Permewan Wright Consolidated Pty Ltd v Trewhitt - [1979] HCA 58

HIGH COURT OF AUSTRALIA

Barwick C.J., Gibbs, Stephen, Mason, Murphy and Aickin JJ.

PERMEWAN WRIGHT CONSOLIDATED PTY. LTD. v. TREWHITT

(1979) 145 CLR 1

22 November 1979

Constitutional Law (Cth)

Constitutional Law (Cth)—Freedom of interstate trade and commerce—State law prohibiting retail sale of eggs unless graded and tested by State authority—Fee payable to authority for grading and testing—Retail sale by agent of producer in another State—Whether regulatory law—Validity—The Constitution (63 &64 Vict. c. 12), s. 92—Marketing of Primary Products Act 1958 (Vict.), ss. 41C, 4 1D.

Decisions

1979, November 22.
The following written judgments were delivered: -
BARWICK C.J. The basic facts which give rise to the challenge in this case to the validity of the Marketing of Primary Products Act 1958 (Vict.) ("the Act") may be stated quite shortly. (at p8)

2. The appellant is a producer of poultry eggs in the State of New South Wales. Part of its production is exported to the State of Victoria there to be sold by retail. So much of the appellant's product as is sold in New South Wales must, by the law of that State, be candled and graded in accordance with a regulation made under the State Act. As a matter of business convenience, eggs destined for any particular market are not segregated from the bulk. All the eggs which the appellant exports to Victoria are subjected to the same regimen for ensuring soundness, quality and grade as are the eggs sold or to be sold in New South Wales, though there is no legal obligation to do so. It is not suggested that eggs submitted to that regimen would at the conclusion of the process be in any wise unfit for human consumption. It is, however, pointed out that over a period of time, eggs in sound condition at the outset may deteriorate. But I do not understand it to be said that the interval elapsing in the appellant's regular course of business between the conclusion of that process and their availability for sale by retail in Victoria could be expected to have caused any such deterioration. (at p9)

3. Section 41D of the Act prohibits the sale of eggs by retail unless they have been submitted to the Victorian Egg Marketing Board ("the Board") and by the Board inspected, graded and marked. Those who submit eggs to the Board for this purpose must pay the fees fixed by the Board for its "services". (at p9)

4. The appellant claims that these provisions placed an unjustifiable burden on its interstate trade in the eggs. It relies substantially on the reasons expressed by me in my dissent in Harper v. Victoria (1966) 114 CLR 361 and invites the Court to reconsider the decision in that case. (at p9)

5. That the requirement to submit eggs not suspected to be a danger to the health of consumers, and to pay the fees set by the Board is a burden on the appellant's trade, can scarce be denied. But it is said that the statutory requirements, including the obligation to pay the fees, are no more than a regulation of interstate trade compatible with its freedom. In other words, that the relevant parts of the Act are only regulatory in nature within the concept which has been developed of what is regulatory. (at p9)

6. I have reread my reasons for judgment in Harper's Case in the light of the argument in this case and of the subsequent decisions of this Court. With due respect to those of a different opinion, I find no need to alter or qualify anything which I there said. The amendment to s. 41D effected by Act No. 8965 of 1976 does not require any change in my opinion: nor, in my opinion, does it furnish any added reason for concluding that the Act is invalid. (at p9)

7. I would, however, wish to expand upon some of the ideas which I have expressed in Harper's Case and elsewhere as to the approach which I think should be made to the application of s. 92 of the Constitution. I would also take the opportunity to discuss the reasons given by those Justices who formed the majority in Harper's Case. (at p9)

8. Two relevant principles have emerged in the case law on the constitutional provision. First, that it is the effect of the impugned statute in the circumstances in which according to its proper construction it was intended to operate, excluding consequentially remote effects, which must be taken into account when deciding whether the Act infringes the constitutional guarantee, i.e. whether the effect of the statute leaves the interstate trade free, i.e. the citizen free to trade interstate. Second, that statutory provisions merely regulatory in nature, and thus the effect they produce, are compatible with and not in denial of that freedom. Perhaps this might better be expressed by saying that laws which produce an effect which is compatible with freedom of interstate trade may be regarded as regulatory in nature and valid. (at p10)

9. These principles have become axiomatic except with those who think that only border duties would infringe the section: a view I must observe long since exploded and, indeed, in my opinion, never tenable. I expressed my reasons for that conclusion in Clark King &Co. Pty. Ltd. v. Australian Wheat Board (1978) 140 CLR 120, at p 151 . (at p10)

10. But, though axiomatic, I feel the principles should be brought to attention in the resolution of the problem presently posed. The corollary of the first of these principles is that the validity of a law vis a vis s. 92 can never be determined by the subject matter of the statutory provision. I shall endeavour to point out a consequence of this result when discussing the second principle. (at p10)

11. The acknowledgment of the second of the two principles does not involve any qualification of the constitutional provision or of the freedom of trade which it guarantees. There can be no warrant whatever for this Court to qualify or limit the freedom which the Constitution guarantees. It is at least absolute in that sense: it is unqualified. But, within the concept of freedom there are inherent restraints. I have attempted elsewhere to describe their basis. It might be said that they are in a real sense a manifestation of the guaranteed freedom. They are in a real sense part of it, just as a prohibition of defamation is not a qualification of freedom of speech but an inevitable part of it, if freedom of speech is distinguished as it should be from unbridled individual licence. Laws which in terms prohibit dealing in deleterious substances, in practices injurious to human safety, or restrictive or fraudulent practice in trade are not qualifications on or of freedom of trade: they are but extrapolations of what is inherent in the concept of freedom in a civilized society, civilized because freedom is distinguished from licence. (at p10)

12. Laws to be acceptable as manifestations of freedom, in the sense that they do no more than represent the restraints inherent in the concept, do not represent any closed class. But it is not the topic or subject matter with which they deal which warrants their acceptance as compatible with freedom of trade. It is the effect they produce as indicative of their nature which will determine their acceptability, not their subject matter. To do something in trading which is injurious or potentially injurious to the health of one's fellows is not an exercise of freedom: it is an example of unbridled licence. But that does not make the laws on the topic of public health necessarily compatible with freedom of the individual in interstate trade. In other words, a law upon the subject of public health cannot, in my opinion, be held to be valid vis a vis s. 92 simply because of its subject matter. To be valid its terms in relation to public health must produce no effect which is incompatible with that freedom of interstate trade: that is to say, the test of validity is not the subject matter but the relevant effect which in its operation the law produces on the individual's interstate trade. It can be held to be valid because those effects are compatible with that freedom of interstate trade, in which case it can be said to be no more than regulatory of that trade. (at p11)

13. If in its nature a law so tested can be considered to be regulatory, the particular way in which the legislature has sought to achieve the regulatory purpose will be a matter for the legislature and not the Court, unless the legislative method is unreasonable in all the circumstances: the unreasonable quality of the legislative provision is in that case indicative of the incompatibility of the law with freedom of interstate trade. (at p11)

14. The question is not, in my opinion, one in which so-called "public interest" can be decisive. There are no doubt laws made in the public interest which considerably infringe individual freedom. In such cases the legislative judgment has been that the individual must concede such a limitation of his freedom for the good or the supposed good of his fellows. But the constitutional guarantee, paramount in its nature, binding all legislatures and to which all legislative power is subject, does not, in my opinion, brook of any such treatment. Its clear constitutional purpose is that that individual freedom to trade interstate is itself paramount and not required to yield to some actual or supposed public interest by a law or executive action which is in its nature incompatible with that freedom. (at p11)

15. The problem for the Court, and it is undoubtedly a difficult problem, is to determine whether the effect of the operation of a given law or executive action is compatible with that paramount freedom. The problem cannot be resolved by deciding either that the law is a reasonable one, reasonable according to some standard other than compatibility with freedom, or by deciding that the law or executive action is in the public interest. (at p11)

16. I applied these concepts in my reasons in Harper's Case (1966) 114 CLR 361 . In my view, the interstate trade of the individual in wholesome eggs included an ability to retail them upon importation into the second State in an honest and not misleading fashion. If the State desired to verify their wholesome quality, it could of course do so by some means which did not substantially impede the conduct of that trade or add to the expense of implementing it. It is clear to my mind that the effect of the challenged sections of the Act is to do both. Consequently, these sections cannot, in my opinion, validly operate to prevent the appellant selling its wholesome eggs by retail. (at p12)

17. I should now say something of the reasoning of the Justices who formed the majority in Harper's Case. (at p12)

18. Sir Edward McTiernan said that the relevant section of the Act operated "after importation or the interstate commerce has ended" (1966) 114 CLR, at p 377 . His Honour thought the reasoning of Sir Owen Dixon in Wragg v. New South Wales (1953) 88 CLR 353 decisive of the appeal. In other words, his Honour held that retail sale by the appellant of its eggs imported for sale by retail was exclusively an intrastate transaction. (at p12)

19. But importation in the course of interstate commerce does not end when the relevant border is crossed in the transit of the goods. That trade must continue, at least until the commercial purpose of sale according to the purpose of the transit has been achieved by sale in the second State. To import goods interstate for sale by retail is, in my opinion, to engage in interstate trade until the retail sale is made, i.e. until the first sale after such importation. The sale of the imported goods upon their importation is, in my opinion, a sale in interstate trade: cf. North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. (1975) 134 CLR 559 . The reasoning in Wragg's Case properly understood does not, in my opinion, deny that proposition. If that decision is to be justified, it must be on the footing that the potatoes in that case had by some act or activity after the importation was complete become part of the aggregation of goods within the State and so subject of a purely intrastate transaction. (at p12)

20. Sir Alan Taylor also was of opinion that Wragg's Case was decisive. (at p12)

21. Sir Douglas Menzies took a radically different line. He expressed the opinion that "full validity" could be given to "standard fixing" legislation which was general and not discriminatory of interstate trade. Having accepted that view, he conceded to the legislature the power to subject the interstate trade to delay and cost in the implementation of a method of "standard fixing" chosen by the State. Sir Douglas did not indicate any limit to the standard fixing and, in particular, he did not confine the standard fixing to matters of health. Nor did he elaborate on his reasons for the opinion expressed. In particular, he did not discuss any relationship of what he asserted to any reported discussion of the scope of s. 92. For the reasons I have already indicated, with the utmost and unfeigned respect to Sir Douglas, I am unable to accept the proposition as stated by him. His expressed views would support the majority in Hartley v. Walsh (1937) 57 CLR 372 , which I think has now been disfavoured and the view of Sir Owen Dixon accepted. (at p13)

22. I cannot think that a law which required fabrics, whether woollen, cotton or of mixed components, to be of stated weight or width could be held to be compatible with freedom of an interstate trade in fabrics: this would be a law setting standards. It might, of course, be in the public interest of the State, or at least in that of manufacturers or traders within the State, to trade only in fabrics of such dimensions: or it might even be thought, perhaps reasonably thought, to be in the interest of the consumers of the State that only fabrics of such standards should be vended in the State, avoiding by the adopted standard confusion. But, in my opinion, s. 92 would secure that interstate traders in fabrics be free to trade in fabrics of other weights or widths. Such a law, though a standard fixing law general in character and non-discriminatory of interstate trade, would, in my opinion, offend the constitutional guarantees because in its nature such a law would be incompatible with the freedom of the interstate trade. It would not be said to be invalid merely because it was unreasonable or imposed an unreasonable burden. It would be invalid because in its nature it was incompatible with the guaranteed freedom. (at p13)

23. Sir William Owen felt that Wragg's Case was decisive and appears to have adopted the view that the retail sale by the interstate importation for sale by retail was itself no more than an intrastate sale. I have already indicated my inability to accept this view. (at p13)

24. In my opinion, if the view of the majority in Harper's Case is to be supported, it must, in my opinion, be for some reason that was not given by any of the Justices forming the majority. For my part, I have not heard any such acceptable reason. I remain unable to accept the majority view. For the reasons I have given here and in Harper's Case, the terms of the Act here produce an effect which, in my opinion, is incompatible with the freedom of interstate trade. (at p14)

25. I would make absolute the orders to review the convictions. (at p14)

GIBBS J. The appellant was convicted of two offences against s. 41D(1) of the Marketing of Primary Products Act 1958 (Vict.), as amended, ("the Act") which provides as follows:
"Any person who -
(a) sells or causes to be sold by retail; (b) uses or causes to be used in the preparation of any meal, or food, for sale; or (c) uses or causes to be used in the preparation of any meal or food to be supplied to any person pursuant to or incidental to any contract or arrangement, other than an arrangement of a domestic nature, whether or not the person to whom the meal or food is supplied is a party to that contract or arrangement - any eggs which have not been graded and tested for quality and standard and marked or stamped in accordance with this Act and the regulations - (i) by the Board or a person authorized by the Board; or (ii) by a producer who has the permission of the Board pursuant to sub-section (4) of section 41C - shall be guilty of an offence and liable, in respect of each offence to a penalty of not more than $200." The circumstances of the case so far as they are relevant were as follows. The appellant entered into an agreement with a group of companies which traded under the name of Bartters Enterprises ("Bartters"), whereby the appellant was appointed as Bartters' agent to sell on Bartters' behalf eggs which would be delivered by Bartters from Hanwood in New South Wales to the appellant in Victoria. Under the agreement the eggs remained the property of Bartters until the appellant sold them; if unsold they were to be returned to Bartters. The eggs the subject of the charges were produced in New South Wales by Bartters and were carried by Bartters' employees to Victoria and delivered there to the appellant, who, acting as Bartters' agent, displayed them for sale and sold them. The eggs were tested for quality and standard (by candling) and graded by Bartters in New South Wales in a way that would have satisfied the law of New South Wales if the eggs had been sold in that State. Bartters were not obliged, by the law of New South Wales, to test or grade any eggs which they sent to Victoria for sale; if, however, they chose to test and grade any eggs which they sent to Victoria for sale, those eggs would, if s. 41D applied, have to be tested and graded again. In the course of testing and grading some eggs - perhaps five per cent - may be damaged or cracked, but the process does not otherwise harm the eggs. The Board referred to in the relevant sections of the Act has an unfettered discretion to refuse to grant permission under s. 41C (4) to a producer to grade and test and mark or stamp his own eggs, and Bartters have not been given permission under that section. If Bartters are required to submit to the Board for grading and testing and marking or stamping the eggs which they wish to sell, they will be put to inconvenience and some delay, and will be required to pay to the Board the fee which may be charged under s. 41C (5) of the Act to defray the expense of grading, testing, marking and stamping the eggs - a fee which exceeds the cost to Bartters of doing their own testing and grading. (at p15)

2. The question for decision is whether, in these circumstances, the application of the provisions of s. 41D (1) of the Act would infringe s. 92 of the Constitution. (at p15)

3. The argument advanced on behalf of the appellant, that s. 41D (1) cannot apply to the case consistently with s. 92, would, if accepted, require us to overrule Harper v. Victoria (1966) 114 CLR 361 . In that case, the plaintiff, who bought eggs in New South Wales and brought them into Victoria for sale there by retail, unsuccessfully sought declarations that the relevant provisions of the Act, as amended by the Marketing of Primary Products (Egg Marketing) Act 1965 (Vict.), were invalid or alternatively inapplicable by reason of s. 92. Since that case a number of amendments have been made to the Act but the only amendment that is material is that which was made by the Marketing of Primary Products (Marketing Boards) Act 1976 (Vict.) which substituted the present s. 41D (1) for the former sub-section which had read as follows:

"Any person who sells by retail any eggs which have not been graded and tested for quality and standard and marked or stamped in accordance with this Act and the regulations - (a) by the Board or a person authorized in that behalf by the Board; or (b) by a producer who has the permission of the Board pursuant to sub-section (4) of section forty-one C of this Act - shall be liable to a penalty of not more than $200."

The scope of the section has been somewhat enlarged by this amendment, in particular in relation to the use of eggs in the preparation of meal or food, but the amendment does not render the legislation in its present form distinguishable from that considered in Harper v. Victoria. (at p15)

4. The majority of the Court in Harper v. Victoria held that the retail sale made in Victoria formed no part of the plaintiff's interstate trade, and that s. 41D (1) entailed, at most, only an economic consequence to the interstate trade. Menzies J. however based his decision on an additional ground. He said (1966) 114 CLR, at p 378 :

"I do not regard s. 92 as denying full validity to what may be described as standard-fixing legislation of a general character which has no special features which burden inter-State trade. Nor do I think it would necessarily constitute an infringement of s. 92 were such legislation to require further that, upon the retail sale of goods for which standards have been fixed, the standard attributed to the goods being sold must for some reason, such as the protection of consumers, be evidenced in some satisfactory way, by marking, by certificate or otherwise. It might possibly happen that legislation, by imposing onerous requirements as to these matters, could burden inter-State trade in breach of s. 92; but I am unable to find that, upon its face, the legislation here in question does so."

Barwick C.J., who dissented, expressed disagreement with the suggestion that the requirements of the legislation could be justified as regulatory, as well as with the other reason given by the majority. (at p16)

5. In Cantarella v. Egg Marketing Board (N.S.W.) (1972) 124 CLR 605 the Court was called on to consider a New South Wales regulation which prohibited the sale, offer or display for sale of any eggs which had been transported for a distance of over 300 miles in New South Wales unless the eggs had been candled and graded by a government marketing board. It was held by a majority of the Court (Windeyer, Walsh and Owen JJ., McTiernan and Menzies JJ. dissenting) that the regulation did not, in its application to eggs brought from Queensland to New South Wales for sale in the latter State, infringe s. 92. In that case no-one doubted the validity of Harper v. Victoria; the question was whether it was distinguishable. Menzies J. (with whom McTiernan J. expressed agreement) said (1972) 124 CLR, at p 611 that the regulation in question prohibited the sale of the eggs because of something, forming part of interstate trade, occuring in relation to the eggs, whereas the prohibition upheld in Harper v. Victoria was not conditioned upon something itself forming part of interstate trade. He accordingly regarded Harper v. Victoria as distinguishable. Windeyer J. held not only that the sale of the eggs was merely a sale in New South Wales but also that the legislation was regulatory (1972) 124 CLR, at pp 613-615 ; he expressly agreed (1972) 124 CLR, at p 614 with part of the passage from the judgment of Menzies J. in Harper v. Victoria (1966) 114 CLR, at p 378 which I have already cited. Owen J. said (1972) 124 CLR, at p 616 that: "the regulation can fairly be regarded as regulatory in character designed to ensure that eggs intended to be marketed in New South Wales accord with the standards of quality and the like prescribed by the regulations." (at p17)

6. Walsh J. said (1972) 124 CLR, at p 617 that counsel for the plaintiff did not challenge the correctness of the decision in Harper v. Victoria and that in those circumstances he proceeded upon the assumption that the decision of the majority in that case was correct. He accordingly held that the law operated on the domestic trade and commerce of a State (1972) 124 CLR, at p 618 but he further said (1972) 124 CLR, at pp 619-620 :
"The law is part of a set of regulations dealing with the standard and the qualities of eggs being sold in that domestic trade and what it does is to provide that when the facts that I have mentioned exist, the intending vendor of the eggs must take steps to have the eggs candled and graded and in some cases stamped with words describing their quality. In my opinion, such a law does not impose upon the activities of any of the plaintiffs, as those activities are described in the amended statement of claim, any burden or restriction from which the plaintiffs or any of them can claim protection by reason of s. 92." (at p17)

7. I shall assume that in the light of North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. (1975) 134 CLR 559 , it should be held in the present case, notwithstanding Harper v. Victoria and Cantarella v. Egg Marketing Board (N.S.W.), that the sale by the appellant, as agent for Bartters, was an inseparable concomitant of Bartters' interstate trade. The question however remains whether s. 41D (1) of the Act is regulatory. The judgments of Menzies J. in Harper v. Victoria and of all the members of the majority of the Court in Cantarella v. Egg Marketing Board (N.S.W.) require that question to be answered in the affirmative, and the judgments of the minority in the latter case are in no way opposed to that conclusion. (at p17)

8. I have already indicated in Bartters Enterprises v. Todd (1978) 139 CLR 499, at p 510 my opinion that the difficulties inherent in s. 92 will be enhanced if the Court does not adhere to "doctrines that have been painstakingly evolved in a succession of careful judgments". Similarly I consider that where the Court has reached a decision on the question whether particular statutory restrictions are regulatory, and for that reason do not offend against s. 92, that decision should be followed, unless of course it appears contrary to principle. The question whether legislation is regulatory involves matters of degree, and, as Lord Porter said in The Commonwealth v. Bank of New South Wales (1949) 79 CLR 497, at p 639; (1950) AC 235, at p 310 in determining whether an enactment is regulatory or something more "there cannot fail to be differences of opinion". There seems to me no error of principle in the approach of Menzies J. in Harper v. Victoria or of the majority in Cantarella v. Egg Marketing Board (N.S.W.). The conclusion there reached on this point is quite consistent with that reached in North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W., where the legislation which was held not to be regulatory in effect prohibited the interstate trade in pasteurized milk. The Act now in question does not prohibit interstate trade in eggs; it controls the incidents of that trade and does so in the interests of public health and of affording protection to consumers. The regulation which the Act effects is not unreasonable and applies equally to interstate and to intrastate trade. It should be held, following Harper v. Victoria and Cantarella v. Egg Marketing Board (N.S.W.), that the provisions in question validly apply to a sale even if it was made in the course of, or was inseparably connected with, interstate trade. (at p18)

9. It seems to me, with all respect, quite irrelevant that Bartters are prepared voluntarily to test and grade their eggs in New South Wales. A regulatory law does not necessarily cease to be reasonable because a person subject to it offers to provide an alternative method of achieving the same result as that sought by the regulation. In any case, the method which Bartters adopted is not subject to official supervision and does not result in the eggs, when tested and graded, being marked or stamped. (at p18)

10. The legislation is not rendered invalid in its application to interstate trade by reason of the fact that a person who presents eggs under s. 41c is required to pay to the Board for the grading, testing, marking and stamping such fee or fees as may be fixed by the Board to defray the expenses incurred therfor (s. 41c (5)). In the present proceedings the Court is concerned with the effect of the Act, administered properly and in accordance with its terms, and not with any possible breaches of its provisions: cf. Cantarella v. Egg Marketing Board (N.S.W.). (1972) 124 CLR, at pp 617-618 , per Walsh J., and Buck v. Bavone (1976) 135 CLR 110, at p 119 . If the Board attempted to fix a fee which went beyond defraying expenses, its action would be open to challenge and the question would arise whether the provisions of s. 41c (8), which attempt to make the decision of the Board as to the method of estimating the fees final and conclusive, are invalid and severable so far as interstate trade is concerned. (at p19)

11. For these reasons the appellant was rightly convicted and the orders to review the convictions should be discharged. (at p19)

STEPHEN J. The substance of this case is whether a Victorian law which requires eggs sold by retail in Victoria to be tested, graded and marked for grade by the Victorian Egg Marketing Board, which charges for doing that work, offends against s. 92 of the Constitution in its application to the sale of eggs in the course of interstate trade. (at p19)

2. The sales here in question form a part of the interstate trade of the present appellant's principals, a group of New South Wales egg producers trading as Bartters Enterprises ("Bartters"). It transports some of its eggs into Victoria where its agent, the appellant, disposes of them on its behalf by retail sales. That the law restricts Bartters' ability and that of its agent, the appellant, to do as they please in selling these interstate eggs in Victoria is clear. The question is whether the restrictions which the Victorian law imposes involve an impermissible burden upon interstate trade. (at p19)

3. Bartters is a very large producer of eggs in New South Wales. At its premises in that State it tests and grades all eggs which it produces. It is expressly authorized to do so by the Egg Marketing Board of New South Wales and thereby satisfies the inspection laws of that State in relation to all eggs which it sells in New South Wales. With eggs which are sold in Victoria New South Wales law has no concern but Bartters in fact applies to them the same testing and grading processes as it accords to eggs destined for the New South Wales market. However, if any of its eggs are to be sold by retail in Victoria the law of that State requires that they be tested and graded by the Board or its authorized agents at the producer's expense and that grade marks be placed on them. This involves Bartters in having its eggs candled and graded twice over and in the incurring of considerable expense, inconvenience and some delay before its eggs can lawfully reach the Victorian consumer, all of which the appellant relies upon in support of the contention that the Victoria law runs counter to s. 92. (at p19)

4. The Board contends that these requirements of the legislation which it administers, which apply to all eggs sold by retail in Victoria and are not especially aimed at eggs produced in other States, involve no more than permissible regulation, inoffensive to the freedom of interstate trade. It also relies upon a number of distinctions between its testing and grading processes and those which satisfy New South Wales law and points out that that law does not, in any event, compel Bartters to subject such of its eggs as are sold outside New South Wales to any testing or grading whatever. (at p20)

5. The terms of the legislation herein question, ss. 36 to 48 of the Marketing of Primary Products Act 1958 (Vict.), were described in detail in the judgment of the Chief Justice in Harper v. Victoria (1966) 114 CLR 361 and accordingly require no restatement here. The only subsequent amendment of any present significance is that made to s. 41D, whereby the reach of the law has, by Act No. 8965 of 1976, been somewhat extended so as to apply not only to the sale of eggs by retail but to the use of eggs in the preparation of meals or food for sale. My references to sale by retail must be understood, where appropriate, as extended in this way. (at p20)

6. As earlier mentioned, a result of this legislation is that the appellant may only lawfully sell its eggs by retail in Victoria if they have first been "graded and tested for quality and standard and marked or stamped" in accordance with the Act and regulations - s. 41D (1). The Act obliges the Victorian Egg Marketing Board to grade, test and mark or stamp all eggs presented to it and empowers it to estimate its expenditure in doing this work and to "determine and fix accordingly" the fees payable to it for those services. Quality grades of eggs are specified by the regulations, weight being a factor in quality grading; the regulations also provide for particular quality marks and require quality and weight classifications to be shown when eggs are displayed for retail sale. The Board may, pursuant to s. 41D (4), permit a producer to itself grade and test its eggs but, subject to that, it is only at the Board's floors and at those authorized by it that eggs may be so processed as to accord with the requirements of the legislation and be capable of being lawfully sold by retail in Victoria. (at p20)

7. The practical effect of the law upon Bartters is that, although its eggs, when they enter Victoria, are already graded and tested and so packed as to enable quality and weight to be accurately stated when they are displayed for sale, they must nevertheless, before retail sale, be presented to the Board for regrading and retesting and for marking and stamping, all at the appellant's cost. In the latter half of 1977 that cost was over 8 cents per dozen eggs, whereas Bartters could itself grade, test and pack its own eggs at its premises in New South Wales at considerably less than half that cost. (at p21)

8. Not only would compliance with the law involve Bartters in substantial expense; it has in the past found the Board's requirements as to the mode of packing of eggs to be inconvenient and commercially unsatisfactory and it has also complained of aspects of the Board's system of grading eggs. Some of these complaints have since been remedied but, cost apart, Bartters will still suffer considerable inconvenience and delay, and some loss of eggs due to breakage in the course of handling, if it is to comply with the law. In fact it has not done so: its eggs have been sold by retail in Victoria without regard to this law, hence the prosecution and conviction of its agent which has given rise to this appeal. (at p21)

9. In 1977 Bartters applied to the Board, pursuant to s. 41D (4), to be permitted to itself grade, test and mark or stamp its own eggs but permission to do this out of the State of Victoria at Bartters' New South Wales premises was, perhaps not surprisingly, refused. Bartters has not since made application to do this work at premises within Victoria, however it relies upon certain evidence to suggest that had it done so that request would also have been refused. There are four testing and grading floors in or near Melbourne operated by or authorized by the Board where eggs may be submitted; four or five others floors also exist in country districts. Some years ago the Board refused at least one Victorian applicant permission to establish in Victoria a new floor for the grading and testing of eggs imported from New South Wales; in fact these were to have been Bartters' eggs. More recently it has apparently sought to discourage both Victorian dealings in interstate eggs which have not complied with Victorian law and, in particular, the sale in Victoria of Bartters' New South Wales eggs. (at p21)

10. That there exists a tension between the constitutionally declared freedom of interstate trade and the need of governments to legislate in aid of what they perceive to be the public interest is obvious. On those occasions when this conflict has been resolved in favour of legislative power this has been attained in a variety of ways. A strict view has been taken of the requirement of interstateness as an element in the concept of interstate trade itself; a quite direct and legal, as distinct from merely consequential and economic, effect upon interstate trade has been demanded before validity is called in question. Perhaps more radical than either of these approaches has been the recognition that, despite the declared absoluteness of its freedom, interstate trade may validly be subjected to regulatory laws. Each one of these approaches, although quite distinct from the others, may on occasion be found in combination with another of them. In the present case there is no room for either of the first two, Bartters' retail trade in eggs in Victoria is indisputably interstate trade and the restrictions imposed upon that trade are direct and substantial. If the present legislation is to be upheld as valid it can only be by resort to the concept of permissible regulation as a substantial qualification of the freedom of interstate trade. (at p22)

11. That the absolute freedom of interstate trade of which s. 92 speaks must be subject to some such qualification is undoubted. The necessity for it appears most clearly in the case of those laws which impose restrictions which from their nature may be seen to be for the benefit of interstate trade and of those engaged in it. Thus, rules of the road for motor vehicles can scarcely be regarded as offending against s. 92 although applicable to interstate carriers as well as to those engaged only in intrastate trade. The process of reasoning which justifies such a law as this as valid, reconciling its apparent conflict with the absolute freedom which s. 92 guarantees, is a familiar one: since true freedom of interstate trade cannot be enjoyed in a state of anarchy, laws which subject the conduct of that trade to reasonable regulation may be seen to promote its freedom of enjoyment rather than to burden it. Rules of the road are, in our community of habitual travellers by road, especially easy to recognize as conforming to this analysis, they are essential to the enjoyment of free use of the roads by all, including those engaged in interstate trade. Other instances abound, their ease of recognition depending upon one's degree of familiarity with the areas of activity to which they apply. (at p22)

12. However, many laws having a direct effect upon interstate trade will not conform to this narrow concept of permissible regulation since they have nothing to do with the promotion of the enjoyment, by those engaged in that trade, of the freedom which s. 92 guarantees. The extent to which they may nevertheless validly affect the freedom of interstate trade, being permitted that operation because they accord with some wider notion of permissible regulation, is a question upon which judicial views have to some extent differed in the past. The question arises quite directly for decision in this case, concerned as it is with a law which, because of its effect upon interstate trade, must fall foul of s. 92 unless, although not regulatory in the narrow sense described above, its impact upon interstate trade may nevertheless be regarded as involving no more than permissible regulation. (at p23)

13. Counsel for the appellant, in their attack upon the validity of the law, take as their test the dissenting judgment of the Chief Justice in Harper's Case (1966) 114 CLR 361 . In that case his Honour, dealing with the present legislation, described its effect upon the retail sale of interstate eggs as prohibitory unless the "services" of the Egg Board in grading, testing and marking or stamping were employed and paid for. It was the legislation's insistence that this work be undertaken by the Board at the expense of the owner that his Honour regarded as decisive of invalidity (1966) 114 CLR, at pp 370-371 . Having said (1966) 114 CLR, at p 374 that legislative control of trading and commercial activity must, to be valid, be such as to be compatible with freedom of interstate trade, to which s. 92 had given constitutional emphasis, his Honour continued (1966) 114 CLR, at p 375 :

"It is not enough that there are perceptible reasons for the enactment of the law valid enough in the eyes of a legislature pursuing some policy conceived by it to be for the public good or the general welfare. The basic nature of the permissible limitations on the trader's activities so far as inter-State trade and commerce is concerned must be the mutual accommodation of the rights and actions of those engaged in that trade and commerce so that each is free in respect of such trade and commerce, though none have licence."

and later said (1966) 114 CLR, at p 375 :

"But limitations on the activities of inter-State traders are not compatible with that freedom upon which the Constitution insists merely because they appear reasonable in the interests of the public as a whole or of the public regarded as consumers of goods, or as reasonable administrative expedients to ensure compliance with laws which might in their general provisions be thought to be no more than regulatory.

Whilst very conscious of the room for different views on such a question, I find myself quite unable to accept the proposition that the requirement that the inter-State importer of eggs must submit them to the Board for grading, testing, marking and stamping before he may sell them by retail however reasonable in the interests of consumers is compatible with the absolute freedom which s. 92 demands. That a fee quantified according to the Board's costs of performing these acts should also be payable is but an additional circumstance making such acceptance to my mind impossible." (at p23)

14. The appellant's primary contention is, then, that permissible regulation as it is understood in the context of s. 92 must be confined to those laws which, in their regulation of interstate trade, affect if only so that those who engage in it may the better enjoy the freedom which s. 92 guarantees; that is to say, to laws which ensure that interstate trade is not anarchic and that true freedom, not mere licence, prevails in that trade. (at p24)

15. In my view the category of laws which, for the purposes of s. 92, may be treated as instances of permissible regulation cannot be so confined. Neither the state of authority in this Court nor any satisfactory theory of the proper place of s. 92 in the Constitution will support such a limitation upon the nature of permissible regulation. (at p24)

16. It is a commonplace of the decided cases that laws concerned with, for example, public health may validly restrict the freedom of interstate trade so long as they do not do so unreasonably or in a discriminatory manner. Yet public health laws do not answer that narrow definition of valid regulatory laws for which the appellant contends. The authorities provide similar examples in areas of the law other than public health, but I instance it since it is peculiarly appropriate to the circumstances of the present case. (at p24)

17. It will be enough to refer to three recent decisions in this Court. In S.O.S. (Mowbray) Pty. Ltd. v. Mead (1972) 124 CLR 529 three members of the Court spoke of the protection of public health as a subject matter on which laws might validly be made notwithstanding that they had an adverse effect upon the freedom of interstate trade. The Chief Justice (1972) 124 CLR, at p 544 referred to regulatory laws "protecting the community from many hazards such as health, nutrition, inimical and fraudulent practices in trade and the like"; Windeyer J. (1972) 124 CLR, at p 574 spoke in similar terms of laws to promote the health of the public and reference to the matter also occurs in the judgment of Walsh J. (1972) 124 CLR, at p 596 . In North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. (1975) 134 CLR, at p 581 the Chief Justice again spoke of "laws to ensure public health and honesty and fairness in commercial dealings" as examples of laws which the concept of freedom of trade and commerce did not deny Gibbs J. (1975) 134 CLR, at p 600 referred in a similar context to the need for the protection of the public against the contamination or pollution of the food there is question, milk. Mason J. said (1975) 134 CLR, at p 607 that a law which did no more than protect the community from hazards affecting health was regulatory in the relevant sense and he made specific reference to noxious foods. His Honour observed (1975) 134 CLR, at p 615 that there were many fields other than public health in which interstate trade might be regulated in the public interest in conformity with s. 92. Jacobs J. also referred to the question (1975) 134 CLR, at p 634 . In the recent case of Clark King &Co. Pty. Ltd. v. Australian Wheat Board (1978) 140 CLR 120 the Chief Justice once more referred to laws as to health, safety, fraud and restrictive practices as being, dependent on their terms, compatible with the freedom afforded by s. 92. (at p25)

18. The reason why public health has had such ready judicial acceptance as a proper area for valid legislative intervention, despite s. 92, is, perhaps, because with it is associated a relatively long history of legislative intervention in the past, the fruits of which have led to a general acceptance by the community of the need for such legislation. Whether by a conscious use of judicial notice or by some less conscious absorption of community acceptance, there has at all events been a quite general judicial recognition of such laws as ones which may validly bear upon and restrict interstate trade. (at p25)

19. The law in question in the present case is not simply a general public health measure; it has two distinct aspects, one relates to that area of public health concerned with the fixing and enforcement of standards for perishable foodstuffs, the other to an elementary form of consumer protection and fair dealing in trade, requiring fair weights and measures and accurate labelling as to weights and quantities. This latter aspect, no less than that of public health, possesses a long history of legislative intervention and accompanying public acceptance and, in terms of permissible regulation for the purposes of s. 92, can, I think, stand in no different position from public health. Indeed, in their particular application to foodstuffs, the history of each in English Law has been closely interwoven. As early as the thirteenth century the Assize of Bread and Ale, 51 Hen. III c. 1 (1266), prescribed varying qualities of bread and standard weights of loaf dependent upon the particular quality and also laid down general standards of weight for food and drink. Instances recur throughout the following centuries of laws concerning weights and measures and of presentments for the use of fraudulent weights and measures: Holdsworth, History of English Law, vol. II, pp. 222, 382, 390 and 467. Bread remained for long the especial concern of the legislature, as attested to by the numerous Acts of the eighteenth and early nineteenth centuries concerned not only with its price but also with its purity and freedom from adulteration. For at least the past hundred years legislation as to the purity of foodstuffs generally has been on the statute books: the Adulteration of Food or Drink Act 1860 (U.K.) and its successors were followed by similar colonial legislation and in 1878 consolidating legislation introduced a comprehensive code of Imperial weights and measures, continuing the system established in 1824 by 5 Geo. IV c. 74. Throughout the present century all Australian States have legislated extensively upon food standards and weights and measures. (at p26)

20. It is not only by reference to the cases and to history that I have concluded that the present law is concerned with a topic which is a proper subject matter for permissible regulation, consistently with s. 92. Interstate trade and those engaged in it cannot in my view be treated in total isolation from the activities of the community as a whole. The existence of areas of anarchy, beyond the reach of the law, in a community is as injurious to that whole community, including the part of it which is concerned with interstate trade, as is such a state of anarchy if confined to interstate trade itself. Neither is, in my view, predicated by the existence in our Constitution of s. 92. It is well established that, consistently with s. 92, the guaranteed freedom of interstate trade must be qualified in the interests of those engaged in that trade, so that there may be a mutual accommodation of their rights and actions, each being free in respect of that trade though none has licence in t. It cannot be any less consistent with s. 92 that its guaranteed freedom should also be qualified in the interests of the community at large, of which community interstate traders form a part. Interstate trade must to that extent accommodate itself to the interests of the wider community, upon whose well-being that trade itself depends for its very existence. It was to no narrow neighbourhood or society of interstate traders that the words of Kitto J. were confined when he said, in Hughes and Vale Pty. Ltd. v. New South Wales (No.2) (1955) 93 CLR 127, at p 218 that regulatory laws were of that kind whereby the individual's latitude of conduct was circumscribed "in the interests of fitting him into a neighbourhood - a society", membership of which entailed acts and forebearances on the part of each in the interests of all. How the necessary accommodation of interests is to be arrived at in particular cases must depend upon the circumstances of each case. (at p26)

21. If permissible regulation is not to be confined to laws concerned only with ensuring that those engaged in interstate trade may better enjoy its freedom, are any limits to be placed upon the concept? For my part I would not regard those particular categories of laws which have been instanced in the reported cases as necessarily marking out the boundaries of the areas in which regulatory laws may validly affect the freedom of interstate trade. As Mason J. said in the North Eastern Dairy Case (1975) 134 CLR, at p 615 , there are "many other fields" apart from public health in which interstate trade may lawfully be regulated in the interests of the public. Jacobs J. said (1975) 134 CLR, at p 621 that

"the question whether by the operation of any impugned legislative or other act an act or event of trade, commerce, or intercourse among the States is in the particular circumstances not absolutely free is a question of fact and different answers to very similar questions may need to be given at different times and in different generations. For instance, the difference between Australia at war and Australia at peace may result in different answers to the question proposed. The degree to which the exigencies of modern industrial society may require the governments of our society to control or participate in the trade, commerce, and intercourse of that society may likewise require different answers to the question of fact to be given at different times and in different ages."

Because, as their Lordships observed in The Commonwealth v. Bank of New South Wales (1949) 79 CLR, at p 639; (1950) AC, at p 310 , the decision whether a restriction is regulatory or something more "will often be not so much legal as political, social or economic" it is not something to be laid down in advance and in vacuo but rather case by case and with regard to those considerations of which Jacobs J. has spoken. The boundaries of permissible regulation extend, in my view, at least as far as to include such traditional areas of legislative intervention as the protection of standards of public health by ensuring the purity and wholesomeness of foodstuffs and the prohibition of deceptive or fraudulent practices engaged in by traders to the detriment of the public: that it as far as I need go in the determination of this present appeal. (at p27)

22. For a law to be valid as permissible regulation for the purposes of s. 92 its effect upon interstate trade must be no more restrictive than is reasonably necessary in all the circumstances and if it is shown to discriminate against that trade it will forfeit its claim to be no more than regulatory. In any discussion of the application of these requirements to the present law reference must be made to certain passages from the judgments of the members of the majority in Harper's Case (1966) 114 CLR 361 , a decision of particular relevance since it dealt with the very legislation currently under challenge. (at p28)

23. The reasons for judgment of Menzies J. in Harper's Case (1966) 114 CLR, at pp 378-379 are particularly in point and I would, with respect, adopt them as my own. His Honour, speaking of the present legislation, said
"I do not regard s. 92 as denying full validity to what may be described as standard-fixing legislation of a general character which has no special features which burden interState trade. Nor do I think it would necessarily constitute an infringement of s. 92 were such legislation to require further that, upon the retail sale of goods for which standards have been fixed, the standard attributed to the goods being sold must for some reason, such as the protection of consumers, be evidenced in some satisfactory way, by marking, by certificate or otherwise. It might possibly happen that legislation, by imposing onerous requirements as to these matters, could burden inter-State trade in breach of s. 92; but I am unable to find that, upon its face, the legislation here in question does so. All it requires is that no eggs should be sold by retail unless they have been tested and graded and marked to show their standard. This testing, grading and marking must be done by the Board, a person authorized by the Board, or by a producer who holds the requisite permit from the Board. Of course, the testing, grading and marking of eggs as the Act requires must add to the cost of eggs for retail sale but this will be so whether the testing, grading and marking of eggs is done by a producer himself, by the Board, or by some other person." (at p28)

24. In that case Taylor J., who also upheld the validity of the legislation but did so in reliance upon the decision of Wragg v. New South Wales (1953) 88 CLR 353 , observed in passing (1966) 114 CLR, at p 378 that the fee charged by the Board for the "services" it rendered "would constitute an infringement of s. 92 if the fees were fixed in such a way that there was discrimination between the fees payable with respect to eggs produced in Victoria and those produced in other States and such discrimination operated adversely to persons presenting eggs of the latter character. No such questions, however, arise in the present case." (at p28)

25. Owen J. (1966) 114 CLR, at pp 382-383 also relied upon Wragg's Case but went on to say of an importer into Victoria of eggs that he "is not required to place them at the disposal of the Board. He may sell them wholesale, he may turn them into egg pulp, he may send them on to another State and he may sell them by retail, provided that in such last-mentioned case he first submits them to be graded and tested for quality and marked or stamped to indicate their grade and quality. To say that this last requirement infringes s. 92 seems to me to be a proposition that cannot be supported. It amounts to saying that a State law which has the effect of increasing the cost of selling goods by retail is invalid because by increasing that cost an importer of those goods from another State finds it less profitable or perhaps unprofitable to do so." There is, in my view, no element of discrimination present in this legislation, nor in the evidence adduced as to its administration so far as it relevantly affects the appellant. Nor can I regard as unreasonably restrictive of interstate trade a legislative requirement, in the case of a commodity such as eggs, that it should be made subject to the sort of impartial testing and grading which the present Act and regulations contemplate, processes which the legislature may well have concluded should not be entrusted to producers generally but only to a government agency and to those whom that agency authorizes and whose operations it can supervise. Eggs are so notoriously perishable a foodstuff that in their deteriorated state they have much enriched the English language in a number of picturesque phrases. There are, perhaps, few other foodstuffs which combine the qualities of being so dependent for their wholesomeness upon freshness, of being so prone to deterioration and the freshness of which at the time of purchase it is so difficult for the consumer to determine from outward appearance. They are not merely perishable but are enigmatic to the ordinary shopper; nor is this quality confined to their state of freshness, it can be no easy matter to distinguish by eye alone between the various weight-related grades of egg. (at p29)

26. The appellant urges that the objects of this legislation might have been attained by other means, by punitive rather than preventive measures and that the present law is excessively restrictive because the protection of the public which it seeks to attain might have been achieved by those other means with less interference to Bartters' interstate trade. The law might, it is said, have been confined to merely punitive measures as, for instance, by the imposition of penalties upon those selling bad or underweight eggs, coupled, no doubt, with measures for the detection of such breaches and for the seizure of offending eggs. Because the form which the law in fact takes, employing preventative rather than punitive measures and accordingly insisting upon the testing and grading of all eggs by the Board or its agents before sale, imposes greater burdens upon those wishing to sell eggs to the public, it is said to be invalid so far as it affects interstate trade in eggs. (at p29)

27. To accede to this submission would be to relegate the power to regulate to a mere ability to punish for detected breach, in this instance depriving the legislature of the ability to ensure, by laws for the inspection and testing of foodstuffs before sale, that faulty products do not reach the public. Thus arbitrarily to confine the power of regulation to one particular mode, the punitive, because that mode involves a minimum of interference with the freedom of interstate trade, cannot, I think, be justified as some general rule necessarily predicated by the terms of s. 92. Nor should it be supported as applicable to the particular circumstances here in question. When the quality and freshness of perishable foodstuffs and their fair grading for weight and quality are in question, the particular means which a legislature may adopt to achieve the desired ends must lie largely in its hands. When its choice has been made and is seen to be neither discriminatory as against interstate trade nor to involve the outright prohibition of that trade, as it did in the Clark King Case (1978) 140 CLR 120 , but to involve a means which ensures perhaps the highest possible degree of protection for the buying public, it can but rarely be open to this Court to deny the propriety of that legislative choice. Any choice of means, as between the prevention of an evil at its source and the punishment of its manifestations, must involve the assessment of a wide range of factors. The outcome of that assessment, reflected in the legislature's choice, should generally prevail unless the material before the Court allows it to say that the legislature's choice is clearly unreasonable, a conclusion far more readily open to it when the effect of the choice upon interstate trade is its virtual prohibition. (at p30)

28. This leads me to the suggestion made in argument that quite precise rules govern this question of choice between means of attaining desired legislative objectives. It was said that where a law prohibited interstate trade its validity would depend upon it being the only reasonable method of regulation, whereas where no outright prohibition was in question the fact that the law was one of a number of reasonable alternative methods of regulation might suffice to uphold validity. (at p30)

29. In the Clark King Case it appeared to me to be appropriate, in light of the legislative and evidentiary context, to apply what their Lordships had said in the Banking Case (1949) 79 CLR, at p 641; (1950) AC, at p 311 where they referred to the valid prohibition of interstate trade with a view to State monopoly where that course was "the only practical and reasonable manner of regulation". However no neat formula, to be used for the resolution of different cases on quite different facts, can be extracted from their Lordships' words. If a law which bears upon interstate trade is nevertheless to be valid because regulatory the restrictions which it imposes must be no greater than are reasonably necessary in all the circumstances. The harsher the restrictions the more critically will the necessity be scrutinized and the greater will be the significance to be attached to the existence of other means of attaining the end in view which are, at the same time, less injurious to interstate trade. To say this is, perhaps, to do no more than to repeat, in different words, what I said in Clark King (1978) 140 CLR, at p 172 , when I observed that "validity will always involve questions of degree and of the relative reasonableness of such laws". Any attempt at greater elaboration of analysis than is afforded by the quite general standard of reasonableness in all the circumstances appears to me to be as unprofitable as it is unnecessary. (at p31)

56. I respectfully agree with what is said in the passages which I have quoted from the judgment of Mason J. (at p62)

57. I am satisfied that neither the reasoning nor the decision in Harper's Case (1966) 114 CLR 361 can be reconciled with the reasoning and the decision in the North Eastern Dairy Case (1975) 134 CLR 559 . (at p62)

58. In the end the question is whether the Act and the regulations may be regarded as regulatory. Authoritative and helpful guidance on this aspect of the case is provided by the North Eastern Dairy Case. There are differences between the legislation there in question and that which we have now to consider. The nature of the legislation considered in the North Eastern Dairy Case is summarized in the judgments in that case. I refer in particular to the judgments of the Chief Justice (1975) 134 CLR, at pp 572-574 and Gibbs J. (1975) 134 CLR, at pp 597-598 and generally to what I have said above about that case. (at p63)

59. In the present case there is no provision which vests Permewan's eggs in the Board, but there is a prohibition upon their sale unless and until they are inspected, graded and packed by the Board. I say that there is a prohibition because it seems to me that that is the effect of s. 47D (1). It directly prohibits retail sales and effectively, though not in express terms, prohibits all sales in Victoria other than for re-export. That is its practical operation, though the theoretical possibility exists that retailers, manufacturers and restaurateurs might buy the eggs and then submit them to the Board before resale or use. To say that Permewan's trade, or for that matter trade in eggs generally, between other States and Victoria is free because the eggs are not divested from their owners at the border is in my opinion to draw a distinction which does not of itself carry the consequence that the trade is free in the relevant sense. (at p63)

60. In the present case I do not think that there is any material difference between saying that the first sale of imported eggs is itself part of interstate trade, and saying that such sale is inseparably connected with that trade or that prohibition on sale would destroy that trade. However cases may arise where that distinction may be of significance. For my own part I would prefer to say that a prohibition on the first sale of goods imported or dispatched from another State will generally be itself part of interstate trade, though it may be possible that circumstances could occur in which that would not be so. It seems to me that to say that goods may freely cross a border but not be sold in the State of destination is drastically to reduce the intended operation of s. 92. To prevent goods which cross State borders from entering into the stream of commerce in the State of destination by prohibiting their sale is to prevent interstate trade from taking place as effectively as would a prohibition on the actual crossing of the border. The identity, or, if it be preferred, the close and intimate relationship, of the first sale of goods imported into, or exported to, one State from another with interstate trade has many times been emphasized, although, in one phase of the continuing elucidation and application of s. 92, it has been wrongly as I think, overlooked or relegated to a place of insignificance. It is worth recalling the words of Isaacs J. in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia (1926) 38 CLR 408, at p 430 where he said: "a sale within a State of goods brought from another State may, not as an exception but as a very common case arising in business, be part of an interState operation of trade and commerce." See also Vacuum Oil Co. Pty. Ltd. v. Queensland (1934) 51 CLR 108, at pp 128-129 where Dixon J. said that:

"The very essence of commercial intercourse between States is importation into or exportation from a State for purposes of sale. In making one of these acts the substantive ground for imposing the burden of supporting home production, the State strikes at inter-State trade."

On this aspect of the case I think that valuable guidance is to be obtained from the judgment of Walsh J. (dissenting) in the Mowbray Case (1972) 124 CLR, at pp 587-594 where he reviewed many of the cases. I conclude by quoting from the joint judgment of Taylor and Owen JJ. in O'Sullivan v. Miracle Foods (S.A.) Pty. Ltd. (1966) 115 CLR, at p 190 : "So far as the defendant is concerned it was, it was said, free to import the margarine in question here into South Australia from New South Wales but since, admittedly, it was not possible for it to correct the lack of conformity with s. 23, the effect of the section in the circumstances was, for all practical purposes, to destroy the inter-State trade in the commodity. To our minds it is merely a matter of words to say that the defendant was free to import the margarine into South Australia from New South Wales for the moment it had it in its possession for sale in the former State, or the moment it sold it in that State, it would commit an offence. To our minds it is about as clear as it can be that, in these circumstances, s. 23 operated directly to terminate its inter-State trade in margarine. This being so, to give s. 23 its full effect in relation to intra-State sales would be to give it an operation which infringes s. 92." (at p64)

61. In this respect I am satisfied that the decision and the reasons of the majority in the Mowbray Case cannot be sustained in the light of the North Eastern Dairy Case. Indeed I regard the Mowbray Case as not capable of being reconciled with Fish Board v. Paradiso and O'Sullivan's Case. (at p64)

62. The present Act however does not impose an absolute prohibition on the sale of eggs other than those which are vested in the Board, but it does impose a qualified prohibition, relaxed only upon the submission of the imported eggs to the Board for inspection, grading and stamping and payment therefor. The question is whether the Act and regulations may be sustained as "regulatory" in the sense in which that word is used in relation to s. 92. (at p65)

63. I respectfully agree with the observation of the Chief Justice in the North Eastern Dairy Case as to the proper application of s. 92 in this respect and for the present purpose would quote only the following short passage (1975) 134 CLR, at pp 581-582 :
"The freedom of the individual to engage in interstate trade and commerce is included in the freedom of interstate trade and commerce which the Constitution guarantees. Thus laws to ensure public health and honesty and fairness in commercial dealings form examples of laws which the concept of freedom of trade and commerce does not deny. Consequently, laws, e.g., to secure public health, must have no impact which is reasonably unnecessary upon the activites of the individual in interstate trade and commerce. The protection of the individual is not merely incidental or peripheral to the enforcement of the constitutional guarantee. Indeed, whilst not exhausting the operation of s. 92, it is central to it." (at p65)

64. I would add that it is clearly established that the onus rests upon those who seek to uphold a qualified prohibition to show that is is manifestly reasonable and just. (at p65)

65. It was argued that this case differs from the North Eastern Dairy Case in that it was there conceded in argument that the pasteurization process could not be repeated without damage to the milk, a fact however not regarded by the parties as sufficiently significant for inclusion in the case stated. I observe that this fact was adverted to only by Barwick C.J. and Mason J. As I read the judgment of Barwick C.J. he did not regard this as an essential factor in the process of arriving at the conclusion that the legislation there in question was invalid. It is perhaps given more significance by Mason J. but it cannot be regarded as part of the ratio of the majority. In so far as it may be material it is to be remembered that the evidence in the present case shows that the process of unpacking, inspection, grading and repacking of eggs involves an inevitable loss of some eggs through breakage, the figure being put at as an average of five per cent. (at p65)

66. However the legislation in the North Eastern Dairy Case did produce the result that the Authority could prevent the sale in New South Wales of any milk pasteurized in Victoria however free from any defect it might have been. (at p66)

67. The present Act provides in s. 41C (1) that "any person who owns or is entitled to sell eggs" (a phrase which as I have said above applies only to importers of eggs from other States and, should it ever occur, from overseas) may present them to the Board. By s. 41C (3) it is provided that the Board "shall cause all eggs so presented to be graded etc. and shall re-deliver such eggs to the person who presented them". No doubt a mandamus would go to compel the Board to perform that function if it failed to do so, or threatened not to do so, within a reasonable time. (at p66)

68. The question is whether the prohibition on the sales of eggs brought into Victoria from another State for sale in Victoria, unless they are inspected, graded and stamped in Victoria by the Board, has been shown to constitute regulation reasonably necessary for the purposes of ensuring that such imported eggs do not present a danger to the health of the consumers in Victoria. With due respect to those who think otherwise I am satisfied that proposition has not been established. (at p66)

69. There is nothing to show that the methods of handling eggs in registered premises in New South Wales are so inferior to those used by the Board in Victoria or that those employed by the Board to operate its system are so much more skilful than those in New South Wales, that only the Board is capable of such handling as is necessary to protect the health of Victorian consumers. In argument much was made of the absence of the Board's mark or stamp on the eggs. That mark however signifies to the consumer no more than that each egg has passed through the Board's inspection, grading and packing processes. A regulation that required all eggs to be graded into various sizes, and inspected for inperfections according to specified standards, and to bear a stamp conveying to the consumer the place at which they had been so graded and inspected might well be regulatory, as would be a requirement that all eggs should be stamped in a manner which would convey to the consumer the date upon which that process had been carried out. To provide that such grading and inspecting can be done only by the Board goes much further than can be regarded as reasonably necessary. (at p66)

70. The requirement that these processes can be performed only in Victoria bears no relation to wholesomeness, purity or quality. This is not to say that no means for ensuring wholesomeness, purity and quality may be imposed by Victorian law. There appears no basis for thinking that reasonable regulations as to the premises in which, and the manner in which, eggs should be graded before sale should not be introduced, including if thought fit, inspection of the premises by the Board. There is no reason why inspectors from Victoria should not inspect premises in New South Wales. The absence of compulsory powers there could be met by a requirement that registration was dependent upon the owners consenting to such inspection. It is not enough that the Victorian legislature or the Board prefers the present method; it must be shown that the method selected is a reasonable regulation for, in this case, protection of public health. If, as plainly is the case, such protection can be obtained without compelling admittedly wholesome and good quality eggs to be inspected and graded by the Board's employees when they have already been inspected and graded in New South Wales and comply with the Board's standards save that they do not bear the Board's mark, then the legislation cannot be sustained. (at p67)

71. It is in effect a legislative means of ensuring that eggs from other States are effectively excluded from Victoria, and in my opinion the fact that the means adopted may be described as an economic consequence of the legislation is no basis for saying that s. 92 does not apply so as to invalidate the legislation in its application to interstate trade. (at p67)

72. I am therefore satisfied that the Act and the regulations in their application to the eggs in question are contrary to s. 92 and that, in accordance with s. 3 of the Acts Interpretation Act 1958 (Vict.), as amended, they must be read down so as not to apply to such eggs. Accordingly the order nisi should be made absolute with costs and the informations should be dismissed with costs. (at p67)

Orders

Order nisi to review the convictions discharged with costs.