Vacuum Oil Company Pty Ltd v Queensland

The Vacuum Oil Company Pty Ltd brought an action in the High Court of Australia against the State of Queensland and its Treasurer and Secretary for Public Works. The company sought declarations that the Motor Spirit Vendors Act 1933 (Q.) was invalid, particularly sections 3 and 6, either wholly or in so far as they restricted inter-State trade and commerce, and an injunction to prevent its enforcement. The plaintiff alleged that the Act required it to purchase power alcohol in proportion to its motor spirit sales, which it contended constituted a customs or excise duty or a bounty, and also burdened its inter-State trade.

The legal issues before the High Court were whether the Motor Spirit Vendors Act 1933 (Q.) contravened section 90 of the Commonwealth Constitution by imposing a duty of customs or excise or granting a bounty, and whether it contravened section 92 of the Commonwealth Constitution by unduly burdening or impeding inter-State trade and commerce. The defendants demurred to the statement of claim, arguing that the Act did not offend against these constitutional provisions and that the plaintiff had not alleged facts demonstrating injury or interference with inter-State trade.

The Court, by majority, held that the Act did not impose a duty of customs or excise or grant a bounty, and therefore did not violate section 90 of the Constitution. However, a majority of the Court (Rich, Dixon, Evatt, and McTiernan JJ., with Starke J. dissenting) found that the Act contravened section 92 of the Constitution. Their reasoning was that the Act imposed a direct burden on importers of motor spirit, including those importing from other Australian states, by requiring them to purchase power alcohol as a condition of selling motor spirit within Queensland. This requirement was seen as directly relating to the inter-State character of the transaction, thereby invading the freedom of inter-State trade guaranteed by section 92.

Consequently, the demurrer was allowed in part. While the Chief Justice found that the plaintiff had not sufficiently alleged facts to establish a cause of action under section 92, Rich J. concluded that the Act did violate section 92 and that the plaintiff was entitled to seek relief in respect of its inter-State trade. The majority view was that the Act was invalid to the extent that it contravened section 92.