Milk Board (NSW) v Metropolitan Cream Pty Ltd

The Milk Board (NSW) sought an injunction against Metropolitan Cream Pty Ltd to restrain the sale of cream within a designated milk-distributing district in Sydney. The Board claimed that under the Milk Act 1931-1936 (NSW), cream supplied to the defendant, which originated from Victoria, had become vested in the Board. The defendant contended that the Milk Act contravened section 92 of the Australian Constitution, which guarantees freedom of inter-State trade, and argued that the Act did not apply to milk produced outside New South Wales or to milk that had been the subject of inter-State trade. The case was removed from the Supreme Court of New South Wales to the High Court of Australia, where the motion for an interlocutory injunction was treated as the trial of the action.

The High Court was required to determine two primary legal issues. Firstly, whether the Milk Act 1931-1936 (NSW), as construed to apply to milk produced in Victoria and sold within a New South Wales milk-distributing district, contravened section 92 of the Constitution. Secondly, if the Act did apply to such milk, whether its provisions were valid in relation to inter-State trade, or if the Act, on its proper construction, did not apply to milk originating from outside New South Wales or to inter-State dealings in milk.

A majority of the High Court, comprising Latham C.J., Rich, Evatt, and McTiernan JJ., held that the Milk Act, when construed to apply to milk supplied for consumption or use within a proclaimed milk-distributing district, did not contravene section 92 of the Constitution. The Court reasoned that section 92 protects inter-State trade and commerce from certain forms of legislative control, but not from all control. Drawing on the principles established in *James v. The Commonwealth*, the Court found that the Act constituted a regulation of trade rather than a prohibition. The Act aimed to regulate the supply, distribution, and sale of milk within the district for hygienic, social, and economic purposes, and its provisions, including the vesting of milk in the Board, were considered a legitimate exercise of State power to control the marketing of milk within its borders. The Court applied the reasoning in *Crothers v. Shiel*, which had previously upheld the validity of the Milk Act against a section 92 challenge, and found that the existence of a substantial inter-State trade in milk did not alter the fundamental nature of the Act as a regulatory measure. Starke J. dissented.