Nelungaloo Pty Ltd v Commonwealth (No 4)

[1953] HCA 87

88 C.L.R.] OF AUSTRALIA.

529

[HIGH COURT OF AUSTRALIA.]

NELUXGALOO PROPRIETARY LIMITED .

P l a in t if f -

R e s p o n d e n t

;

AND

THE COMMONWEALTH AND OTHERS

D e f e n d ANTS- A p p l ic a n t s .

[No. 4.]

Constitutional Law [Cth.)— Question as to limits inter se of constitutional power of

H. C. OF A.

Commonwealth and States— Wheat—Compulsory acquisition hy Commonwealth

1953.

—Compensation to growers—Payment— Commonwealth regulations—Amount—

Duty of Commonwealth and Australian Wheat Board—Action brought in State

Sydney,

court—Removal into High Court—Inter se question—“ Arisen ”—The Constitu­Aug.

17 ;

tion (6.3 (fe 64 Viet. c. 12 ), s. 51 (xxxi.)— Judiciary Act 1903-1950 [No. 6 of Dec.

8.

1903—No. 80 of 1950), ss. 40, 40a —National Security [Wheat Acquisition)

Dixon C..I.,

William,s,

Regulations (1939 S.R. No. 96—1945 S.R. No. 9).

Webb,

Fullagar and

Kitto JJ.

In an action brought by N. in the Supreme Court of New South Wales against the Commonwealth, the Minister for Commerce and Agriculture and the Australian Wheat Board, N. claimed for the value of wheat delivered to the board for two cereal seasons in respect of each of which N. declared in two counts containing alternative causes of action, one set of counts being based on reg. 14 of the National Security (Wheat Acquisition) Regulations and the other set being based on a duty alleged to be upon the defendants as to the disposal of the wheat forming the pool in which N.’s wheat of the cereal year was comprised. Each of the counts based on reg. 14 included, inter alia, an allegation that the property in the wheat vested in the Common­ wealth by force of the regulations ; that N. duly delivered the wheat to, and it was duly received and accepted by, the board; and that N. was entitled to be paid by the defendants compensation in accordance with reg. 14 but the defendants had not done so. The other set of counts, alternative counts, on the basis that the ascertainment of the recompense to the owner of wheat delivered to the board was governed by reg. 19 and that his compensation consisted of a distributable share in the proceeds of a pool, alleged that a duty rested on the defendants to obtain for and pay to the credit of the pool accounts

[E ditor’s Note.—Regulations 14, 15, 16, 17 and 19 are printed in the

report of earlier proceedings between the same parties :—see Nelungaloo

Pty. Ltd. V. The Commonwealth (1950) 81 C.L.R. 144, at pp. 146-148.]

VOL. L X X X V I I I . —

34

530 HIGH COURT

[1953.

H.C. OF A. a sum which represented the fair, just and reasonable value of the wheat.

1953.A breach of that duty was alleged and it was said that for that reason the defendants wore unable to pay to N. the sums which they should have been

N elungaloo

able to pay. d'heso counts ended with a claim that thereby N. lost the money

1’t y . Lt d .

V. and the use and benefit thereof which otherwise N. could and should have

T hereceived from the defendants. The defendants pleaded as to the first set of

(A)mmon-

WEALTirtwo counts that they relied on reg. 19 as providing the exclusive means of

[No. 4.]measuring compensation, and that they denied the duty alleged in the alterna­ tive set of two counts. Upon an application by the Attorney-General and the defendants.

Held, by Dixon C.J., Williams, Fullagar, and Kitto JJ., that within the meaning of s. 40a (1) of the Judiciary Act 1903-1950 there had arisen in the action a question or questions as to the limits inter se of the constitutional ])owers of the Commonwealth and those of the iStates, and that therefore the action had been removed into the High Court.

Held, by Webh J., that it was not known what attitude N. would take as regards the exclusive application and validity of reg. 19 asserted bĵ the defendants, therefore the application was premature and should be dismissed.

Mo t io n .

An action was brought by Nelungaloo Pty. Ltd. in the Supreme Court of New South Wales against the Commonwealth of Australia, John McEwen and the Australian Wheat Board for the value of wheat delivered to the Wheat Board for the two cereal seasons 1946-1947 and 1947-1948. In respect of each of those seasons the company declared in two counts containing alternative causes of action, one set of counts being based on reg. 14 of the National Security {Wheat Acquisition) Regulations, and the other set being based on a duty alleged to be upon the defendants as to the disposal of the wheat forming the pool in which the company’s wheat of the cereal year was comprised. In each of the two respective counts based on reg. 14, after certain preliminary allegations, including an allegation that the property in the wheat vested in the Com­ monwealth by force of the regulations, it was alleged that the company duly delivered the wheat to the board and the board duly received and accepted it and otherwise all conditions were performed and all things happened and all times elapsed necessary to entitle the company to be paid by the defendants compensation in accordance with reg. 14 and to maintain the action to recover the said compensation but the compensation remained wholly unpaid. The amounts claimed under these counts were respectively, in respect of the 1946-1947 season, £2,196 11s. 5d. (being £1,830 9s. 6d., and £366 Is. lid . interest at four per cent per annum for five years to issue of writ), and in respect of the 1947-1948 season,

88 C.L.R.] OF AUSTRALIA.

531

£10,984 5s. Od. (being £9,308 13s. 9d. and interest £1,675 11s. 3d.).

The other set of two counts proceeded on the basis that the amount

1953.

payable to the company for wheat delivered to the board was nelungaloo

governed by reg. 19 of the National Security {Wheat Acquisition)

P ty . Ltd .

V.

Regulations and that that amount consisted of a distributable share

The

in the proceeds in pool numbered 10 and pools numbered 11 and Common­

wealth

11 A. On that basis it was alleged in each of those aiternative counts that a duty rested on the defendants in and about the disposal of the wheat, including the wheat delivered by the company, to obtain for and pay to the credit of the accounts of the pool a sum which represented the fair, just and reasonable value of the wheat yet the defendants contrary to their duty in that behalf did not obtain for or pay to the credit of those accounts a sum representing the fair, just and reasonable value of the wheat but disposed of it at prices which did not represent and were generally below the fair, just and reasonable value of the wheat whereby the defendants were unable to pay to the company by way of dividends out of the accounts of the pool the sums which the defendants or one of them otherwise could and should have been able to pay to the company whereby the company lost the money and its use and benefit which otherwise it could and should have received from the defendants and was otherwise damnified. The amounts claimed under these alternative counts were respectively, in respect of the 1946-1947 season, £1,831 15s. Od. (being £1,540 7s. lOd. and £291 7s. 2d. interest at four per cent per annum from date of delivery to issue of writ of summons), and in respect of the 1947­ 1948 season, £9,294 17s. 2d. (being £7,945 5s. 3d. and interest £1,349 11s. lid .).

[No. 4.]

The defendants pleaded as to the first count that they were always ready and willing to pay and tendered to the company in respect of the acquisition of the wheat mentioned in that count the sum of £952 2s. 9d. which they alleged was the amount of compensation payable in accordance with reg. 19 of the National Security {Wheat Acquisition) Regulations and which sum they brought into court, and further that in accordance with reg. 19 the residue of the money claimed in that count, namely, £1,244 8s. 8d., was not payable as compensation for the acquisition of the wheat. Similar pleas were put on in respect of the second count, the amount tendered being £6,850 Os. 7d. and the residual amount alleged in accordance with reg. 19 to be not payable as compensation for the wheat acquired being £4,134 4s. 5d. To the third and fourth counts the defendants pleaded that they were not nor was any of them guilty as alleged, and to so much of those counts as alleged

632 HIGH COURT

[1953.

H. C. OF A. defendants contrary to their duty in that behalf did not I9i).t obtain for or pay to the credits of the accounts mentioned in those Neiainoauu) representing the fair, just and reasonable value of Ptv. Ltd. the said wheat and that the defendants disposed of the wheat at

V.

'I’ll 10])rices whicli did not represent and were generally below the fair, COMMON-just and reasonable value of the wheat, denied all those allegations.

WEALTIi

In a further ]dea to the third and fourth counts the defendants

|.\0 .

4.]

said that in the administration of the said pools by the board and in tlic performance by the defendants of their duties in and about the disposal of wheat in those pools, including the wheat delivered by the company, and otherwise in the performance of their duties, they and each of them acted in accordance with the regulations including reg. 19, and they further said that those pools were administered so as to provide just terms for the acquisition of the wheat in those pools including the wheat delivered by the company. The Attorney-General of the Commonwealth on behalf of himself and the defendants to the action applied to the High Court for, inter alia, (i) an order declaring that the action has been removed into the High Court under s. 40a of the Judiciary Act 1903-1950; (ii) alternatively, an order that the action be removed into the High Court under s. 40 of the Judiciary Act 1903-1950 ; and (iii) an order providing for the further conduct of the action and the filing of a statement of claim therein.

Dr. E. G. Coppel Q.C. (with him W. J. V. Windeyer Q.C. and R. Else-Mitchell), for the applicants. In an application by the Attorney-General under s. 40 of the Judiciary Act 1903-1950 the pleadings are not an important matter. The automatic removal under s. 40a of that Act may not take place until the cause reaches a stage at which it becomes apparent that it is necessary to determine the question, whereas under s. 40 it is not necessary to wait until that happens. The Attorney-General may apply at any stage. The Attorney-General appears in the application now before the Court to ask the Court to make an order as of course. Applications under s. 40 were dealt with in Ex parte Walsh and Johnson ; In re Yates (1) and Hopper v. Egg and Egg Pulp Marketing Board (Viet.) (2). I t may be said for the company that reg. 19 of the National Security (Wheat Acquisition) Regulations is bad, but by the use of s. 46 (b) of the Acts Interpretation Act 1901-1950, reg. 14 is given an operation which results in the company having a right to sue for compensation upon general principles. That is

(1) (1925) 37 C.L.R. 36, at pp. 73,

(2) (1939) 61 C.L.R. 665, at p. 674.

74, 130.

88 C.L.R.] OF AUSTRALIA.

533

referred to as the “ Tonking ” construction, and if that is the way in which it is to be, then, of course, the allegation that reg. 19 is bad raises the constitutional question which entitles the cause to >j

'elungaloo

be brought into this Court. If it is contended that reg. 19 is good,

P ty. Ltd.

V.

but provides a mere alternative method of compensation, leaving

The

the common law claim to be brought under reg. 14, that contention Common­

wealth

would be opposed to the majority of opinion given by this Court

[No. 4.]

(Nelungaloo Pty. Ltd. v. The Commonivealth (1) ). Regulation 19 is valid. I t provides the only method of assessing compensation. The weight of judicial opinion with regard to these regulations is in favour of the view that a claim cannot be made under reg. 14 unless reg. 19 is bad and severable. Compensation can be assessed under reg. 14 only by first striking down reg. 19 and then applying s. 46 (6) of the Acts Lnterpretation Act 1901-1950, so as to enable a claim to be made under s. 40. Construction aided by the Con­ stitution is enough for the present application because the question would then involve an interpretation of the Constitution. The invalidity of reg. 19 is an inter se question. There is involved in the first two counts and the defences to them a question which entitles the Attorney-General to have the cause removed under s. 40. So long as the cause be removed it is immaterial whether it be so removed under s. 40 or under s. 40a . An issue arises on the pleadings whether reg. 19 does or does not govern the situation. In solving that issue the Court is bound to give regard to what in its opinion is the total content of the relevant law. In that task the Court will be faced inevitably with the task of determining whether or not reg. 19 is valid. A regulation cannot be made good by the concession of counsel. The trial judge, upon a consideration of reports of relevant cases, inevitably would come to the conclusion that the company’s case could only succeed on the footing that reg. 19 was bad because he is told so by this Court. On the pleadings the defendants allege there is not any cause of action under reg. 14 at all, the only claim is one under reg. 19. The defendants’ pleadings raised the constitutional question. The question of the construction and effect of reg. 14 and reg. 19 cannot be approached without involving considerations affecting s. 51 (xxxi.) of the Constitution. Correspondence is before this Court in which the company shows that what it is resting on is a constitutional c[uestion. The other two counts are on a somewhat different footing. They are claims for damages for breach of duty. That duty is not alleged to arise under the regulations. I t appears to be an allegation of the duty

(1) (1948) I d C.L.R. 495, at pp. 505, 543, 546, .547, .559-562, 585, 586 ;

(1952) 85 C.L.R. 54.5, at p. .587.

r).‘}4 H IGH COUUT

[1953.

li. (!. OK A. the Constitution. The damage claim could not possibly flow from the breach of the duty, unless it is a duty to provide just Nui.cnoai.oo ([uestion arising directly under the Con-

rry. l/i'i).

stitution, and, therefore, directly within s. 40 of the Judiciary Act.

V.

TiiicIt is not suggested that s. 51 (xxxi.) of the Constitution gives a ('UMMON-

right of action. 'The breach of duty alleged is not the duty arising

w HAi/ni

[No. -J..!out of the word cotnpensation itself in the regulation, but in the

constitutional duty. Had there been a right under the regulations for compensation one would liave expected the company to sue for compensation. To obtain, presumably by sale, the best price for the wheat and pay that money into the pool is not a duty which forms part of the content of the compensation. The claim is for sometliing approximating the total amount claimed under the first count, said to be damages due to a breach of duty ; the only duty is a duty to provide just terms, which is found in the Con­ stitution. The duty was intended to be denied by the plea of Not Guilty. The further question in relation to the third and fourth counts also entitles the Attorney-General to an order under s. 40.

Sir Garfield Barwich Q.C. (with him A. F. Mason), for the respon­ dent to the motion. There is not any ground for making the order. The only matter involved is the inter se point. I t is not right to say that under s. 40 there can be anticipated the possibility of a question arising involving the construction of the Constitution. The stage at which it must be able to be said that a question of the construction of the Constitution is necessarily involved was referred to in Ex farie Walsh and Johnson ; In re Yates (1) and Hopper V. Egg and Egg Pulp Marketing Board [Viet.) (2). There is nothing stated in the cases collected in Duncan v. Vizzard (3). There is not

any argument on an inter se question.

There is a long line of consis­

tent authority that the question must necessarily arise : see Miller v. Uaweis (4) ; R. v. Maryborough Licensing Court; Ex parte Webster & Co. Ltd. (5) ; George Hudson IM . v. Australian Timber Workers' Union (6) ; Pirrie v. McFarlane (7); Australian Commonwealth Shipping Board v. Federated Seamen’s Union of Australasia (8) and O’Neill V. O’Connell (9). A point involving the construction of the Constitution cannot be said to arise on the pleadings as now before the Court. Regulation 19 is excluded by means of construction.

(1) (192,5) 37 C.L.R. 36, at p. 75.

(6) (1923) 32 C.L.R. 413, at pp. 429,

(2) (1939) 61 C.L.R. 66.5, at p. 674.

431, 444.

(3) (19.3.5) 53 C.L.R. 493.(7) (1925) .36 C.L.R. 170, at p. 223.

(4) (1907) 5 C.J..R. 89, at pp. 93, 94.

(8) (1925) ,36 C.L.R. 142, at pp. 450,

(5) (1919) 27 C.L.R. 249, at pp. 253,

451.

254, 256.

(9) (1946) 72 C.L.R. 101, at p. 116.

88 C.L.R.] OF AUSTRALIA.

535

H. C. OF A.

The company’s rights come under reg. 14.

In point of construction

that regulation stands by itself. The other contention is on the

1953.

footing that the regulations are wholly good ; that regs. 14 and 19 N elungaloo

are read together, but nonetheless on their proper construction there

Pty. Ltd.

V.

is a duty to be found, which construction is not a constitutional

The

construction at all. In respect of the second group of counts it is Common­

wealth

a matter of mere construction, and it must be in the company’s

[No. 4.]

hands to say that if a court takes a concrete view and wants to construe the regulations otherwise, then the company will suffer a verdict. The matter is entirely in the company’s hands. I t cannot be said at this stage on these pleadings that a question of construc­ tion of the Constitution must arise. If the company could fail without ever getting near reg. 19, the question may never arise. The third and fourth counts are not counts upon any Fifth Amend­ ment idea that the company is entitled to just terms in any event, as a cause of action. The doctrine of the Court has consistently been that if the court below can dispose of the matter without resort to the constitutional question, not only does that court retain jurisdiction but it must retain control of the case. I t is its duty to proceed and deal with the matter to the point at which it reaches that question {In re Drew (1) ; R. v. Maryborough Licensing Court; Ex parte Webster <& Co. Ltd. (2) ). If the question may, perhaps, be reached, and not inevitably reached, then that should be the end of the motion. The way in which the Privy Council has construed s. 74 of the Constitution and the way that operates with the possibility of alternate submissions, cannot apply to this section because of the difference in the structure of the two sections and of the circumstances. So that under s. 40 and s. 40a it must, at the time the motion is made, be seen that the question must arise ; and if it must arise, that it has arisen by the very fact that the process is in hand which must attract the federal question. In attempts to bring special cases to this Court, at times the Court has indicated that it must be satisfied at the time. In O’Keefe v. Country Roads Board (3) the Court emphasized the fact that it must be very satisfied on the facts and circumstances that the question has arisen, that the matter is appropriate. At this stage the Court has not any material upon which it can say that the cause involves—here and now—the interpretation of the Constitution, or that a question inter se arises now. The motion should be dismissed.

(1) (1919) V.L.R. 600 ; (1920) V.L.R.

(2) (1919) 27 C.L.R. 249.

139.(3) (1931) 45 C.L.R. 27, at p. 31.

r>;}() HIGH COURT

[1953.

H. C. 01'' A.

J)r. E. G. Coppel (^.C., in reply, referred to Nelungaloo Pty. Ltd.

im :!.

V. The Coimnonwealth (1).

X Kl . UNOALOO

Cur. adv. vult.

1't v . Lt d .

r.

T hi5

The following written judgments were delivered :—

< ' o M M O N -

D ix on C.,1. This is an application on the part of the Attorney- wealth and the other defendants in an action against them pending in the Supreme Court of New South Wales. The application is for either an order declaring that under s. 40a (1) of the Judiciary Act 1903-1950 the action has by force of that provision been removed into this Court or alternatively for an order under s. 40 of the Act removing the action into this Court. The plaintiff in the action is Nelungaloo Pty. Ltd., which was the plaintiff in the proceedings reported (2). The claim then made by the plaintiff company was for the value of wheat delivered to the Australian Wheat Board for the board’s cereal season 1945-1946.

W I'lAl/l'II

General of the Commonwealth and also on the part of the Common­

[Xo.

4.

1

Doc. S.

In the present action the claim is in respect of wheat delivered to the board for the two following respective seasons, viz., 1946­ 1947 and 1947-1948. In respect of each of those seasons the plaintiff declares in two counts containing alternative causes of action. One set of counts is based on reg. 14 of the National Security {Wheat Acquisition) Regulations. The other set of counts is based on a duty which the pleading places upon the defendants as to the disposal of the wheat forming the pool in which the plaintiff’s wheat of the cereal year was comprised. Each of the two respective counts based on reg. 14, after certain preliminary allegations, including an allegation that the property in the wheat vested in the Commonwealth by force of the regulations, states that the plaintiff duly delivered the wheat to the board and the board duly received and accepted the same and otherwise all conditions were performed and all things happened and all times elapsed necessary to entitle the plaintiff to be paid by the defendants compensation in accordance with reg. 14 of the regulations and to maintain this action to recover the same, but the defendants did not &c.

This states the essential ground of the cause of action and means that, according to the plaintiff’s contention, the words of reg. 14 which describe the rights and interests of every person in the wheat as thereby converted into claims for compensation are not simply introductory to reg. 19 but operate to give a right to compensation

(2) (1948) 75 C.L.R. 495; (1951) A.C. 34; 81 C.L.R. 144; (1952) 85 C.L.R. 545.

(1) (1950) 81 C.L.R. 144, at p. 157.

88 C.L.R.] OF AUSTRALIA.

537

which is not qualified by reg. 19. In other words the plaintiff ascribes to reg. 14 an effect which gives to the suppliers of wheat a right to compensation assessed on general principles, a right inde- Nelungaloo

pendent of reg. 19, not merely a right, governed by reg. 19, to Ptal Ltd.

V.

participation in a pool.

The

Common­

The other set of two counts adopts the opposite hypothesis. These counts proceed on the assumption that the ascertainment of

wealth

[No. 4.]

the recompense to the owner of wheat who delivered it to the board

Dixon C.J.

is governed by reg. 19 and that his compensation consists of a distributable share in the proceeds of a pool. On that footing these alternative counts assert that a duty rested upon the board, and also apparently upon the Minister and, no doubt vicariously, upon the Commonwealth, a duty in and about the disposal of the wheat in the pool, including the wheat delivered by the plaintiff, to obtain for and pay to the credit of the accounts of the pool a sum which represented the fair, just and reasonable value of the wheat. The alternative counts then allege a breach of the duty, stating that the defendants disposed of the wheat at prices which did not represent, and were generally below, the fair, just and reasonable value of the wheat, whereby the defendants were unable to pay to the plaintiff by way of dividends out of the accounts of the pool the sums which they should have been able to pay. These counts end with a claim that thereby the plaintiff lost the money and the use and benefit of the same which otherwise the plaintiff could and should have received from the defendants and was otherwise damnified. To this declaration the defendants have pleaded. For the purpose in hand it is enough to say of their pleas that in answer to the first set of two counts they rely on reg. 19 as providing the exclusive means of measuring compensation and that, whether they effectively do so or not, they intend in answer to the alternative set of two counts to deny the duty alleged.

The question upon which the decision of the present application depends, this being the state of the pleadings, is whether in the action there has “ arisen” within the meaning of s. 40a (1) of the Judiciary Act a question inter se or whether within the meaning of s. 40 (1) the action is a cause arising under the Constitution or involving its interpretation or any part of the action arises under the Constitution or involves its interpretation.

The considerations upon which the application of s. 40a (1) and of s. 40 (1) to the set of two counts based on reg. 14 depends are quite different from the considerations governing the applica­ bility of the same provisions to the other set of two counts.

The counts resting on reg. 14 are based on the proposition of law which is necessarily implied, that reg. 14 is independent of

5:38 HIGH COURT

[1953.

H. ('. OF A. reg.

19 whicli does not qualify reg. 14 and does not govern the

1 or);}.

ascertainnient of the compensation, or the right to compensation. Nelunoai.oo proposition the defendants in their pleas in effect take up and

P t y . Lt d .

r. make its correctness an issue of law. The question, so far as this

'I’llHset ol counts is concerned, is whether that issue of law contains, (\)MMON- W lOAl.TIIso that it has arisen, a question inler se, or, so that it is involved,

LNu. -L'l an application of some interpretation of the Constitution. Now

it is impossible in ])oint of law to reach the conclusion that reg. 19 does not qualify reg. 14 except in one or other of two ways. One is by interpreting the regulations as producing that result. The other is by holding that reg. 19, because it fails to afford just terms, is constitutionally invalid and that it is severable from reg. 14 which, left thus standing alone, is construed as conferring the right upon which the plaintiff sues. I t needs no argument to show that this second means of reaching the result involves the inter­ pretation of the Constitution ; for it depends upon the effect assigned to s. 51 (xxxi.) of the Constitution. In the previous litigation it was decided that to impugn the validity of reg. 19 under s. 51 (xxxi.) involved a question inter se within s. 74 of the Constitution and that is the same thing as saying within ss. 38a and 40a of the Judiciary Act.

Dixon ('..I.

But the other way of reaching the result that reg. 19 does not qualify reg. 14 namely, by the interpretation of the regulations, may, and indeed in my opinion must, involve the Constitution. The reason for saying that it may involve the Constitution is that, because regs. 14 and 19 cannot be valid unless they are justified by s. 51 (xxxi.), the interpretation placed upon them may be due to a view that unless they were construed as independent and as giving a right to compensation based upon reg. 14 without reg. 19, there would be no compliance with the requirement of just terms and the regulations would go outside the power. The reason for saying that in my opinion it must involve the Constitution is that, excepting the rule, which is made statutory by s. 46 (h) of the Acts Interpretation Act 1901-1950, that regulations must if possible be given a meaning and operation that will save their validity, there are so many and such strong considerations against an interpre­ tation which makes reg. 14 confer a right to compensation independ­ ently of reg. 19 that I cannot think any one would adopt it if the constitutional power were ignored. The considerations to which I refer I have stated at length already in dealing with the appeal in the previous proceedings (1). I t is enough to refer to that statement.

(1) (1948) 75 C.L.R., a t pp. 558-566.

88 C.L.R.] OF AUSTRALIA.

539

But, as Tanking's Case (1) shows, if the interpretation is one adopted in the light of the constitutional power the contrary

result may be reached.

Because of Tonking’s Case (1), which was t̂j,l0ngaloo

treated as applicable to the National Security {Wheat Acquisition)

P ty. Ltd.

V.

Regulations, the parties in the previous proceedings, until they

The

reached the Privy Council, adopted the assumption that the effect Common­

wealth

of reg. 14 was to give a right to compensation independently of [Xo. 4.]

reg. 19 and that reg. 19 did not confine growers to participation in

a pool. For the purpose of describing the position I shall repeat

Dixon C.J.

what I said on a former occasion :—“ The result thus reached by the parties in this Court meant in substance that an interpre­ tation of the regulations was tacitly adopted which was based upon the view that, to avoid the invalidation of reg. 19 as affording terms that were not just, they must be taken to mean that partici­ pation in a distribution under reg. 19 should not be the only means of obtaining compensation but that growers might, unless they chose to accept payments under reg. 19 in satisfaction, recover in proceedings at law compensation assessed on ordinary principles. I t will be seen that although the interpretation was influenced, if not determined, by the view that if reg. 19 provided the only means of compensation it would be invalid, nevertheless, an actual conclusion that reg. 19 was invalid was not involved. But what was necessarily involved was a construction of regs. 14 and 19, which made reg. 14 confer a right to compensation independently of reg. 19, which was interpreted as affording only an optional means of obtaining satisfaction of the right so conferred ” (2).

Clearly enough this interpretation was adopted partly because it was considered that otherwise reg. 19 would be invalid for failure to fulfil the requirement of s. 51 (xxxi.) that the acquisition should be on just terms. This involves giving a meaning and application to s. 51 (xxxi.) ; see per Isaacs J., Pirrie v. McFarlane (3) ; Nelun­ galoo Pty. Ltd. V. The Commonwealth (4) ; and to do that is to decide a question inter se ; Grace Bros. Pty. Ltd. v. The Commonwealth (5) ; Nelungaloo Pty. Ltd. v. The Commonwealth (6). These cases show that the constitutional question which the Attorney-General and the defendants say is contained in the issue of law whether reg. 14 gives an independent right to compensation is a question inter se. The application therefore seems to depend on s. 40a (1) and not

s.

40 (1). It was suggested, however, that if we should be of opinion

(1) (1942) 66 C.L.R. 77.	(5) (1951) A.C. 53; 82 C.L.R. 357.
(2) (1952) 85 C.L.R., at pp. 565, 566.	(6) (1951) A.C. 34; 81 C.L.R. 144;

(3) (1925) 36 C.L.R. 170, at p. 189. (1952) 85 C.L.R. 545.

(4) (1951) A.C. 34, at pp. 50, 51 ;

81 C.L.R. 144, at p. 157.

540 HIGH COURT

[1953.

H. V. O K A.

that at this stage the question had not

arisen ” within the meaning

1^'^' of the word “of the word “ arises ” in s. 40a (1) we might nevertheless think Nhu'noauh) ca-iise or part of tlie cause was one “ involving ” the

I’Tv. Ltd.

interpretation of the Constitution within the meaning of the wmrd

r.

'I’UH“ involving” in s. 40 (I). The two expressions may not be co­ C' OMMON-

extensive in their apjilication. But a very wide meaning should

\V

H A I . T I I

[No. 4.1 now (le. given to s. 40a because it clearly is intended to cover all

ni.voii C.J.cases if they are of sucli a kind that the decision upon them of the

Higli Court would come within s. 74 and the reasoning of the Brivy Council in the Banking Case (1), in Nelungaloo Pty. Ltd. V. The Commonwealth (2), and in Grace Bros. Pty. Ltd. v. The Commonwealth (3), interprets s. 74 as comprehending all cases where a question inter se is inherent in a conclusion forming the groundwork of a “ decision ” whatever may be said about the question by the parties or the Court.

I t will be seen from the foregoing that in the conclusion essential to the plaintiff’s success upon the first set of two counts, namely, that reg. 14 gives a right to compensation independent of reg. 19, there is inherent a process of legal reasoning into which there enters a question inter se. To decide that reg. 19 is invalid is to determine such a question. To interpret the two regulations so as to reach the plaintiff’s conclusion is to invoke s. 51 (xxxi.) unless it is found possible to disregard the Constitution altogether in the construction of those regulations and at the same time by mere textual con­ struction to reach the same conclusion. As I have already said, I would regard that as impossible. But the case made for the plaintiff in resisting the present application altogether depends upon it. The argument for the plaintiff is that as a matter of formal reasoning it must be true that a construction may be placed upon the regulations supporting the desired conclusion without taking into account the constitutional limitation imposed by s. 51 (xxxi.). I t is not, the argument proceeds, the occasion for a judge of this Court to form or to act upon any opinion of his own that such reasoning cannot validly be adopted. That, so it is said, is a matter for the State Courts. Until they have excluded the possibility there can be no resort to the Constitution.

Let it be supposed that it is proper to put aside the opinion I have expressed that, except by reference to s. 51 (xxxi.) and the necessity of adopting any possible interpretation that would conhne the regulations within that paragraph, reg. 14 and reg. 19 would never receive the construction it is sought to give to them.

(1) (19.50) A.C. 2.3.5 ; 79 C.L.R. 497.(.3) (1951) A.C. 53; 82 C.L.R. 357.

(2) (1951) A.C. 34 ; 81 C.L.R. 144.

88 C.L.R.] OF AUSTRALIA.

541

There still remains a fallacy in the argument for the plaintiff.

H. C. OF A.

The argument assumes that there are two alternative processes

1953.

by which the regulations may be interpreted and their effect NeLUXG.4L00

ascertained, that the processes are alternatives and that a choice

P ty. Ltd.

V.

lies with the party enabling him to exclude one of them and rely

The

on the other or that at all events such a choice lies with the State Common­

wealth

Court. The fact is that interpretation is one process in which all the relevant considerations are to be taken into account and one

[No. 4.]

of these considerations must in such a case as the present be the

Dixon C.J.

ambit and the conditions of the constitutional power in the exercise of which the law is enacted. This or that mind may give more or less weight to it. But regarded objectively the question whether upon the proper interpretation of the regulations, reg. 14 has the effect which the plaintiff assigns to it brings into consideration the scope of s. 51 (xxxi.). Moreover a decision against the plaintiff’s contention cannot be given unless the interpretation which the plaintiff seeks to give to the regulations is negatived and the validity of the provision is affirmed or, though the invalidity of reg. 19 is conceded, the regulations are held inseverable and wholly invalid. Such a decision therefore must involve the question inter se. To state the matter in another way, the legal conclusion upon which the plaintiff’s first set of counts depends is capable of being sustained only on grounds to which the interpretation of s. 51 (xxxi.) is either essential or relevant and cannot be denied except by negativing the grounds to which the interpretation of s. 51 (xxxi.) is essential or relevant.

It follows that on the plaintiff’s first set of two counts and the defendants’ pleas thereto there “ arises ” a question as to the limits inter se of the constitutional powers of the Commonwealth and those of the States.

The second or alternative set of two counts caimot be sustained except by extracting from the regulations, particularly reg. 19, an implied duty of the tenor stated in the pleading. I know of no grounds on which this can be done other than those which I myself endeavoured to state in the previous proceedings at (1) and to summarize at (2), though the tenor of the duty is expressed not precisely in the same way as in the counts. The summary is as follows :—“ As I see the matter, the basal issue whether reg. 19 as an exclusive provision of the means of compensating growers is valid depends upon the question whether it is possible to work out an interpretation of the regulations which -would sufficiently protect the interests of the growers in the pool. Such an interpre-

(1) (194:8) 75 C.L.R., at pp. 568, 569.

(2) (1952) 85 C.L.R., at p. 568.

542 HIGH COURT

[1953.

H. C. OF A. tation must rest upon the use of s. 46 (6) of the Acts Interpretation,

Act 1901-1950 and upon implications arising from the fact that

Nelungaloo regulation is an exercise of the legislative power to acquire

I’ty. Ltd .

property on just terms. If it is legitimate by these means to give

V.

'rirEto the regulations an effect which would make it the board’s duty

Common­to bring forward a recommendation based upon the results of the

wealth ■

[No. 4.]pool, which would limit the grounds upon which the Minister

could reject the recommendation, and which would require that

Dixon C.J.

for wheat disposed of for the use of the Commonwealth or for domestic consumption a recompense to the pool must be made which was honestly fixed or estimated as a fair and reasonable value, if such an effect might properly be attributed to the regu­ lations, then their validity might be supported. Their validity might then be supported, provided that in s. 51 (xxxi.) the expression ‘ upon just terms ’ is not given the same meaning as ‘ subject to payment of full (or adequate) compensation ’ : cf. Grace Bros. Pty. Ltd. V. The Commonwealth (1)” .

This mode of interpretation once again draws in s. 51 (xxxi.) as an element in the reasoning. If this be not done I find it difficult to see how it is possible to find sufficient support for the coDtention. For the foregoing reasons I think that there has arisen in the action a question or questions as to the limits inter se of the con­ stitutional powers of the Commonwealth and those of the States and that an order should be made so declaring.

I think that the order should declare that within the meaning of s. 40a (1) of the Judiciary Act 1903-1950 there has arisen in the cause in the notice of motion mentioned a question or questions as to the limits inter se of the constitutional powers of the Com­ monwealth and those of the States and that the cause by virtue of the said Act has been removed into this Court. The costs of the motion should be costs in the cause.

W illia m s J.

I agree with the reasons for judgment of the Chief

Justice and with the order he proposes.

W e b u j . This is an application by the Attorney-General of the Commonwealth under s. 40 of the Judiciary Act 1903-1950 for the removal of a cause to this Court from the Supreme Court of New South Wales. The cause, which is alleged by the Attorney- General to involve the interpretation of the Commonwealth Con­ stitution, is one in which the plaintiff company sues the defendants for compensation in respect of wheat of the 1946-1947 and 1947-

(1) (1946) 72 C.L.R. 269.

88 C.L.R.] OF AUSTRALIA.

543

1948 seasons acquired by the Commonwealth under the National Security {Wheat Acquisition) Regulations. The application is made for removal of the cause before any evidence has been given in Nelungaloo

the action, and indeed before the close of the pleadings.P ty. Ltd.

V.

The wheat in question in this action went into Pools Nos. 10, 11 and l l A ; that in respect of which there was the litigation in

The

Common­

wealth

this Court as reported in Nelungaloo Pty. Ltd. v. The Comm.onwealth

[No. 4.]

(1), was for the 1945-1946 season and went into No. 9 Pool. The

Webb J.

claim is under reg. 14, as it was in the earlier action in respect of the wheat in No. 9 Pool, or in the alternative for the amount which the plaintiff should have been credited with in the accounts of Pools Nos. 10, 11 and 11A if the Australian Wheat Board had obtained a proper price for the wheat, which the plaintiff denies. The plaintiff in its declaration in the action does not question the validity of reg. 19, which was treated in the proceedings before Williams J. in the litigation referred to as providing an alternative method of compensation, but which on appeal to the Full Court was held by three of their Honours to provide the only basis of compensation and by two of their Honours to be invalid. However the defendants in their defence plead that the plaintiff is entitled to compensation only under reg. 19 which they contend is valid. If the defendants are right then the plaintiff must fail in the action ; but so far there has been no replication and no application to strike out the defendants’ plea.

This application for removal is opposed by the plaintiff on the ground that in determining whether the interpretation of the Constitution is involved in this action this Court is bound by the state of the pleadings at the time when the application is made, and that at this stage the pleadings do not disclose that the inter­ pretation of the Constitution is involved.

In O’Neill v. O’Connell (2), Starke J. referring to s. 40a of the Judiciary Act 1903-1940, said that this Court must be satisfied that the decision on the constitutional question is necessary for the adjudication of the rights of the parties, and that, he gathered, jurisdiction attaches at the moment the Supreme Court encounters, and not before it encounters, the constitutional question. Earlier in Ex parte Walsh and Johnson-, In re Yates (3), his Honour had observed on s. 40 that it was not necessary where removal cf a cause is sought to establish that the interpretation of the Consti­ tution will necessarily call for decision, but only that that subject is involved or entangled in the controversy ; a statement which

(1) (1948) 15 C.L.R. 495.(3) (192.5) 37 C.L.R. 36, a t p. 130.

(2) (1946) 72 C.L.R. 101, at p. 116.

544 HIGH COURT [1953.

Oh- A. received the approval of Rich J. in Hopper v. Egg wnd Egg Pulp Marketing Board [Yicl.) (1). In the same case Isaacs J. (2) stated Neliinoauio Attorney-General can satisfy this Court of the nature

H.

P'j'v. Ltd.

of the case, as it appears at the moment that he applies, this Court

V.

'I’ll 10

makes the order.

f'oMMON-

Having regard to these statements of the law, the accuracy

\V HAI/rll

[No. 4..] of wliich was not ([uestioned, which were not contended to be

inconsistent to any extent, and winch I accept as correct, this Wolib ,1.application is, 1 think, premature, as it is not yet known what

attitude the plaintiff will take as regards the exclusive application and validity of reg. 19 asserted by the defendants. I t cannot be said then that the interpretation of the Constitution is actually “ involved or entangled in the controversy ”, although it may appear

almost certain to be so eventually.

'

Starke J. already quoted above, the decision on the constitutional question was not at that stage necessary for the adjudication of the rights of the parties. This was because the plaintiff had not so far joined issue on the defen­ dants’ plea. Meanwhile the decision on the constitutional question was not necessary for the adjudication. Up to that stage it is the policy of s. 40a (1), as seen by Starke J., to allow the proceedings to remain in the Court in which they were commenced. But Rich and Starke JJ. perceived a different policy in s. 40 when the appli­ cation for removal is made by an Attorney-General. In that case,

I would dismiss this application. that the cause has been removed into this Court under s. 40a I would also dismiss. This further application received little, if any, attention in argument. The supporting affidavit refers only to the Attorney-General’s application for removal under s. 40. If the claim under reg. 14 was necessarily based on s. 51 (xxxi.) of the Constitution, and because of that section alone reg. 19 was necessarily assumed to give an option to the wheat growers as to the nature of the compensation they would receive if it was to be regarded as a valid regulation, then, when the plaintiff filed its declaration on 27th March 1953 basing its claim for compensation on reg. 14 without making any reference to reg. 19, thereupon the action was by force of s. 40a (1) removed into this Court; so that when the defendants on 4th August 1953 filed in the Supreme Court their plea that reg. 19 provided the only method of assessing the compensation the action had already been removed into this Court. However I think the defence was rightly filed in the Supreme Court, as, to repeat the language of

(]) (1939) Cl C.L.R. C65, at p. 674.

(2) (1925) 37 C.L.R., at p. 75.

88 C.L.R.] OF AUSTRALIA.

545

although the constitutional question must be involved or entangled in the proceedings, i.e., must be actually raised for decision, the Attorney-General is entitled to have the proceedings removed into iv̂elungaloo

this Court, even if there are other declarations or pleas not affecting

P ty . Ltd .

V.

the Constitution which might prove sufficient to dispose of the

The

matter. Linder s. 40 an Attorney-General is not bound to wait Common­

wealth

until it can be seen that the constitutional question is necessary [No. 4.]

for the adjudication of the rights of the parties.

Webb J.

I t may be that Parliament in enacting s. 40a (1) thought that the Constitution would not permit of the automatic removal of a matter to this Court from a State Court unless a decision on the constitutional question was necessary for the adjudication of the rights of the parties ; but, in enacting s. 40, thought that a risk might be taken where an Attorney-General applies for the removal; provided a constitutional question was actually involved or entangled, although a decision on it might eventually prove to be unnecessary.

As to the constitutional requirements, it should be noted that in Australian Commonwealth Shipping Board v. Federated Seamen’s Union of Australia (1), Isaacs J. stated that “ arising ” means “ does arise ” and not “ may arise ” ; and that if it were otherwise there would be an undue extension of Commonwealth judicial power. His Honour had previously stated in George Hudson Ltd. V. Australian Timber Workers’ Union (2), that when a question inter se arises, and not before, the hand of the Supreme Court is stayed and the matter becomes a Federal matter.

F u llagar J. I agree with the judgment of the Chief Justice, and I do not think that there is anything that I can usefully add.

K itto J. I agree that, for the reasons which have been stated by the Chief Justice, an order should be made declaring that the cause to which this application relates has been removed into the Court by virtue of s. 40a (1) of the Judiciary Act 1903-1950. Because of some of the arguments which were advanced in support of the application for an order for removal under s. 40 (1), I venture to add a few words with particular reference to the first two counts of the declaration.

The cause in c|uestion is an action instituted on the common law side of the Supreme Court of New South Wales. The plaintiff has declared, and the defendants have filed pleas. I t is a t this stage of the action that the defendants and the Attorney-General

(1) (1925) 36 C.L.R. 442, at p. 4.50.

(2) (1923) 32 C.L.R. 413, at p. 429.

VOL.

L X X X V I I I . ----35

546 HIGH COURT

[1953.

H. (5. OF A. of the Commonwealtli come to this Court, contending that either I sm.tlie ciuise is one involving the interpretation of the Constitution

N H l. irN (M I,(H )

within tlie meaning of s. 40 (1) of the Judiciary Act, or there has

I't v . Lt d .arisen in the cause a (pfcvstion as to the limits inter se of the constitu­

v.

' i ’ ll 15

tional powers of the Commonwealth and those of the States within

( 'OSIMON- the meaning of s. 40a (I).

W E A l.T lI

I t is surely clear, as Sir Gar Held Barwick submitted, that before we ca-n accept either of these contentions we must see that the inter­

INo.

4 .1

Kitto J.

pretation of the Constitution is actually involved or an inter se (piestion has actually arisen, and see it now, and see it on the pleadings. I t cannot be enough to say that in view of the general nature of the action it is very probable that such a question will be involved or will arise. The sections are quite specific as to the conditions in which they are to apply. The applicants must affirm either that the action does involve the interpretation of the Con­ stitution or that an inter se question has arisen in i t ; and their affirmation must be made good from the pleadings.

The only question of constitutional interpretation which is said to be involved is an inter se question ; and, that being so, it must follow from the foregoing that the application either must succeed under s. 40a (1) or must fail altogether; for unless it can be said that the inter se question has already arisen on the pleadings it cannot possibly be said that the cause is shown by the pleadings to involve that question.

The point about the first and second counts which is crucial for the purpose of considering whether an inter se question has yet arisen is that, although the declaration alleges that by virtue of the National Security {Wheat Acquisition) Regulations (referred to as a whole) the plaintiff’s wheat was acquired by the Common­ wealth, and that by the regulations the plaintiff was required to deliver the wheat to the defendant board, it selects reg. 14 alone as the provision in accordance with which the plaintiff claims a right to be paid the amount of compensation sued for. Thus by plain implication the declaration excludes reg. 19 as a provision affecting the compensation. On the other hand, the pleas, whatever defects they may have (and an application to strike out portions of them was foreshadowed), show beyond doubt that in the forefront of the defence is an assertion that reg. 19 is definitive of the right to compensation.

With the filing of the pleas the action reached a stage at which the parties were at issue on this question. But the plaintiff says that still no inter se question was raised, because the Supreme Court might be able to decide the point in the plaintiff’s favour without

88 C.L.E.] OF AUSTRALIA.

547

C. OF A.

resort to constitutional considerations at all.

I t might hold that

the regulations, considered simply as a piece of English, mean that

1953.

a dispossessed owner of wheat may, under reg. 14, recover compen­N elungaloo

sation either according to reg. 19 or in disregard of it, as he pleases.

P ty. Ltd .

V.

The submission was added that it is not for this Court on the present

The

application to say whether the Supreme Court would be right or Common­

wealth

wrong in so holding ; what matters is that unless and until the [No. 4.]

Supreme Court has decided the point against the plaintiff a situation

Kitto J.

has not been reached in which the plaintiff needs to rely upon any

argument involving s. 51 (xxxi.).

I t would not be a valid answer to this argument that there is little likelihood of the plaintiff’s obtaining a favourable decision on the point, and that therefore the interpretation of the Consti­ tution is involved in the action subject only to a contingency which appears to be more or less remote. To say this would be to confess that the interpretation of the Constitution is not yet involved in the action, and that the inter se question has not arisen and by possibility may not arise. I therefore should be disposed to agree with the plaintiff’s argument if the suggestion with which it com­ mences, that the construction of the regulations adopted by the declaration inay possibly be reached by a process of reasoning independent of the Constitution, had any reality about it. But it clearly has not. The answer to the submission that this is a matter for the Supreme Court to decide is simply that there is really nothing to be decided, until ideas founded upon s. 51 (xxxi.) are introduced into the consideration of the matter. Until then, the question whether reg. 19 can be ignored by a claimant for com­ pensation has only to be asked to evoke its self-evident answer. This may be seen at once by asking how the matter would stand if the regulations had been made under a State Act so that their construction could not be influenced by s. 51 (xxxi.). I t would not be too much to say of a decision holding that an intention was evinced by such State regulations to give a dispossessed owner a choice between the compensation he would receive under the scheme established by the regulations, determined as it would be in accordance with reg. 19, and the compensation he could recover by going outside the scheme and obtaining in an action a t law a verdict arrived at in disregard of reg. 19, that it would be a decision not merely wrong but simply perverse.

Once this fact is recognized, the conclusion is inevitable that the pleadings have already reached the point of disclosing that the plaintiff cannot succeed on either of the first two counts without invoking considerations which depend upon s. 51 (xxxi.) of the

54S HIGH COURT

[1953.

H. (!. OF A. Constitution, in order to make good the assertion implicit in the counts, that reg. 14 is to be construed as giving a right to recover Nm.rNoALoo inde])cndently of reg. 19. An inter se question has

I’t v . Lt d .

thcTT'fore arisen in the cause.

V.

As to tlie remaining counts of the declaration, I have nothing

CoMMON- to add.

\v KAI/ril

Declare that within the meaning of s. 40a (1) of the Judiciary Act 1903-1950 there has arisen in the cause in the notice of motion mentioned a question or questions as to the limits inter se of the constitu­ tional powers of the Commonwealth and those of the States and that the cause hy virtue of the said Act has been removed into this Court. Order that the costs of the motion he costs in the cause.

I No. 4 .1

Solicitor for the applicants, D. D. Bell, Crown Solicitor for the

Commonwealth.

Solicitors for the respondent, J . W. Maund and Kelynack.

J. B.