Re H Brazil and Co Pty Ltd

[1978] HCA 25

HIGH COURT OF AUSTRALIA

GIBBS A.C.J., Stephen, Mason, Jacobs, Murphy and Aickin JJ.

Ex parte H. BRAZIL &CO. PTY LTD.

(1978) 138 CLR 194

22 June 1978

Constitutional Law (Cth)

Constitutional Law (Cth)—Freedom of interstate trade, commerce and intercourse—Interstate character of activity—Hen quota system—Hens for sale interstate—Evidence—The Constitution (63 &64 Vict. c. 12), s. 92—Hen Quotas Act, 1973-1975 (Q.), s. 56 (1)(b).

Decisions

June 22.
The following written judgments were delivered:-
GIBBS A.C.J. The Hen Quotas Act, 1973-1975 (Q.) is expressed to be an Act relating to the stabilization of the egg industry. Under the Act provision is made for the allocation of egg producers' basic hen quotas, adjusted hen quotas and temporary hen quotas, the holders of which are given certain exclusive rights to sell or otherwise dispose of eggs. (at p196)

2. The appellants were convicted of an offence against s. 56 (1) (b) of the Act which provides as follows:

"Any person who, except with the prior approval of the Committee (proof whereof shall lie upon him) - ... (b) keeps over quota hens, is guilty of an offence against this Act."

The phrase "over quota hens" is defined by s. 6 to mean "hens kept by an egg producer in excess of his quota flock or temporary quota flock." By the same section, "quota flock" means "the number of hens constituting the whole or part of an egg producer's basic hen quota or of an egg producer's adjusted hen quota" and "temporary quota flock" means "the number of hens constituting the whole or part of an egg producer's temporary hen quota". The Committee referred to in the section is the Hen Quota Committee constituted under the Act. (at p196)

3. The evidence given before the magistrate established that the appellant company had been granted an egg producer's basic hen quota of 14,367 hens for the 1976-1977 season, and had not been granted any adjusted hen quota. Its quota flock was therefore 14,367. However on 25th February 1977 it kept 16,438 hens, without the prior approval of the Hen Quota Committee. Subject to one matter that will shortly be mentioned it could not be contested that in these circumstances the appellant company had committed an offence against s. 56 (1) (b). If the company committed an offence, the two individual appellants, who were respectively a director and the manager of the company, were deemed also to have committed that offence: see s. 58 of the Act. (at p196)

4. The appellants appealed against their convictions to the Supreme Court of Queensland by way of order to review, and the proceedings have been removed into this Court. Their contention was that s. 92 of the Constitution has the effect that the provisions of s. 56 (1) (b) of the Act cannot validly apply in relation to certain of the hens which, it was said, were committed to interstate trade. The hens were kept by the appellant company at its premises at Killarney in Queensland. They were kept primarily for the production of eggs. The eggs were sold to a firm in Legume in New South Wales but that circumstance does not form the basis of the appellants' contention in the present case. As hens became older and less productive it was good business to sell them and replace them with younger birds. The appellant company had an arrangement under which it sold hens to a firm named Summerland Chicken Farm which conducted a chicken abattoir near Casino in New South Wales. This arrangement was made some months before 25th February 1977, and continued in existence after that date. The terms of the arrangement were not precisely established. One of the appellants said that "the arrangement was that all the hens that were sold as old hens would be sold to Summerland Farms". He further said that at some stage in February 1977 it had been arranged that 4,000 hens would be sold to Summerland Chicken Farm at 40 cents per hen, and that delivery would be made at the convenience of the abattoir. It may be assumed that the magistrate accepted this evidence although he made no specific finding to that effect. However, the magistrate did find that by the arrangement no particular hens were committed to interstate trade, and this finding was not challenged. The appellants submitted that the evidence supported a finding that at the material date 4,000 hens had to be supplied by the appellant company to Summerland Chicken Farm on demand, although it was conceded that no particular hens had to be supplied. It was then submitted that s. 56 (1) (b) could not validly apply in relation to 4,000 of the hens, and should be construed as applying only to the balance of the flock kept by the appellant company; if that were so the number kept should be regarded as being only 12,438 which was less than the quota flock. By s. 5 of the Act it is provided (inter alia) that if, by reason of the Constitution, a provision of the Act cannot validly apply in relation to any particular hens or class of hens, that provision shall be construed as intended to operate in relation to all hens in relation to which it purports to apply, being hens in relation to which it can validly apply. The question for decision therefore is whether by reason of s. 92 of the Constitution the provisions of s. 56 (1) (b) could not validly apply in relation to 4,000 unspecified hens out of the total flock kept by the appellant company. (at p197)

5. The appellants in their argument relied heavily on the decision in Fergusson v. Stevenson (1951) 84 CLR 421 . In that case it was held that the defendant's company was engaged in a transaction which was essentially one of interstate trade and that the legislation there considered could not validly penalize the possession in question, which was "an inseparable concomitant or consequence of that transaction" (1951) 84 CLR, at p 435 . However it is unnecessary in the present case to decide whether if 4,000 hens were or were intended to be the subject of interstate trade, the keeping of those hens would be an inseparable concomitant of that trade, so that the case would fall within Fergusson v. Stevenson, or would on the other hand be merely an antecedent or preparatory transaction which, in accordance with decisions such as Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR 55 and Damjanovic and Sons Pty. Ltd. v. The Commonwealth (1968) 117 CLR 390 would not be protected by s. 92. The appellants' case breaks down at the outset because it has not been proved that any particular hens were or were intended to be the subject of interstate trade. (at p198)

6. It is clear that the protection given by s. 92 does not extend to "acts which may or may not lend to transactions of inter-State trade and at best can only be preparatory to transactions which may or may not prove to have an inter-State character" (Carter v. Potato Marketing Board (1951) 84 CLR 460, at pp 485-486 ; Damjanovic and Sons Pty. Ltd. v. The Commonwealth (1968) 117 CLR, at p 397 ). In the present case, at the date of the offences charged, 25th February 1977, none of the 4,000 hens which were to be supplied to Summerland Chicken Farm had been selected. None was the subject of any interstate transaction, or had been committed to interstate sale or interstate transportation. The hens intended to be the subject of an interstate sale, or to be committed to interstate transportation, had not been identified. In respect of the keeping of any particular hen, the most that could be said was that it might or might not lead to a transaction of interstate trade. In respect of the keeping of all the hens, the most that could be said was that it might or might not lead to a transaction of interstate trade involving some of them. In these circumstances the protection of s. 92 did not extend to the keeping of the hens. The case lacks the necessary evidentiary basis to call for a decision on the question whether the protection of s. 92 would have been available to the appellants if the hens had been the subject of an interstate sale, or had been committed to interstate sale or transportation. (at p199)

7. To avoid possible misunderstanding, it may be added that it has not been proved that any sale of the hens that might have been made under the arrangement mentioned would have had an interstate character. It was not proved that it was a stipulation (express or implied) of the arrangement that the hens to be supplied to Summerland Chicken Farm should be despatched from the property at Killarney in Queensland and delivered by the appellants at the abattoir in New South Wales. It would not be enough to give to the sale an interstate character that the appellants would in fact supply the hens from Queensland, although the actual movement of the hens across the border from Queensland to New South Wales would of course be interstate trade and commerce and within the protection of s. 92. What was said on this subject in W. &A. McArthur Ltd. v. Queensland (1920) 28 CLR 530, at pp 559-560 has frequently been approved, most recently in H. C. Sleigh Ltd. v. South Australia (1977) 136 CLR 475, at pp 495, 508 . (at p199)

8. The order to review should be discharged. (at p199)

STEPHEN J. I agree with Gibbs A.C.J. that, for the reasons given by him, the order to review should be discharged. (at p199)

MASON J. I have had the advantage of reading the reasons for judgment prepared by Gibbs A.C.J. and agree that the order to review should be discharged. (at p199)

JACOBS J. I agree with Gibbs A.C.J. that the order to review should be discharged for the reasons which he has given. (at p199)

MURPHY J. The applicants, H. Brazil &Co. Pty. Ltd., its managing director and its manager, were convicted by a magistrate of keeping over quota hens in breach of s. 56 (1) of the Hen Quotas Act, 1973-1975 (Q.) which states:

"Any person who, except with the prior approval of the Committee (proof whereof shall lie upon him) - ... (b) keeps over quota hens, is guilty of an offence against this Act. Penalty: $1,000." (at p199)

2. The applicants obtained from Stable J. of the Supreme Court of Queensland an order under the Justices Act, 1886 (Q.), as amended, requiring the respondent complainant to show cause before the Full Court of the Supreme Court why the convictions and consequential orders should not be reviewed. By order of this Court, the proceedings on the order to show cause were removed into this Court (under s. 40(1) of the Judiciary Act 1903-1976 (Cth)). (at p200)

3. The applicants claim that the over quota hens were kept for sale to interstate buyers and that the Act, so far as it relates to hens kept for sale to interstate buyers infringes s. 92 of the Constitution and is invalid. (at p200)

4. The Hen Quotas Act (s. 56) does not impose directly or indirectly any customs duty or similar tax. Assuming in favour of the applicants that their keeping of over quota hens was trade and commerce among the States, s. 92 has no application, for the reasons I gave in Buck v. Bavone (1976) 135 CLR 110 . (at p200)

5. The order should be discharged. (at p200)

AICKIN J. I have had the advantage of reading the reasons for judgment prepared by Gibbs A.C.J. and agree that the order to review should be discharged. (at p200)

Orders

Order to review discharged with costs.