 of that Act. The informations were heard together. It appeared that the vehicle in question (a motor truck), which was owned by McCarter, was intercepted on a Victorian highway when it was being driven by Gough it was carrying a load of beer from South Australia through Victoria to New South Wales. The vehicle was not licensed under the Act above mentioned, nor did it have a permit under the Act for the journey. There was evidence that McCarter had said that he had applied for a licence but it had been refused and that he had been advised by counsel that he did not require a licence for the vehicle. It did not appear on what grounds the licence had been refused. It was submitted on behalf of the defendants that the relevant provisions of the Transport Regulation Act 1933 did not on their true construction apply to the defendants nor to the motor truck in question and

that if they did SO apply they were unconstitutional and contravened S. 92 of the Commonwealth Constitution."

The magistrate convicted the defendants. From this decision the defendants appealed by way of order to review to the High Court under S. 73 of the Constitution on the basis that the magistrate was called on to exercise Federal juris- diction because of the defence based on S. 92 of the Constitution.

G. Gowans K.C. (with him P. H. Opas), for the appellants. In Riverina Transport Pty. Ltd. v. Victoria 1 it was held that the Transport Regulation Act 1933 (Vict.), as amended in 1935, did not

1(1937) 57 C.L.R. 327 : See pp. 340, 347, 352, 364-366, 369. 80 CLR 434

contravene S. 92 of the Constitution; but that case can no longer be regarded as authority. The Act has since been amended in material respects in its present form it does offend S. 92. Even if the amendments are not material in this regard, the decision should not be followed it is based on R. v. Vizzard Ex parte Hill 1, which is inconsistent with the decision in James v. The Commonwealth 2, and with the reasons of the Privy Council in Commonwealth v. Bank of New South Wales (Banking Case) 3: It is true that in the case last mentioned 4 the Privy Council said that Vizzard's Case "may be reconciled " with James v. Cowan 5, but this cannot mean any more than that the decisions may possibly be reconciled by someone. It cannot be taken as approval of Vizzard's Case when one looks at the whole of the Privy Council's judgment in the Banking Case it is apparent that the views expressed are inconsistent with the reasons in Vizzard's Case. The following tests of the operation of S. 92, which were the basis of Vizzard's Case, are all rejected in the Banking Case :- (1) Freedom is not guaranteed to individuals by S. 92. (2) Inter-State trade is free so long as the volume of trade between States remains the same after as before interference with individual traders. (3) The real object of a statute can be ascertained otherwise than by relation to its necessary effect. (4) Only the passage of goods is protected by S. 92. (5) It is only at the frontier that the stipulated freedom can be impaired. 6 If legislation prohibits both inter-State and intra-State activities, it does not offend S. 92. The view taken by some members of the Court in Vizzard's Case that transport is not itself trade but is merely an instrument of trade had already been rejected in Australian National Airways Pty. Ltd. v. The Common- wealth (6), which was approved by the Privy Council in the Banking Case. Vizzard's Case is thus deprived of its foundation, and it must be regarded as no longer authoritative. [He referred to Vizzard's Case 7; O. Gilpin Ltd. v. Commissioner for Road Trans- port and Tramways (N.S.W.) 8.] The effect of the Banking Case is, firstly, that S. 92 is concerned only with direct and immediate restrictions of trade &. An Act which effects only an indirect and consequential impairment of trade SO that it may fairly be regarded as remote from trade does not offend the section. Secondly, an Act which allows trade to continue while prescribing rules as to

1(1933) 50 C.L.R. 30. 2(1936) A.C. 578; 55 C.L.R. 1. 70, 71, 82, 106, 107. 3(1950) A.C. 235; 79 C.L.R. 497. 4(1950) A.C., at p. 309 79 C.L.R., 49-52, 71 et seq., 82, 87, 101. at p. 638. 5(1932) A.C. 542; 47 C.L.R. 386. 6(1945) 71 C.L.R. 29 See pp. 57, 7(1933) 50 C.L.R., at pp. 46-48, 8(1935) 52 C.L.R. 189, at pp. 204- 80 CLR 435

the manner in which it is to be conducted, and nothing more, does not offend; that is to say, SO long as it is merely regulatory and not prohibitory. The "pith and substance' test, among others, may be applied in determining whether an Act is regulatory. An Act which burdens inter-State trade as does the Act now challenged is not valid it is not merely regulatory. An Act which sets up a licensing system SO that it prohibits inter-State trade either entirely if there is no licence or partially if there is a licence is bad (James v. The Commonwealth 1 ). The licensing system set up by the Transport Regulation Act has all the material features of the system which the Privy Council held to be invalid in James v. The Commonwealth. In that case the Privy Council did not approve the decision in Vizzard's Case. The passage which has frequently been taken as expressing such approval does not deal with anything more than a criticism in the judgment of Evatt J. of W. &A. McArthur Ltd. v. Queensland 2.

[DIXON J. referred to Interstate Oil Pipe Line v. Stone 3 H.P. Hood &Sons v. Du Mond 4.]

A licensing system which permits the refusal of a licence to an inter-State trader is not valid if it merely prescribes conditions on which he may continue to carry on trade, it may be good. That is subject to what the Privy Council said in the Banking Case as to the power of a State to exclude persons on grounds of fitness, to protect the safety of its own citizens. This seems to be confined to physical safety. At any rate it does not relate to what may be called the economic safety of the State. It is one thing to say that S. 92 permits legislation which is directed solely to the safety of persons using the roads it is another to say that the whole system of transport may be controlled for the purpose of excluding competi- tion. An Act which is designed to exclude competition in transport, merely on the basis of bringing about order because it is inefficient to allow too many services, is not a valid regulation of transport under S. 92. Where, as in this case, the Act gives a discretion- which, if not "unlimited," has no clearly defined limits-to refuse licences to persons engaged in inter-State trade, it is bad. The reference in the Banking Case to the possibility of a monopoly being valid is not directed to affairs as they exist at present it merely suggests a possibility in the future. [He referred to the Airways Case 5.] The licence fees imposed by the Transport Regulation Act constitute a tax which, SO far as inter-State trade is concerned,

1(1936) A.C. 578; 55 C.L.R. 1. 2(1920) 28 C.L.R. 530. 3(1949) 337 U.S. 662 [93 Law. Ed. 4(1949) 336 U.S. 525 [93 Law. Ed. 5(1945) 71 C.L.R., at pp. 59, 60, 72, 77-79, 107, 108, 110. 80 CLR 436

A. is not permitted by S. 92. Such a fee, it is submitted, must be

regarded as a burden by way of a tax unless it appears from the Act that it is no more than a charge for the use of the roads. That is the way in which the matter has been approached in the United States it is in that way that the question has arisen whether the sum imposed can be regarded as a reasonable charge for the use of the roads if not, it is a tax which is not permitted. [He referred to Aero Mayflower Transit Co. v. Board of Railroad Commissioners of Montana 1 Crutcher v. Kentucky 2; Buck v. Kuykendall 3 G. Bush &Sons Co. v. Maloy 4; Sprout v. City of South Bend 5; Interstate Transit Inc. v. Lindsey 6.] See also, as to the distinction between a tax and a charge for services, Parton v. Milk Board (Vict.) 7; Commonwealth and Common- wealth Oil Refineries v. South Australia 8. The fees have been substantially increased by amendment of the Act since the date of the Riverina Transport Case 9, and cannot be regarded as a charge for the use of the roads. It is submitted, therefore, that the Transport Regulation Act is invalid in the following respects (1) In SO far as it authorizes at discretion the prohibition of inter- State trade unless with the consent of the State, it imposes a direct and immediate restriction on inter-State trade; (2) in SO far as it authorizes at discretion the imposition of conditions limiting the routes or areas in which operations may be carried out, or such other conditions as the Board thinks proper, it goes beyond the regulation of the manner of conducting trade; (3) in SO far as it authorizes a tax on inter-State trade, it imposes a direct and immediate burden on it. If it is invalid in any of these respects, S. 45, under which the appellants were convicted, cannot stand, and the convictions should be set aside.

D. I. Menzies K.C. (with him G. A. Pape), for the respondent. The argument for the appellants would not affect only the Transport Cases it would mean that almost every decision of this Court in which an Act has been held not to offend S. 92 was wrong. Such cases as Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd. 10 and Hartley v. Walsh 11 could not stand. The market-

1(1947) 332 U.S. 495 [92 Law. Ed. 2(1891) 141 U.S. 47 [35 Law. Ed. 965-971]. 649]. 3(1925) 267 U.S. 307, at p. 315 4(1925) 267 U.S. 317 [69 Law. Ed. 5(1928) 277 U.S. 163, at pp. 170, 171 [72 Law. Ed. 833, at p. 837]. 6(1931) 283 U.S. 183, at pp. 185- 190 [75 Law. Ed. 953, at pp. 7(1949) 80 C.L.R. 229. 8(1926) 38 C.L.R. 408. [69 Law. Ed. 623, at p. 626]. 9(1937) 57 C.L.R. 327. 10(1939) 62 C.L.R. 116. 627]. 11(1937) 57 C.L.R. 372. 80 CLR 437

ing legislation of the States would be invalid, and price control H. also, it would seem. Much legislation of the Commonwealth, too, would be invalidated. The Privy Council had the opportunity of saying in the Banking Case that the decisions which are now challenged were wrong, but it did not do SO. On the contrary, it said that Vizzard's Case may be reconciled with James v. Cowan. This Court should not overrule its own decisions in the cases now in question unless the reasoning of the Privy Council in the Banking Case shows them to be manifestly wrong; this, it is submitted, it does not show. The propositions rejected by the Privy Council were put in argument, but they were not supported by the decisions of this Court, and there is no suggestion in the judgment of the Board that in rejecting those propositions it was correcting the High Court. As to the tests enumerated in the argument for the appellants, it is true that some reliance on them is to be found in judgments of individual members of the Court, but their rejection does not mean that the decisions cannot be sustained. The argument for the appellants suggests that in the view of the Privy Council any Act which has a direct, as distinct from a remote, effect on inter-State trade is bad; that where there is a direct effect, the question whether the Act is regulatory does not arise. This is not SO. The position is that, if the effect is merely remote, the Act is good, and no further question is necessary. If the effect is direct, the Act may still be good if it is merely regulatory. Sec- tion 46 of the Banking Act was a direct and immediate prohibition it was not regulatory. It therefore failed under the two branches of the test; but it was tested in both respects. [He referred to Peanut Board v. Rockhampton Harbour Board 1, per Rich J.; Gallagher v. Lynn 2.] The Board's approval in the Banking Case of the passage in the judgment of Latham C.J. in the Airways Case 3 in which he referred to what he had said in the Milk Board Case 4 is important as an indication of the kind of legislation which is to be regarded as regulatory. It is clear that the Board attached a wide meaning to the word 'regulation." The judgment of the Board shows that under a system of regulation individuals may be excluded from inter-State trade they may be excluded down to the point where only one is left. The suggestion of the Board that in some circumstances a monopoly may be valid can be justified only if monopoly is a manner of regulation. The

1(1933) 48 C.L.R. 266, at p. 274. 2(1937) A.C. 863, at pp. 867, 869, 3(1945) 71 C.L.R., at p. 61. 4(1939) 62 C.L.R. 116. 80 CLR 438

judgment supports these propositions as to "regulation" -1 The Board used the word in the sense used by Latham C.J. in the Milk Board Case; it includes regulation of the kind found in the Trans- port Cases, of which Vizzard's Case is a clear example. 2 Regula- tion may prohibit participation in inter-State trade to the point of monopoly. 3 It may exclude trade in particular objects by particular persons. The setting in which Vizzard's Case was argued was that, if the Court would not reconsider and overrule McArthur's Case (1), it must be accepted that S. 92 "precludes the Parliaments of the States from in any way regulating or controlling inter-State trade, &. (2). The attack made on the New South Wales Act in Vizzard's Case was that it regulated inter-State trade, and the Act was defended on the ground that any interference with inter-State trade was of an incidental character which was not prohibited by McArthur's Case. Much of what was said in the judgments was directed to rejecting arguments founded on McArthur's Case if what was said does not seem appropriate now, it does not follow that the decision itself is bad. The basis of the decision can be re-stated in the light of what is said in the Banking Case; the challenged legislation is permissible regulation. [He referred to Vizzard's Case (3).] The judgment in James V. The Commonwealth 4 shows that the approval of Vizzard's Case was not SO restricted as the appellants contend. [He referred to Gilpin's Case 5.] In James v. Cowan 6 the Board recognized that legislation which substantially interferes with inter-State trade and with the conduct of persons in that trade, going to the extent of preventing their participation in it, may be valid in certain circumstances that the interference may properly be regarded as merely incidental. The section of the Act there in question which was held invalid, S. 20, is not comparable with SS. 26, 28, of the Transport Regulation Act. It would be impossible to say that the Act is invalid because some persons who desire to conduct inter-State transport are prevented from doing SO. At most the inter-State operator could say that he is not bound to have a licence under the Act, or, if he is granted a licence expressed to be subject to conditions which offend S. 92, that he is at liberty to disregard the conditions. The Act requires the Board to state its reasons for refusing a licence it says that a licence must be subject to certain conditions and may be subject to others. The general operation of the Act is, not that

1(1920) 28 C.L.R. 530. 2(1920) 28 C.L.R., at p. 546. 3(1933) 50 C.L.R., at pp. 47-49, 4(1936) A.C., at p. 629; 55 5(1935) 52 C.L.R., at pp. 204, 206, 54-56, 59, 60, 67, 71 et seq., 82, 6(1932) A.C. 542 ; 47 C.L.R. 386. 80 CLR 439

licences shall be refused, but that they shall be granted. In James V. The Commonwealth the effect of the challenged provision was that a person should not take fruit beyond the border of his State without a licence. That is very different from an Act which does no more than say that the movement of commercial vehicles on a public highway within a State requires a licence. The Privy Council, having the Transport Cases before it in James v. The Commonwealth, accepted them as correct. The way in which it dealt with McArthur's Case and with the view of that case which Isaacs J. expressed in Roughley v. New South Wales 1 shows that the Board preferred the contrary view taken in the Transport Cases. That is the view that has been accepted in this Court. [He referred to Home Benefits Pty. Ltd. v. Crafter 2.] The Riverina Transport Case 3 is the first transport case decided after James v. The Com- monwealth; the conclusion was that the earlier transport cases and their consideration in James v. The Commonwealth left the matter no longer open, but one that had been authoritatively settled. The respondent adopts that view. Gratwick v. Johnson 4 contains nothing inconsistent with this view; nor does the Airways Case 5. The basis on which the Transport Cases should now be accepted is that there is a permissible regulation of inter- State trade; it is a regulation of inter-State trade, not merely a regulation of individuals, and it is possible that certain persons may be excluded. It is not correct to say that regulation of trade merely provides a method of control of the doing of acts by those who participate that anyone can participate if he conforms with certain standards. The subject regulated is trade, not merely persons engaged in trade. As to the amendments of the Transport Regulation Act since the Riverina Transport Case, S. 28 (2), as it now stands, may be referred to, although the appellants do not rely on it or, at all events, have not shown what invalidating effect it could have on the Act. It permits the Board to impose as a condition of a licence maximum and minimum rates to be charged for the carriage of goods. If the condition offends S. 92, one view may be that the licence is free of the condition. If the correct view is that the Act is invalid in providing for such a condition, it does not affect the validity of the rest of the Act. It is submitted, however, that the condition is valid it is merely a price-fixing provision, and it does not offend S. 92. As to the licence fees, it

1(1928) 42 C.L.R. 162. 2(1939) 61 C.L.R. 701, at pp. 717, 14, 16, 17, 18, 19, 20-22. 3(1937) 57 C.L.R. 327. 231, 238, 239, 283, 290, 291, 295, 305, 311, 383-385, 389, 390. 4(1945) 70 C.L.R. 1 See pp. 12- 5(1945) 71 C.L.R. 29 See pp. 229, 80 CLR 440

is submitted that the matter is concluded by the Riverina Transport

Case; the amendment makes no difference in principle. The American cases do not go SO far as the appellants suggest, [He referred to the Harvard Law Review, vol. 63, p. 143.]

P. D. Phillips K.C. (with him C. I. Menhennitt), for the Common- wealth (intervening by leave). It is not correct that the Transport Regulation Act confers an unlimited discretion on the Board. The Act defines the conditions to which the Board is to have regard, and it may be required to give its reasons in writing. Thus, it can be ascertained whether its decision did or did not depend on consider- ations which the Act makes relevant. It is not to the point to say that the legal machinery for keeping the Board within the discretion may not be adequate. That does not alter the nature of the Act, the nature of the power given or the functions or duties imposed. That the discretion is not unlimited appears from Nicholson V. Victorian Railways Commissioners 1. As to the Governor in Council, it should be assumed that the Governor in Council will act in accordance with the will of Parliament. However, if the Act is to fail merely because of the introduction of the Governor in Council into the matter, it is a point with which the Commonwealth is not greatly concerned. The Commonwealth adopts the submission of the respondent that the true view of " regulation," according to the Privy Council in the Banking Case, is not that it is merely a regula- tion of persons engaged in trade. The passages in the judgment which refer to individual rights in relation to S. 92 and to the litigant, James, having vindicated his freedom are not inconsistent with this view. All that is meant is that the individual can rely on the Constitution to give him the benefit of escape from an invalid law. It does not follow that S. 92 necessarily considers individuals and the individual 'right" to trade. The judgment does not support the appellants in the view that freedom of trade means no prohibition of any kind on the traders. No support is got from the rejection of the argument that S. 92 is concerned only with the volume of trade regarded quantitatively. In the judgment of Isaacs J. in James v. Cowan 2 there are some observations which seem to support what may be called the "individual rights concep- tion " of S. 92. In part he was insisting that there was a right in a person, not in goods for the rest he did not say any more than the Privy Council has said in the Banking Case. The Common- wealth also adopts the respondent's argument that, in the view of

1(1935) V.L.R. 51, at pp. 59, 65 2(1930) 43 C.L.R. 386. 52 C.L.R. 383, at pp. 383, 391, 393, 397. 80 CLR 441

the Privy Council, if an Act is regulatory, it is valid notwithstanding that its effect is direct. The inquiry whether an Act is or is not valid as being regulatory is not concluded by showing that it is directly restrictive of some individual trader. On the other hand, if it is indirect in its effect on trade or on a trader, the inquiry is concluded. The reference to monopoly shows that an Act which is directly restrictive of traders may be valid as being regulatory. The Act in James v. The Commonwealth was not regulatory because its operation and effect were to restrict the trade as a whole. Like- wise as to James v. Cowan; and that is the reason why that decision may be reconciled with Vizzard's Case-because the Act in the latter case was regulatory. In Gratwick v. Johnson 1 there was a simple prohibition of travelling inter-State; but it does not follow that provisions could not have been drafted by reference to defence which by way of regulation would have excluded particular persons. According to the Privy Council, the pith and substance of an Act is, or may be, relevant in considering whether it is regula- tory. That is different from considering the operation of the Act on the individual. It cannot be said that merely because an Act says that no-one may do such-and-such without a licence, it cannot be regulatory, it must be prohibitory. The argument of the appellants puts the matter of regulation at its lowest-that it is only directed to physical safety. The American cases do not help on this question the American States have no power to pass Acts which are regulatory of inter-State trade. An Act may fail in the United States for the very reason that will make it valid here. The only assistance that might be got is that, if an Act is valid there, an especially strong case can be made for its validity here. [He referred to Freeman v. Hewit 2; Bradley v. Public Utilities Commission of Ohio 3 Joseph v. Carter &Weekes; Joseph V. John Clark &Son 4.] The American cases have not quite the effect, in the matter of licence fees, suggested by the appellants. If a fee is a charge for services rendered, it is, of course, valid; but the question still remains whether as a tax it is of a kind which is not permissible. The way in which this matter is to be determined is indicated in the annotation to Interstate Transit Co. v. Lindsey 5. However, if the fees here amount to the imposition of a privilege tax on inter-State trade, the only result could be to invalidate the provision of the Act relating to fees either wholly or in relation to

1(1945) 70 C.L.R. l. 2(1947) 329 U.S. 249 [91 Law. Ed. 3(1933) 289 U.S. 92 [77 Law. Ed. 4(1947) 330 U.S. 422 [91 Law. Ed. 5(1931) 283 U.S. 186 [75 Law. Ed. 80 CLR 442

inter-State operators; it would not invalidate the whole Act. If S. 26 of the Act contains something which offends S. 92, but is otherwise truly regulatory, it will not be wholly invalid, nor will it necessarily be wholly inapplicable to inter-State operators. Regard must be had to the Acts Interpretation Act 1930 (Vict.).

M. F. Hardie K.C. (with him J. R. Kerr), for the States of New South Wales and Queensland (intervening by leave). If the legislation now challenged is invalid, it would seem that the similar legislation in New South Wales and Queensland must fail too. The result of the failure of this type of legislation would be that a large and gradually increasing field of transport could not be effectively regulated by the States. If the legislation is in part invalid (that is, as to inter-State transport), there will be serious difficulties in policing the remaining valid provisions; there would be room for evasion by persons claiming to be inter-State operators. It is desired to adopt the arguments which have been put on behalf of the respondent and the Commonwealth and to submit that no reason has been shown for departing from the decision in the Riverina Transport Case. Approval of this decision may be gathered from the judgments of the Privy Council. It will be recalled that the Board refused special leave to appeal in two of the transport cases. The judgment of the Board may be construed as an intimation or direction that questions under S. 92 are to be decided on evidence. There is no suggestion, however, that existing conditions should be re-opened on questions of fact and, SO far as conditions of transport in the States are concerned, evidence is not needed. The discre- tionary nature of the licence provided for by the New South Wales Act was clearly before the Court in Vizzard's Case 1. See also Bessell v. Dayman 2. The Airways Case 3 does not make it necessary to say that the Transport Cases should not now be followed. The regulation held invalid in that case gave an unlimited discretion, thus differing from the legislation now in question. It is significant also that the regulation dealt solely with inter-State aviation. The two tests put by the Privy Council in the Banking Case are independent or cumulative in the sense that S. 92 is not infringed if the effect of the Act is remote or incidental or if it is regulatory if the effect is direct, it must still be considered whether it is regulatory or not. The indications of the way in which it is to be decided whether an Act is regulatory have already been put

1(1933) 50 C.L.R. 30 : See pp. 50, 2(1935) 52 C.L.R. 215, at p. 219. 3(1945) 71 C.L.R. 29 : See pp. 60, 61, 88-90, 108, 109. 80 CLR 443

by other counsel. What it is desired to stress is that they show that the Privy Council used the word regulation" in a sense which may be said to be somewhat elastic in comparison with the sense indicated in the cases relating to by-laws. [He referred to Melbourne Corporation v. Barry 1; Country Roads Board v. Neal Ads Pty. Ltd. 2 Swan Hill Corporation v. Bradbury 3; Slattery V. Naylor 4; Hazeldon v. McAra 5.] On the question whether an Act is regulatory, the Privy Council in the Banking Case does not say that it is in all cases immaterial whether the Act deals with both inter-State and intra-State trade or only with the former. What was said was that it was irrelevant in that case that the prohibition extended to both those classes of activities. It is submitted that in the present case this feature is not irrelevant and is of importance.

A licensing system such as is established by the Transport Regulation Act is one of the recognized modern methods of regulation, a method particularly appropriate and effective when-as is the case here- the activity or industry concerned is such that it would be imprac- ticable to incorporate in legislation all the conditions necessary or desirable in the public interest. Legislation could not effectively meet the constantly changing problems of transport. A licensing system enables a review of the position from time to time. Instances of discretionary licensing systems-although no question of S. 92 was involved-are to be found in Stenhouse v. Coleman 6; Wer- theim v. The Commonwealth 7. As to licence fees, it is submitted that the amendment of the Act makes no material difference and that the correct view of the Act is that there is no tax as distinct from a proper charge for services. [He referred to Gilpin's Case 8.]

G. Gowans K.C., in reply. The argument for the respondent and the interveners has resulted in no very clear statement of what is meant by regulation. However, what appears to be meant in speaking of an Act relating to trade as regulatory is that it is of the class which co-ordinates trade. It is further contended that an Act may be regulatory even though it operates directly and immediately to restrict trade. These contentions do not give effect to the decisions in the James Cases or the views of the Board in the Banking Case. The legislation in each of the James Cases was

1(1922) 31 C.L.R. 174. 2(1930) 43 C.L.R. 126. 3(1937) 56 C.L.R. 746. 4(1888) 13 App. Cas. 446, at p. 5(1948) N.Z.L.R. 1087, at pp. 1096, 1097, 1107, 1109. 6(1944) 69 C.L.R. 457 : See pp. 7(1945) 69 C.L.R. 601 : See pp. 8(1935) 52 C.L.R., at pp. 202, 213, 80 CLR 444

"co-ordinating"; nevertheless it was bad. In SO far as it suggests that the dried-fruits legislation was bad because it was restrictive in that it cut off from the volume of trade some part of it, the argument for the Commonwealth seems a thinly disguised form of the old argument that validity under S. 92 is to be tested by reference to the total volume of inter-State trade. The legislation was bad because it was directly restrictive of the individual trader. [He referred to James v. Cowan 1.] In the Banking Case, in dealing with James v. The Commonwealth, the Board applied, not the test of regulation, but that of direct restriction. The fact that an Act is regulatory in character may assist the decision of the question whether there is a direct and immediate, or merely a remote or consequential, restriction, but it does not determine the matter. McCartney's Case 2 shows that the discretion of the Board under the Act now challenged is not unlimited but, looked at in the light of that case, the Act leaves such a wide discretion that it might be impossible to say whether in the exercise of the discretion the Board was doing anything in the way of permissible regulation of inter-State transport. The discretion is SO wide that it leaves room for the Board to exclude persons merely on the basis that they would compete with others engaged in land transport. No principle of severability can be applied, as suggested on behalf of the Common- wealth, to cut down S. 26 of the Act SO that considerations which would apply to an intra-State applicant for a licence may be regarded as not applying to an inter-State applicant. [He referred to Huddart Parker Ltd. v. The Commonwealth 3.] Sections 23, 24, 26 and 28 are SO interlocked that, if they to some extent offend S. 92 of the Constitution, they must wholly fail. As to S. 34 the submis- sion is that it empowers the exaction of a fee which is not necessarily related to the use of the roads. It is a tax which offends S. 92. The result, it has been contended, is that S. 34 is severable SO that it does not affect SS. 23 and 24 of the Act. Again, the matter is not one of severability. The position is that the obligation to take out a licence is discharged SO long as a person cannot satisfy it except by paying an unlawful tax.

The following written judgments were delivered: -

LATHAM C.J. The appellants F. C. McCarter and R. A. Gough were convicted on 12th October 1949 of offences against the pro- visions of the Transport Regulation Act 1933 (Vict.), S. 45. McCarter

1(1930) 43 C.L.R., at pp. 389-391, 2(1935) 52 C.L.R., at p. 383. 3(1931) 44 C.L.R. 492, at p. 513. 80 CLR 445

was charged for that on 2nd August 1949 at South Merbein in Victoria he was the owner of a commercial goods vehicle which operated on a public highway without the said vehicle being licensed as a commercial goods vehicle under Part II. of the Transport Regulation Act 1933. Gough was charged with driving an unlicensed vehicle in breach of the Act. I deal with the case in relation to the Latham C.J. appellant McCarter because no separate consideration is required of the case of Gough. Section 45 of the Act provides, inter alia, that the owner of any commercial goods vehicle which operates on any public highway and is not licensed as such under Part II. of the Act shall be guilty of an offence. It was proved that the appel- lant was the owner of a commercial goods vehicle, that the vehicle operated on a public highway in Victoria and that it was not licensed under the Act. Accordingly if the Act applied to the appellant he was guilty of the offence charged. The appellant had applied for a licence under the Act and his application had been refused. The Act does not give any person a right to obtain a licence. The issue of licences is within the discretion of the Transport Regulation Board except in certain cases specified in S. 22. The appellant's defence was that on 2nd August his driver Gough was engaged in transporting beer from South Australia through the north-west corner of Victoria to New South Wales. Both McCarter and Gough were therefore engaged in inter-State trade and commerce. They contended that the Act was not valid in its application to such trade and commerce because S. 92 of the Constitution provided that 'trade, commerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free." The reply to this defence was that the Act had been held to be valid in Riverina Transport Pty. Ltd. v. Victoria 1. The appel- lant contends in answer to this reply that the case cited was based upon the decision R. v. Vizzard; Ex parte Hill 2, and that the authority of both the Riverina Transport Case and of Vizzard's Case has been destroyed by the decision of the Privy Council in the case of The Commonwealth v. The Bank of New South Wales 3 (the Banking Case). That case, it is said, withdraws such approval as was given by the Privy Council to Vizzard's Case in James v. The Commonwealth 4, and, further, stated principles which destroyed the basis of the decisions in the Riverina Transport Case and Vizzard's Case.

The Court is therefore asked in this case to overrule Vizzard's Case the Riverina Transport Case; O. Gilpin v. Commissioner

1(1937) 57 C.L.R.J327. 2(1933) 5 C.L.R.30. 3(1949) 79 C.L.R. 497. 4(1936) A.C. 578; 55 C.L.R. 1. 80 CLR 446

of Road Transport 1; Bessell v. Dayman 2; and Duncan and

Green Star Trading Co. v. Vizzard 3 (the three last-mentioned cases were based upon Vizzard's Case). The argument for the appellant also suggested that Willard v. Rawson 4 was possibly BRODIE.

wrongly decided and certainly that Hartley v. Walsh 5 and Milk Board v. Metropolitan Cream Pty. Ltd. 6 were also wrongly decided. Indeed in this case the Court is asked to hold that most of the decisions of the Court in relation to S. 92 were wrong and that minority judgments throughout have been right.

There was a further argument for the appellant which should be mentioned at the outset. It was contended that the Transport Regulation Act 1933 had, since the Riverina Transport Case held that it was valid, been amended in relevant particulars.

The Act contains a detailed scheme of transport regulation under a Transport Regulation Board which was established by the Trans- port Regulation Act 1932. Section 5 of the 1933 Act provides that

"commercial goods vehicle means any motor car within the meaning of the Motor Car Acts which is used or intended to be used for carrying goods for hire or reward or in the course of trade." The word "operate" means, in the case of a commercial goods vehicle, " carry goods for hire or reward or in the course of trade." It is therefore quite plain that the Act is intended to deal with trade and the use of vehicles in trade. There is a prohibition of the operation of commercial goods vehicles on any public highway unless the vehicle is licensed under the Act-s. 23. The Board has power to grant a licence (s. 24) and the application for a licence must contain certain particulars (s. 25), namely-" (a) The routes or area upon or in which it is intended that the commercial goods vehicle is to operate (b) A description of the vehicle in respect of which the application is made (c) The classes of goods proposed to be carried; and (d) Such other particulars relevant to the subject-matter of the said application as are prescribed".

Section 26 provides Before granting or refusing to grant any such licence the Board shall have regard primarily to the interests of the public generally including those of persons requiring as well as those of persons providing facilities for the transport of goods and without restricting the generality of the foregoing requirement shall take into consideration-(a the advantages of the service proposed to be provided and the convenience which would be afforded to the public by the provision of such service (b) the

1(1935) 52 C.L.R. 189. 2(1935) 52 C.L.R. 215. 3(1935) 53 C.L.R. 493. 4(1933) 48 C.L.R. 316. 5(1937) 57 C.L.R. 372. 6(1939) 62 C.L.R. 116. 80 CLR 447

existing transportation service for the carriage of goods upon the routes or within the area proposed to be served in relation to--- (i) its present adequacy and probabilities of improvement to meet all reasonable public demands; and (ii) the effect upon such existing service of the service proposed to be provided (c) the benefit to any particular district or districts or to the residents thereof which would be afforded by the service proposed to be provided (d) the condition of the roads to be included in any proposed route or area and (e) the character qualifications and financial stability of the applicant."

Section 27 provides that, subject to the provisions of the Act (e.g. S. 22) "the Board may grant the application (with or without variation) or may refuse to grant the application, and subject to this Part the decision of the Board shall be final and without appeal." Section 28 provides for certain conditions of licences relating to the fit and serviceable condition of the vehicle, limits of weight and speed, limitation of hours of driving, observance of industrial awards as to wages and conditions of labour. Section 28 further provides that, subject to the provisions of S. 22, the Board may attach to a commercial goods vehicle licence all or any of the following conditions, namely-" (a) A condition that the vehicle shall operate only upon specified routes or in a specified area; (b) A condition that prescribed records relating to the operation of the vehicle under the licence shall be kept; and (c) Such other conditions appropriate to the service to be provided by the vehicle as the Board thinks proper to impose in the public interest."

The period of the licence is four years-s. 30 as amended by Act No. 5220.

The 1933 Act, S. 37, provided for a right of appeal to the Supreme Court if a licence were refused. Act No. 4298, however, abolished this right and provided (s. 4) that decisions of the Board granting or refusing to grant licences should not have any force or effect until they were reviewed by the Governor in Council, who could approve or disapprove such decisions or make another decision. Section 38 of the Act provides that the Victorian Railways Commis- sioners may, notwithstanding the provisions of the Act as to the necessity for obtaining licences, with the consent of the Governor in Council operate on public highways commercial passenger vehicles and commercial goods vehicles on such routes or in such areas and subject to such conditions as the Governor in Council thinks fit, but that before such a consent is given consideration must be given to a recommendation of the Transport Regulation Board. The fee payable for a licence for a commercial goods

80 CLR 448

vehicle under the 1933 Act (s. 34) was such fee as was determined by the Board, but not exceeding £5 annually, or 5s. annually for vehicles referred to in S. 22. An amendment was made by Act No. 5220, S. 7, providing that the fee for a licence for a commercial goods vehicle should be £1 and a further fee calculated at an annual rate determined from time to time by the Board based on the load capacity of the vehicle ascertained as prescribed but not exceeding five shillings per hundredweight of load capacity. Section 7 also provides that the fees received by the Board shall be paid into the Transport Regulation Fund out of which is paid the cost of adminis- tration of the Transport Regulation Acts, cost of re-imbursement of expenses of municipal councils in administering the Acts, cost of certain transport improvements, any surplus to go to consolidated revenue, which is to make good deficits, if any, in the fund. There is no evidence as to the amount of the fund or as to the amount of the charges upon it-which must vary from year to year.

These two amendments-1 affecting the right of appeal to a court, and 2 increasing the fees for licences and allocating the proceeds-do not in my opinion really affect the character of the Act, which embodies a general control of road transport based upon considerations affecting, not only traffic on the roads, but also the provision of necessary services along particular routes and in particular areas, the exclusion of services deemed to be unnecessary or undesirable, and involving a consideration of the interests of the railways as being another form of transport with which road trans- port should be co-ordinated in the general interests of the com- munity. The Act as amended remains essentially a transport regulation Act dealing with trade and commerce and applying to inter-State trade and commerce. The amendments made since 1933 do not in my opinion affect its substantial character in any relevant respect.

The contention for the appellant is that inter-State trade and commerce cannot be controlled by a law of this character. It is conceded that the decisions in R. v. Vizzard and the Riverina Transport Case are decisive against the appellant, but it is argued that those cases and the other transport cases to which reference has been made, namely Gilpin's Case, Bessell v. Dayman, Duncan and Green Star Trading Co. v. Vizzard, and possibly Willard V. Rawson, should be overruled.

In James v. The Commonwealth (1) the Privy Council referred to some of the reasoning of Evatt J. in Vizzard's Case. It was said (2):

" The elaborate judgment of Evatt J. in that case is of great

1(1936) A.C. 578; 55 C.L.R. 1. 2(1936) 55 C.L.R., at p. 50. 80 CLR 449

importance. It is impossible to quote here at length from it; one short passage may be extracted 1 Sec. 92 does not guarantee that, in each and every part of a transaction which includes the inter-State carriage of commodities, the owner of the commodities, together with his servant and agent and each and every independent contractor co-operating in the delivery and marketing of the com- modities, and each of his servants and agents, possesses, until delivery and marketing are completed, a right to ignore State transport or marketing regulations, and to choose how, when and where each of them will transport and market the commodities'

If this reasoning, which in Vizzard's Case 2 was primarily applied to the States, as it seems to be, is correct, then in principle it applies mutatis mutandis to the Commonwealth's powers under sec. 51 (i)

In the Riverina Transport Case and other cases this passage was treated as an approval of the quoted statement. As far as transport is concerned, it will be seen that it denies that S. 92 gives persons "a right to ignore State transport regulations" and to choose how, when and where each of them will transport commodities. In other passages in James v. The Commonwealth the Privy Council referred to a number of Federal and State statutes which applied to transactions of various kinds in inter-State trade, commerce, or intercourse, and stated that their provisions did not infringe S. 92. These statutes included the Post and Telegraph Act 1901-1923, the Wireless Telegraphy Act 1905, the Secret Commissions Act 1905, the Commerce (Trade Description) Act 1905-1933, the Australian Indus- tries Preservation Act 1906-1930, the Sea Carriage of Goods Act 1924, and the Transport Workers Act 1928-1929 (see 3 ). As to State statutes which apply to inter-State transactions, the Privy Council in the first place rejected the argument (which was stated at p. 24) that if a law imposed any burden upon anything which formed part of trade and commerce as trade and commerce, that is, by reason of any of the characteristics which made it trade or commerce, the legislation was a breach of S. 92. It was said 4 Nor is help to be derived from speaking of freedom of trade as trade: as well speak of freedom of speech as speech. Every step in the series of operations which constitute the particular transaction, is an act of trade: and control under the State law of any of these steps must be an interference with its freedom as trade."

Their Lordships proceeded to say that among the State Acts which can validly be applied to inter-State trade are Sale of Goods

1(1933) 50 C.L.R., at p. 94. 2(1933) 50 C.L.R. 30. 3(1936) 55 C.L.R., at pp. 54, 55. 4(1936) 55 C.L.R., at p. 57. 80 CLR 450

Acts and Bills of Exchange Acts. If a transaction "involves sea,

railway or motor carriage, relevant Acts operate on it; it is subject to executive or legislative measures of State or Commonwealth dealing with wharfs or warehouses or transport workers. It must be SO subject. Otherwise the absurd result would follow that the C.J. inter-State operation of trade would be immune from the laws of

either State, of the State of origin equally with the other State. There would thus be in every State a class of dealings and acts entirely immune from the general law of the State, though only distinguishable from other like dealings and acts by the fact that they are parts of an inter-State transaction."

Accordingly in James v. The Commonwealth the Privy Council plainly recognized that there might be valid State laws controlling transport and, in particular, controlling motor carriage. The ques- tion which had to be determined was which of such laws were to be held invalid and which of such laws could properly be held to be valid. The answer to this question given in James v. The Common- wealth was that laws which dealt with the movement of goods were invalid if they were inconsistent with the conception of freedom from customs duties, imposts, border prohibitions and restrictions of every kind: the people of Australia were to be free to trade with each other and to pass to and fro among the States without any burden, hindrance or restriction based merely on the fact that they were not members of the same State" 1.

It is now contended that in the Banking Case the Privy Council has SO expounded these statements of principle that it should now be held that any law with respect to inter-State trade, commerce, or intercourse which imposes any "burden" upon it is necessarily invalid.

The particular reference made in the Banking Case to Vizzard's Case 2 recites the approval in James v. The Commonwealth of the reasoning of Evatt J. in that case. Their Lordships, however, go on to say that it does not appear that the whole of that learned judge's reasoning received the considered approval of the Board and that the facts in relation both to subject matter and to manner of restriction or interference are SO widely different in the two cases (that is Vizzard's Case and the Banking Case) that it is difficult to apply to one case all that was said in the other. Reference is made to the statement in James v. Cowan that their Lordships were in accord with the convincing judgment delivered by Isaacs J. in the High Court, and it is said that it would not be easy to reconcile

1(1936) 55 C.L.R., at p. 58. 2(1950) A.C., at p. 309 79 C.L.R., 80 CLR 451

all that was said by Evatt J. in the one case with all that was said by Isaacs J. in the other, though it is stated that the decisions in James v. Cowan and in Vizzards Case may be reconciled. In my opinion it cannot fairly be said that this means that the decision in one case was wrong and in the other case was right.

In my opinion this passage states what was always plain, namely that what was approved in the judgment of Evatt J. in Vizzard's Case was only the passage quoted, which is described as reasoning, but which, in my opinion, rather states conclusions reached as the result of reasoning. The significance of that approval in the present case is to be found in the specific reference to State regulation of transport. The present case is a case about transport, and not about some other subject. What is pointed out in the Banking Case is that an approval of a particular statement of the law made in relation to the passage of commodities cannot be, as it were, lifted out and mechanically applied to questions relating to banking. It is necessary, their Lordships say, to consider the subject matter and the manner of restriction or interference of which complaint is made. Accordingly I regard the reference made to Vizzard's Case in the Banking Case as amounting to a warning that general statements made with reference to a particular subject matter ought not to be extended SO as to be applied to another subject matter irrespective of distinctions between those matters and without reference to the particular form of legislation in each case. In other words, a decision under S. 92 with respect to transport ought not to be applied in relation to banking without regard to the limita- tions mentioned.

It is further argued for the appellant, however, that the reasoning of their Lordships in the Banking Case destroyed the basis of the decisions in Vizzard's Case and in the other transport cases. The Privy Council in the Banking Case corrected certain misunder- standings of prior decisions upon which the appellants in the Banking Case had based their argument. But those misunder- standings were not attributed to this Court and they were not, in my opinion, the ground of the decisions in this Court which were attacked by the present appellant. The relation of S. 92 to individual rights was expressly mentioned. No case has been decided upon the basis that S. 92 was irrelevant to individual rights. It has been pointed out in this Court that, as was stated by the Privy Council in the reasons for judgment in the Banking Case 1, S. 92 does not create any new rights in an individual but that where it operates it has the effect of invalidating legislation which otherwise might

1(1950) A.C., at p. 288; 79 C.L.R., at p. 618. 80 CLR 452

have prevented an individual from asserting a particular right or defending himself against a particular claim: see, e.g. Riverina Transport Case 1 and James v. The Commonwealth 2. It follows from this view as to the nature of S. 92 that, as was stated in the Banking Case 3, the application of S. 92 does not involve calcula- tions as to the actual present or possible future effect (which would almost necessarily vary from time to time) upon the total volume of inter-State trade. The difficulties of applying such a criterion are obvious. The statements in Vizzard's Case that it was not shown that the volume of inter-State trade was or would be diminished by the statute were replies to the contrary allegation made by those who challenged the statute.

The Board and the Governor in Council have a discretion to grant or to refuse any application for a licence. But this discretion is not an unlimited and arbitrary discretion as was held to be the case in Gratwick v. Johnson 4 and the Airways Case 5. This Court has already expressly held with respect to this Transport Regulation Act that the ambit of the discretion of the Board by the general scope and object of the enactment ": Victorian Railways Commissioners v. McCartney 6, where there is a summary of the matters which " the Board is required to take into considera- tion " under S. 26 of the Act. I see no reason for assuming that the administrative authorities will act in disregard of the express provisions of the Act. Subject to this qualification as to the nature of the discretion vested in the Board I agree with the view of the character of the Transport Regulation Act which has been submitted on behalf of the appellants. The Act requires a person to hold a licence before he can operate a commercial goods vehicle upon the highways of the State. It applies to such a person even though he is engaged in inter-State trade and commerce. No person has a right to obtain a licence. It can be granted or refused at discretion -though, as I have said, that discretion is not unlimited and arbitrary in character. If a licence is granted the licensee is subject to many conditions which control the manner in which he is allowed to carry on his business. The appellants then say that the result is that their activities in inter-State trade and commerce are subject to a burden or restriction imposed by State law by reference to the characteristics of those activities as trade and commerce, and I agree also with this proposition. It is argued that therefore the law is invalid, SO that inter-State operators are entitled to ignore all the

1(1937) 57 C.L.R., at pp. 341, 342. 2(1939) 62 C.L.R., at p. 362. 3(1950) A.C., at p. 288 79 C.L.R., 4(1945) 70 C.L.R. 1. 5(1945) 71 C.L.R. 29. 6(1935) 52 C.L.R. 383, at p. 391 : see also pp. 394, 395, 396. 80 CLR 453

provisions of the Act, though intra-State operators are bound by H. C. them.

The fact that everybody is not entitled as of right to obtain a licence is enough, it is argued, to make the law invalid. It follows that it is beyond the power of any Parliament in Australia merely to place a limit upon the number of vehicles using the highways. Further, the conditions attached to a licence as to routes, areas to be served, conditions of work &., are also said to be elements which make the law totally invalid as far as inter-State trade is concerned because they impose burdens upon it.

The appellant really adopts and relies upon the decision as to the meaning of absolutely free" in S. 92 in W. &A. McArthur Ltd. V. Queensland 1. The decision in McArthur's Case that S. 92 did not bind the Commonwealth was overruled in James v. The Common- wealth. But the other doctrine of McArthur's Case has been relied upon in dissenting judgments in all the transport cases and in other cases relating to S. 92. That doctrine was that the words

absolutely free " had a " natural meaning of absolute freedom from every sort of impediment or control by the States with respect to trade, commerce and intercourse between them, considered as trade, commerce and intercourse': 2. This proposition (with now the substitution for the words by the States" of the words "by either the Commonwealth or the States") has been re-stated from time to time and it is now contended that it has been finally established as good law by the Banking Case. The proposition was repeated in Peanut Board v. Rockhampton Harbour Board 3 in the following terms The words absolutely free' admit of no qualification, but they are used with reference to governmental control and exclude all such control trade, commerce and inter- course among the States are made up of acts, transactions and conduct which, considered as trade, commerce and intercourse, are free of all State governmental control whatever (cf. McArthur's Case 4 )." See also Vizzard's Case 5, where it was said in a dissenting judgment that McArthur's Case showed that' the burden- ing of inter-State transport by means of taxes, duties, or imposts, or impeding, regulating or controlling it by the requirement of licences, is obnoxious to the provisions of sec. 92." See also Gilpin's Case 6.

In my opinion the authority of McArthur's Case as to both of the propositions stated was destroyed by the decision in James V.

1(1920) 28 C.L.R. 530. 2(1920) 28 C.L.R., at p. 554. 3(1933) 48 C.L.R. 266, at p. 287. 4(1920) 28 C.L.R., at pp. 550, 551, 558. 5(1933) 50 C.L.R., at p. 56. 6(1935) 52 C.L.R. 189, at pp. 201, 80 CLR 454

The Commonwealth, and it has not been restored by the Banking Case. The analysis of the decisions of this Court which was made in James v. The Commonwealth leads up to a consideration of whether the rule in McArthur's Case, which had been held in this Court to apply only to the States, should be accepted, and it was clearly held that it should not be accepted. Their Lordships gave many examples of laws which imposed conditions upon inter-State trade and com- merce which were held to be valid and their Lordships specifically rejected the view 1 that those laws were invalid because they applied to inter-State trade and commerce considered "as trade and commerce." It was pointed out that control under State law of any of the steps in inter-State trade " " must be an interference with its freedom as trade." Nevertheless many specified State laws to which reference has already been made were expressly held to be valid notwithstanding S. 92. The decision in McArthur's Case that the price-fixing law of Queensland was invalid in its application to inter-State transactions was expressly disapproved by the Privy Council in the observation that the decision in McArthur's Case deprived the State of its sovereign power of fixing prices 2. Their Lordships 3 rejected " the theory of McArthur's Case as to the nature of the freedom protected by S. 92.

The application of the principle for which the appellant contends would, now that it has been finally determined that S. 92 applies to the Commonwealth as well as to the States, remove inter-State trade and commerce from legal control under any law (Federal or State) that imposed what could be described as a burden or restric- tion upon it. It has already been shown that many laws, Federal and State, are applicable to inter-State trade and commerce. Trade and commerce are unintelligible as conceptions and impossible as facts if there are no laws applying to trading and commercial transac- tions: see Milk Board Case 4. Any other view would reduce S. 51 (i.) of the Constitution, which gives power to make laws with respect to inter-State trade and commerce, to a nullity, except in the case of facultative laws such as laws granting bonuses or bounties. Another example may be given. The Commonwealth Parliament has power to make laws with respect to quarantine Constitution, S. 51 (ix.). The proposition for which the appellant contends would make it impossible to pass any valid legislation under this power which attempted to prevent the movement of things or persons inter-State, because the essence of quarantine law

1(1936) A.C. 578; 55 C.L.R., at 2(1936) A.C. 578; 55 C.L.R., at 3(1936) A.C. 578; 55 C.L.R., at 4(1939) 62 C.L.R. 116, at p. 125. 80 CLR 455

is that the actual movement of persons or transportation of things, e.g. animals and plants, is restricted or altogether prohibited. Such a law would be made in respect of the movement or trans- portation itself and any such law would be invalid according to the test laid down in McArthur's Case, unless indeed the suggestion were adopted which appears in McArthur's Case 1, that laws on other subjects than inter-State trade or commerce might restrict or prohibit inter-State trade and commerce, notwithstanding S. 92. But the essential character of S. 92 is that, whatever it means, it imposes a limitation upon all law-making power Gratwick V. Johnson 2. No law is to prevent inter-State trade and commerce from being absolutely free. It is not material to ask whether the law can be described as a law upon crime or bankruptcy or health or sanitation or the exercise of a particular occupation. If the law does in fact interfere with the freedom protected by S. 92 it must be invalid, whether or not it can be described as a law which is not itself a law upon trade and commerce.

It is true that in all arguments upon S. 92 certain concessions are made by those who contend that S. 92 invalidates a law. One concession is that they do not argue, for example, that criminals cannot be imprisoned because imprisonment would interfere with their travelling inter-State or conducting inter-State business. Other concessions are that of course it is not argued that traffic regulations must not be obeyed, that motor cars travelling inter- State need not carry lights or observe the rule of the road or have their brakes in order or observe directions as to the non-user of certain roads or limitations of weight in respect of bridges and the like. If the general principle is that no law may impose a restriction or burden upon inter-State trade-that it is to be free from all governmental control-then laws with respect to the matters mentioned simply become incomprehensible exceptions. But these concessions are not, in my opinion, supported by any argument which shows that the admissions made are consistent with the arguments submitted. All the laws to which I have referred are laws which in fact impose restrictions upon inter-State move- ment or inter-State trade and commerce. This is true of the sim- plest rule of the road.

There is no authority for the proposition that the courts are authorized to inquire whether such restrictions are "reasonable" or not in order to determine whether they become "burdens" SO as to infringe S. 92. It is not for a court to determine, to take some

1(1920) 28 C.L.R., at p. 551. 2(1945) 70 C.L.R. 1, at pp. 11, 17, 80 CLR 456

examples, whether a Sale of Goods Act, a Bills of Exchange Act, an Act relating to the control of wharves and warehouses, an Act requiring fruit to be prepared in a particular way before it is sold or animals to be killed in licensed abattoirs before the meat can be BRODIE.

sold, are reasonable or not. The Transport Regulation Act deals C.J. directly with transportation in trade, which is itself trade and

commerce Australian National Airways v. The Commonwealth 1. The Act imposes restrictions upon persons engaged in such trans- portation and prevents those persons doing as they please. Without control of transport on the roads, chaos would result. There would be the same result if inter-State transport were free from control and intra-State transport were subject to control. There is in my opinion no authority for the proposition that such restrictions will be valid if, in the opinion of a court, they are " reasonable' but not otherwise. There are many laws relating to highways. It is contended primarily that there can be no control of the persons who use the highways in inter-State transport by permitting only licensed persons to use them, but there is a reluctant admission that if the licence fee is "reasonable" it may be permissible to im- pose it. The roads of the State of Victoria have cost many millions of pounds; the railways of the State have cost many millions of pounds. It would be a most difficult task to determine what is a reasonable charge for the use of all or some of the roads by a particular motor truck or private motor car or some other vehicle. If a court is at liberty to inquire into such matters I do not see why the railway fares and freights between Victoria and all other States should not be held to be invalid unless it can be shown that they are "reasonable." Similarly the toll on the Sydney bridge, which is part of a highway used by inter-State traffic, might be held to be inconsistent with S. 92 unless a court was of opinion that it was reasonable. It is obvious that the determination of such matters as the amounts of licence fees, freights and fares, of conditions of road traffic and rail traffic, must depend upon considerations of policy which cannot be determined by a court. If the question is asked what would be a reasonable fee for a licence for a large truck or a small truck or a private motor car, or if it is asked how far it would be "reasonable" to limit motor traffic by reason of the financial obligations of the State in relation to the railways, or how much should motor traffic be required to contribute to general revenue to help to pay for roads &., it would be quite impossible for a court to answer the questions. Any answer would depend upon the policy to be applied, e.g. whether the town should be

1(1945) 71 C.L.R. 29. 80 CLR 457

favoured as against the country or the railways as against the roads or the producers as against the distributors. In my opinion there is no authority for the proposition that it is left to a court to deter- mine whether particular laws with respect to inter-State trade are "reasonable" or not.

The principle for which the appellant contends would necessarily result in overruling such cases as Hartley v. Walsh 1, where a law was upheld which required that dried fruits should not be sold until they had been treated in registered packing houses, and Milk Board v. Metropolitan Cream Pty. Ltd. 2 upholding the validity of a system of control of the sale of milk which was directed towards securing hygienic treatment and distribution of milk. Indeed the adoption of the principle for which the appellant contends would involve the overruling of almost every case in which legislation has been upheld by this Court against an objection based upon S. 92.

I proceed to consider more in detail whether the principles laid down by the Privy Council in the three cases of James v. Cowan, James v. The Commonwealth and the Banking Case should lead to a reconsideration of the principles which have been applied by this Court from the time of Vizzard's Case to that of the Milk Board Case.

In James v. Cowan the precise question was whether a Minister had used a statutory power in accordance with the provisions of the statute. Section 28 of the South Australian Dried Fruits Act 1924 provided that "Subject to sec. 92 of the Commonwealth of Australia Constitution Act and for the purposes of this Act or of any contract made by the Board, the Minister may on behalf of His Majesty purchase by agreement or acquire compulsorily any dried fruits in South Australia.

It was found as a fact that the Minister had used this power for the purpose of forcing surplus dried fruit off the Australian market. Their Lordships said 3 that

To force the surplus fruit off the Australian market' appears necessarily to involve two decisions first, the fixing of a limited amount for Australian consumption (a necessary element in the conception of a surplus ') secondly, the prevention of the sale of the balance of the output in Australia." It was found as a fact that the Minister exercised his powers for the express purpose of preventing the sale of the plaintiff's fruit inter-State. There was no difficulty therefore in holding that the section (expressed to be subject to S. 92) did not authorize such an exercise of the power. The conclusion which was drawn in this Court from the decision

1(1937) 57 C.L.R. 372. 2(1939) 62 C.L.R. 116. 3(1932) A.C. 559. 80 CLR 458

in James v. Cowan was that if legislation was "directed against "

inter-State trade and commerce it was invalid, but that inter-State trade and commerce might be regulated and controlled by some laws. This conclusion was based upon the further statement in James v. Cowan which was in the following terms If the real object of arming the Minister with the power of acquisition is to enable him to place restrictions on inter-State commerce, as opposed to a real object of taking preventive measures against famine or disease and the like, the legislation is as invalid as if the legislature itself had imposed the commercial restrictions" 1. If a power of acquisition were used for these latter objects (as to famine, disease, &.) it would as effectively interfere with inter-State trade and commerce as in the prohibited case (prevention of inter-State trade). The individual owner of the fruit would be deprived of his fruit in every case. There would be no possibility that he could sell it inter-State. Thus James v. Cowan did not decide that all laws which restricted the power of an individual to deal with his goods in inter-State trade were invalid.

James v. The Commonwealth 2 decided that the Commonwealth as well as the States was bound by S. 92. In that case a further exposition of S. 92 was given by the Privy Council. That case overruled McArthur's Case on both points which were there decided. The effect of McArthur's Case was summarized by Gavan Duffy C.J. in the following terms in R. v. Vizzard; Ex parte Hill 3 This Court in McArthur's Case " laid down the following propositions with respect to sec. 92 of the Constitution of the Commonwealth of Australia :-(1) The section in no way limits or restricts the legis- lative power of the Commonwealth. (2) The section precludes the Parliaments of the States from in any way regulating or controlling trade, commerce, and intercourse among the States." In James V. The Commonwealth both of these propositions were rejected. There is no dispute that proposition No. (1) was rejected. As to proposi- tion No. (2), that also was rejected. If it had not been rejected the position would have been that no Parliament in Australia could in any way regulate or control trade, commerce and intercourse among the States." In James v. The Commonwealth 4 this result is expressly stated as one of the reasons for rejecting the theory expounded in McArthur's Case." In McArthur's Case the view of the Court was that S. 92, as construed by the Court, must be held not to bind the Commonwealth because otherwise inter-State trade and commerce would be free from all law, with the result that

1(1932) A.C., at pp. 558, 559. 2(1936) A.C. 578 ; 55 C.L.R. 1. 3(1933) 50 C.L.R., at p. 46. 4(1936) 55 C.L.R., at p. 60. 80 CLR 459

S. 51 (i.) would be a nullity. The Privy Council rejected the doctrine that S. 92 meant that inter-State trade and commerce was free from law-either Federal or State. As it was put in James v. The Commonwealth 1, if the theory enunciated in McArthur's Case failed, the only substantial argument for the respondent's conten- tion (as to S. 92 not binding the Commonwealth) failed. Accordingly in James v. The Commonwealth it was held that inter-State trade and commerce could be controlled and regulated by law and that such control and regulation was not necessarily inconsistent with S. 92, provided, to use the words of James v. Cowan, that "it was not directed against " such trade and commerce.

In the Transport Cases, in Home Benefits Pty. Ltd. v. Crafter 2, Hartley v. Walsh 3, and Milk Board v. Metropolitan Cream Pty. Ltd. 4, this Court endeavoured to apply what were understood to be the principles laid down in James v. Cowan and James v. The Commonwealth. In these cases it was held that inter-State trade and commerce could be regulated by law consistently with S. 92 but that a mere prohibition of such trade and commerce was inconsistent with S. 92. This principle was applied in the Milk Board Case and repeated in Australian National Airways v. The Commonwealth 5, in the following words quoted in the Banking Case from a judgment of the Chief Justice in the Airways Case 6 :-"I venture to repeat what I said in the former case (viz. the Milk Case 7: 'One proposition which I regard as established is that simple legislative prohibition (Federal or State), as distinct from regulation, of interstate trade and commerce is invalid. Further, a law which is 'directed against interstate trade and commerce is invalid. Such a law does not regulate such trade, it merely prevents it. But a law prescribing rules as to the manner in which trade (includ- ing transport) is to be conducted is not a mere prohibition and may be valid in its application to interstate trade, notwithstanding S. 92

This quotation follows an express statement that regulation of trade, commerce and intercourse among the States is compatible with absolute freedom and that S. 92 is violated only when a legis- lative or executive act operates to restrict such trade, commerce and intercourse directly and immediately, as distinct from creating some indirect or consequential impediment which may fairly be regarded as remote. Thus the Privy Council in the Banking Case expressly rejected the proposition that S. 92 precluded Parliaments

1(1936) 55 C.L.R., at p. 60. 2(1935) 61 C.L.R. 701. 3(1937) 57 C.L.R. 372. 4(1935) 62 C.L.R. 116. 5(1945) 71 C.L.R. 29. 6(1949) 79 C.L.R., at p. 640. 7(1939) 62 C.L.R. 116, at p. 127. 80 CLR 460

(Commonwealth or State) from in any way regulating or controlling inter-State trade and commerce, and a statement of the law was selected for approval which defined the relevant criterion as the distinction between regulation which was permitted, and prohibition, which was not permitted.

The result is that S. 92 does not mean that inter-State trade and commerce is to be free from control by law. In a passage to which

I have just referred their Lordships held that if laws have only an indirect effect in relation to inter-State trade and commerce they are not invalidated by S. 92. This proposition deals with the case of the man who is convicted of an offence and is imprisoned and other similar cases. The laws which are permitted as being con- sistent with S. 92 include not only laws which have only an indirect effect upon inter-State trade and commerce, but also laws which have a direct effect and operation upon that trade and commerce. For example, any laws which can validly be enacted under the power given to the Commonwealth Parliament under S. 51 (i.) to make laws with respect to trade and commerce among the States must have a direct operation in relation to trade and commerce. How then can a distinction be drawn between laws having such a direct operation which are permitted by S. 92 and those which are not SO permitted ? The answer is to be found in the distinction between regulation and prohibition. This is the distinction which was applied in the Home Benefits Case, the Milk Board Case and the Australian National Airways Case and this is the distinction, as already stated, which has now been expressly adopted by the Privy Council as the relevant criterion.

In the Banking Case their Lordships conclude their judgment by stating that it will sometimes be difficult to determine in a particular case whether a law exceeds the limits of regulation and transgresses into prohibition and the conclusion of the Privy Council is sum- marized in the following words: "

it appears to their Lord- ships that, if these two tests are applied: first, whether the effect of the Act is in a particular respect direct or remote and, secondly, whether in its true character it is regulatory, the area of dispute may be considerably narrower" 1. Therefore the questions which are to be asked are these :-Is the effect of a challenged Act in relation to inter-State trade and commerce direct or remote ? If it is remote no question in relation to S. 92 arises. Next, where the effect of the Act is direct, is the Act in its true character regula- tory and not merely prohibitive ? If it is truly regulatory and not prohibitive it will not be invalidated by S. 92.

1(1950) A.C., at p. 313 79 C.L.R., at p. 642. 80 CLR 461

The question, therefore, is whether the Transport Regulation Acts of Victoria are regulatory or prohibitive. The Acts are entirely different from, for example, the Act which was considered in James V. The Commonwealth, a statute which was enacted upon the then accepted basis that S. 92 did not bind the Commonwealth. The Act specifically penalized the transport of fruit inter-State without a licence. In the sense of James v. Cowan it was held to be directed against inter-State trade. It was obvious that if the Common- wealth was bound by S. 92 such an Act was an infringement of that section. The present Transport Regulation Act is a carefully designed extensive system of transport control. Perhaps the most common method of regulating trade is by a licensing system, e.g. in the case of intoxicating liquor, drugs, slaughtering of stock, dealing in marine stores &. In each case some authority has the duty of determining whether an application for a licence shall be granted or refused. Such licences are generally subject to conditions relating to the manner of carrying on the trade and these conditions frequently involve the payment of a fee. It is such a system which the Transport Regulation Act applies. The Act has all the characteristics of a system of regulation. The words of Gavan Duffy C.J. in Vizzard's Case 1, with respect to a substantially identical Act, in my opinion apply precisely to the present Act: " the intention of the Legislature was

to provide that trans- port within the State should be carried on in the most effective and economic manner and to co-ordinate the means for carrying on such transport SO as to obtain the best available services." This in my opinion is what the Act does. It is a system of regulation and is valid.

It has, however, been particularly objected that a power to regulate trade and commerce does not include a power to exclude any person from operations in trade and commerce. But it is obvious that any regulation which imposes conditions upon activities of individuals must exclude from those activities persons who are not prepared, or who are not able for any reason, to satisfy those conditions. In other words all regulation involves some degree of prohibition and, further, all regulation operates upon persons. Laws apply to persons, not to things, and what is called regulation of a subject matter must be a system of regulating the conduct of persons. The argument that a power to make laws regulating and controlling inter-State trade and commerce does not authorize the exclusion of any person from such trade and commerce is met, not only by the general considerations which have just been

1(1933) 50 C.L.R., at p. 47. 80 CLR 462

mentioned, but also by the express decision of the Privy Council in the Banking Case:

regulation of trade may clearly take the form of denying certain activities to persons by age or circum- stances unfit to perform them or of excluding from passage across the frontier of a State creatures or things calculated to injure its citizens" 1. It must be a question of policy for Parliament to determine what creatures or things or courses of action are to be regarded as "calculated to injure the citizens' of a State.

Finally, reference was made to certain cases decided in the United States of America and it was contended that these authorities supported the view that the legislation challenged in this case is invalid. With respect to American authorities on this subject the following comments may be made. The Constitution of the United States does not contain any such provision as S. 92. The problems which arise from the presence of S. 92 in the Commonwealth Con- stitution do not arise in the United States in anything like the same way. The power of Congress is a power to make laws to regulate commerce with foreign nations and among the several States and with the Indian tribes. There has been much variation of opinion in the Supreme Court of the United States with respect to the character and limits of this power. Originally it was held to be a concurrent power. Later it was held to be an exclusive power -see Willis, Constitutional Law, (1938) pp. 307 et seq. It was the prevailing view that Gibbons v. Ogden 2 decided that " The States may not in any manner directly interfere with or attempt the regulation of commerce between the States by whatever agency that commerce may be carried on ": see Willoughby on the Constitution of the United States, (1929) 2nd ed., vol. 2, at p. 763, SO stating the effect of Gibbons v. Ogden (2). This proposition is rejected, with respect to the Commonwealth Constitution, in James v. The Com- monwealth and in the Banking Case. Later, however, it was held that the States were at liberty to regulate local matters, and that the power of Congress was exclusive only in relation to matters which were considered (by the Supreme Court) to require treatment upon a national scale. No such doctrine has ever been suggested or applied in Australia, There was much conflict of opinion in the United States as to the position where Congress had been silent in relation to a particular matter: Willis, p. 308. On the one hand it could be contended that the silence of Congress upon a matter meant that Congress intended that the States were to be free to legislate with respect to that matter. On the other hand, it was

The necessary implications of these decisions are important. First may be mentioned an argument strenuously maintained on this appeal that S. 92 of the Constitution does not guarantee the freedom of individuals. Yet James was an individual, and James vindicated his freedom in hard-won fights. Clearly there is here a misconception. It is true, as has been said more than once in the High Court, that S. 92 does not create any new juristic rights, but it does give the citizen of State or Commonwealth, as the case may be, the right to ignore, and, if necessary, to call upon the judicial power to help him to resist legislative or executive action which offends against the section. And this is just what James successfully did.

"Linked with the contention last discussed was another which their Lordships do not find it easy to formulate. It was urged that, if the same volume of trade flowed from State to State before as after the interference with the individual trader and, it might be, the forcible acquisition of his goods, then the freedom of trade among the States remained unimpaired. In the first place, this view seems to be in direct conflict with the decisions in the James Cases for there the section was infringed though it was not the passage of dried fruit in general, but the passage of the dried fruit

1(1950) A.C., at p. 305; 79 C.L.R., at p. 635. 80 CLR 494

A. of James, from State to State that was impeded. Secondly, the

test of total volume is unreal and unpractical, for it is unpredictable McCARTER

whether by interference with the individual flow the total volume will be affected, and it is incalculable what might have been the BRODIE.

total volume but for the individual interference. Thirdly, whether Fullagar J.

or not it might be possible, if trade and commerce stood alone, to give some meaning to this concept of freedom, in S. 92 trade and commerce' are joined with intercourse, and it has not been suggested what freedom of intercourse among the States is protected except the freedom of an individual citizen of one State to cross its frontier into another State or to have such dealings with citizens of another State as his lawful occasions may require."

This passage seems to me completely to destroy the whole basis of R. v. Vizzard, the only foundation discoverable from the reasons of the majority as that on which it was rested. But Lord Porter went further. In a passage which seems to me to govern affirmatively the present case, His Lordship said 1 The bearing of those decisions with their implications upon the present appeal is manifest. Let it be admitted, let it, indeed, be emphatically asserted, that the impact of S. 92 upon any legislative or executive action must depend upon the facts of the case. Yet it would be a strange anomaly if a grower of fruit could successfully challenge an unqualified power to interfere with his liberty to dispose of his produce at his will by an inter-State or intra-State transaction, but a banker could be prohibited altogether from carrying on his business both inter-State and intra-State and against the prohibition would invoke S. 92 in vain. In their Lordships' opinion there is no justification for such an anomaly. On the contrary, the considerations which led the Board to the conclusion that S. 20 of the South Australian Dried Fruits Act 1924 offended against S. 92 of the Constitution lead them to a similar conclusion in regard to S. 46 of the Banking Act 1947. It is no answer that under the compulsion of S. 11 of the Act the Common- wealth Bank will provide the banking facilities that the community may require, nor, if anyone dared SO to prophesy, that the volume of banking would be the same. Nor is it relevant that the pro- hibition affects the intra-State transactions of a private bank as well as its inter-State transactions: SO also in the James Cases there was no discrimination his fruit, for whatever market des- tined, was liable to be the subject of a ' determination

A person whose business is the transportation of goods cannot be in a different position from a banker, unless indeed a person

1(1950) A.C., at pp. 305, 306; 79 C.L.R., at pp. 635, 636. 80 CLR 495

whose business is banking is, while a person whose business is the transportation of goods is not, engaged in trade and commerce, and that view has, as I have said, been decisively rejected by this Court.

The only other passage in the Banking Case to which I need refer specifically is the passage 1 in which their Lordships consider the references made by Lord Wright in James v. Commonwealth to R. V. Vizzard This passage need not be set out. It conveys to my mind that their Lordships felt a difficulty in reconciling R. v. Vizzard with James v. Cowan, and considered it impossible to reconcile all that was said by Evatt J. in the one case with all that was said by Isaacs J. in the other. I have already called attention to what I regard as the conspicuous features of the judgment of Isaacs J., and ex- pressed my opinion that R. v. Vizzard represents a complete denial of his reasoning.

I am of opinion that R. v. Vizzard is irreconcilable with the law as propounded in the Banking Case. I have still, however, to consider an argument put before us in support of R. v. Vizzard, the major premiss of which argument is not only consistent with, but supported by, the Banking Case. The major premiss is, in the words of their Lordships, that " regulation of trade commerce and intercourse among the States is compatible with its absolute freedom." And the minor premiss is that the Transport Regulation Acts of the State of Victoria are merely regulatory of trade and commerce, including trade and commerce among the States.

The distinction between what is merely permitted regulation and what is a true interference with freedom of trade and commerce must often, as their Lordships observed, present a problem of great difficulty, though it does not, in my opinion, present any real difficulty in the present case. We may begin by taking a few examples, confining our attention to the subject matter of transportation, which is now under consideration. The require- ments of the Motor Car Acts of Victoria afford very good examples of what is clearly permissible. Every motor car must be regis- tered we may note in passing that there is no discretionary power to refuse registration. A fee, which is not on the face of it unreason- able, must be paid on registration. Every motor car must carry lamps of a specified kind in front and at the rear, and in the hours of darkness these lamps must be alight if the car is being driven on a road. Every motor car must carry a warning device, such as a horn. A motor car must not be driven at a speed or in a man- ner which is dangerous to the public having regard to all the cir-

1(1950) A.C., at p. 307 79 C.L.R., at p. 637. 80 CLR 496

cumstances of the case. Other legislation of the State-Par- liamentary or subordinate-prescribes other rules. In certain McCARTER

localities a motor car must not be driven at more than a certain specified speed. The weight of the load which may be carried by BRODIE.

a motor car on a public highway is limited. The driver of a motor car must keep to the left in driving along a highway. He must not overtake another vehicle on a curve in the road which is marked by à double line in the centre. He must observe certain "rules of the road " at intersections for example, the vehicle on the right has the right of way.

Such examples might be multiplied indefinitely. Nobody would doubt that the application of such rules to an inter-State trader will not infringe S. 92. And clearly in such matters of regulation a very wide range of discretion must be allowed to the legislative body. When we ask why such rules do not infringe S. 92, I think that commonsense suggests a fairly clear and satisfactory answer. The reason is that they cannot fairly be said to impose a burden on a trader or deter him from trading: it would be foolish, for example, to suggest that my freedom to trade between Melbourne and Albury is impaired or hindered by laws which require me to keep to the left of the road and not drive in a manner dangerous to the public.

Of course, even rules of the kind which I have taken as examples could be made to operate as a burden or deterrent in a high degree. Let me take an example. The town of Wangaratta is in Victoria, some fifty miles by road from the border between Victoria and New South Wales. It is on the Hume Highway, which is the busy main highway between Melbourne and Sydney. A law which provided that a motor car should not travel on that highway at greater speeds than thirty miles per hour within the limits of towns and sixty miles per hour outside towns would not impede or interfere with the trade of persons carrying goods for reward between Melbourne and Sydney: their trade would remain free." But let me suppose a law that no person should drive a motor car between Wangaratta and the border at a speed exceeding one mile per hour. We should instantly say that such a law interfered with the freedom of inter-State trade. It would operate as a burden and a deterrent to the trader by making the journey economically impossible. The examples which I have taken seem clear. On which side of the line a particular case falls will, of course, be a question of fact. It may be a difficult question in some cases, but it does not seem to me likely that any very difficult question will arise

80 CLR 497

within the sphere of practical politics. The real, and truly baffling, H. difficulties of S. 92 seem to me to lie outside the field of trans- portation. Within that field the very nature of the subject matter seems to lend itself to the application of a quite simple test, which will rarely, if ever, be productive of any real difficulty. When difficulty does arise, it will be the kind of difficulty with which lawyers are constantly called upon to deal in a great variety of cases.

The question is sometimes raised whether a State-or the Com- monwealth for that matter, since the Commonwealth is equally bound by S. 92-can, consistently with S. 92, make a charge for the use of trading facilities, such as bridges and aerodromes, provided by it. The answer is that of course it can. The great bridge over Sydney Harbour was erected at huge expense to facilitate trade commerce and intercourse between all places north of the Harbour and all places south of the Harbour. The collection of a toll for the use of the bridge is no barrier or burden or deterrent to traders who, in its absence, would have to take a longer or less convenient or more expensive route. The toll is no hindrance to anybody's freedom, SO long as it remains reasonable, but it could, of course, be converted into a hindrance to the freedom of trade. If the bridge authority really wanted to hamper anybody's trade, it could easily raise the amount of the toll to an amount which would be prohibitive or deterrent. It would not be possible

priori to draw a dividing line between that which would really be a charge for a facility provided and that which would really be a deterrent to trade, but the distinction, if it ever had to be drawn, would be real and clear, and nobody need worry about it in advance. Nothing but futile exaggeration of the difficulties of S. 92 can result from an insistence on imagining border-line cases which are excessively unlikely to arise in practice. If we are ever actually calred upon to say whether a money exaction is really a charge for a facility provided or really a burden on some- body's freedom to conduct a trade or business or engage in inter- course, human affairs are such that we are unlikely to experience any very serious difficulty in making a decision.

It is clear enough that such provisions as I have been considering are properly regarded as regulatory in character, and therefore within the category which their Lordships have held to involve no violation of S. 92. It should be emphasised that they are to be examined from the point of view of every individual engaged in trade commerce or intercourse, because S. 92 protects the trade commerce and intercourse of the famous Mr. James and every

80 CLR 498

other individual. As to what is not regulatory in the relevant

sense, one thing at least is clear. Prohibition is not regulation. Lord Porter 1, after quoting from the judgment of the learned Chief Justice of this Court in Australian National Airways Pty. Ltd. V. Commonwealth 2, said "simple prohibition is not regulation."

It is quite impossible, in my opinion, to distinguish the present case from the case of a simple prohibition. If I cannot lawfully prohibit altogether, I cannot lawfully prohibit subject to an absolute discretion on my part to exempt from the prohibition. The reservation of the discretion to exempt by the grant of a licence does not alter the true character of what I am doing. This was, indeed, as I have pointed out, one of the two things that were really decided in James v. Commonwealth 3, though it was naturally treated as more or less self-evident, and the contrary view does not seem to have been very seriously argued. Such cases as Melbourne Corporation v. Barry 4, and Swan Hill Corporation V. Bradbury 5, do not, of course, afford exact parallels to such cases as the present, because they turn primarily on the meaning of the word "regulate" in a statute, but they are, in my opinion, pre- cisely in point, since one thing that they make plain is that, if a legislative body cannot lawfully prohibit altogether, it cannot lawfully prohibit subject to an administrative discretion to exempt from the prohibition. It is quite true to say that regulation may involve partial prohibition, but it is quite untrue to say that total prohibition subject to discretionary exemption or "licensing" is merely partial prohibition within the meaning of that proposition.

The truth is that it is possible to regard such legislation as regulatory with respect to trade and commerce if, but not unless, we regard S. 92 as referring not to the trading and commercial activities of individuals but to a totality or general volume or flow of trading and commercial activities. A simple prohibition, or a prohibition subject to discretionary exemption, of the trade of an individual may be regarded as regulatory of the general flow or volume of trade. It cannot possibly be regarded as regulatory of the trade of the individual who is simply not allowed to carry on his trade at all. The view that S. 92 does not protect an in- dividual trader but has regard only to a general volume of inter- State trade could hardly have been more emphatically rejected by the Privy Council, and it must now, I would think, plainly be

1(1950) A.C., at p. 309 79 C.L.R., 2(1945) 71 C.L.R., at p. 61. 3(1936) A.C. 578; 55 C.L.R. 1. 4(1922) 31 C.L.R. 174. 5(1937) 56 C.L.R. 746. 80 CLR 499

regarded as unsound. And, without it, the view that the Victorian H. Transport Regulation Act is merely regulatory, SO far as it affects inter-State trade and commerce, cannot stand.

It was argued before us that the regulation of public transport vehicles in respect of such matters as safe maintenance and SO on could not be efficiently undertaken without a system of inspection and licensing. The same difficulty was felt by municipalities in connection with their building by-laws by reason of such decisions as Swan Hill Corporation v. Bradbury 1, but very little ingenuity was required to overcome the difficulty. The modern Victorian building by-law requires the issue of a permit or licence to com- mence building, but it also provides that, if plans and specifications comply with the specific requirements of the by-law, the intending builder is entitled, as of right, to the issue of the licence or permit. The legal right, SO given, is, of course, enforceable by mandamus to issue the licence or permit. Such a law differs vitally from a prohibition subject to obtaining a licence which may be granted or withheld at discretion. The only reason why such a system would not be regarded as satisfactory in such legislation as that now under consideration is that such legislation is not really con- cerned-or at any rate is by no means solely concerned-with the safety of public transport. It is concerned very largely with restricting the development, in competition with existing railways, of modern and convenient methods of transport, and one of its supposed advantages is that the discretion to withhold licences can be used to protect the trade of one State at the expense of another. It is, for example, obviously within the sphere of practical politics that it should be thought in Melbourne that Cootamundra ought to drink Victorian beer and not South Australian beer. The protection of the industries of one State against those of another State was, of course, one of the primary things which S. 92 was designed to prevent, but, if the legislation now in question is valid, effect can easily be given to such an opinion without any- body knowing anything about it. I mention these matters only by the way and as serving to emphasise the essential vice of the legislation.

It only remains, I think, to refer briefly to Willard v. Rawson 2.

I have already expressed my opinion that that case, unlike R. V. Vizzard, can, in my opinion, be supported consistently with what is said by their Lordships in the Banking Case. In Willard V. Rawson the relevant legislation was contained in S. 4 of the Victorian

1(1937) 56 C.L.R. 746. 2(1933) 48 C.L.R. 316. 80 CLR 500

Motor Car Act 1928 as amended by the Motor Car Act 1930. That section required every motor car to be registered under an indentify- ing number. On registration a fee was to be paid. The amount of the fee payable depended on the weight and horse-power of the vehicle. A person who drove on a public highway in Victoria a motor car which was not registered under the Act was guilty of an offence. Sub-section (7) (a) provided This section shall not apply to a motor car (other than a motor car which is used in Victoria for carrying passengers for hire or goods for hire or in the course of trade)-(i) which is owned by a person resident in another State (ii) which is temporarily in Victoria (iii) which is registered in such other State and (iv) on which the number allotted to the motor car in such other State is exhibited." The effect of this provision was that, if four conditions were fulfilled, a motor car registered in another State was not required to be registered in Victoria before travelling on a Victorian highway, unless it was a vehicle used for carrying passengers or goods for hire or in the course of trade, in which case registration was required. It was held that the requirement of registration, which involved, of course, payment of the prescribed fee, did not contradict S. 92. I think, with respect, that the essen- tial reasons underlying the decision are correctly stated by Dixon J. in R. v. Vizzard; Ex parte Hill 1. To put it very shortly, the fee was not a tax but rather in the nature of a reasonable charge for facilities provided by the State and used by persons who drove motor cars in Victoria, it did not deal with trade and commerce as such, and, if it could be said to have any burdensome effect on inter-State trade and commerce, that effect was merely indirect and conse- quential. So understood, I think that there is no great difficulty in regarding Willard v. Rawson as an example of 'regulatory legislation. It would not, of course, affect my opinion in the present case if I thought otherwise of Willard v. Rawson, but I have thought it proper to express my view of that case.

I have advisedly refrained from discussing in this judgment a number of American authorities which have been cited from time to time in this Court in cases arising under S. 92, although I have given a good deal of consideration to a number of them. The Constitution of the United States contains no such provision as our S. 92, and I have thought it sufficient to refer only to decisions of this Court and of the Privy Council. I may add, however, that the American decisions suggest strongly to my mind that, if Congress were to enact a law in the terms of S. 92 of our Constitution, a State

1(1933) 50 C.L.R., at pp. 67, 68. 80 CLR 501

Act such as the Victorian Transport Regulation Act would have H. no chance of surviving a challenge in the Supreme Court.

In my opinion, the appeals should be allowed, and the con- victions quashed.

Appeals dismissed with costs. Solicitors for the appellants, Davis, Cooke &Cussen. Solicitor for the respondent, F. G. Menzies, Crown Solicitor for Victoria.

Solicitors for the interveners, K. C. Waugh, Crown Solicitor for the Commonwealth; F. P. McRae, Crown Solicitor for New South Wales (acting for New South Wales and Queensland).