SOS (Mowbray) Pty Ltd v Mead

[1972] HCA 18

HIGH COURT OF AUSTRALIA

Barwick C.J., McTiernan, Menzies, Windeyer, Owen Walsh, and Gibbs JJ.

S.O.S. (MOWBRAY) PTY. LTD. v. MEAD

(1972) 124 CLR 529

29 February 1972

Constitutional Law (Cth)

Constitutional Law (Cth)—Freedom of inter-State trade and commerce—Cooking margarine—Retail sale—State legislation prohibiting sale in State of margarine with added colouring or flavouring substances—Margarine manufactured in another State—Acquired by retailer from manufacturer—Whether retail sale subject to legislation—The Constitution (63 &64 Vict. c. 12), s. 92—Dairy Produce Act 1932 (Tas.)—Dairy Produce Act 1969 (Tas.), s. 6.

Decisions

1972, February 29.
The following written judgments were delivered: -
BARWICK C.J. The appellant was convicted by a stipendiary magistrate in the Court of Petty Sessions at Launceston, upon the complaint of the respondent, Director of Agriculture in Tasmania, of two offences against the provisions of the Dairy Produce Act 1969 (Tas.) (the Act). The offences were (a) that it did sell at Launceston cooking margarine to which there had been added a prohibited colouring substance, namely beta carotene, contrary to s. 6 of the Act and (b) that it did sell at Launceston cooking margarine to which there had been added a prohibited flavouring substance, namely aliphatic delta lactones of carbon chain length between six and fourteen contrary to s. 6 of the Act. (at p540)

2. Section 6 of the Act is in the following terms:

"No person shall, within the State, manufacture or sell cooking margarine to which there is or has been added any - (a) prohibited colouring substance; or (b) prohibited flavouring substance." "Cooking margarine" is defined by s. 3 of the Act as: "margarine that contains beef fat or mutton fat, or beef fat and mutton fat, in a quantity of not less than ninety per cent by weight of the total quantity of fat and oil contained in the margarine." "Prohibited colouring substance" is defined as : "(a) a colouring substance that is specified in Part I of the schedule ; and (b) any other colouring substance, that is declared by the regulations to be a prohibited colouring substance for the purposes of this Act." "Prohibited flavouring substance" is defined as : "(a) a flavouring substance that is specified in Part II of the schedule ; and (b) any other flavouring substance that is declared by the regulations to be a prohibited flavouring substance for the purposes of this Act." Part I of the Schedule to the Act includes as a prohibited colouring substance "(a) Beta carotene". Part II of the Schedule includes as a prohibited flavouring substance : - "(d) Aliphatic delta or gamma lactones of carbon chain length between six and fourteen." (at p541)

3. The appellant carries on the business of the retail sale of food stuffs in supermarkets in and around Launceston, and of importing from the mainland goods for sale in that business. It ordered from Marrickville Holdings Ltd., a company based and carrying on business in the State of New South Wales a quantity of cooking margarine of a brand known as "Marville" in one half pound packets to be delivered to it in Launceston ex Sydney. The quantity ordered, according to the evidence, was made up as a batch in the course of manufacture in Sydney by Marrickville Holdings Ltd. and delivered by ship and road transport to the appellant in Launceston. On arrival in the appellant's store it was placed on its cool shelves and displayed for sale which was the purpose with which the appellant ordered the batch from Marrickville Holdings Ltd. On the date charged the appellant sold to retail purchasers three half pound packages, part of the said shipment of "Marville" margarine. (at p541)

4. The process of manufacturing this cooking margarine was evidenced before the magistrate and described by him in his reasons for judgment. I have no need to detail it. Clearly, the substance produced by the described process satisfied the statutory definition of cooking margarine and at a stage in the course of that process a small quantity of beta carotene was introduced and also at another stage a small quantity of the said prohibited flavouring substance. The magistrate found that "the two prohibited substances have been added, within the meaning of s. 6 to cooking margarine". Although in an extremely technical sense at the time these substances were introduced into the mixture being processed the mixture had not assumed the quality of cooking margarine, I see no reason to regard the magistrate's view as untenable. Indeed in a practical sense, the section needs to be read as including the addition of the substances in the course of the manufacture of cooking margarine. (at p542)

5. Thus, all the elements of the statutory offences were made out. But it was, and still is, objected on the part of the appellant, that its transactions with the "Marville" margarine which formed the basis of the charges, were protected by s. 92 of the Constitution, so that s. 6 of the Act could not validly apply to them. (at p542)

6. By the Act the sale in Tasmania of coloured and flavoured cooking margarine which hereafter I shall simply call margarine is prohibited. There is no suggestion whatever that the protection of human life or health is involved. We should be shutting our eyes to reality if we did not at once perceive that the motivation of the legislation is the protection of the dairying industry of the State, though in this case in my opinion the motivation of, and this evident purpose to be achieved by, the legislation need play no part in its construction or in the determination of its validity. (at p542)

7. Evidence was given before the magistrate and not disputed that cooking margarine as a commercial product both in Australia and abroad is both coloured and flavoured. There is no suggestion that the colouring or flavouring present in this case is a danger to health or that either affects the nutritive value of the product. The situation is akin to the requirement of the addition of arrowroot which was dealt with in O'Sullivan v. Miracle Foods (S.A.) Pty. Ltd. (1966) 115 CLR 177 . The magistrate thought that the prohibition upon the addition of colouring and flavouring substances was to prevent confusion of the product with butter. But in my opinion there is no substance in this suggestion. Oddly enough, s. 7 of the Act prohibits the addition to butter of the same substances as are detailed in the schedule. The product is sold in a packaged condition. Section 5 of the Act contains explicit provisions as to the marking to be placed on the package. However, it was suggested that imposition was possible by a restaurateur by serving at the table cooking margarine for butter. But even if this is a possibility, the prohibition on sale in s. 6 cannot for that reason be regarded as regulatory in the constitutional sense. It would clearly be unreasonably incommensurate with the supposed deception. The view that the section is but regulatory is clearly in my opinion insupportable. The section is thus what Lord Porter in The Commonwealth v. Bank of New South Wales (1950) AC 235, at pp 310, 311; (1949) 79 CLR 497, at p 640 calls a "simple prohibition" which as his Lordship says is not regulation. (at p543)

8. The prohibition of sale purported to be imposed by the Act encompasses the sale both of locally produced margarine, if any, and of margarine imported from another State. It also embraces the sale in Tasmania of margarine contractually to be delivered from another State : and, importantly for the present case, it includes the sale in Tasmania by its importer of margarine imported from another State for sale in Tasmania. We have long since been told that the equal treatment of transactions in locally produced goods and of transactions in inter-State commerce will not save a law otherwise infringing s. 92. We have also been reminded that the law may infringe though it strikes at a point and time when the transit of the border by the goods has long past. Thus it cannot of itself be a justification of a law which operates to burden inter-State trade that the transaction it seeks to prevent or hinder occurs within the State. Indeed the initiation and completion of every inter-State transaction in or transport of commercial goods must take place wholly within a State. (at p543)

9. Thus the Act would prevent the importer from selling in Tasmania the goods he has imported from another State for sale. But the respondent claims that the Act is valid and not in breach of s. 92 because he says firstly that any effect on the appellant's inter-State trade and commerce in the "Marville" margarine which the Act may have or produce is but an economic consequence and is not brought about by the direct and immediate operation of the statute itself. Second that the sales by the appellant in Launceston of the half pound packets of margarine were intrastate sales and outside the protection of the constitutional provision. (at p543)

10. It is of course the freedom of individuals in their trade and commerce between the States which is guaranted by the Constitution. Here the relevant trade and commerce between the States is that of the appellant in "Marville" margarine. His inter-State trade was not merely to procure the delivery inter-State of what he had ordered from Marrickville Holdings Ltd., although transit of the goods contractually required across State lines is a mark of inter-State trade and commerce. The relevant trade and commerce in my opinion does not consist merely in the movement of the goods from State to State. It essentially includes the element of purchase at one end and sale at the other end of the goods thus imported for sale. The applicant's trade and commerce in the margarine necessarily and essentially had as its end point, not the arrival of the margarine in store, but its sale in Tasmania : his relevant trade and commerce was inter-State importation for sale. Without sale of the goods so imported there is no concluded trade or commerce of the appellant in the goods. It is the sale of the goods by him which is the commercially significant part of that trade or commerce. The Constitution does not merely guarantee the freedom of movement of goods from State to State ; it guarantees the freedom of trade and commerce in goods between the States. To forbid the sale by the importer in the second state of goods so imported is in my opinion inevitably to impair that trade and commerce ; indeed it would not merely burden the importer's inter-State trade and commerce, it would destroy it. That destruction is in my opinion directly and immediately brought about by the prohibition on sale by the importer in Tasmania of the imported goods. (at p544)

11. I have no doubt myself for these reasons and for reasons I have expressed in earlier cases that no law, State or Commonwealth, can prohibit the sale by the importer of goods imported by him for sale from one State to another, no considerations being present which would justify the conclusion that the law is no more than regulatory in the relevant sense. This reservation leaves a wide area in which laws may be made protecting the community from many hazards such as health, nutrition, inimical and fraudulent practices in trade and the like. As I have already indicated we have here no such considerations. Where they may exist, a problem which I mentioned in Samuels v. Readers' Digest Association Pty. Ltd. (1969) 120 CLR 1, at p 15 must be faced and resolved. I there pointed out :

"On the other hand, failure to observe and effectuate the limitation inherent in the concept of freedom of trade and commerce as used in the section can well result in unwarranted restrictions upon the ability of the legislatures to secure the society and its members against practices and activities which are incompatible with the maintenance of freedom of trade and commerce in a civilised society. There is thus a need in each case closely to observe a nicety of balance between freedom of trade and commerce and the permissible restrictive legislation of a free and civilised society which is compatible with that freedom." (at p544)

12. I might here mention that in this case we are not concerned with another difficulty which at times has beset the application of the constitutional guarantee. There is here no question in my opinion as to the appellant's interest to maintain his suit; he is an inter-State importer of goods for sale. In some of the cases examination of the plaintiff's interest has required a discussion whether the impairment of which he complains is an impairment of inter-State trade and commerce as distinguished, at times with a high degree of artificiality, from intra-State trade and commerce or whether a particular transaction is a transaction in inter-State trade and commerce. But in my opinion for reasons which I have already given, and for others which will appear, this case does not really raise such a question. The appellant complains of the impact of the prohibition on sale upon his interstate trade and commerce. As I have indicated I regard the sale by him of what he has imported inter-State for sale as an integral part of his inter-State trade and commerce. (at p545)

13. These considerations answer in my opinion both the submissions made by the respondent. The appellant's sale in Launceston was part of his inter-State trade and commerce in the margarine and the effect which a prohibition of that sale would effect would be the direct and immediate operation of the Act itself. (at p545)

14. However the matter does not merely rest on the fundamental considerations to which I have referred. In my opinion this case is indistinguishable from the case of Fish Board v. Paradiso (1956) 95 CLR 443 . Indeed this case is a fortiori of that case. There s. 27 (1) of The Fish Supply Management Acts, 1935 to 1951 (Q.), provided that

"No person shall in any district sell or purchase any fish unless such fish have first been brought to a market in that district and there sold at a sale conducted by the board . . . ".

i.e. a corporate board set up by that statute with power to conduct all sales of fish by public auction or otherwise subject to such conditions as it might deem fit to impose, and to determine the manner of such sales and the order of priority of selling. See s. 27 of The Fish Supply Management Acts. In terms that statute operated to prohibit the sale in Queensland of any fish by any person, including the inter-State importer of the fish, except through the board and subject to its conditions. A "reading down" provision in the Act made its terms inapplicable to inter-State trade and commerce. (at p545)

15. The defendant in the case was a retailer who imported from New South Wales fish for sale in his retail shop. He was prosecuted by the Fish Board for selling fish in his retail shop near Brisbane, which had not first been brought to a market and there sold at a sale conducted by the Board. It was conceded that his purchase of the fish from New South Wales and its delivery to him in Brisbane were activities of inter-State trade and commerce outside the reach of the Act. But it was contended that his sale of that fish in Brisbane was an act of intra-State trade, validly caught by the prohibition of s. 27. The Court rejected the argument and dismissed the Fish Board's complaint. The Court took the ground that s. 27 (1) in so far as it purported to prevent an inter-State importer of fish for sale from dealing with it after he had received it otherwise than by sale through the Board had a direct and immediate impact upon inter-State trade and commerce and thus infringed s. 92 of the Constitution. Paradiso had imported the fish from New South Wales for sale by him. It does not appear that his vendor was contractually bound to bring from New South Wales the fish Paradiso ordered: though, no doubt this was the contemplation of the parties. He ordered the fish to be delivered to him and they in fact came to him from his vendor in New South Wales. The importation in fact of the fish for the purposes of sale in Brisbane was clearly an activity of inter-State trade and commerce. The inability to sell the fish he had thus ordered and received for the purposes of sale made an inadmissible impact on that inter-State trade and commerce. The inability derived from the statute as part of its direct and immediate operation (1956) 95 CLR, at pp 452-453 . (at p546)

16. It is of interest that both Williams v. Metropolitan and Export Abattoirs Board (1953) 89 CLR 66 and Wragg v. New South Wales (1953) 88 CLR 353 were cited to and pressed upon the Court in the argument of Fish Board v. Paradiso (1956) 95 CLR 443 . Neither receives mention in the reasons of the majority, though Kitto J. decided the former of the cases and Taylor J. wrote the leading judgment in the latter. Both Justices were parties to the unanimous judgment of the Court in Fish Board v. Paradiso (1956) 95 CLR 443 . I do not find either of those two cases to stand in the way of the conclusion I have expressed. But, having regard to the submission that the appellant's sales in Launceston were, as it is said, intra-State sales, I should say something about the decision in Williams v. Metropolitan and Export Abattoirs Board (1953) 89 CLR 66 . In that case, a South Australian statute, amongst other things, forbade the sale in the metropolitan abattoirs district of Adelaide of any meat from an animal slaughtered outside that district unless the meat had been brought to the metropolitan abattoirs, inspected and branded by an inspector. This provision might possibly have been intended as a health measure, and, subject to such considerations as are illustrated in Collier Garland Ltd. v. Hotchkiss (1957) 97 CLR 475 and discussed in Harper v. Victoria (1966) 114 CLR 361 might have been held to be no more than regulatory and thus not invalid as in breach of s. 92. A further provision of the statute forbade any person to bring into that district from any place outside it any meat derived from stock slaughtered outside it, unless pursuant to a permit which the board might grant. There would have been much more difficulty in holding such a provision to be regulatory. (at p547)

17. The plaintiff carried on business in Victoria, buying meat from wholesale butchers, cutting it into portions, boning, seasoning, rolling and cooking it in electric ovens. There came a time when he appointed an agent in South Australia to procure orders for his cooked meat. His agent found customers who ordered meat which was despatched from Victoria to them, through the hands of the South Australian agent. The orders were oral and were found not to have contained a term that the meat must come from Victoria, though it might well have been thought that the purchasers contemplated that it would. Ultimately an inspector under the statute, the Metropolitan and Export Abattoirs Act, 1936-1948 (S.A.), informed the plaintiff and his South Australian agent that this course of business was contrary to that statute and that the meat then in the agent's hands en route to its purchasers would be forfeited under the statute unless it was immediately returned to Melbourne that day. This the plaintiff did and terminated his course of business in selling into that metropolitan area. Kitto J. was satisfied that he did so because of the inspector's threats, threats for which the defendant board was responsible. The agent in consequence of the plaintiff's course of action lost his employment as the plaintiff's South Australian agent. (at p547)

18. The plaintiff and the agent sued for a declaration that the statute did not render unlawful the plaintiff's course of business which I have briefly described, did not authorize a seizure of meat, as threatened by the inspector and for an injunction to restrain a repetition of such acts and damages. (at p547)

19. In the course of the business I have described the purchasers of the meat might have been regarded as inter-State importers. They might be none the less so in fact because the contracts by which they purchased the meat were not themselves inter-State contracts. Of course for the contract itself to have been made in the course of inter-State trade it would need to stipulate for the delivery from State to State. But the absence of that stipulation does not in my opinion prevent the actual importation inter-State for sale being inter-State trade and commerce. It is noticeable that no reference is made in the judgment in Fish Board v. Paradiso (1956) 95 CLR 443 to the presence or absence in or from the contractual arrangements of a stipulation that the fish must come from outof-State, though, of course, the contemplation must have been that it would. However the case did not concern the purchaser's trade: the plaintiff clearly was at least an exporter from Victoria of the meat for sale: in Williams v. Metropolitan and Export Abattoirs Board (1953) 89 CLR 66 Kitto J. said of the statutory provision proscribing the sale of meat:

"There is no denying that this provision, if it has literal effect, operates directly and immediately upon inter-State trade; for it is a prohibition upon sale generally, and sale is at the heart of trade." (1953) 89 CLR, at p 73 (at p548)

20. But in the long run, his Honour declined to make any of the orders sought because he held that the plaintiff had no sufficient interest to maintain the suit. With that proposition except in so far as it related to the claim for damages I can with due respect agree, for the plaintiff did not claim that he intended to resume the course of trade which he had abandoned. Other considerations may arise as to the claim for damages which need not be discussed for the purposes of this case. However, his Honour based that lack of interest to maintain the suit upon the view that the course of business formerly pursued by the plaintiff was not and did not include any part of inter-State trade and commerce, because the orders obtained from the Adelaide purchasers did not include a contractual term requiring delivery of the goods across State lines. But in my opinion the plaintiff's course of business in fact was the export into Adelaide from Victoria of the meat he had processed either for sale there or to fulfil a sale made there as part of his exporting business. The actual movement of goods inter-State in the course of trade, with a view to sale, is essentially inter-State trade. To deny the plaintiff the capacity to sell that which he brought into Adelaide in the course of that trade was in my opinion not merely to burden but to prevent that inter-State trade. (at p549)

21. The fact that the plaintiff's sale of these goods was made in Adelaide, if that in truth was the fact, does not mean that it was not the end point and indeed part and parcel of that inter-State trade. So it was held, in Fish Board v. Paradiso (1956) 95 CLR 443 . I am unable to understand how it can properly be said that the sale by the exporter, or the importer, of the goods exported or imported as the case may be in the course of trade, that is to say with a view to sale, can be said not to be inseparably connected with the actual commercial exportation or importation as the case may be. In my opinion, the sale within the said State of such goods by the exporter or the importer is part and parcel of the inter-State trade of the exporter or the importer as the case may be. It is none the less so in my opinion because the sale itself takes place wholly within the State. (at p549)

22. I would therefore find his Honour's reason for holding the plaintiff in Williams v. Metropolitan and Export Abattoirs Board (1953) 89 CLR 66 to lack interest to maintain a suit for a declaration inconsistent with the decision in Fish Board v. Paradiso (1956) 95 CLR 443 and, with due respect, I am unable to accept it. (at p549)

23. The submission is again made that only laws which fasten upon a characteristic which a transaction must have to be itself a transaction of inter-State trade and commerce as the criterion of the law's operation can offend s. 92. I have already indicated my inability to accept this proposed test of validity, see Samuels Readers Digest Association Pty. Ltd. (1969) 120 CLR at p 18 . No doubt a law which in terms placed an impairment upon some aspect of such trade and commerce will offend the Constitution. So much and in my opinion no more was said in the dissenting judgment in O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways (N.S.W.) (1935) 52 CLR 189, at p 206 . The positive statement in Grannall v. Marrickville Margarine Pty. Ltd. that (1955) 93 CLR 55, at p 78 :

"If some fact or event or thing which itself forms part of trade, commerce or intercourse or forms an essential attribute of that conception (essential in the sense that without it you cannot bring into being that particular example of trade, commerce or intercourse among the States) is made the subject of the operation of a law which by reference to it or in consequence of it imposes some restriction or burden or liability, it does not matter how circuitously it is done or how deviously or covertly",

though the statement has to my mind several inherent difficulties, may be accepted without subscribing to the exclusive test which the respondent submits. This passage from Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR 55 does not purport to imply or to assert its obverse or to propose an exclusive test: nor does the statement (1955) 93 CLR, at p 79 which begins with the sentence "Two tendencies have grown manifest of late", if the whole passage is read in the light of the subject matter with which that case dealt and in the light of the illustrations which are there given. The laws described in these passages would seem to me to be laws about trade and would be express in their imposition of the inadmissible burden. (at p550)

24. The sale by an inter-State importer of the goods he has imported for sale cannot be properly described in my opinion as "a subsequent transaction" or "necessarily consequential" upon the importer's inter-State trade and commerce in the goods. That sale is as I have said in my opinion part and parcel of that trade and commerce. It is an essential feature making the importation commercial: indeed if one were to adopt the language of the earlier passage I quoted from Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR, at p 79 , the sale in Tasmania by the appellant of the margarine he had imported from New South Wales for sale was "an essential attribute of the conception" of trade and commerce in that commodity between the two States. I need say no more about Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR 55 as I have elsewhere expressed my view of what it decides and of what use can be made of it. (at p550)

25. Allied to this submission is the insistence that only the direct and immediate operation of the law is relevant when considering its validity in relation to this constitutional guarantee. But the nub of the submission is in what is encompassed by the "operation of the law" and what is meant by "direct and immediate". Related to these matters is the submission that the economic consequences which the law brings about are necessarily beyond its operation and irrelevant when consideration is being given to the validity or invalidity of the law vis-a-vis s. 92. (at p550)

26. But trade and commerce are matters of fact. Long since the need for a non-technical and generous view to be taken of trade and commerce was emphasized. The operation of a law in my opinion is that which it does to and with the facts and circumstances which according to its intendment fall within and under its terms. What it achieves or produces in relation to those facts when applied to them are part of its operation. To what extent the widening ripples of disturbance in fact caused by the intrusion of a law into the pool of trade and commerce ought to be held to be within the operation of the law involves a question of degree often difficult of resolution. But no doubt there comes a time when the ripple becomes so far removed from the point of intrusion to become, to use the words of Lord Porter, "some indirect or consequential impediment which may fairly be regarded as remote": see The Commonwealth v. Bank of New South Wales (1950) AC, at p 310; (1949) 79 CLR, at p 639 . The contrast is between that which is "direct" and that which is "only remote or incidental" (ibid). Remoteness as a concept limiting the legal extent of a chain of causation is of course well known, used as it is in various fields of the law. (at p551)

27. But to say that the only thing that falls within the operation of the law is the depression, and perhaps not even the splash at the point of intrusion of the law into that pool is in my opinion to ignore the real operation of the law. In my opinion all that the law produces in its application to the facts is within its operation until that point of remoteness is reached; or it can be seen that the effect is but a consequence. All that impact which is not remote or mere consequence is direct and immediate in the relevant sense. (at p551)

28. Further when linked with the formula to which I have already referred the submission would in my opinion confine the operation of law to its text so that its direct operation is equated with its verbal expression. In other words in that view the operation of the law is discovered merely by textual construction. But it is quite clear from their Lordships' reasons in The Commonwealth v. Bank of New South Wales (1950) AC 235; (1949) 79 CLR 497 that the question of the operation of the law becomes a question of fact and degree. The present case is perhaps a good illustration of the narrowness and unreality of these submissions. The law in this case says that the person who has imported from another State goods for sale may not sell the goods he has imported for sale. The submission says that the undoubted effect this has upon that person's trade and commerce in the goods between the States is but economic and beyond and not within the operation of the law. This submission in my opinion is unacceptable. The destruction of the appellant's interstate trade in the margarine would be brought about by the operation of the Act itself if it were valid. It cannot properly be said that that effect of the Act is remote or incidental or merely consequential in the proper use of those words. (at p552)

29. We are here concerned only with the complaint against the appellant. If as I think s. 6 cannot validly apply to the sales of the margarine made in Launceston by the appellant because of their relation to his inter-State trade and commerce, that complaint ought to have been dismissed. Consequently, the the appeal should be allowed and the conviction quashed. (at p552)

McTIERNAN J. This appeal arose from the prosecution of S.O.S. (Mowbray) Pty. Ltd. for selling in one of their stores in Launceston several packages of cooking margarine, answering the definition of that commodity in the Dairy Produce Act 1969 (Tas.), coloured and flavoured by the manufacturers, contrary to s. 6 of that Act. The packages were part of a consignment of cooking margarine sent by the manufacturers in New South Wales on the order of the defendant company to the said store. The Magistrate who heard the case convicted the company. The principal question is whether s. 6 of the Act offends against s. 92 of the Constitution in so far as s. 6 provides that no person shall within the State of Tasmania, sell cooking margarine, as defined by s. 3, to which there has been added any colouring, or flavouring substance that is a prohibited substance within the meaning of s. 3 (1) of the Act and its Schedule. The words of s. 6 dealing with the sale of cooking margarine are applicable to the sale of this commodity imported from another State if it be coloured or flavoured contrary to s. 6, even if the sale is made by the importer. And under s. 8 he is guilty of an offence and liable to the penalty prescribed by s. 8. (at p552)

2. In order to determine the question it is necessary to apply the criteria enunciated by the Privy Council in The Commonwealth v. Bank of New South Wales (1950) AC 235, particularly at p 310; (1949) 79 CLR 497, at p 639 . Their Lordships said:

"In this labyrinth there is no golden thread. But it seems that two general propositions may be accepted: (1) that regulation of trade commerce and intercourse among the States is compatible with its absolute freedom and (2) that s. 92 is violated only when a legislative or executive act operates to restrict such trade commerce and intercourse directly and immediately as distinct from creating some indirect or consequential impediment which may fairly be regarded as remote. In the application of these general propositions, in determining whether an enactment is regulatory or something more, or whether a restriction is direct or only remote or incidental, there cannot fail to be differences of opinion. The problem to be solved will often be not so much legal as political, social or economic. Yet it must be solved by a court of law."

And later (1950) AC, at pp 310-311; (1949) 79 CLR, at p 640 :

"Difficult as the application of these general propositions must be . . . it appears to their Lordships that this further guidance may be given."

There follows a quotation from the judgment of Latham C.J. in Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd. (1939) 62 CLR 116, at p 127 . (at p553)

3. The passage reads thus:

"One proposition which I regard as established is that simple legislative prohibition (Federal or State), as distinct from regulation, of inter-State trade and commerce is invalid. Further, a law which is 'directed against' inter-State trade and commerce is invalid. Such a law does not regulate such trade, it merely prevents it. But a law prescribing rules as to the manner in which trade (including transport) is to be conducted is not a mere prohibition and may be valid in its application to inter-State trade, notwithstanding s. 92."

The Privy Council added the following (1950) AC, at pp 310 - 311; (1949) 79 CLR, at p 640 :

"With this statement which both repeats the general proposition and precisely states that simple prohibition is not regulation their Lordships agree." (at p553)

4. As s. 1 (2) of the Dairy Produce Act 1969 (Tas.) enacts that this Act is incorporated and shall be read as one with the Dairy Produce Act 1932, it is necessary to have regard to the provisions enacted in the latter Act for the regulation of the manufacture and sale of margarine and other substitutes for butter to understand the nature and operation of the section of the Dairy Produce Act 1969 under discussion. Under s. 3 (1) of the Dairy Produce Act 1932, "dairy produce" means "milk, cream, butter, cheese, condensed milk, and any other product of milk, and includes margarine" ; and "margarine" means "any substance made from vegetable or animal fats, or a combination of both, and intended to be used, or capable of being used, as a substitute for butter". (at p553)

5. Section 30 (1) (c) and (e) and sub-s. (2) of the Dairy Produce Act 1932 are provisions to which regard should be had for present purposes. The first provision reads:

"s. 30 (1) No person shall -

. . . . . .

(c) sell, or offer, or expose, or prepare for sale by retail, margarine or any butter substitute which contains milk-fat or any product of milk, except skim milk containing not more than one-tenth of one per centum of milk-fat;

. . . . . .

(e) mix, colour, or strain any butter substitute with any ingredient or material so as to imitate butter."

Subsection (2) reads:

"For the purposes of this section, 'butter substitute' means any substance resembling butter which is intended to be used as a substitute for butter." (at p554)

6. The object stated in the long title of the Act which s. 30 is enacted to effectuate is "to provide for the regulation of the manufacture and sale of margarine and other substitutes for butter". The long title of the Dairy Produce Act 1969 is as follows:

"AN ACT to make provision with respect to the labelling of packages containing margarine and the addition of certain colouring substances and flavouring substances to margarine and to butter and with respect to matters incidental thereto."

The definition of "margarine" in the Dairy Produce Act 1932 is relevant to the Dairy Produce Act 1969. But the latter Act also contains a definition of "cooking margarine" which is relevant to s. 6. The definition, contained in s. 3, is as follows:

"'cooking margarine' means margarine that contains beef fat or mutton fat, or beef fat and mutton fat, in a quantity of not less than ninety per cent by weight of the total quantity of fat and oil contained in the margarine."

The word "vegetable" and the words "and intended to be used, or capable of being used, as a substitute for butter" are not found in the definition of "cooking margarine" in s. 3 of the Dairy Produce Act 1969. These words are used in the definition of "margarine" in the Dairy Produce Act 1932. The legislature did not, of course, include any "prohibited colouring substance" or "any prohibited flavouring substance" as an ingredient of "cooking margarine". The commodity "cooking margarine" means for the purposes of s. 6 "cooking margarine" as defined by s. 3 (1) of the Act. Under s. 3 (1), "table margarine" means "margarine that is not cooking margarine". Section 4 (1) of the Dairy Produce Act 1969 provides that:

"No person shall sell table margarine unless it is contained in a package on which there is printed in the prescribed manner - (a) the words 'table margarine' in letters of the prescribed size and prescribed colour; (b) the name and address of the manufacturer of the margarine; and (c) such other words, statements, or particulars, if any, as are prescribed."

Section 5 (1) is a similar provision applying to "cooking margarine". Section 30 (1) of the Dairy Produce Act 1932 and both s. 4 (1) and s. 5 (1) of the Dairy Produce Act 1969 are of general application. None of these provisions is of the nature of "simple legislative prohibition", as distinct from regulation, of inter-State trade and commerce in margarine. It is right to apply the description "simple legislative prohibition" to s. 6 of the Dairy Produce Act 1969, in so far as this section applies to sale of cooking margarine or to s. 7 in so far as this section applies to sale of butter? The validity of s. 30 (1) (c), s. 4 (1), s. 5 (1) or s. 7 is not impugned here. (at p555)

7. The necessary legal effect of s. 6 of the Dairy Produce Act 1969 is to exclude from the domestic trade of Tasmania any cooking margarine offending against the section, but its necessary legal effect does not deprive any person of the liberty to import cooking margarine of that character. The Dairy Produce Act by its definition of "cooking margarine" is regulatory of the composition of that commodity. Section 6 is regulatory of the composition of the commodity at the point of sale by forbidding sale if that commodity to be sold as cooking margarine is coloured or flavoured in a manner forbidden by the section. In my opinion s. 6 is not other than regulatory as far as the sale of cooking margarine is concerned and is therefore compatible with the freedom guaranteed by s. 92. It would appear that the policy which inspires s. 6 is to prevent a commodity composed according to the definition of "cooking margarine" being coloured or flavoured so as to give the impression that it is butter not margarine. Section 6 is ancillary to s. 5 (1) of the Dairy Produce Act 1969. The policy inspiring s. 6 is akin with that inspiring s. 30 (1) (c) and (e) of the Dairy Produce Act 1932. The nature of those provisions is regulation as distinct from simple prohibition. Section 6 may be characterized similarly. The case of O'Sullivan v. Miracle Foods (S.A.) Pty. Ltd. (1966) 115 CLR 177 is not, in my opinion, a precedent on which to decide the present case. (at p555)

8. The finding of the magistrate that the prohibited colouring and flavouring substances, specified in the complaint initiating the prosecution, had been "added to" the batch of cooking margarine of which the cooking margarine in the packages sold by the appellant on the occasion in question was a part, is, in my opinion, supportable by the evidence which he heard of the process of manufacture of the batch. I consider that the finding ought not to be disturbed. (at p556)

9. In my opinion the appeal should be dismissed. (at p556)

MENZIES J. The appellant was convicted in the Court of Petty Sessions at Launceston for offences against s. 6 of the Dairy Produce Act 1969 (Tas.) in that it sold cooking margarine to which had been added a prohibited (1) colouring substance and (2) flavouring substance. It appealed on two grounds. First that the court was in error in finding that the prohibited substances, which had been used in the manufacture of margarine, had been added to the margarine, because they had been introduced in the course of the manufacture of the margarine sold rather than added to it after manufacture had been completed. Secondly that the prohibitions of the section cannot validly apply to the sales of the margarine made by the appellant because, were they to do so, they would interfere with its interState trade for which s. 92 of the Constitution secures absolute freedom. (at p556)

2. The section under challenge is as follows:

"No person shall within the State manufacture or sell cooking margarine to which there is or has been added any (a) prohibited colouring substance or (b) prohibited flavouring substance." (at p556)

3. The first ground of appeal can be disposed of shortly. It is a common use of the word "added" to describe the addition of substances in the course of manufacturing. The word clearly has that meaning here because part of the prohibition is against the manufacture of margarine with the prohibited additions. (at p556)

4. The argument of the second ground ranged widely over the decisions of the Privy Council and this Court upon s. 92 and its consideration requires a review of those authorities. Before embarking upon this review, however, it is necessary to say something about the section itself and the facts of this case. (at p556)

5. What is prohibited is the doing of certain acts in Tasmania. The manufacture or sale in Tasmania of cooking margarine with the addition of certain substances is prohibited. "Margarine" is "any substance made from vegetable or animal fats, or a combination of both, and intended to be used, or capable of being used as a substitute for butter". "Cooking margarine" is "margarine that contains beef fat or mutton fat, or beef fat and mutton fat, in a quantity of not less than ninety percent by weight of the total quantity of fat and oil contained in the margarine". The prohibition upon sale extends to all cooking margarine wherever manufactured. (at p557)

6. The learned magistrate found that the appellant carries on business of selling food by retail in supermarkets and, in the course of that business, it sold, on 23rd October 1970, three half pound packets of "Marville" brand cooking margarine manufactured by Marrickville Holdings Ltd. in Sydney. The packets so sold were bought by the appellant in Tasmania as part of a consignment ordered and received, according to the magistrate's findings, in the following fashion:

"The order was prepared and signed on behalf of the defendant in Launceston on 22nd September 1970 by Mr. B. J. Fitch, the Managing Director of the defendant. It was then handed by him in Launceston to Mr. Logan, an employee of Marrickville Holdings Ltd., who took the order back to Marrickville Holdings Ltd. in Sydney. On arrival at the premises of Marrickville Holdings Ltd. in Sydney Mr. Logan, on 23rd September 1970, initialled acceptance of the order on behalf of Marrickville Holdings Ltd. Following upon receipt of the order, arrangements were made to manufacture cooking margarine to fulfil it."

After manufacture the margarine

" . . . was loaded onto a refrigerated van of Mayne Nickless Ltd. for dispatch to Launceston. A dispatch note was made out in respect of the shipment. It was taken in the refrigerated van to the docks at Sydney where the refrigerated van was itself loaded onto a ship for shipment to Hobart. At Hobart the ship was met by a representative of Mayne Nickless Ltd., the refrigerated van was off-loaded, and the van and its

contents driven directly to Launceston. Upon arrival in

Launceston part of the cooking margarine which formed the subject matter of the said order (including the three pieces of margarine which form the subject matter of these proceedings) was off-loaded into the supermarket of the defendant at 264 Invermay Road, Launceston where the cooking margarine was immediately placed in the cool shelves of the shop and displayed for the purposes of sale." (at p557)

7. A critical question is, of course, whether the sale which constituted the offence charged was a sale in the course of the inter-State trade of the appellant. In my opinion it was not. The sale was in the course of the appellant's business of selling goods by retail in Tasmania. If a retailer in Tasmania sells in its shop a tin of biscuits which it has imported from Scotland for sale in Tasmania, it is, in making that sale, not engaging in trade with Scotland, whether or not the biscuits were made to its order and whether or not its order for the biscuits was given or accepted in Tasmania or in Scotland. The transaction of sale would be by a retailer in Tasmania to a customer in Tasmania, and the place from which and the manner in which the retailer acquired the biscuits would have no bearing upon the character of the retail sale. If the retailer had in stock tins of biscuits, some made in Tasmania, the others imported by it from Scotland or from Western Australia, it is hardly to be thought that, according to the choice of the customer, the sale made to him of the tin chosen is part of the retailer's Tasmanian, Scottish or Western Australian trade. The truth is that, once the biscuits had become part of the retailer's stock in trade in Tasmania, their sale across the counter to a Tasmanian customer is part of its retail trade in Tasmania regardless of how the stock was acquired. Any other conclusion would lead to absurdity. The sale of goods imported from Scotland is not overseas trade and the sale of goods imported from Western Australia is not interState trade, notwithstanding that the retailer, in importing the goods, has engaged in overseas trade or inter-State trade as the case may be. (at p558)

8. It has often been pointed out that the Constitution does require the distinction to be drawn between intra-State trade and inter-State or overseas trade. Sometimes the distinction is not easy to make. In this case I think it is. It appears to me that the sale made by the appellant here falls completely outside what the Constitution describes as "trade and commerce with other countries and among the States". (at p558)

9. The foregoing conclusion is well established by the authorities to which reference will be made later. (at p558)

10. The next point, also well established by authority, is, to use the language of Taylor J. in Tamar Timber Trading Co. Pty. Ltd. v. Pilkington (1968) 117 CLR 353, at p 374 .

" . . . that a law of general application which prohibits or restricts an activity which is not, itself, an activity of the provisions of that section. Examples of such laws are those which restrict production of a commodity which it is intended shall be used in inter-State trade (Grannall's Case (1955) 93 CLR 55 ) even though the obligation of manufacture for the purposes of inter-State trade is an obligation contractually undertaken (Beal v. Marrickville Margarine Pty. Ltd. (1966) 114 CLR 283 ); those which prohibit the importation of articles including those intended for use in inter-State trade (REg. v. Anderson; Ex parte Ipec-Air Pty. Ltd. (1965) 113 CLR 177 ), and those which operate, inter alia, to impose restrictions on the disposal of articles imported from other States (Wragg's Case (1953) 88 CLR 353 )." (at p559)

11. Is then s. 6 such a law? Upon its face it is. It was, however, suggested that the law is not general but particular and its purpose must be to interfere with inter-State trade because there is no other good reason for prohibiting the use of the colouring and flavouring substances specified. It is, however, for the Parliament of Tasmania to decide what colouring or flavouring substances should not be used in foodstuffs manufactured or sold in Tasmania. The Court cannot examine Parliament's reason for the legislation which it enacts. Moreover, a law applying to the manufacture of margarine in Tasmania with prohibited ingredients, as well as the sale in Tasmania of margarine with prohibited ingredients, provides no basis whatever for a search for some ulterior purpose for interfering with either overseas or inter-State trade. Furthermore, there are similar restrictions upon the manufacture and sale of butter, s. 7. (at p559)

12. I come now to the authorities which, as I read them, establish (1) that the sale which constitutes the offence was not part of the intra-State trade of the appellant, and (2) that this particular prohibition of an act of intra-State trade is not in contravention of s. 92 because any detrimental effect that it has upon inter-State trade is not within the direct operation of the law. (at p559)

13. I go first to James v. The Commonwealth (1936) AC 578; (1936) 55 CLR 1 , which emphasizes that the problems to which s. 92 gives rise can only be solved as they emerge by giving effect to the language used in the Constitution. There James v. Cowan (1932) 47 CLR 386 , was regarded as a case of a prohibition of export from State to State. It was said (1936) 55 CLR, at p 52 :

" . . . the case is simply that of a restriction or prohibition of export from State to State, which necessarily involves an interference with the absolute freedom of trade among the States".

Vacuum Oil Co. Pty. Ltd. v. Queensland (1934) 51 CLR 108 , was explained as a case

" . . . in which it was held that a burden placed (in substance) on the first seller in the State of imported petroleum, was in truth, though not in form, a sort of tax or impost."

In James v. The Commonwealth (1936) AC 578; (1936) 55 CLR 1 the Privy Council regarded s. 92 as protecting the passage of goods from one State into another State notwithstanding that it was recognised that the burden upon importation could arise either before or after the goods crossed the State border. Nothing is to be found in James v. The Commonwealth (1936) AC 578; (1936) 55 CLR 1 to support the contention that s. 6 is in conflict with s. 92. In particular it does not afford any support for a general proposition that a prohibition of sale in the course of intra-State trade constitututes a legal burden upon the importation of the goods the subject of the prohibition. (at p560)

14. After James v. The Commonwealth (1936) AC 578; (1936) 55 CLR 1 this Court decided a number of cases giving effect to that judgment. In 1948 it decided, in Bank of New South Wales v. The Commonwealth (1948) 76 CLR 1 , that s. 46 of the Banking Act 1947 (Cth), which prohibited banks from carrying on inter-State banking business, was in conflict with s. 92. The Privy Council upheld that decision (1950) AC 235; (1949) 79 CLR 497 . In so deciding the Privy Council applied its earlier decision in James v. The Commonwealth (1936) AC 578; (1936) 55 CLR 1 saying that the section does not "remotely or incidentally . . . but directly, restrict the inter-State business of banking". Their Lordships observed (1950) AC, at p 310; (1949) 79 CLR, at p 639 that the word "free" in s. 92 must receive some qualification. The qualifications proposed by their Lordships were as follows:

"(1) that regulation of trade commerce and intercourse among the States is compatible with its absolute freedom and (2) that s. 92 is violated only when a legislative or executive act operates to restrict such trade commerce and intercourse directly and immediately as distinct from creating some indirect or consequential impediment which may fairly be regarded as remote,"

Three words in this formulation seem to me to have particular significance in deciding this case. They are the word "only", the word "operates", and the word "directly". Unless s. 6 operates to restrict inter-State trade directly, it is, according to their Lordships' formulation, not touched by s. 92. (at p560)

15. Subsequently this Court applied the Privy Council decision in the Banking Case (1950) AC 235; (1949) 79 CLR 497 in a number of cases upholding some laws which were challenged as contraventions of s. 92. In one field, however, this Court was in error. By a majority, against strong minority views, this Court did uphold laws which restricted the inter-State operation of transport vehicles by requiring their licensing at the discretion of State authorities and without regard to considerations such as public safety. There was, as their Lordships observed in Hughes and Vale Pty. Ltd. v. New South Wales (1955) AC 241, at p 308; (1954) 93 CLR 1,at p 34 , a "remarkable conflict of judicial opinion". In that case the conflict was resolved by the adoption of the minority view in language culled mainly from minority judgments. It was decided that legislation of the State of New South Wales, requiring a licence - to be given or refused at discretion - to operate vehicles in the course of, and for the purposes of inter-State transport, was invalid. The very terms of this decision show its limits, i.e. that it applied only to vehicles operating "in the course and for the purposes of inter-State trade" (1955) AC, at p 309; (1954) 93 CLR, at p 35 . The decision requires that, in deciding the application of s. 92 in a particular case, attention must be focussed upon the question whether the challenged law does burden inter-State trade. If it does it is justified only if it is a permissible regulation or the burden is not direct but is remote or consequential, i.e. the interference is not within the operation, but is merely a consequence of the operation of the law that is challenged. It was said categorically (1955) AC, at p 308; (1954) 93 CLR, at p 34 that "their Lordships accept without qualification everything that was said by the Board in the Bank Case". Nothing in any of the decisions of the Privy Council upon s. 92 supports the appellant's central proposition that the sales which constituted the offences here were in the course of inter-State trade. Furthermore, the judgment of the Privy Council is that, if s. 6 does restrict inter-State trade, the question then to be answered is whether the section "operates to restrict such trade . . . directly and immediately as distinct from creating some indirect or consequential impediment which may fairly be regarded as remote". (at p561)

16. The Privy Council forecast that, in determining whether a restriction is direct or only remote or incidental, there could not fail to be differences of opinion. This forecast has been realized, as a review of the more recent decisions of this Court will demonstrate. In this case, if the sales penalized were sales in the course of the inter-State trade of the appellant, then it is clear that the direct and immediate operation of the law prohibiting them would restrict inter-State trade. If, however, those sales were not in the course of the appellant's inter-State trade, then, in my view, any restriction upon inter-State trade that results from the prohibition of the section is no more than indirect or consequential. The strong current of authority in this Court supports this conclusion. (at p562)

17. In the forefront of these authorities I place Wragg v. New South Wales (1953) 88 CLR 353 . I do so because, what was there decided by a unanimous court, does, I think, anser the question whether the sales giving rise to the convictions here were sales in the course of the appellant's inter-State trade, and, because the acceptance of the decision that the effect of the law impugned upon inter-State trade was not direct but consequential, has been decisive in a number of other cases. Wragg's Case (1953) 88 CLR 353 was decided after the Banking Case (1950) AC 235; (1949) 79 CLR 497 . By virtue of a law of New South Wales the maximum price for the sale of potatoes in New South Wales, whether imported or not, had been fixed. The plaintiff's contention was that s. 92 prevented the application of the price fixing legislation to the sale in New South Wales of potatoes imported from Tasmania. Taylor J. states the contention thus (1953) 88 CLR, at p 393 :

" . . . the plaintiffs do contend that the fixing of a maximum price upon sales by retail, or upon any anterior sale, would infringe the provision of s. 92, for it is claimed that the business of importing potatoes cannot be freely carried on if, upon a sale at any stage of their marketing, a maximum price is fixed."

This contention was rejected. It was held that even the first sales in New South Wales of potatoes imported from Tasmania had not been shown to be sales in the course of inter-State trade. Dixon C.J., with the concurrence of other members of the Court, said (1953) 88 CLR, at p 385 :

"The argument upon which the plaintiffs depend appears to me to mean that in the case of an article imported into a State, State law cannot fix the maximum price at which it may be sold in any transaction between buyer and seller at any stage between importation and purchase by the actual consumer. It is of course clear that in the case of most imported articles sales which take place in the course of distribution to the consumer are, when considered by themselves, entirely intra-State transactions. If they take on the character of inter-State commerce it must be in virtue of some inseparable connexion with the importation of the article from another State."

His Honour also said (1953) 88 CLR, at p 387 :

"It is, I think, undeniable that once the potatoes imported from Tasmania in the course of business which is described in the case stated have been delivered from the wharf in Sydney any further dealing with them by sale or other disposition forms part of the domestic trade of New South Wales. If any such sale is brought within the protection of s. 92, so that it cannot be governed by State legislation fixing the maximum price, it can only be on the ground that the fixing of the maximum price for the domestic sale produces economic consequences prejudicing importation because it affects the domestic price which an importer can afford to pay. This cannot, in my opinion, justify the application of s. 92 to the transactions."

Taylor J., with the concurrence of other members of the Court and after referring to the Banking Case, said (1953) 88 CLR, at p 398 :

"The substance of the plaintiff's argument on this point was that the prescription of maximum prices at any stage of the marketing in New South Wales of Tasmanian potatoes directly burdens or interferes with inter-State trade as such. But it is important again to observe that both the Act and the order made thereunder deal generally with goods, whether locally produced or imported from any other country, and any effect which the prescription of a general price for intraState sales may have on the business of importing potatoes from Tasmania is not a direct effect but an economic consequence too remote to constitute an impairment of the freedom which s. 92 assures."

Speaking specifically of sales by importers, his Honour said (1953) 88 CLR, at p 399 :

"With respect to sales by 'primary wholesalers' who are importers there may be stronger grounds for invoking s. 92, for some of these sales may actually be made in the course of inter-State trade. But before the plaintiffs can invoke s. 92 they must establish that, at least, some of those sales are of such a character as to be within the protection of s. 92."

His Honour held that it had not been established that any sales by importers were made in the course of inter-State trade. That they were first sales of imported goods, was not, of itself, sufficient to establish this. (at p563)

18. Next I consider two cases much relied upon by counsel for the appellant, which I regard as having been decided on the basis that the law impugned was invalid because it burdened the importation of goods into one State from another State. The first is The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia (1926) 38 CLR 408 ; the second Vacuum Oil Co. Pty. Ltd. v. Queensland (1934) 51 CLR 108 . The basis of these decisions invalidating laws of South Australia and Queensland respectively was stated by Taylor J. in Wragg's Case (1953) 88 CLR, at pp 396, 397 in language which I entirely accept. His Honour said that the former was a case "where the burden attracted by the first sale of motor spirit in South Australia or by its use in that State was regarded as a tax on the goods in the importers' hands". The second was a case where "a majority of the Court held the Queensland legislation to be in conflict with s. 92, not because the first sale of petrol in Queensland was itself a part of trade, commerce and intercourse among the States, but rather because" the importer was taxed. His Honour said (1934) 51 CLR 108 :

"The destruction of the legislation under consideration in the last two cases may well be said to have resulted, not because the affected transactions were themselves necessarily part of inter-State trade and commerce, but because the particular burdens imposed were, in the circumstances, considered to be burdens directly imposed upon inter-State trade as such." (at p564)

19. The next cases are the so-called Margarine Cases, Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR 55 , and Beal v. Marrickville Margarine Pty. Ltd. (1966) 114 CLR 283 . As to these cases I adopt what Kitto J. said in Samuels v. Readers' Digest Association Pty. Ltd. (1969) 120 CLR 1, at pp 30-31 :

"The Margarine Cases were cases of manufacture, but the principle for which they are authorities is missed if they are thought of as having been decided as they were because of some consideration applying exclusively to manufacture. The ratio decidendi had to do, not with anything peculiar to manufacture, but with the distinction between laws which impose by their own force restrictions or burdens upon the very things which s. 92 protects, namely inter-State trade, commerce and intercourse themselves, and laws which impose restrictions or burdens upon things antecedent or preparatory or collateral to inter-State trade, commerce or intercourse and affect such trade, commerce and intercourse as a matter only of economic or practical consequence. The application of that ratio decidendi to cases other than cases of manufacture is not an extension or development of the law as laid down in the Margarine Cases and the long line of cases from which they extract the essence. It is not open to be condemned as resulting rather from a pursuit of logic than upon the actual provisions of the Constitution. The purpose of the test which Dixon J. propounded is the exact opposite. It is to bring thought on the subject back to the very terms of the Constitution, and to insist that since s. 92 decrees freedom for nothing but trade, commerce and intercourse among the states no considerations of logic or supposed reasonableness should be allowed to extend the freedom beyond that concept to facts, events or things which, though incidental or ancillary or conducive to or necessarily consequential upon some activity of trade, commerce or intercourse (1955) 93 CLR 55, at p 79 , neither form part and parcel of it nor give it the quality of inter-Stateness."

The test propounded by Dixon J. accorded with his Honour's statement in Hospital Provident Fund Pty. Ltd. v. Victoria (1953) 87 CLR 1, at pp 17-18 . Part of that statement is as follows:

"But if the fact or event or thing with reference to which or in consequence of which the law imposes its restriction or burden or liability is in itself no part of inter-State trade and commerce and supplies no element or attribute essential to the conception, then the fact that some secondary effect or consequence upon trade or commerce is produced is not enough for the purposes of s.92." (at p565)

20. The next case for consideration is Fish Board v. Paradiso (1956) 95 CLR 443 . Counsel for the appellant greatly relied upon this decision but, as the argument was, in my opinion, based upon a misconception of what was decided, I will explain in some detail how I understand the case. The law impugned was s. 27 (1) of The Fish Supply Management Act (Q.). It provided :

"No person shall in any district sell or purchase any fish unless such fish have first been brought to a market in that district and there sold at a sale conducted by the board. . . ."

It was decided that the subsection, in so far as it purported to prevent the purchaser of fish in the course of inter-State trade from dealing with it upon its delivery to him in Queensland otherwise than by placing it at the disposal of the Board, constitutes an infringement of s. 92 of the Constitution because of its direct impact upon inter-State trade. The majority of the Court said (1956) 95 CLR, at p 451 :

"The prohibition contained in s. 27 (1) is a conditional prohibition against the sale or purchase of fish in any fish supply district and unless the specified condition has been observed any such sale or purchase is unlawful. No difficulty arises in applying the section to cases where no element of inter-State trade is present but difficulties resulting from the nature of the condition immediately obtrude themselves in cases such as the present. It may be conceded that the sale the subject of the charge against the defendant was an intra-State transaction and, as such, that it was, in general, subject to control by the State legislature."

Here it is stated categorically that the retail sale of fish purchased by the seller from a New South Wales company and delivered to him in Queensland was an intra-State transaction. Had that retail sale been part of an inter-State transaction, that would have been an end of the matter for inter-State trade would have been forbidden by the State law. It was because the retail sale was an intraState transaction that the Court had to go on and consider the effect of the section upon the importation of fish. The following statement explains why s. 27 (1) could not apply to the sale (1956) 95 CLR, at p 451 :

". . . when the subsection as a whole is considered it appears quite clearly not as a provision the object of which is to make it unlawful for retailers to sell fish in Queensland, but rather as a provision designed to ensure that all fish in Queensland shall be initially distributed in each particular district by means of sales conducted by the board."

The operation of the subsection was stated as follows:

". . . if the subsection had provided that all fish in or coming into Queensland, whether in the course of inter-State trade or not, should be delivered to the board for sale there could be no doubt that it would collide with s. 92. Indeed we do not understand that proposition to be in dispute. But what difference is there between such a provision and that now under consideration? In each case the plain object is to compel the purchaser to place his property in the disposition of the board; the only difference is in the sanction provided."

So understood, the burden imposed by the subsection was a direct burden upon the importation of fish from New South Wales. The terms of the judgment flatly contradict the proposition that a general prohibition of the retail sale of a commodity in a State cannot, by reason of s. 92, apply to the sale of goods imported from another State. Rather than supporting the appellant's case, Fish Board v. Paradiso (1956) 95 CLR 443 makes untenable two principal propositions upon which it was based - (1) that the sale of the margarine was not an intra-State transaction, and (2) that a prohibition of retail sale in a State simpliciter cannot constitutionally apply to goods imported from another State for such sale. (at p566)

21. I now come to a series of cases upon miscellaneous matters decided since 1965 in which the differences of opinion forecast by the Privy Council have become pronounced. In Deacon v. Mitchell (1965) 112 CLR 353 , Webb v. Stagg (1965) 112 CLR 374 , and Tamar Timber Trading Co. Pty. Ltd. v. Pilkington (1968) 117 CLR 353 the Court, by a majority, decided that Tasmanian laws prohibiting the carriage of timber in Tasmania validly applied to timber that it was intended at a future time should be exported to other States. The basis of the decisions was that the transport in question was not itself part of interState trade and that its prohibition did not constitute an unlawful impediment to inter-State trade. It is the latter proposition that is important here and the differences of opinion in the Court about the former proposition are not of present significance. In the last-mentioned case Taylor J. (1968) 117 CLR, at p374 explained the second proposition in words which I have cited earlier to the effect that a law of general application prohibiting activity not in itself part of interState trade does not infringe s. 92. Kitto J., who had not taken part in the decision of the earlier cases, based his decision on the same broad principle. He said (1968) 117 CLR, at p 367 :

"The point is that s. 92 decrees freedom, not for every step a person may take with a view or for the purpose of preparing to carry out an example of inter-State trade, but only for a step which itself is in the course of, or for the purpose of actually carrying out, an example of inter-State trade; and that therefore a step which is only a prerequisite of the initiation of such an example is outside the subject matter of the protection."

What is true of a step in anticipation of inter-State trade is also true of a step consequent upon inter-State trade. Owen J. and I decided the cases by application of the same principles as those applied by Kitto J. and Taylor J. (1965) 112 CLR, at pp 366, 381, 382 and 385 . These cases were not simply transport cases requiring a determination whether or not a journey within a State is, or is not, part of a larger interState movement of goods; they were concerned generally with the application of s.92 to transactions which are not themselves part of inter-State trade and reaffirmed the principles upon which Wragg's Case (1953) 88 CLR 353 and the Margarine Cases were decided. I do not think that the case now before the Court could be decided in favour of the appellant without a substantial departure from the foregoing decisions. The contentions of the appellant accord, not with the decision of the majority, but rather with the reasoning of Barwick C.J. who, in dissenting, said in Tamar Timber Trading Co. Pty. Ltd. v. Pilkington (1968) 117 CLR, at p 364 :

"Without attempting to exhaust the relevant effect of s. 92, it can, in my opinion, be said that, consistently with s. 92, a law cannot be allowed an operation which would prevent the movement of a commodity with which the citizen challenging the law trades inter-State."

The substitution of the word "sale" for the word "movement" in the passage cited represents the argument of the appellant in this case. That argument was expressed as follows:

"A State law which, if it were to operate according to its terms, would prohibit the importer of a recognized article of commerce from selling that article within the State after its importation by him from another State for the purpose of such sale, would to the extent of such a purported prohibition be involved in infringing s. 92." (at p568)

22. Harper v. Victoria (1966) 114 CLR 361 is an important case. In the first place the Court, by a majority, decided the case by the application of Wragg's Case (1953) 88 CLR 353 . See per McTiernan J. (1966) 114 CLR, at p 377 , Taylor J. (1966) 114 CLR, at p 377 , Menzies J. (1966) 114 CLR, at p 378 (first paragraph) and Owen J. (1966) 114 CLR, at p 382 . This was put forcibly by McTiernan J. who, in referring to s. 41D of the Marketing of Primary Products Act 1958 (Vict.) which imposed an obligation upon an importer of eggs into Victoria from New South Wales to grade, test and mark the eggs before selling them in Victoria, said (1966) 114 CLR, at p 377 :

"The section operates after importation or the inter-State commerce has ended. When the obligation imposed by s. 41D to grade, test and mark the eggs arises the eggs are already committed to the intra-State retail trade of Victoria. The section operates at that stage, not beforehand; it does not restrict the plaintiff's trade as at the frontier. If the section entails any consequence to the plaintiff's inter-State commerce the consequence is economic : it does not operate on the inter-State commerce ; its restrictive operation is limited to the domestic retail commerce. In my view the contention of the plaintiff as to the application of s. 92 of the Constitution is met by the principles enunciated by Dixon C.J. in Wragg v. New South Wales (1953) 88 CLR 353 ."

Secondly, Taylor J. and Owen J. both made it clear that there was, in their opinion, no inconsistency between Wragg's Case (1953) 88 CLR 353 and Paradiso's Case (1956) 95 CLR 443 and explained the limits of Paradiso's Case (1956) 95 CLR 443 . Thus, Taylor J. said (1966) 114 CLR, at p 377 :

"The problem raised is clearly covered by the decision in Wragg v. New South Wales (2) - which decided that a company which had imported goods from another State into New South Wales could, notwithstanding s. 92, be bound by local legislation not to sell them by retail at prices in excess of those fixed for sales by retail - and is plainly distinguishable from that with which the Court later dealt in Fish Board v. Paradiso (1956) 95 CLR 443 , where the legislation was held to interfere directly with the performance of an inter-State contract calling for the delivery of goods from the vendor in one State to the purchaser in another. I adhere to the observation which I made in the earlier case, and accordingly, it follows that I agree that the demurrer should be allowed."

Owen J. explained the limits of Fish Board v. Paradiso (1956) 95 CLR 443 and in distinguishing that decision said (1966) 114 CLR, at pp 382 - 383 :

"A person who in the course of his inter-State trade brings eggs into Victoria from another State is not required to place them at the disposal of the Board." (at p569)

23. The decision in Harper v. Victoria (1966) 114 CLR 361 is entirely inconsistent with the appellant's main thesis that a restriction upon the sale of goods imported from one State into another State for sale in the latter State is contrary to s. 92. (at p569)

24. In O'Sullivan v. Miracle Foods (S.A.) Pty. Ltd. (1966) 115 CLR 177 , the Court, by a majority, decided that s. 23 of the Margarine Act (S.A.), which prohibited the sale of margarine unless it contained a percentage of starch or arrowroot, was contrary to s. 92 in so far as it applied to margarine manufactured in New South Wales and sold in South Australia. The only judgment to which I want to refer is the joint judgment of Taylor J. and Owen J. which it was argued was inconsistent with what Taylor J. had first said in Wragg's Case (1953) 88 CLR 353 and had repeated in other cases, e.g. Deacon v. Mitchell (1965) 112 CLR 353 and Harper's Case (1966) 114 CLR 361 , and which Owen J. had adopted, e.g. Harper's Case (1966) 114 CLR 361 . I regard it as unthinkable, in a judgment which referred to Wragg's Case (1953) 88 CLR 353 without any criticism, that their Honours were departing from the settled principles which Taylor J. had done so much to establish by his epoch making judgment in Wragg's Case (1953) 88 CLR 353 . What was said in O'Sullivan's Case (1966) 115 CLR 177 was not an off-hand recantation. First, it is to be observed, that their Honours decided that the retail sales in question were not made in the course of inter-State trade (1966) 115 CLR, at pp 189 and 190 . The explanation of the judgment lies elsewhere. It is that their Honours regarded the otherwise pointless law under consideration as one which could have no reason other than to impose a burden upon the importation of margarine into South Australia. Having referred to the evidence, their Honours said (1966) 115 CLR, at p 190 :

"Upon the evidence s. 23 cannot be justified as a provision concerned with the safeguarding of public health; it is merely a provision intended to enable a simple test to be made in order to establish that the product contains dry starch or arrowroot and, presumably, that it is not butter. But the direct effect of the section is to put an end to trade in margarine between South Australia and other States where the margarine is imported into South Australia for the purpose of resale if the margarine does not conform to the requirements of s. 23. 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 interState 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."

It is apparent, I think, that the law was regarded as one of the sort described in Mansell v. Beck (1956) 95 CLR 550, at p 565 as follows:

"A law which imposes restrictions or burdens upon some description of act matter or thing not of its own nature forming part of inter-State trade, commerce or intercourse and does so because of some characteristic which is independent of any element entering into that conception is very unlikely to be found to destroy impair or detract from the freedom secured by s. 92. It may conceivably do so if upon examination of the facts and scrutiny of its intended operation it appears that in spite of the prima-facie absence of any but an accidental interference with inter-State trade, commerce and intercourse the law is but a circuitous means of burdening, restricting or impeding operations of a kind which s. 92 protects."

So understood the joint judgment stands with every word of what their Honours have said in considered judgments over a period of thirteen years beginning with Wragg's Case (1953) 88 CLR 353 . (at p570)

25. Two cases decided in 1969 have still to be considered. In Samuels v. Readers' Digest Association Pty. Ltd. (1969) 120 CLR 1 , the Court, by a majority, decided that a South Australian law prohibiting the use of trading stamps and the giving of rebates in kind validly applied to the defendant who sent from Sydney, to persons in Adelaide, a letter containing trading stamps and offering to sell a record album with a collateral advantage, i.e. the gift of another record. The actual decision is not particularly important for present purposes. What was said, however, by Kitto J. and Taylor J. is of great importance. Kitto J. (1969) 120 CLR, at pp 27-31 reaffirmed the passage from the judgment of Dixon J. in Hospital Provident Fund Pty. Ltd. v. Victoria (1953) 87 CLR 1 to which reference has already been made. This passage, I have no doubt from his Honour's concurrence with the judgments of Dixon and Taylor JJ. in Wragg's Case (1953) 88 CLR 353 , would have been applied to the sales of goods brought into one State from another State for sale by a retail transaction. His Honour added (1969) 120 CLR, at p 31 :

"A necessary application of the principle which I thus take to be established is that where the operation of a law is to impose a prohibition or burden upon any form of conduct with respect to goods, the question whether s. 92 prevents that operation in a given instance depends upon whether the conduct in that instance is an integral part or feature of a transaction of inter-State trade or is only preliminary or preparatory to it. If the former, s. 92 prevents the application of the law to that case. If the latter, s. 92 has nothing to say to the case."

Again, what is said of a step preliminary to inter-State trade applies mutatis mutandis to a step subsequent to inter-State trade. Taylor J. (1969) 120 CLR, at p 36 reaffirmed what was said by Dixon C.J., McTiernan J., and Webb J. in Hughes and Vale Pty. Ltd. v. New South Wales (No. 2) (1955) 93 CLR 127, at p 162 , and by Dixon C.J. and Webb J. in Mansell v. Beck (1956) 95 CLR, at pp 564-565 in a passage from which I have already quoted. What Kitto J. and Taylor J. said in their judgments in Samuels v. Readers' Digest Association Pty. Ltd. (1969) 120 CLR 1 is completely at odds with the contentions of the appellant here. (at p571)

27. It was proved by evidence which has not been challenged that at least for a very long time and perhaps from the first time that the product called margarine began to be made, there has been used in making it an ingredient, natural or synthetic, which gives it a colour different from the almost colourless appearance that otherwise it would have. For a long time the colour so imparted has been a yellow colour similar to the colour of butter. It has been, also, the practice to use a flavouring ingredient to make the product more palatable and to make it a more saleable commodity. (at p595)

28. In the process of manufacture of margarine for commercial purposes, there is no essential difference between the substances which are now defined by legislation as being respectively "table margarine" and "cooking margarine". Evidence was given that until the enactment in Victoria of legislation similar to that which was enacted later in Tasmania, all margarine had a taste and a colour similar to the taste and colour of the margarine the subject of these charges. In consequence of legislation in Victoria, margarine was afterwards marketed in that State without the colouring and flavouring substances, but apart from that, according to one of the witnesses, "margarine always had the taste and colour that we have got here". It is true that the product thus marketed in Victoria after the introduction of restrictive legislation was marketed as "cooking margarine" and it was not disputed by the witnesses that it was correct to refer to it as margarine. Therefore it cannot be said that margarine without the colouring and flavouring substances stands wholly outside the area of trade. But, in my opinion, it is clear from the evidence that, but for legislative restrictions and but for the statutory definitions in the enactments by which those restrictions are imposed, it was a product that included in it a colouring substance and a flavouring substance and that had a recognized colour and taste derived from those substances which constituted the well-known ordinary article of commerce called margarine. In these circumstances it is right, in my opinion, to regard the product having those characteristics as being the commodity in which the appellant was trading and to reject the suggestion that the prohibition imposed by s. 6 left the appellant free to trade in a commodity in which it was trading and in which it desired to trade, and merely regulated that trade. In my opinion, the proper conclusion on the facts is that if the use of the prohibited substances is excluded from the process of manufacture, the resulting product, although it may be called margarine, is in a relevant sense a thing different in kind from the commercial product in which the appellant traded. (at p596)

29. The consequence of those views concerning the facts of the case is that the law imposes an absolute prohibition on sale and it cannot be regarded as a regulatory provision compatible with freedom of trade. In this case there is, of course, no suggestion of an overriding necessity to prohibit the sale of the product, derived from an apprehension of danger to life or to health: see Tasmania v. Victoria (1935) 52 CLR 157, at pp 168-169 . (at p596)

30. In my opinion the appeal should be allowed. (at p596)

GIBBS J. The appellant is one of a group of companies which carried on the business of retailing goods, including foodstuffs, at a number of shops (called "supermarkets") in and around Launceston in Tasmania. In the course of its business the appellant ordered a consignment of packages of "Marville Cooking Margarine" from Marrickville Holdings Limited, a company which manufactures that product in Sydney. The order was signed by the appellant's managing director and handed by him, in Launceston, to an agent of Marrickville Holdings Ltd., who took the order form to Sydney, where an acceptance was endorsed on it. In fulfilment of the order, margarine was manufactured and was then despatched, in cartons of half-pound packages, from Sydney to Launceston. Upon their arrival in Launceston some of the packages of the margarine were displayed for sale in the cool shelves of one of the appellant's shops in that city, and, on 23rd October 1970, the appellant sold by retail three of the packages. In respect of these sales the appellant was charged that it did sell cooking margarine to which there had been added a prohibited colouring substance, namely, beta carotene, contrary to s. 6 of the Dairy Produce Act 1969 (Tas.) ("the Act") and that it did sell cooking margarine to which there had been added prohibited flavouring substances, namely, aliphatic delta lactones of carbon chain length between six and fourteen, contrary to s. 6 of the Act. A stipendiary magistrate convicted the appellant of both offences and an appeal against his judgment is now brought to this Court. (at p597)

2. Section 6 of the Act reads:

"No person shall, within the State, manufacture or sell cooking margarine to which there is or has been added any - (a) prohibited colouring substance; or (b) prohibited flavouring substance."

"Cooking margarine" means "margarine that contains beef fat or mutton fat, or beef fat and mutton fat, in a quantity of not less than ninety per cent by weight of the total quantity of fat and oil contained in the margarine" (s. 3 of the Act) and it is conceded that the margarine in question answered this description. "Prohibited colouring substance" and "prohibited flavouring substance" are defined by s. 3 to include a colouring substance and a flavouring substance respectively specified in Pt I and Pt II of the Schedule to the Act. Part I specifies, inter alia, beta carotene and Pt II specifies, inter alia, aliphatic delta or gamma lactones of carbon chain length between six and fourteen. These prohibited substances were admittedly added to the refined beef tallow during the course of the manufacture of the margarine. The effect of these additives is to make the resulting product look and taste like butter; margarine which does not contain these or similar substances is, according to the evidence, white, insipid and unpalatable. (at p597)

3. It was submitted on behalf of the appellant that the prohibited substances had not been added to the margarine within the meaning of s. 6 since they were ingredients used in the course of manufacture and were not added to the product after it had become margarine. This contention cannot, in my opinion, be supported. The section forbids not only the sale but also the manufacture of margarine to which a prohibited substance has been added and it is therefore impossible to construe the section as prohibiting the addition of the substances only after the process of manufacture has been completed. The appellant in the present case sold margarine to which the prohibited substances had been added, notwithstanding that the addition had taken place in the course of manufacture. (at p597)

4. The main contention of the appellant, however, is that if the provisions of s. 6 of the Act operated to prohibit the sale by the appellant of the margarine which it had brought from New South Wales into Tasmania for the purpose of selling it in the latter State they would conflict with s. 92 of the Constitution. (at p598)

5. Each of the sales which formed the subject of the charges was made within the four walls of a Tasmanian shop. From the beginning to the end of the transaction the buyer and the seller's employees were present in that shop and the goods were in stock there. In my opinion, there was no inter-State element in any of these sales; each of them formed part of the trade which the appellant carried on within Tasmania. It is true that there had been an inter-State transaction in respect of the goods before the sales were effected. But although the appellant's purpose in engaging in that inter-State transaction was to sell the goods in Tasmania, the inter-State transaction did not extend to and include the subsequent sales within the shop. It had ended before the goods were sold to the customers who, of course, simply bought out of stock and were not concerned how the goods got into stock or whence they had been obtained. When a merchant makes a sale over the counter to a customer who comes into his shop to buy goods which he has in stock, it seems to me that the commercial reality is that the sale to the customer is a domestic sale and is not part of the merchant's inter-State trade, notwithstanding that the merchant had, by means of an inter-State transaction, obtained the goods for the purpose of selling them in his shop. In my opinion, the conclusion that the sales in question in the present case were purely intra-State transactions accords with the authorities: W. &A. McArthur Ltd. v. Queensland (1920) 28 CLR 530, at pp 540, 559-560 ; Wragg v. New South Wales (1953) 88 CLR 353, at pp 387, 398-399 ; Fish Board v. Paradiso (1956) 95 CLR 443, at p 451 ; Harper v. Victoria (1966) 114 CLR 361, at pp 377, 382 ; and O'Sullivan v. Miracle Foods (S.A.) Pty. Ltd. (1966) 115 CLR 177, at p 189 . (at p598)

6. However the appellant contends that if it is prohibited from selling in Tasmania the margarine which it has imported from New South Wales for the purpose of sale in Tasmania, the prohibition will constitute a direct burden on its inter-State trade and will infringe s. 92 even if the sales which it is prohibited from making are themselves of an intra-State character. There can be little doubt that if s. 6 of the Act is valid the appellant will cease to carry on its inter-State trade in "Marville Cooking Margarine". The purpose of that inter-State trade is to have that brand of margarine available for sale in Tasmania. If the margarine cannot lawfully be sold in Tasmania the appellant is likely to find it impossible, for commercial reasons, to continue to buy the margarine. The practical consequence of the law may well be to put an end to the appellant's inter-State trade in margarine. (at p599)

7. However, from a purely legal point of view, the appellant's inter-State trade is not affected. The appellant has the legal right to continue to order "Marville Cooking Margarine" from Marrickville Holdings Ltd. for delivery in Tasmania if it wishes to do so and to receive the margarine in Tasmania if it is delivered there. In other words, s. 6 leaves the appellant absolutely free, as a matter of law, to continue its inter-State trade in the margarine, although as a matter of practical and commercial reality the section may have the effect of destroying that trade. The important question for decision is whether, in these circumstances, the law infringes s. 92. (at p599)

8. The answer to that question depends on whether s. 6 of the Act operates to restrict the inter-State trade of the appellant directly and immediately or whether it does no more than create some indirect or consequential impediment which may fairly be regarded as remote: The Commonwealth v. Bank of New South Wales (1950) AC 235, at p 310; (1949) 79 CLR 497, at p 639 . The proposition thus enunciated by their Lordships has been refined in this Court. In Hospital Provident Fund Pty. Ltd. v. Victoria, Dixon C.J. said (1953) 87 CLR 1, at pp 17-18 :

"If a law takes a fact or an event or a thing itself forming part of trade commerce or intercourse, or forming an essential attribute of that conception, essential in the sense that without it you cannot bring into being that particular example of trade commerce or intercourse among the States, and the law proceeds, by reference thereto or in consequence thereof, to impose a restriction, a burden or a liability, then that appears to me to be direct or immediate in its operation or application to inter-State trade commerce and intercourse, and, if it creates a real prejudice or impediment to inter-State transactions, it will accordingly be a law impairing the freedom which s. 92 says shall exist. But if the fact or event or thing with reference to which or in consequence of which the law imposes its restriction or burden or liability is in itself no part of inter-State trade and commerce and supplies no element or attribute essential to the conception, then the fact that some secondary effect or consequence upon trade or commerce is produced is not enough for the purposes of s. 92."

The principle expressed in this passage has been accepted as correct and applied in a number of subsequent cases. It forms, in my opinion, the ground of the decision of the majority of the members of the Court who decided Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR 55 and Beal v. Marrickville Margarine Pty. Ltd. (1966) 114 CLR 283 , where it was held that restrictions on the manufacture of a commodity intended to be sold and delivered inter-State do not conflict with s. 92 (see particularly in Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR, at pp 78-79 ). Other decisions, in which the principle has been applied, at least by some members of the Court, are Reg. v. Anderson; Ex parte Ipec-Air Pty. Ltd. (1965) 113 CLR, 177 , where a refusal to permit the importation of aircraft intended to be used in inter-State transportation was upheld (1965) 113 CLR, at pp 193, 196 , Damjanovic &Sons Pty. Ltd. v. The Commonwealth (1968) 117 CLR 390 , where an Act imposing a levy on hens was held validly to apply in respect of hens owned and kept for the production of eggs intended exclusively for sale in the course of inter-State trade (1968) 117 CLR, at pp 399-401, 403-404 , and Associated Steamships Pty. Ltd. v. Western Australia (1969) 120 CLR 92 , where stamp duty was held payable on amounts received in payment of freight charged for carriage of goods inter-State (1969) 120 CLR, at pp 109, 111 . For present purposes, however, the most important application of the principle is to be found in Wragg v. New South Wales (1953) 88 CLR 353 , where a law fixing the maximum price on the sale of potatoes in New South Wales was held validly to apply to potatoes grown in Tasmania and imported into New South Wales for the purpose of sale there. Dixon C.J. said (1953) 88 CLR, at p 387 :

"The law restricting the price is not one operating in reference to or in consequence of any matter or thing itself forming part of trade, commerce or intercourse among the States. It does not limit the legal freedom to import potatoes or to contract to buy them for shipment from Tasmania. Its operation is to create conditions of trade in potatoes within New South Wales which react on the economic, not the legal, capacity of the trader desiring to import Tasmanian potatoes. The economic consequences which it may have upon inter-State trade may well be serious, but that is a different thing from interference by law or government action with the freedom which s. 92 confers."

In the same case Taylor J. said (1953) 88 CLR, at p 398 :

"The substance of the plaintiff's argument on this point was that the prescription of maximum prices at any stage of the marketing in New South Wales of Tasmanian potatoes directly burdens or interferes with inter-State trade as such. But it is important again to observe that both the Act and the order made thereunder deal generally with goods, whether locally produced or imported from any other country, and any effect which the prescription of a general price for intra-State sales may have on the business of importing potatoes from Tasmania is not a direct effect but an economic consequence too remote to constitute an impairment of the freedom which s. 92 assures."

McTiernan, Williams, Fullagar and Kitto JJ. expressed agreement with both Dixon C.J. and Taylor J. Wragg v. New South Wales (1953) 88 CLR 353 was followed and applied by the majority of the Court in Harper v. Victoria (1966) 114 CLR 361, at pp 377, 377-378, 382 . (at p601)

9. If the principle which underlies these decisions is applied to the present case the result is that the law under attack must be upheld as valid. That law operates with respect to sales within Tasmania. Those sales, as I have held, are themselves no part of inter-State trade, and they do not supply any element or attribute essential to the concept of inter-State trade. The importation of the margarine can be carried to completion notwithstanding the ban on its sale within the State. The present case may be compared with Fergusson v. Stevenson (1951) 84 CLR 421 , where the defendant was charged under the Fauna Protection Act, 1948 (N.S.W.) with having in his possession in Sydney certain kangaroo skins, which had been consigned from Brisbane to Sydney where they were to be sorted and exported overseas. The defendant was held entitled to the protection of s. 92, because the transaction in which he was engaged was one of inter-State trade, and his possession of the skins in Sydney was "an inseparable concomitant or consequence of that transaction" (1951) 84 CLR, at p 435 . The possession by the appellant of the margarine in Launceston could no doubt appropriately be similarly described, but the sale by the appellant of the margarine after it had been delivered to him was not "an inseparable concomitant or consequence" of his transaction with Marrickville Holdings Ltd. (at p601)

10. In my opinion, although s. 6 of the Act has an economic, commercial or practical effect on the appellant's inter-State trade, that effect must, in accordance with the principles that I regard as now settled, be regarded as consequential rather than direct. Section 6 therefore does not restrict the inter-State trade of the appellant contrary to s. 92. (at p601)

11. However, it is necessary to consider four cases which, at first sight, seem at variance with the principles to which I have referred and upon which the appellant naturally places strong reliance. Two of these cases were decided before the effect of s. 92 had been expounded in the Bank Case (1949) 79 CLR 497 . In The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia (1926) 38 CLR 408 , an Act which imposed a tax upon the income of a vendor who sold Motor spirit within the State of South Australia for the first time after the entry of such motor spirit into that State was held to violate s. 92. In Vacuum Oil Co. Pty. Ltd. v. Queensland (1934) 51 CLR 108 , an Act whose effect was to require the first seller of motor spirit within the State of Queensland to buy a proportionate quantity of power alcohol was similarly held invalid. The Act in the latter case infringed s. 92 because it placed a special burden on the goods in the State to which they had come, simply because they had come from the other State: see James v. The Commonwealth (1936) AC, at p 631; (1936) 55 CLR, at p 59 . Although the Justices who decided the former case appear to have considered that the Act was invalid because it covered both inter-State and intra-State sales and was inseverable, it seems right to regard the burden imposed by the legislation considered in that case as a tax on the goods in the importer's hands (see per Taylor J. in Wragg v. New South Wales (1953) 88 CLR, at pp 396-397 ) so that in both of these cases the legislation which was held to be invalid imposed a burden on the importer because he was the importer - a burden the criterion of whose imposition was the importation of the petrol into the State. It is well settled that s. 92 is not limited in its operation to laws which discriminate against inter-State trade; "An Act may contravene s. 92 though it operates in restriction both of intraState and of inter-State trade" - James v. The Commonwealth (1936) AC, at p 628; (1936) 55 CLR, at p 56 . Where, however, a statute places a special burden on an activity simply because it is an activity of inter-State trade, it would seem impossible to resist the conclusion that the burden is directly imposed upon the inter-State trade. Of course, the fact that the burden is imposed after the trade has terminated does not necessarily prevent it from amounting to a direct burden on the trade: Wragg v. New South Wales (1953) 88 CLR, at p 397 . (at p602)

12. The next case, Fish Board v. Paradiso (1956) 95 CLR 443 , is most important to the appellant's argument. It was there held by Dixon C.J. and Williams, Webb, Fullagar, Kitto and Taylor JJ., that s. 27 (1) of The Fish Supply Management Acts, 1935 to 1951 (Q.), which provided that "No person shall in any district sell or purchase any fish unless such fish have first been brought to a market in that district and there sold at a sale conducted by the board. . . .", infringed s. 92 in so far as it purports to prevent a purchaser of fish in the course of inter-State trade from dealing with it upon its delivery to him in Queensland otherwise than by placing it at the disposal of the board. Their Honours said (1956) 95 CLR, at p 452 :

"In terms s. 27 (1) operated to prohibit the sale by the defendant of the fish ordered by him as from the moment of its entry into Queensland and the event which attracted the prohibition was its entry into that State."

They went on to say that they regarded the provision as one in substance providing that all fish in or coming into Queensland, whether in the course of inter-State trade or not, should be delivered to the board for sale. Their Honours did not explain why they considered that the event which attracted the prohibition imposed by s. 27 (1) was the entry of the fish into the State. However, by s. 3 of Thu Fish Supply Management Acts, "sell" is defined to include "keep or have in possession for sale". The Act therefore forbad any person who imported fish from another State for sale to keep or to have the fish in his possession for sale. The case may therefore perhaps be regarded as one in which the legislation made it impossible for the parties to complete an interState contract calling for fish to be delivered from one State to another for the purpose of sale - a case not unlike Fergusson v. Stevenson (1951) 84 CLR 421 . However it cannot be thought that the Justices who delivered the judgment in Fish Board v. Paradiso (1956) 95 CLR 443 intended, sub silentio, to depart from the principles which they themselves had recently affirmed in Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR 55 and Wragg v. New South Wales (1953) 88 CLR 353 . (at p603)

13. Finally, in O'Sullivan v. Miracle Foods (S.A.) Pty. Ltd. (1966) 115 CLR 177 , it was held by Barwick C.J. and Taylor and Owen JJ., Menzies and Windeyer JJ. dissenting, that s. 23 of the Margarine Act, 1939-1956 (S.A.) which provides that no person shall manufacture, sell or have in his possession for sale any margarine unless onetenth of one per centum by weight of such margarine consists of dry starch or arrowroot intimately mixed with other constituents of the margarine, imposes a burden contrary to s. 92 in so far as it applies to margarine manufactured in another State but sold or held for sale in South Australia. The decision may be supported on the ground that the section not only prohibited sale but also made it an offence for a person who had brought margarine into South Australia from another State to have it in his possession for sale. If, however, the decision can not be distinguished from the present case, I would, with great respect, feel bound to decline to follow it, on the ground that it is contrary to Grannall v. Marrickville Margarine Pty. Ltd. (1955) 93 CLR 55 and Wragg v. New South Wales (1953) 88 CLR 353 . In O'Sullivan v. Miracle Foods (S.A.) Pty. Ltd. (1966) 115 CLR, at p 187 , the Chief Justice said:

"Though the forbidden sale may be characterized as an intra-State sale, its prohibition directly puts an end to the commercial possibility of inter-State movement in the commodity."

For the reasons I have given, I respectfully consider that the commercial consequences of a prohibition on an intra-State sale do not cause such a prohibition to be a direct burden on the interState trade which had been engaged in with a view to making the intra-State sale, but which was completed before that sale was made. (at p604)

14. I hold, therefore, that s. 6 of the Act does not directly burden the appellant's inter-State trade. It operates after that trade has been completed and has only an economic or commercial effect upon it. In accordance with the principles to which I have referred I hold that the section does not contravene s. 92. It is therefore unnecessary to decide whether if the provisions of s. 6 did impose a direct burden on inter-State trade they might, nevertheless, be upheld as being regulatory. (at p604)

15. The appellant was, in my opinion, rightly convicted and I would dismiss the appeal. (at p604)

Orders

Appeal dismissed with costs.