Wragg v State of New South Wales

Cons/4-G Cons

S O S

Foil

^aOU

(IK'IJ vAusi ^Lmsv

P V Dunne

(Aust) Ply Ltd National Vnclona 9irld7^ Metropolitan

(2003131

vBeU 97

Airlines

09661114 a

Ex ̂n

FaniLR 178

ALR217

Commission

0976) 138 CLR 361

Abattoirs

CLR 492

88 C.L.R.] OF AUSTRALIA.

353

[HIGH COURT OF AUSTRALIA.]

WRAGG AND OTHERS ■....................................

P l a in t if f s ;

AND

THE STATE OF NEW SOUTH WALES A N D \ O T H E R S ...................................................... /

D e f e n d a n t s .

Constitutional Law (Cth.)—Potatoes— Crown in Tasmania— Consumers in New

H. C. OF A.

South Wales— State legislation—Price—Fixation—Order—Effect— Freedom of

1953.

inter-State trade or commerce— Validity of statutory provision and order—

The Constitution (63 & 64 Viet. c. 12), ss. 51 {i), 92—Prices Regulation Act

S y d n e y .

1948-1949 (iV.N.lF.) [No. 26 of 1948—Ao. 24 of 1949)—Prices Regulation

March, 25-27,

Order No. 322 {N.S.W.).

30, 31.

Mel b o u r n e .

An order under the Prices Regulation Act 1948-1949 (N.S.W.) purported to fi.x maximum prices upon the sale of potatoes in New South Wales, whether

June 9.

imported or not, at every stage of the trade until they reached the consumer.

Dixon C..T., McTiernan,

Certain plaintiffs, who consisted of growers of potatoes in Tasmania, a com

WlUiams,

Webb,

pany incorporated in Tasmania, which there carried on the business of a Fullagap,

Kitto and Taylor JJ.

merchant deahng in potatoes, and a company incorporated in New South

Wales which there carried on the business of a merchant dealing, inter alia, in potatoes grown in Tasmania and imported into New South Wales, sought declarations as to the validity of that Act and Prices Regulation Order No. 322 made thereunder claiming tha t they infringed the provisions of s. 92 of the

Constitution.

Held, (1) tha t none of the claimants was entitled to any part of the relief claimed ;

(2) th a t none of the plaintiffs would be entitled to relief even if it were established by evidence that since and by reason of the fixing of prices for potatoes sold in New South Wales (a) growers in Tasmania had received for crops exported to New South Wales a price which was less than the cost of producing those crops ; (b) many growers in Tasmania had substituted for

.	varieties previously grown by them varieties which were less choice or could be produced a t lower co st; (c) individual growers in Ta.smania had planted reduced acreages with potatoes ; and (d) the total acreage of land in Tasmania planted with potatoes had been reduced to a very serious extent.

The Commonwealth v. South Australia (1926) 38 C.L.R. 408 and Vacuum Oil Co. Pty. Lid. v. Queensland (1934) 51 C.L.R. 108, distinguished. W . <fc A. McArthur Ltd. v. Queensland (1920) 28 C.L.R. 530, explained.

VOL.	L X X X V III .—23

HKJH COURT

(1953.

H . ( ' . OK A.

Cask iS'I'A'I'kd.

In 11 suit, liruuo'iit by way of writ of summons in the High Court

W'k a o oby {'li'iiumt (Jill'S VVragg, .Leslie .Eli .Brown, Stanley Edward Wing,

V.William Ollingtoii .Malloy, Clements & Marshall .Rty. Ltd., John

S t .VI' 10

OK'

Warrington. (\)loma,u and Ca,moron. & MoEadyen. Pty. Ltd. against

N low

Sol 'TII

W'.AI.IOS.the State', of Now South Wbdos, the Attorney-General for New

South Wales, Eraidc Eiiman and Norman dames White for certain deolaralions in i'os})oct of the Prices Regulation Act 1948-1949 (N.S.W.) and orders mad<' thereunder, Fullagar d. stated a case under s. 18 of ( he Judiciary Act 1903-1950 for the opinion of the Enll Court substantially as follows

1. This action was commenced by writ of summons on 4th June 1951, and was heard by me in Sydney on 30th April and 1st and 5th May 1952. During the course of the hearing I gave leave to counsel on behalf of the Commonwealth to intervene and to take part ill the examination of witnesses.

2. In pursuance of the Prices Regulation Act 1948-1949 (N.S.W .̂) various declarations have been from time to time made by the Minister and published in the Gazette declaring potatoes to be declared goods for the purpose of that Act, and at all material times until 21st May 1952, as hereinafter mentioned, potatoes continued to be declared goods for the purpose of the Act. In pursuance of these declarations and of the provisions of the Act, and, in particular, of ss. 19 and 20 thereof, certain Prices Regulation Orders have from time to time been made and published in the Gazette, fixing the maximum prices at which potatoes may be sold by primary wholesalers, secondary wholesalers and retailers

respectively as defined in the Orders.

[In Prices Regulation Order No. 322 (N.S.Wh) the expressions “ primary wholesaler ” and “ secondary wholesaler ” are defined as follows :—

“ ‘ Primary wholesaler ’ means, in relation to the sale of any potatoes, a person who sells those potatoes to a person other than a retailer and who—

(a) is registered as a primary wholesale potato merchant with the Potato Marketing Board for the State of New South 'Wales ; or

(b) has bought or in any way acquired those potatoes from a grower in New South MMles or any authority constituted xmder the provisions of the Marketing of Primary Products Act, 1927-1940, or any amendment thereof or any person acting for or on behalf of or as agent for any such authority; or

88 C.L.R.] OF AUSTRALIA.

355

H. C. OF A.

1953.

South Wales ;

‘ Secondary wholesaler ’ means, in relation to the sale of any potatoes, a person other than a primary wholesaler who sells potatoes

W kagg

State

by whole.sale ” .]N ew

South

W a l e s .

3. The plaintiffs’ statement of claim, before it was amended as hereinafter mentioned, referred to (inter alia) a declaration of the invalidity of Prices Regulation Order No. 192, which was published in the Gazette on 21st August 1950. That Order was revoked and replaced by Order No. 231, which was published in the Gazette on 27th March, 1951. Order No. 231 was in turn revoked and replaced by Order No. 239, which was published in the Gazette on 4th May, 1951 and which was the Order in force at the time of commencement of the action. After the commencement of the action Order No. 239 was revoked and replaced by Order No. 244, and further Orders were made thereafter. At the time of the hearing of the action the Order in force was Order No. 322, which was published in the Gazette on 6th March 1952. Copies of Orders Nos. 192, 239 and 322 (so far as may be material) were -annexed. 4. On 21st May 1952 by notification published in the Gazette the declaration of potatoes as declared goods for the purposes of the Prices Regulation Act 1948-1949 was revoked. A copy of that notification was annexed.

5. By their statement of claim, as amended, the plaintiffs claimed the following relief :—

“ 1. A declaration that the Prices Regidation Act, 1948-1949 (N.S.W.) and particularly ss. 20, 22, 25, 26, 30 and 33 of that Act or some one or more of them is or are invalid or inoperative by reason of the provisions of s. 92 of the Constitution.

2. A declaration that the Act and those sections or some one or more of them is or are invalid or inoperative in so far as it or they respectively purport to restrict or hinder trade and commerce in potatoes as carried on by the plaintiffs among the States.

3. A declaration that Prices Order No. 239 made on 4th May 1951 under the Act and particularly pars. 7 and 9 of that Order or one or other of them is or are invalid as not being authorized by the Act on its proper construction.

4. A declaration that Prices Order No. 322 made on 6th March 1952 is invalid as not being authorized by the Act.

5. Alternatively to the third claim, a declaration that the Prices Orders or one or other of them is or are invalid by reason of the provisions of s. 92 of the Constitution.

35() HI GH COUKi:

[1953.

i r . c . OK A.G. All ornat ively to the fifth claim, a declaration that those Prices

Orders or one or other of them is or are invalid or inoperative in

W'HAOljso far a,s tluiy respectively purport to restrict or hinder trade in

j)otat(»('.s a,s (airried on l>y the plaintiffs between the State of Tas-

Statu

oi '̂

NHW SuKTII

imuiia, and the defendant State.

W'a i .ks,7. Alt(!rnativoly to the preceding claims a declaration that upon

the proper (;onstruction of the Act and of the Orders the Orders do not a])ply to ])otatoes imported into the defendant State from other States including the State of dVrsmania.

8. Alternatively to the last preceding claim, a declaration that upon Idle proper construction of the Act and the Orders the Orders do not a})ply to potatoes the subject of trade and commerce among the States and in ])articular between the defendant State and the State of Tasrnania ” .

6. The defendant the Honourable Frank Finnan is the Minister administering the Prices Regulation Act 1948-1949. The defendant Norman .James White is the Prices Commissioner appointed under the Act.

7. The plaintiffs Clement Giles Wragg, Leslie Eli Brown, Stanley Edward Wing and William Ollington Malley are growers of potatoes in Tasmania.

8. The plaintiff Clements & Marshall Pty. Ltd. is a company incorporated in Tasmania, which carries on in Tasmania the business of a merchant and deals with {inter alia) potatoes grown in Tasmania. I t has its head office at Devonport, and has offices also at Launceston and Burnie these ports being the principal ports from which potatoes grown in Tasmania are exported to other States. I t has no office in New South Wales.

9. The plaintiff Cameron & McFadyen Pty. Ltd. is a company incorporated in New South W''ales, which carries on in New South Wales the business of a merchant, and deals with {inter alia) potatoes grown in Tasmania. I t has no office in Tasmania. I t is a primary wholesaler within the meaning of the Prices Regulation Orders. I t buys potatoes from growers in New South Wales, and it imports potatoes from sources outside New South Whales, including Tasmania. I t sells potatoes exclusively, or almost exclusively, to persons who are secondary wholesalers within the meaning of the Prices Regulation Orders.

10. The P. I. C. Pty. Ltd. is a company incorporated in New South Wales, the members of which are potato-importing merchants in New South Wales. The plaintiff Cameron & McFadyen Pty. Ltd. is a member of this company.

88 C.L.R.] OF AUSTRALIA.

357

H. C. OF A.

11. -Ttie Tasmanian Potato Merchants’ Association is an unin corporated association of Tasmanian potato merchants.

1953.

The

plaintiff Clements & Marshall Pty. Ltd. is a member of this associa

W ragg

tion.

State

12. The demand for potatoes for consumption in New South Wales is very much greater than can be supplied by means of

N ew South

W a l e s .

potatoes grown in New South Wales. On the other hand, the production of potatoes in Tasmania is very greatly in excess of the requirements of Tasmanian consumers. New South Wales has been for many years, and is, the principal export market for potatoes produced in Tasmania.

13. From and after 27th April 1942 the marketing of potatoes was controlled under the National Security {Potatoes) Regulations of the Commonwealth. These regulations went out of force by virtue of s. 4 of the Defence {Transitional Provisions) Act 1948, which became law on 1st January 1949.

14. The course of trade in potatoes between Tasmania and New South Wales is not governed by any general written or other contract between grower and merchant or between merchant and merchant, but is a matter of practice and common understanding. In the following paragraphs the course of dealing is, for convenience, set out in general terms. The plaintiffs, in their respective capacities, are concerned in transactions of the character described.

15. Each Tasmanian grower deals directly with a particular Tasmanian merchant only, but the actual arrangements for the receipt and shipping from Tasmania of potatoes are commonly made by the Tasmanian Potato Merchants’ Association. And, although potatoes imported from Tasmania into New South Wales are sold by particular merchants in New South Wales, arrangements for the shipping and receipt in New South Wales of Tasmanian potatoes are commonly made by the P. I. C. Pty. Ltd.

16 (a). When Tasmanian potatoes are required by Sydney merchants, and it is known that a ship will be available to transport potatoes from Tasmania to Sydney, a communication to this effect is made, usually by inter-State telephone, by the P. I. C. Pty. Ltd. to the Tasmanian Potato Merchants’ Association. The association is informed as to quantity required, name of ship, port of loading and approximate date of departure of ship.

(b). On receipt of such a communication an announcement is published in the local press, and broadcast by radio, that potatoes will be received from certain growers at certain times at a certain wharf for shipment by a certain ship. The growers who are thus invited to deliver potatoes on wharf are determined in accordance

;jr)8 HIGH COUHT [1953.

H . C . OF A.

with a syKtcin which is designed to ensure as far as possible that

Iall growers shall in each year share equitably in the available

market.

Amu'xed hereto is an extract from “ The Advocate ”

W u A U d

V.ot 7th April 1952. “ The Advocate ” is a daily newspaper published

Nt a TJC

i )V

K K\V iSoF'i ’ll in Burnie and circulating in the north-west of Tasmania. This

W 'a l k .s .extract is a tyf)ical example of the announcements made in the press and by radio broadcasting. [The extract was in the following terms : The Kakapo is at Devonport loading produce for Sydney and is expected to sail later in the week ”.

“ Delivery Instructions

Devoii])ort; A road delivery will be received to-day from growers in the H. to M. and the balance of the D. to G. groups. Seed is not required.

Burnie : Growers in the N. to R. and balance of the F. to M. categories may deliver from 8 a.m. till 2 p.m. to-day. About 10,000 sks. are needed ”.]

(c). Potatoes are conveyed from farm to wharf by rail or by road transport. A substantial majority is conveyed by licensed carriers by road. The contract of carriage is made by the grower, who pays the cost of transport from farm to wharf.

, (d). Potatoes delivered by growers on wharf are weighed on a weighbridge. A weighbridge ticket is issued to each grower showing the weight of the potatoes delivered by him and accepted. No other receipt or acknowledgment is given to the grower in respect of potatoes delivered by him.

(e). Potatoes delivered on wharf for each particular ship are dealt with as a bulk shipment. No record is kept by which it Avould be possible to identify, after they have been delivered on wharf and stacked, the potatoes delivered by any individual grower.

17 (a). Potatoes, so delivered by growers on wharf, and bulked, are consigned by the Tasmanian Potato Merchants’ Association to the P. I. C. Pty. Ltd. a t Sydney. The price is an agreed price per ton f.o.b. Tasmanian port for the whole shipment. Annexed hereto are copies of an invoice and the relevant part of a bill of lading relating to such a shipment. Payment for the consignment is made immediately or shortly after shipment by the P. I. C. Pty. Ltd. to the Tasmanian Potato Merchants’ Association.

[The invoice was made at “ Devonport, 2/5/51, No. 362/30 ” and was headed : “ P. I. C. Pty. Ltd., Sydney, Dr. to Tasmanian Potato Merchants’ Association (Devonport Branch).” I t referred to “ S.S. Codana ” and to 3,402 sacks B1 potatoes ; 1,739 sacks A1 potatoes ; and 15 sacks F l potatoes and amounts of £5,954 7s. 6d. ; £3,030 Os. Od. ; and £27 10s. Od. respectively, and to weight, 360 tons, 9 cwt. 2 qrs. in all.

88 C.L.R.] OF AUSTRALIA.

359

H. C. OF A.

The bill of lading was headed “ Melbourne Steamship Company Limited 27-31 King St., Melbourne, Vic. Port of Devonport ” and

1953.

was as follows :—‘‘ Received in apparent good order and condition

W ragg

except as otherwise noted hereon for shipment from Tasmanian

State

Potato Merchants’ Association Devonport Branch to be forX ew

So f t h

warded per s.s. ‘ Codana ’ or any other ship to Sydney and there

W a l e s .

the consignee or his assigns to take delivery and all liability of the Company and ship to cease as soon as the goods are from the ship’s tackles the undermentioned goods consigned to P. I. C. Pty. Ltd. freight payable at dn.

Marh, No. etc. Pkgs.

Description of Goods.

B1 3,402

1,739Sacks potatoes.

F l

5,156

(b). After delivery to the wharf and usually after shipment each grower is paid by his own merchant for the potatoes delivered on wharf by him. Annexed hereto is a typical account sales delivered by merchant to grower. In a large number of cases advances will have been made by merchant to grower before delivery of potatoes, and a running account is in many cases kept between merchant and grower, in which the grower is debited with the prices of goods supplied to him by the merchant.

[The account sales was as follows : “ Burnie 8 /6 /’51.

C. G.

Wragg, Elliott.

In account -with Atkinson & Co., Produce and General Merchant. Potatoes. Al (Proceeds Ex Sydney

.. £100 7 2

Commission . . . . . . £2 0 0 Receiving, Inspection and Wharfage 1 4 6 AVeighing . . . . . . 2 0

------------

3 6 6

£97 0 8]

(c). On arrival at Sydney the potatoes shipped are allotted by the P. I. C. Pty. Ltd. among Sydney merchants who are primary wholesalers within the meaning of the Prices Regulation Orders, and who sell potatoes exclusively, or almost exchisively, to persons in Kew South AVales who are secondary wholesalers within the meaning of these Orders. Except in tlie case of the small proportion sold otherwise than to secondary wholesalers, the merchant does

3G0 HIGH COURT

[1953.

Pr. C. OD- A.

imported potatoes into store, but sells them ex wharf,

and delivery is taken by the purchaser at the wharf.

Wkauu

course of dealing described in pars. 16 and 17 hereof

V. is the usual course of dealing at the present time. In some cases,

NPew St)UTir liowever, potatoes are delivered by a grower to a particular

W’a i. ios.Tasmanian merchant on wharf at Tasmanian port and consigned

by that merchant to a particular merchant in New South Wales. In such cases the price as between merchant and merchant is an agreed price c.i.f. & e. Sydney. Annexed hereto are copies of an invoice, a health certificate and the relevant part of a bill of lading, relating to a transaction of this nature between the plaintiff Clements & Marshall Pty. Ltd. and the plaintiff Cameron & McFadyen Pty. Ltd.

, Those annexures were respectively as follows :—^

“ Devonport,

6th June, 1951.

Messrs. Cameron & McFadyen Pty. Ltd.,

Sydney

No. 4124

Dr. To Clements & Marshall Pty. Ltd.

Marks

tons cwt. qrs. lbs.

CM 108 sacks B1 Potatoes

7 13 3 —

30 „ Al „ 2 2 1

—

138 9 16 — — 30/4/-£295 18

c i f

Sydney

Exchange 15

£296 14 7

Shipped per s.s. ‘ Kamo ’.

Insurance—Our care.

Draft through Bank of New South Wales.”

“ Department of Agriculture, Tasmania.

Certificate of Health.

I hereby certify that the Vegetables described hereunder con signed by Clements & Marshall Pty. Ltd., of Devonport to ‘ O rder’ of Sydney per ‘ Kamo ’, have been inspected by an authorised officer and are, to the best of his knowledge, free from any disease or pest proclaimed under the provisions of the Plant Diseases Act, 1924, of New South Wales, and the relevant Acts of Queensland, Victoria, South Australia, and Western Australia.

88 C.L.R.] OF AUSTRALIA.

361

H. C. OF A.

Class of Plant

Number of Name and Address Grade or

1953.

or Vegetable Packages of Grower

Marks

Potatoes 108 L. D. Russell B 1

W kagg

30 T. Finn A 1

State

N ew South

138W a l e s .

Dated this 6th day of June, 1951.

Inspector (Sgd.) A. S. Lynd (?)

Address

Devonport ”

‘‘ Union Steam Ship Company of New Zealand, Limited.

Port of Devonport 5th June 1951

RECEIVED in apparent good order and condition, except as other wise noted hereon, for shipment (subject to the conditions, excep tions and stipulations on the front and back hereof, which form part of the contract) from Clements & Marshall Pty. Ltd. to be forwarded per m.s. Kamo or any other ship to Sydney and there the consignee or his assigns to take delivery and all liability of the Company and ship to cease as soon as the goods are free from the ship’s tackles the undermentioned goods con signed to Cameron & McFadyen Pty. Ltd. freight payable at Devonport.

No. of

Packages or

LeadingUnits or

Description

Marks

Quantity or

Weight

CM138

sacks Potatoes

19. Before the coming into force of the National Security {Potatoes)

Regulations there was a third method by which Tasmanian potatoes were commonly marketed in New South Wales. According to this method potatoes were shipped by a Tasmanian merchant on behalf of a grower to a Sydney merchant “ on consignment ” . Such potatoes were then sold in Sydney as and when it was thought that the best price was obtainable. The proceeds, less the Sydney merchant’s charges, were then remitted to the Tasmanian merchant, and paid by him, after deduction of his own charges, to the grower. This form of transaction is no longer in use, but annexed hereto are copies of an invoice, the relevant part of a bill of lading, and an account sales, relating to such a transaction. The particular transaction to which these documents relate was carried out in May 1951 for the special purpose of illustrating to the Court a disposal of Tasmanian potatoes sent “ on consignment ” to Sydney.

362 HIGH COURT

[1953.

H. C. OK A.

Those annexures were respectively as follows :—

] 95;}.

“ Devonport,

IT I. C. Rty. Ltd.

2nd May 1951

'W’RAOC!

Sydney.

No. 361

Static ok Dr. to 'Pasinanian Potato Merchants’ Association _

-Nicw South

Wai t̂cs.

(Devonport Rranch)

s.s. ‘ Coolana ’

tons cwt. qrs. lbs.

1. 55 sacks A 1 Potatoes

3 18 0 0

Shipped to Sydney on a/c of grower. Messrs. L. E.

Rrown & Son, AVesley Vale ”

“ Melbourne Steamship Company Limited

27-31 King St., Melbourne, Vic.

Port of Devonport 2/5/1951 Received in apparent good order and condition except as other wise noted hereon for shipment from Tasmanian Potato Merchants’ Association to be forwarded per s.s. Coolana or any other ship to Sydney and there the consignee or his assigns to take delivery and all liability of the Company and ship to cease as soon as the goods are free from the ship’s tackles the undermen tioned goods consigned to P. I. C. Pty. Ltd. freight payable at dn.

Marks Nos. etc. Pkgs.

Description of Packages

Al 55

sacks Potatoes ”

“ P. I. C. Pty. Limited

189 Sussex Street, Sydney

Tasmanian Potato Merchants’ Association, Devonport Account Sales of 55 bags Potatoes Al. DD Account of

L. E. Brown & Sons

Ex Coolana 12/5/51

Wesley Vale

55 bags 3.15.3.14 32/10/£123 5 11

Less Charges

Freight £5/3/- per ton £18 17

Export Whfge. 5 ? 10

Sort, k Stack. 5/1 „ „ 18

Load. & AAVighing 2/9 „ ,,

10 5

Inspection 6 15 or part 2

Wharfage 4/- per ton (15) 14 8

Insurance 3/3% C.I.E. 3

6 3 3 28 0 7

Commission

28 0 7

Proceeds

88 C.L.R.] OF AUSTRALIA.

363

20. The reason why the practice of sending potatoes from H. C. of A. Tasmania to Sydney “ on consignment ” was not resumed after

the expiration of the National Security [Potatoes] Regulations is that -\yr-4 gg

the expiration of those regulations was followed by the making of

Prices Regulation Orders under the Prices Regulation Act relating -\Ê y™ouTH

to potatoes. If the Orders fixing the prices at which potatoes may

W a l e .s .

be sold in New South Wales are valid and are applicable to potatoes grown in Tasmania, there is no potential advantage in sending potatoes from Tasmania to Sydney “ on consignment

21. The price which the primary wholesaler in Sydney, who imports potatoes from Tasmania, is able to pay to the Tasmanian exporter, is, of obvious necessity, conditioned by the price for which he may lawfully sell in New South Wales potatoes so imported by him. In actual fact the one price bears an almost constant ratio to the other price. Thus, in transactions such as are described in pars. 16 and 17 hereof, which transactions are conducted on the assumption that the relevant Prices Regulation Orders of New South Wales are valid and apply to potatoes imported from Tasmania into New South Wales, the price quoted by Sydney to Tasmania is invariably arrived at by taking as a basis the price at which a primary wholesaler in New South Wales may lawfully sell potatoes, and deducting therefrom (a) the various costs, charges and expenses which are incurred between delivery on board at Tasmanian port and arrival on Sydney wharf and (b) a profit or reward to the Sydney merchant of £1 per ton.

22. Tasmanian potatoes are, generally speaking, of very good quality and readily saleable in New South AVales. By reason of the maximum price which it is able to offer, the plaintiff Cameron & AIcFadyen Pty. Ltd. is a t times unable to obtain its full require ments of Tasmanian potatoes.

23. Apart from odd lots, Tasmanian potatoes always command in New South AA'ales the maximum prices permitted under the current Prices Regulation Order, and for most of the year could readily be sold in New South AVales at higher prices than the maximum prices so permitted.

24. If maximum prices were not fixed by Prices Regulation Order in New South AAmles, many more potatoes would be imported from Tasmania into New South AA’ales and sold in New South AVales than are in fact so imported and sold.

25. Paragraphs 16, 17, 18 and 19 of the original statement of claim in the action were as follows ;—

“ 16. The maximum prices fixed by the said Order have been so fixed in disregard of the cost of carriage of potatoes from the

364 HIGH COURT

[1963.

H.C. OF A.State of Tasmania to the defendant State and of the quality of

1953.	such potatoes and solely by reference to costs of production in the
\\’HAOa	defendant State and to local standards of quality.

V.17. The operation of the said Act and the said Order has placed

State

oi’

A E\v S outh the Plaintiffs and other Tasmanian growers and exporters at a W a l e s .disadvantage as compared with growers of potatoes in the defendant

State which is such that the said trade in potatoes is progressively declining and will soon cease to be a substantial trade at all. The effect of the said Act and Order upon the said trade is the same as a customs duty on potatoes imported from Tasmania or a bounty on potatoes grown in the defendant State.

18. As a direct result of the said Order and of earlier Orders similarly made and having a similar operation and effect the area of land in Tasmania under cultivation with potato crops has declined from 85,000 acres in the year 1944-1945 to 31,000 acres in the year 1949-1950 and a probable area of 25,000 acres for the current year. 19. As a further direct result of the said Order the defendant State is under-supplied with potatoes and from time to time suffers a substantial shortage thereof” .

26. The allegations in par. 16 of the statement of claim were denied by the defence, and the allegations in pars. 17, 18 and 19

were not admitted.

27. At the hearing Dr. Louat, for the plaintiffs, applied for leave to amend par. 15 of the statement of claim. Mr. Wallace Q.C., for the defendants, asked that I should allow the amendment only on conditions, and, in particular, on condition that pars. 16, 17, 18 and 19 should be struck out. Dr. Louat then asked for leave to amend these paragraphs also, and finally submitted the following paragraphs which he wished to have substituted for pars. 15, 16, 17, 18 and 19 of the original statement of claim :—

“ 15. On the 18th day of August 1948 the said system of Com monwealth control having ceased to operate the said Act came into force and on the 20th day of March 1951 the Defendant Com missioner in the exercise of his powers under the said Act made Prices Regulation Order No. 231 fixing inter alia the price of potatoes for sales by primary wholesalers as defined in the said Order. The Plaintiffs crave leave to refer to the said order when produced as if the same were fully set forth herein.

16. Thereafter the defendant Commissioner made certain further

Orders of a similar nature each revoking the Order previously in force and on the 6th March 1952 made an Order No. 322 in sub stitution for a then existing Order No. 294, whereby the price of potatoes sold in New South Wales by a primary wholesaler was

88 C.L.R.] OF AUSTRALIA.

365

fixed at £43 per ton irrespective of the place of origin of the potatoes

H. C. OF A.

and irrespective of the locality of sale in the said State. The 1953.

plaintiffs crave leave to refer to the said Order No. 322 as if the

W ragg

same were fully set forth herein.

State

17. The said orders referred to in the last two preceding para graphs have the effect of placing the plaintiffs as inter-State traders

N ew

S outh

W a l e s .

at a special disadvantage as compared with suppliers of potatoes in the defendant State in that they provide for a uniform maximum price for sale by primary wholesalers irrespective of the place of origin of potatoes, and in the case of Order No. 322 for the further reason that the said uniform maximum price is fixed without providing any allowance of transport costs within such State as an addition to price where the potatoes are sold to purchasers in country districts. Before the said order was made the plaintiffs had a substantial trade in potatoes sold in country districts of New South Wales.

18. The said Orders further place the plaintiffs at such special disadvantage by reason of the fact that the potatoes of Tasmanian origin dealt in or grown by the plaintiffs are of substantially better quality than those produced in the defendant State and as such are of higher value and the said Orders make no distinction between different qualities of potatoes.

19. The costs of packing, handling, transport and other necessary charges in sending the potatoes grown or handled by the plaintiffs to the Sydney market amount in all to a substantial portion of the selling price of £43 allowed by the said Order No. 322

28. After argument I announced my decision on Dr. Louat’s

application in the following terms :—

“ I will allow the new pars. 15 and 16 which are intended to replace the existing par. 15. I will strike out the existing pars. 16 to 19 inclusive, and I refuse to allow the amendment of the statement of claim by the insertion of the new proposed pars. 17, 18 and 19. I take this course because I am, as at present advised, of opinion that the substantial questions which arise are the two questions which I stated—somewhat roughly and imperfectly, no doubt— yesterday. I am unable at the moment to see how, if the power to fix prices affecting the trading operations of the plaintiffs can exist consistently with s. 92, that power can be limited by a con dition that prices shall not be fixed except in such a way as to advantage, or at least not to disadvantage, the exporter from another State who competes with the local grower in the local market. The fact, of course, if fact it be, that the power may be used to disadvan tage the exporter from another State to the advantage of the local

;5()G HIGH COURT

[1953.

H. 0. OK A.growc'f, may afford a strong argument against the existence of

the power. ,

i. feel eompcih'd to a(Ioj)t the course 1 take, ()ecause at present

"WuACiCt

,my opinion on the. posif ion is ((uite clear.

I arn, however, reluctant

S tatio

XK\V iSoKTII to shut out ;dtog(',ther a,ny [)oint wl)ich Dr. Louat may wish to take

W'ai .ks .before the Full Court. I, will accordingly, if I decide, as probably

1 sha.ll, to state' a cas(i, include in the case stated a question which will ask ('ither whether I was right in dealing with the pleading as 1 ha.ve, or probably preferably—whether, if the facts pleaded in the rejected paragraplis were established, the plaintiffs would be entitled to any of the relief claimed. If the Full Court says ‘ Yes ’, I may have to hear further evidence, but I consider that I am taking the course which is least likely to lead to unnecessary delay and expense. I will not now hear evidence which is relevant only on the issues raised by the old pars. 16, 17, 18 and 19, or the new proposed pars. 17, 18 and 19

29. In pursuance of the decision stated in par. 28 hereof, I

rejected evidence tendered on behalf of the plaintiffs which, if

admitted, would have tended to show—

(a) that, since and by reason of the fixing of prices for potatoes in New South Wales, growers in Tasmania had received for crops exported to New South Wales a price which was less than the cost of producing those crops ;

(b) that, since and by reason of the fixing of prices for potatoes in New South Wales, many growers in Tasmania had substituted for varieties previously grown by them varieties which were less choice or could be produced at lower cost;

(c) that, since and by reason of the fixing of prices for potatoes in New South Wales, individual growers in Tasmania had planted reduced acreages with potatoes :

(d) that, since and by reason of the fixing of prices for potatoes in New South Wales, the total acreage of land in Tasmania planted with potatoes had been reduced to a very serious extent.

The questions for the Full Court were :—

1. Are the plaintiffs or any and which of them entitled to any

and which of the declarations claimed by the statement of claim

or to any other and what relief by reason of the facts and matters

herein stated ?

2. May potatoes imported from Tasmania be lawfully sold in New South Wales—(a) by the plaintiff Cameron & McFadyen Pty. Ltd. and other primary wholesalers ; (b) by secondary whole salers : (c) by retailers—at prices in excess of the maximum prices

88 C.L.R.] OF AUSTRALIA.

367

respectively fixed from time to time by Orders made under tire H . C . o f A.

Prices Regidation Act of New South Wales ?

3. Would the plaintiffs or any and which of them, if not otherwise

W eagg

entitled to relief in this action, be entitled to relief if the facts alleged

State

in the paragraphs or proposed paragraphs of the statement of

claim which are set out in pars. 25 and 27 hereof were established

W a l e s .

by evidence ?

An addendum to the case stated was stated by Fullagar J. substantially as follows :—

1. On 1st August 1952 an application was made to me by counsel on behalf of the defendants that I should proceed no further in the matter of stating a case for the Full Court but should stay the action for ever or until further order.

2. The apphcation was based on the facts set forth in par. 4 of the case which I have stated.

3. The application was opposed by the plaintiffs, who tendered in evidence an extract from the; Sydney Morning Herald newspaper of Thursday 22nd May 1952. A reporter on the staff of the Sydney Morning Herald was called, who proved to my satisfaction that the statements attributed to the persons mentioned in the extract from the newspaper were in fact made by them respectively. A copy of the said extract from the said newspaper is annexed hereto.

[The extract was in the following terms :—

“ Potato Control Lifted

Potato price control was removed by the Prices Minister, Mr. F. J. Finnan, yesterday.

Mr. Finnan said he felt the best interests of consumers would be served by the step which he had taken after discussions with representatives of the N.S.W. Potato Marketing Board and potato growers.

A deputation representing these interests had assured him that potatoes were in plentiful supply and that selling was highly competitive.

I t had told him decontrol would encourage growers to organise their planting and digging to avoid seasonal shortages.

Mr. Finnan warned that if any unwarranted price increases were

made, he would have no hesitation in reimposing control.

Price Unchanged

The chairman of the N.S.W. Potato Marketing Board, Mr. H. Swane, said the board would continue to sell N.S.W. potatoes at the present price of £38 6s. 8d. per ton, for some time.

The board would, however, progressively increase the price of potatoes during August, September, and October, when they would be scarce.

368 HIGH COURT

[1953.

H. r, OF A.

Referring to statements tliat merchants had lost some £20,000

J953.due to tlie reduction this week in the price of potatoes, Mr. Swane

\Vka(K)

said that for some weeks potatoes had been available to merchants

V’.

at from £1 to £2 a ton less than the fixed price.

State

N ew South

‘ Hut 1 kmow of no instance where this reduction was passed on

W a l e s .to consumers

he declared ” . |

4. Tlie plaintiffs also tendered in evidence (a) a letter dated

30th May 1952 from the solicitor for the defendants to the solicitors for the plaintiffs, (b) a letter dated 4th June 1952 from the solicitors for the plaintiffs to the solicitor for the defendants, and (c) a letter dated 5th June 1952 from the solicitor for the defendants to the solicitors for the plaintiff's. Copies of these letters are annexed hereto. No further reply had been received by the solicitors for the plaintiffs to their letter of 4th June 1952. [Omitting formal parts the said letters were as follows :—

(a) “ I forward herewith for your information copy of a Declara tion, No. 89, made by the Minister on the 21st inst., and published in the Government Gazette of that date, whereby Declaration No. 82 was amended by omitting from Schedule ‘ A ’ thereto the word ‘ potatoes’ where appearing, immediately after the word ‘ peas’ in item 143 and whereby Declaration No. 84 was revoked. Copies of Declarations Nos. 82 and 84 are also enclosed.

The effect of Declaration No. 89, so far as is relevant to the present proceedings, is to remove Tasmanian potatoes from Price Control. Accordingly, it appears that no good purpose would be served by proceeding further with the suit and it is suggested that, in order to save unnecessary expense and trouble, application should be made for leave to discontinue the action, on mutually satisfactory terms.”

(b) “ We acknowledge your letter of the 30th ultimo which was received by us yesterday afternoon. We have referred particularly the last paragraph of your letter to our clients for instructions and they have instructed us to inform you that they disagree with your statement that no good purpose would be served by proceeding further with this Suit.

The Defendant Minister stated publicly on removing potatoes from Price Control that he would re-impose control at any time he deemed necessary. Our clients regard the uncertainty created by the asserted right of control to be as detrimental to their interests as the control itself.

We would point out further that the action includes a claim for a declaration that the Act is invalid.

88 C.L.R.] OP AUSTRALIA.

369

H. C. O F A

Our clients definitely desire to proceed with the action and to have the case stated heard, unless of course, a satisfactory under

1953.

taking can be given by you to the Court that Control will not be

Wr-cgg

re-imposed on Tasmanian potatoes ; if such an undertaking can

State

be given, our clients would then agree to make application to disN ew

S outh

continue the action on terms satisfactory to them so far as costs W a l e s .

are concerned,” and

(c)

“ I acknowledge receipt of your letter of the 4th inst. the

contents of which have been noted. I will reply further at an

early date.”]

5. I refused the said application with costs, but without prejudice

to any submission which might be made to the Full Court that the questions asked by the case which I have stated should not be answered.

E. Banvick Q.C. and Dr. F. Louat Q.C. (with them P. Vine Hall),

for the plaintiffs. The plaintiffs’ cause of action, from a technical point of view, was not destroyed consequent upon the revocation of the price-fixing orders and the rescission of the declaration relating to potatoes. There remained a threat to re-enact the price-fixing orders, or, in other words, to bring potatoes under control at any moment. The form of declaration now sought is open to the plaintiffs quite apart from the existence of a price-fixing declaration. Although at present potatoes are not declared goods within the meaning of the Prices Regulation Act 1948-1949 (N.S.W.) nor is there in existence any price-fixing order in relation to them, at the inception of the suit there was both a declaration and an order. The plaintiffs’ claim, as it is now before the court, is, in the first place, for a declaration as to the extent of the power granted by certain sections of the Prices Regulation Act 1948-1949.

G. Wallace Q.C., by invitation. I t is submitted that the plaintiffs have no locus standi. The scheme of the Prices Regulation Act 1948-1949 (N.S.W.) is indicated by sub-s. (2) of s. 2 which meets the position suggested on behalf of the plaintiffs. Then there is the Ministerial declaration in relation to goods and then the oper ative effect is under the order. Whether that is legislative intention or not is another matter, but the commissioner makes the order and fixes the price. Now there is neither declaration nor order in existence and the plaintiffs in those circumstances—having regard to the presence of s. 2 (2)—cannot get any declaration about the invalidity of the A c t; at that stage s. 2 (2) is the answer. There not being any order which in fact can be claimed as interfering

VOL. L X X X V III .—

HTO HIGH COUR'r

[1958.

H. ( . OK A. vinth inter-State trade and commerce, it is submitted that the

plaintiffs liave not any cause of comj)laint.

\\'RA(U(

( r . E. Banvick Q.C.

The principal declaration sought by the

Statio

X lOW Sol'TII ])laintin's does not dej)end upon the existence of a price-hxing order W’ai. ios.or dechiration. One of the dee.larations so sought is to the extent

ol‘ ibe power conferred, for example, by s. 20 of the Act. The Sta.te of New South Wales by the Act purports to give the com missioner power to fix in his uncontrolled and absolute discretion the ])rice at which any declared emnmodity may be sold in the State, but running with that section there is s. 1 (3) which purports to restrain the construction and the operation of such a section within constitutional limits. Each of the plaintiffs, being traders in potatoes, has an interest to maintain a suit for a declaration as to the extent to which the commissioner may make price-fixing orders affecting his trade. Each plaintiff has good grounds for thinking that the Act infringes upon his trade by the very existence of the power : see James v. The Commonwealth (1) ; The Com monwealth and Commonwealth Oil R.efineries Ltd. v. South Australia (2) and The CommonweaJh v. Bank of New South Wales (3). In the last-mentioned case their Lordships said that the existence of the legislation, apart from its exercise, gave to the grower a right to challenge the Act, and the appellant in that case could have brought his suit before the determinations were made. The plaintiffs are entitled to an order or orders to protect them in relation to the taking or the limiting of the sale of their goods, and the Court should grant a declaration on a view of the effect of the reading down provision upon the substantive provision of the Act {Cam. <£■ Sons Pty. Ltd. v. Chief Secretary of New South Wales (4) ). Declara tions similar to the declarations in that case, and also declarations that the orders which did exist were invalid during their currency, are required by the plaintiffs. The fact that the orders had been revoked would have little or nothing to do with what had happened under the orders while they were extant. In Australian National Airways Pty. Ltd. v. The Cornmomvealth (5) the suit was brought before the Act there under consideration was proclaimed.

[M c T ie r n a n J. referred to Anderson v. The Commonwealth (6).] [D ix o n C. J. referred to Luna Park Ltd. v. The Commonwealth (7).J The Court should allow the matter to proceed.

(1) (1936) A.C. 578 ; 55 C.L.R. 1.

(4) (1951) 84 C.L.R. 442, at p. 456.

(2) (1926) 38 C.L.R. 408.(5) (1945) 71 C.L.R. 29.

(3) (1950) A.C. 235, at p. 305 ; (1949)

(6) (1932) 47 C.L.R. 50.

79 C.L.R. 497, at pp. 634-635.

(7) (1923) 32 C.L.R. 596.

88 C.L.R.] OF AUSTRALIA.

371

OF A.

D ix o n C.J. We think you may proceed.

We do not propose to

say anything to tie our hands in the matter but probably all of 1953.

us are impressed with the view that really what is at issue is

WK.A.GG

whether what has been done can be repeated.

State

X ew S outh

tVALES.

G. E. Banvick Q.C. The question arises in relation to this Act, not of invalidity of the sections such as 20, 25 and 38, but the question of the extent of the area over which they can validly operate. The plaintiffs deal in a commodity, in which of necessity there is an inter-State trade into New South Wales {Vacuum Oil Co. Pty. Ltd. V. Queensland (1) ; The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia (2) ). Order No. 322, which was the actual order in force at the date of the hearing of this suit, was not authorized by the statute. The order purported to fix the maximum price at which the importer may make his first sale, and to fix the sale by the secondary wholesaler and the sale by the retailer. The whole price structure starts from the price fixed for the primary wholesaler. The proper analysis is that the grower sells his potatoes through two agencies, (i) the co-operative merchants’ association in Tasmania, and then (ii) the co-operative buying merchants’ organization in Sydney, to the particular merchant who ultimately receives his potatoes, but because of the intervention of the two co-operative bodies there is not any need to define the identity'of the potatoes. The members of the P. I. C. Pty. Ltd. regard themselves as importing merchants. The stated case shows that there is a commodity which of necessity is imported into New South Wales ; in which there is in fact a large inter-State trade with New South Wales from Tasmania ; in which trade all the plaintiffs have a part and upon which trade the fixing of a price in New South Wales does preclude transactions in Tasmanian potatoes. The power in the State of Neŵ South Wales does not extend to the making of the orders referred to. The orders purport to fix the price at which an importer may effect his first sale. The validity of a power to fix the price at which an importer shall make his first sale can be approached in three distinct ways. The attempt to fix the price of the first sale by an importer is necessarily to impede the importation and therefore is a burden on the inter-State trade. The first sale by the importer in relation to the present material is itself part and parcel of the inter-State trade in potatoes ; the re-selling is a necessary part of the inter-State trade. The fixing of a price at which the importer shall make his first sale, because he is an

(1) (1934) 51 C.L.R. 108.

(2) (1926) 38 C.L.R. 408.

372

HIGH COURT

[1953.

H. ('. OK A. ini])orter, places a special burden upon him, and in that view it ID'):}.would lit the ])recise way Vacuum Oil Co. Pty. Ltd. v. Queensland (1) W'louiliwas decided in some of the iudgments : see also The Common

I ’ .

wealth and Conemonweallh Oil Refineries Ltd. v. South Australia (2).

S tatk

X ICW SOKTII Sinc(' the decision iu The Commonwealth v. Bank of New South \ \ ' a i . k s .Wales (.3) the first (juestion is whether the Act not remotely but directly restric,ts iuter-State commerce. This is not a case of a partic-iilar activity as in Reg. v. Wilkinson ; Ex parte Brazell, (iarliek ami Coy (4) arid Carter v. Potato Marketing Board (5), but argument is ])rcsented on the supyiosition that the on-selling is not part of inter-State trade and where there is an interference with, what prinia facie appears to be a purely intra-State activity, the Act working that interference is restricting inter-State trade. Even if the on-selling is not regarded as part of inter-State movement in trade, a restriction or burden is placed on the inter-State commerce. Price fixation or the power to fix prices does restrict inter-State commerce. In fact, on the findings, the mere presence of the power, and the exercise in particular, has diminished the number of transactions that have been made in relation to a particular commodity. When considering what is the effect of the Act regard should be had to the matter on a broad basis and not on any narrow or merely pedantic view of what is the precise legal thing done by the Act {Banks’ Case (6) ). In this case there is a finding that in fact the Act restricts inter-State trade, and it is submitted that it does so as part of the operation of the Act itself, not some remote consequence : see Duncan v. Queens land (7). In that case the idea of looking to the economic consequence of the Act and regarding that as within its effect and operation was entertained. Cf. Banks’ Case (8). The same idea was adverted to in Wilcox Mofflin Ltd. v. New South Wales (9). The judgment in the Banks’ Case (3) lays down quite definitely that inter-State trade may not be interfered with or restricted by an Act, and when it is found that there is some interference produced by an Act it may be necessary to consider whether the particular interference is not to be laid at the door of the Act directly. The Act is not regulatory.

[D ix o n C.J. referred to City of Melbourne v. Rarry (10).]

(1) (1934) 51 C.L.R. 108.(7) (1916) 22 C.L.R. 556, at p. 595.

(2) (1926) 38 C.L.R. 408.

(8) (1950) A.C., at pp. 310, 311;

(3) (1950) A.C. 235; (1949) 79

(1949) 79 C.L.R., at pp. 639,

C.L.R. 497. .

640.

(4) (1952) 85 C.L.R. 467.(9) (1952) 85 C.L.R. 488, at p. 523.

(5) (1951) 84 C.L.R. 460.(10) (1922) 31 C.L.R. 174.

(6) (1950) A.C., at p. 310 ; (1949) 79

C.L.R., at p. 639.

88 C.L.R.] OP AUSTRALIA.

373

H. C. OF A.

The Privy Council in the Banks' Case (1) used the word “ regula tory ” in the restricted sense, that is that freedom is modified so

1953.

that all people may be free. The law in

James v. South Australia (2)

W ragg

and the activity in James v. Cowan (3) were directed to maintaining

State

a price. The dominant idea is to maintain an ordered freedom. The N ew

S outh

view that ultimately prevailed in W. d A. McArthur Ltd. v. Queens

W a l e .s .

land (4) was that whether or not the State law infringed s.. 92 was tested by deciding the subject matter. In that case (5).the Court looked to see whether there was an inter-State transaction being directly regulated or directly dealt with by the statute, and the Court decided that it was only the transactions, vhich, as transactions, were inter-State transactions, which could be protected. In Reg. v. Wilkinson ; Ex parte Brazell, Garlick and Coy (6) there was not any stipulation for inter-State transit though it in fact happened, and the Court thought the absence of the stipulation did not matter although there was an actual inter-State transit which did matter. The exception in that case was : “ Except in the course of trade or commerce between the States ” . Reg v. Wilkinson; Ex parte Brazell, Garlick and Coy (7) is contrasted with McArthur's Case (8) at this point because in the latter case there was an emphasis on finding a law that was directly interfering with the inter-State transaction itself. Since that date the Court has taken the view that the inter-State trade and commerce is not limited to inter-State transactions themselves; that there is a course of trade which embraces more than the actual inter-State contract itself.

[Dixon C.J. referred to Field Peas Marketing Board {Tas.) v.

Clements & Marshall Pty. Ltd. (9).]

On the assumption that the first sale by the importer was not in the course of inter-State trade, a law fixing the price of a commodity which must necessarily be imported and in which there is an inter-State trade offends the provisions of s. 92, because it was direct and not remote. An intended effect cannot be said to be remote. The on-selling by the importer is itself in the course of inter-State trade and commerce [McArthur’s Case (10) ; Bank of New South Wales v. The Commonwealth (11) ; Banks’ Case (12) ;

(1) (1950) A.C. 235; (1949) 79

(8) (1920) 28 C.L.R. 530.

C.L.R. 497.

(9) (1948) 76 C.L.R. 414.

(2) (1927) 40 C.L.R. 1.(10) (1920) 28 C.L.R., a t p. 549.

(3) (1932) A.C. 542 ; 47 C.L.R. 386.

(11) (1948) 76 C.L.R., at pp. 380, 381,

(4) (1920) 28 C.L.R. 530.

384, 385.

(5) (1920) 28 C.L.R., a t p. 559.

(12) (19.50) A.C., a t jjp. 305, 306;

(6) (1952) 85 C.L.R., a t pp. 479, 483.(1949) 79 C.L.R., at pp. 635, 636.

(7) (1952) 85 C.L.R. 467.

:}74 HIGH COURT

[1963.

H . (I. ()!.• A. yY/f' Co»mionwealth and Commonwealth Oil Refineries Ltd. v. South A ustralia (1) ; Vacuum Oil Co. Pty. Ltd. v. Queensland (2). The bimlon on the intra-State sale in the circumstances necessarily

V. constitut('(l a restriction of the freedom of the inter-State traffic

Soi'tii pi'('t‘'<'(hai it. This submission is supported by Field Peas Walks. Ma.rheti'iiy Board {Tas.) v. CUments ffi Marshall Pty. fJd. (3) . ̂ a.nd James v. Cowa,n (4). Regard should, be had to what the elfoct will be l)y denying the grower the right to deliver under his intra-Stat.e contract to the inter-State dealer ; it will be found that the effect of it is to preclude the inter-State trade, which would infringe s. 92. The effect of an Act precluding sale by a domestic transaction may be to directly interfere with the inter state transaction. The subject sale, the sale by the importer, was itself in the course of inter-State trade and commerce {Field Peas Marketing Board {Tas.) v. Clements d Marshall Pty. Ltd. (5); Reg. V. Wilkinson ; Ex parte Brazell, Garlick and Coy (6) ; Wilcox Mofflin Ltd. v. New South Wales (7) ). The fact of the plaintiff's being importers is seized upon as a criterion for the opera tion of the law {Vacuum Oil Co. Pty. Ltd. v. Queensland (8) ). The first sale by the importer could not be subject to price-fixing control {Vacuum Oil Co. Pty. Ltd. v. Queensland (9) ; Commonivealth and Commonwealth Oil Refineries lAd. v. South Australia (10)). A subsidiary and separate argument is that to make an inter state transaction itself unlawful except at a price arbitrarily fixed by a State official must burden inter-State trade. The various sections of the Act must be construed and the powers they purport to confer must be confined so as to avoid conflict, so far as presently relevant, with s. 92 {Graham v. Paterson (11); Cam (& Sons Pty. Ltd. v. The Chief Secretary {N.S.W.) (12); Carter

V. Potato Alarketing Board (13) ).

Dr. F. Louat Q.C. An Act which in fact directly and immediately affects inter-State trade is not saved by any consideration about its purpose or motive or pith and substaiice or anything else. The restriction may take a great many forms, and the list can never be closed. A sale in its basic elements consists of three things,

(]) (192(3) 3S C.L.R., a t pp. 426, 427,

(7) (1952) 85 C.L.R., at p. 619.

4,30, 440.(8) (1934) 51 C.L.R. 108.

(2) (1934) 51 C.L.R., at pp. 117, 118,

(9) (1934) 51 C.L.R, 108.

128, 134. 138, 140, 141.

(10) (1926) 38 C.L.R. 408.

(3) (1948) 76 C.L.R., at p. 429.

(11) (19,50) 81 C.L.R, 1, a t pp. 16,

(4) (1930) 43 C.L.R. 386, at ji. 418.

20. 23.

(5) (1948) 76 C.L.R,, at j>p. 423, 429.(12) (1951) 84 C.L.R., at ])p. 453, 454.

(6) (1952) 85 C.L.R,, at p]). 479, 480,

(13) (1951) 84 C.L.R. 460, at p. 477.

483, 486.

88 C.L.R.] OF AUSTRALIA.

375

namely, the consensus, what is sold and the price. If any

H. C. OF A.

one of those three things, which are the very structure and essence 195.3.

of a sale, is made the subject of direct restriction, then trade and

W ragg

commerce, or commerce consisting of the selling, is directly restricted.

Sta te

For the first element see James v. South Australia (1) ; the second

X ew South

element, see Fergiisson v. Stevenson (2) ; and the third element,

W a l e s .

as in this case, see McArthur’s Case (3). The fixation of price removes all freedom of bargaining from one of the parties, the seller, all freedom to bargain about the price which he can receive, and, of course, the purchaser is unable to pay either. A law that removes freedom to bargain in a transaction of buying and selling cannot be remote because it is direct, and it cannot be regulatory because it does not purport to regulate anything ; it purports, in fact, to do something very different. The whole essence and purpose of the Act, its terms, is to dictate the terms on which goods can be sold, including goods engaged in inter-State commerce.

G. Wallace Q.C. (with him B. P. Macfarlan Q.C. and R. Else- Mitchell), for the three defendants. The form of relief to which the plaintiffs are entitled in the circumstances set forth in the stated case is not readily apparent. In the net result it would only be by virtue of the exercise of the Court’s discretion that it would make a declaration, and no case arises for canvassing the operation of the order, it no longer being in existence. The form of declaration sought involves simply and precisely what the Act itself says. The plaintiffs have no locus standi to ask for a declaration unless they can show prejudice from the operation of the Act when dealing with s. 92 {Graham v. Paterson (4) ). The States have got power to legislate in respect of inter-State trade and commerce {James v. The Commonwealth (5) ; Milk Board (A .̂S'.IF.) v. Metropolitan Cream Pty. Ltd. (6). Price fixing is an aspect of trade and com merce. The extent to which the State may so legislate turns on the facts and circumstances and the subject matter of a given case. The fixing of uniform and maximum prices was discussed in R. v. Bromhead ; Ex parte Miss Daveney Pty. Ltd. (7). Price fixing is almost an essential feature of govern ment under modern conditions. The subject price-fixing has a special application because of the basic wage system, and the “ C ” series index figures, and the obvious connection between prices of

(1) (1927) 40 C.L.R. 1.

(5) (1936) A.C., at pp. 611, 632 ; .55

(2) (1951) 84 C.L..R 421.

C.L.R., at pp. 41, 60.

(3) (1920) 28 C.L.R. .5.30.

(6) (19.39) 62 C.L.R. 116, at pp. 133,

(4) (1950) 81 C.L.R. 1.

134.

(7) (1946) 73 C.L.R. 237, at p. 253.

HIGH COURT

IJ953.

H, ('. OK A.

commodities whicli arc on the regimen with the basic wage and the circle of inflation and price rising. I t is important to assess the

U 'kaoopart wliich ])rice-iixing ])lays in the community and it cannot be

V.sugg('.sted against a government which makes a general price-fixing

(Static ok

Xtcw Soil Til law tha,t it is not acting in the interests of the general welfare of

W a l k s .

the public and in due pursuance of its powers to govern for the peace, order and good government of New South Wales. I t is at the point of consumption that maximum prices are intended to operate. The ])rice-fixing laws which are of a general nature must, prima facie, i)e deemed not only valid but highly desirable features of the government of New South Wales. The facts in the stated case do not reveal that the Act or the orders have affected inter State trade or commerce. .Even if that be not so then the affectation is not to any illegitimate extent and is valid. The inter-State transaction ends when the importer has distributed the goods (potatoes) for resale in this State {Hospital Provident Fund Pty. Ltd. V. Victoria (1) per Williams J.). Once it is conceded that the State of New South Wales has this plenary power concurrent with the Commonwealth power to legislate on this type of subject matter, it cannot be confined because in some indirect manner the inter-State trader is partially restricted. The order is directed solely towards the goods after their entry into the State. That fact and the fact that the orders deal with the whole mass of potatoes distinguish this case from Vacuum Oil Co. Pty. Ltd. V. Queensland (2) and The Commonwealth and Common wealth Oil Refineries Ltd. v. South Australia (3). The stated case does not prove that there is any prejudice. The validity of a general Act, like this Act, whether it is regulatory or prohibitive, cannot be judged by the experiences or complaints of an individual or a series of individuals. The subject orders do not touch inter-State trade at all because they operate on the first sale after importation. Once the potatoes are allotted to Cameron & McFadyen Pty. Ltd. the inter-State element in the transaction is ended. The stated case is intended to reveal that the P. I. C. Pty. Ltd. import the potatoes and own them on their arrival in Sydney, in fact as they leave the shore of Tasmania, and then by some domestic arrangement between the company and the shareholders they are allotted to the primary wholesalers, being members of the company. In that state of affairs the sales within New South Wales are the same as the sales of other imported goods, they are domestic sales. There is nothing in either

(1) (1953) 87 C.L.R. 1.(3) (1926) 38 C.L.R. 408.

(2) (1934) 51 C.L.R. 108.

88 C.L.R.] OF AUSTRALIA.

377

Vacuum Oil Co. Pty. Ltd. v. Queensland (1) or The Commonwealth

H. C. OF A.

and Commonwealth Oil Refineries Ltd. v. South Australia (2) contrary 1958.

to those submissions. McArthurs Case (3) can no longer be con

W k.\gg

sidered a binding authority because the two important features of ■

Statb

that case seem to be that s. 92 binds the Commonwealth and that X ew

S outh

a State has no power to regulate inter-State trade and commerce ;

W a l e s .

it is beyond its power. I t is not beyond the power of a State to

regulate inter-State trade.

Banks' Case (6). Although the facts are different the principle is there. In The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia (7) there was a direct tax again on the first sale. The test to-day would be whether the imposition was discriminatory and intended so to be. The test of discrimination or the fact that a law is not discriminatory does not necessarily mean that it is invalid. I t is important in this case that all the orders do, or all that Order No. 322 does, is fix the ultimate or retail price, and as a corollary to that, and as an adjunct to it, it also fixes the prices of the first and second whole salers. In a case such as this where it is a general law of a non- discriminatory nature the power would attach at the stage where the importation ceases and the property has passed from the importer to a New South Wales resident for the purposes of being dealt with and sold in New South Wales. I t is necessary, when considering an issue of whether a law is regulatory that the Court ascertain the legal effect of the law and then consider it in the light of political, social and economic factors [Banks' Case (8) ). There is not any justification for the suggestion that the price-fixing order has the effect of a bounty on New South Wales potatoes. The potatoes are invoiced to and owned by P. I. C. Pty. Ltd. and there is not any suggestion in the stated case that P. I. C. Pty. Ltd. is an agent either for the Tasmanian merchant or for the Tasmanian grower.

[Dixon C.J. referred to James v. The Commonivealth (4).] still obtain and are consistent with the

P. D. Phillips Q.C. (with him J . K. Manning), for the Common wealth, intervening by leave. The three important matters for consideration are : (i) a determination of what is the course of inter-

(1) (1934) 51 C.L.R. 108.

(6) (1950) A.C. 235 ; (1949) 79 C.L.R.

(2) (1920) 38 C.L.R. 408.

497.

(3) (1920) 28 C.L.R. 530.(7) (1926) 38 C.L.R. 408.

(4) (1936) A.C., a t pp. 618-620; 55

(8) (1950) A.C., a t p. 310; (1949) 79

C.L.R., at pp. 47-49, 56, 57, 59.

C.L.R., a t 13. 639.

(5) (1934) 51 C.L.R., at pp. 120, 126,

128, 129, 133.

m s

HIGH COURT

[1953.

ir. a OF A.

State trade, a mixed f|uestion of fact and law ; (ii) to test the validity ]9r>:).of the law by considering whether impact on inter-State trade, as

thus revea,l(Hl, of tlie law is direct or remote ; and (iii) whether the

V.impact of the law u])on intrsr-State trade, as thus revealed, burdens

Statu

it or merely reguhites it.

It cannot be determined as a matter of

N iow Soii'j'ii

W'auos .law that the fii'st sale of an imyrorted commodity is necessarily in

the course of iirter-State trade (Vacuum Oil Co. Fty. Ltd. v. Queens land (I) ). The course of inter-State trade may vary between one commodity and another, the manner of dealing with, and the nature of the economic interests involved in one commodity or class of commodities may normally lead to the inter-State trade in that commodity ceasing before the first sale, and the same factors may lead to embracing a sale in another commodity. The problem here is to determine whether the first sale is the last act in inter-State or the first act in intra-State trade. Whether a law is direct or not may depend upon the transactions with which it deals. When an Act deals with a fact or thing not itself part of trade, commerce or inter course, in order for it then to be direct the nature of its effect upon trade, commerce or intercourse has to be very different from the effect upon trade, commerce and intercourse when it deals with the fact, event or thing itself. In this case the essence of this law is that it does not deal, except incidentally, with a fact, event or thing itself forming part of trade, commerce or intercourse. If the law deals with a fact, event or thing which may be, in some circum stances, part of inter-State commerce, but need not be part of inter State commerce, then it falls into the category of laws not dealing with the fact of commerce, and the necessity of direct action must be viewed in terms of a law which deals with something other than inter-State commerce itself and is alleged to have a direct effect upon inter-State commerce and must be tested from that point of view. There is not sufficient evidence to determine the crucial question as to whether the first sale by potato wholesalers is the last act in inter-State trade or the first act in intra-State trade. A law which deals with a matter not an act of inter-State trade may or may not be hit at by s. 92. The Act must be viewed as a law which regulates price on sale in New South Wales. The rather superficial conclusions that the first sale of imported potatoes is in inter-State trade should be carefully scrutinized. For the purposes of determin ing the validity of the Act it is proper to assume that the sale in question is outside of inter-State trade, because in many cases it may be so. The first sale of an imported commodity may or may not be in i7rter-State trade, and it depends upon variable facts,

(.1) (19.34) .51 O.L.R., at p. 133.

88 C.L.R.] OF AUSTRALIA.

370

sometimes upon the nature of the commodity, sometimes upon the

manner of handling the commodity.

[Dixon C.J. referred to Parker v. Brown (1).]

W ragg

The test to apply to the law will be the same whether the first sale be in inter-State trade or not.

State

The questions arise : (i) What T\TEw™orTH

are the proper tests to apply to determine whether a law is direct

W a l e s .

or remote in its impact upon inter-State trade when it acts upon facts not part of inter-State trade 1 ; and (ii) When is a law regu latory or not in relation to inter-State trade when it acts upon matters not themselves part of inter-State trade ? A law which affects activities of manufacture or consumption may or may not be a law which infringes the constitutional guarantee of freedom, but it indubitably is a law which is acting upon, in fact operates upon, activities which are not themselves part of inter-State commerce. Interference is quite another matter. The limits of inter-State commerce are a matter of business consideration. The terminal point varies. On the very question of the first sale it may be within or without according to circumstances. Not only are matters which can be the subjects of legislation under s. 51 (1) of the Constitution prohibited by s. 92 but also matters which must, on any view, be outside the scope of s. 51 (i). One of the merchants herein deals entirely in Tasmanian potatoes ; another merchant deals much more extensively in New South AVales potatoes. He takes his allocation of Tasmanian potatoes and mixes them together. It is agreed that the facts that they are sold as Tasmanian potatoes is a very important consideration in determining whether the first sale is in inter-State trade or not, but it can be far from conclusive. That they are so sold does not matter. Where there is a statute which authorizes the fixation of the price of sales, and it extends to sales of imported goods, it should be determined whether that law affects freedom of inter-State trade by a test which will be applicable to all the sales of imported goods. There ought not to be applied to the question of the validity of a law fixing the price of sales in New South Wales a test which happens to be appropriate to the accidental circumstances represented by the small group of facts present in the litigation. The place of the first sale, whether it be in inter-State trade or not, is irrelevant in determining the validity of the law. Validity has to be found on other considerations and not on whether the sale is part of inter-State trade or not. The facts contained in par. 22 of the stated case are irrelevant. I t is irrelevant that Tasmanian potatoes are, generally, of very good quality and readily saleable in New South Wales, and that

(1) (1942) 317 U.S. 341 [87 Law. Ed. 315],

HIGH COURT

[1953.

H. C. OF A. because of the lunximiim price the plaintiffs are unable to obtain

I ! ) ■ ) ; { .their full requirements of Tasmanian potatoes. The validity of

WUAIU)the law (loos not depend upon the yn'ofit left to the grower. Paragraph

24 ol the statcid case really only amounts to the statement that if the

Statu

price IS higher the supply will be larger. That does not throw any

A K\v

S ou t h

W'a l h s .

light on the constitutional freedom of a person to trade, whether it be Jixed either by law or otherwise. A law which acts upon facts which are not part of inter-State trade cannot be invalid under s. 92. I t does not become invalid because the economic repercussions of that law are prejudicial to trade. The fact that it acts upon matters not themselves part of inter-State trade goes a long way towards establishing in itsedf that it is indirect in its relation. I t does not permanently establish it, but it goes a long way towards establishing it (Hospital Provident Fund Ply. Ltd. v. Victoria (1) ).

[D ixon C.J. referred to Willard v. Rawson (2).]

As far back as that case (3) the difference in views between the Chief Justice and Rich J. was that the latter took the view that if it was not immediate and not direct then, however much a burden, it was valid. The Chief Justice took the other view. Between those two views their Lordships in the Banks’ Case (4) elected to prefer the view of Rich J. This statute is indirect in its operation because though it may accidentally deal with a sale which, being the first sale after importation, is a sale in the course of inter-State trade, that is not an essential fact, event or thing m inter-State trade upon which it seizes ; it is an accidental feature and that is not a criterion for determining whether this statute is direct in its operation or not. A law which fastens on the acci dental event, thing or fact in inter-State trade is indirect and therefore valid. A law which conditions the manner of conducting trade, the trade of an individual trader, is a regulatory law and valid {Banks’ Case (5) ). If a law prescribes the manner in which the trade is to be conducted it is, prima facie, regulatory. At what stage does a law imposing the manner of conducting exceed permissible burden ? Some of these manners of controlling are necessarily burdens and yet valid. The test must be one of degree. The true logical approach was properly applied in Hospital Provident Fund Pty. Ltd. v. Victoria (6) per Williams J. A law does not cease to be a constitutionally valid law under s. 92 because it contains very considerable limitations and controls upon the

(]) (1953) 87 C.L.R. 1.

(5) (1930) A.C., at p. 311 ; (1949) 79

(2) (1933) 48 C.L.R. 316, at p. 331.

C.L.R., at p. 640.

(3) (1933) 48 C.L.R., at p. 324.

(6) (1953) 87 C.L.R. 2, at pp. 27-30.

(4) (1950) A.C., at pp. 310, 312; (1949) 79 C.L.R., at pp. 639, 641.

88 C.L.R.] OF AUSTRALIA.

381

H. C.OF A.

manner of conducting business.

There is not any choice as between

the view which says that everything which burdens, impairs in any 1953.

way, is bad on the one hand, and a system which supplies some

W kagg

appreciation of the nature and extent of the burden to ascertain

State

whether it passes forbidden limits. The powers in the Act are N ew'

South

designed and limited by the purpose of maintaining the price level

W a l e s .

and preventing inflation, and as a Comnionw^ealth law would be a legitimate exercise of the defence power. The whole basis of the judgment in R. v. Bromhead ; Bx paHe Miss Daveney Pty. Ltd. (1) was that the powers were subject to judicial control but that it had not been shown that the exercise of the power went outside the limits. There are limits to be adduced from the nature of this Act, its history, and the well-known circumstances from which the judicial control is to be implied. In determining the question as to whether this Act is a regulatory law or not, that is of vital importance. Prevention of inflation contemplates the maintenance of trade, the avoidance of some disease in the economy, the main tenance of economy in health. The law is not directed to abolishing it and so a power exercised under a law of that nature does not lose its regulatory effect. A regulation of the manner of trading must be considered in all the circumstances. This Act can be described as regulatory because of its history and the purpose which ought to be attached to it. I t contemplates the continuance of trade, including inter-State trade. I t regulates trade notwithstanding that it burdens some inter-State traders by limiting them to reasonable profits. The Act is a law the powers of which are designed to protect against inflation, and that gives it a regulatory character. The undermentioned American authorities will give the Court an indication of the view current in the United States of America as to the freedom of inter-State trade from State laws unconstitutionally interfering with that freedom by price fixing and otherwise : Freeman v. Hewit (2) ; Milh Control Board v. Eisenberg Farm Products (3) ; Panhandle Eastern Pipe lAne Co. v. Indiana Public Service Commission (4) ; and Panhandle Eastern Pipe Line Co. v. Michigan Public Service Commission (5). In The Commomvealth and Commonwealth Oil Refineries Ltd. v. South Australia (6) the essence of the finding by the court was that there was a customs duty imposed on the importer and therefore the

(1) (1946) 73 C.L.R. 237.

(4) (1947) 332 U.S. 507, at pp. 508,

(2) (1946) 329 U.S. 249, a t p. 266

519-524 [92 Law. Ed. 128, at

[91 Law Ed. 265, at p. 279].

pp. 133, 139-141].

(3) (1939) 306 U.S. 346 [83 Law. Ed.

(.5) (1951) 341 U.S. 329, a t pp. 337

752].

339 [95 Law. Ed., a t pp. 1000,

1001].

(6) (1926) 38 C.L.R. 408.

HIGH COURT

[J953.

If.

(II.’, A.

Wtulc liiw was invalid. The Act under consideration in Vacuum OH Oo. Ply. Lid. V. Queensland (1) dealt with a commodity the

\\'KA(<((wlioh' of which was imported. The statutory result was really

V.to op('ra.te on ini[)ortation, notwithstanding the fact that the

St\’I'K

oh'

N i;\v SnuTii woi'd “ sal('. ” wa.s sehu'.ted. McArllmPs Case (2) is wrong at the

W 'a i . h s .foundation la'cause it carried too far the inhibition. I t forbade

any control of tin; manner of trade. No other case has ever gone a,s (iir a.s tluit. atid thero; a.r(! other (;as(!s whicli have clearly decided (he c.onlu'ary. An interesting c.ontrast to Vacuum Oil Co. Fty. Ltd. V. (Luernslaml (1) and McArth.ur's Case (3) may be found in Home HenefUs Pty. Ltd. v. Crafter (4) where the Court undoubtedly did find 11 law conditioning the mode of conducting inter-State trade and held that there was nothing in s. 92 to prevent a State from making a law about the kind of rebates that might be granted in inter-State trade ; see also Hartley v. Walsh (5). As to whether this Act is direct in its impact upon inter-State trade, or remote, the first subjnission is merely that its contact with inter-State trade is by reference to sale, but the sale of imported goods may be in inter-State trade or outside it, and in those circumstances the impact should be held to be remote. The second view of the remote ness or directness of the Act in its relation to inter-State trade does not depend upon the fact, event or thing selected, but upon the legislative character, the character of the law, when it selects the fact, event or thing. The Act under consideration in P. v. Connare ; Ex parte Wawn (6) and in E. v. Martin ; Ex parte Wawn (7)—the lottery cases—escaped s. 92 not because it regulated inter-State trade, but because it was remote from inter-State trade, its remoteness arising from the inevitable character of the Act (8). Price-fixing under the Act is remote and not direct because the selection of the inter-State fact is too accidental, and because the essential nature of the Act, its purpose, is the control of the general price level. I t is not concerned with regulating trade as inter-State trade, nor with regulating or controlling trade as such. The conditions are applicable to all persons who trade in New South Wales.

1). 1. Menzies Q.C. (with II. A. Winneke Q.C. Solicitor-General for the State of Victoria and with them K. Else-Mitchell) for the State of Victoria, intervening by leave. Economic consequences that fix the amount of trade that passes from one State to another

(1) (1934) 51 C.L.R. 108.(5) (1937) 57 C.L.R. 372.

(2) (1920) 28 C.L.R. 530.(6) (1939) (11 C.L.R. 596.

(3) (1920) 28 C.L.R. 530.(7) (1939) 62 C.L.R. 457.

(4) (1939) (11 C.L.R. 701.

(8) (1939) 62 C.L.R., at p. 462.

88 C.L.R.] OF AUSTRALIA.

383

are circumstances not to be taken into accoimt in determining

H. C. OF A.

under s. 92 the validity of the Act, or the orders made under 1953.

it. The only significant fact is that there is a price regulation

Wkagg

which, according to circumstances, may or may not encourage

iState

inter-State trade. General price-fixing legislation can validly N ew

S outh

apply to sales in one State of goods that have been brought into

W a l e s .

that State from another State. The question here is not whether the Act applies to inter-State sales. An inter-State sale is the sort of sale that was held in McArthur's Case (1) could not be affected by the Queensland Act. In that case the question never was : Would the provisions of any of the contracts amount to inter-State trade 1 but was ; Do the sales themselves amount to inter-State trade in the circumstances there present ? The Act is a general price-fixing law. The Act does not apply to any transaction outside New South Wales at all. The Act applies to goods regardless of their origin; overseas, inter-State, or produced locally. The discretion given to the commissioner is not a discretion to determine whether or not a person should trade, but to fix the price at which sales would take place. There is not any difference between that and actual specification of the price in the legislation itself. What has been described as an arbitrary licensing system has not been held incompatible with the freedom conferred by s. 92 (0. Gilpin Ltd. V. Commissioner for Load Transport and Tramways (A.S^.IF.) (2) ; McCarter v. Brodie (3) ). There is not any discrimination on the face of the order, nor is there anything to justify the conclusion that it operates to the disadvantage of the importers of Tasmanian potatoes. There is not any evidence as to the relative costs of the production in Tasmania and bringing Tasmanian potatoes to the New South Wales market, and the cost of production in New South AVales and bringing New South AVales potatoes on to the market. I t is apparent from the order itself that every price which is fixed is the price at which one person in New South Wales sells to another person in New South Wales potatoes which are in New South Wales. This price-fixing legislation is indirect upon inter-State trade. If it is direct, it is nevertheless permitted because it is a permissible regulation. A law that operates generally to sales, even if it affects inter-State sales, does not operate directly upon inter-State trade. This is not a law which seizes upon any essential element of inter-State trade. The first sale after inter-State trade is not of necessity inter-State trade. I t may be in some circumstances,

(1) (1920) 28 C.L.R. 530.(3) (1950) 80 C.L.R. 432.

(2) (1935) 52 C.L.R. 189.

384 HIGH COURT

[1953.

H. C .o r A.but it is necessary to liave regard to the trade itself. If it Ije found that the legislation does no more than create an indirect or

W raooconsequential impediment, then it is not affected by s. 92 at all.

I t is only when it operates to restrict trade directly and immediately

Statr of

X f.w Sooth that s. 92 comes into play (1). 0. Gilpin Ltd. v. Commissioner

Wale .s .for Road Transport and, Tramivays (Â .<S.IF.) (2) ; McCarter v. Brod,ie (3) ; R. v. Vizza.rd ; Ex parte Hill (4) and Riterina Transport Pty. Ltd. V. Victoria (5) may be regarded as permissible regulation rather than as having an indirect operation upon inter-State trade. The explanation of the decisions in Neu' South Wales v. The Common wealth (6) ; R. V. Connare ; Ex parte Wawn (7) ; R. v.. Martin ; Ex parte Waivn (8) ; Roughley v. New South, Wales (9) and Ex parte Nelson {No. 1) (10) is that the legislation operated 1ti an indirect fashion and the imposition upon inter-State trade was indirect. The real test is direct or indirect operation. “ Indirect ” should not be construed narrowly. Inter-State trade is affected by legislation that does not have any inter-State movement as the criterion of its operation. If the Court comes to tlie conclusion that tlie transactions in this case are inter-State trade, it would be a proper solution of the matter to find the legislation operated indirectly upon inter-State trade and s. 92 was not attracted. Fox V. Robbins (11) was a transaction of inter-State trade and was held bad by virtue of s. 92 because of its direct effect upon inter-State trade, direct because it discriminated. Upon the facts it is immaterial whether the Court comes to the conclusion that the importer of the subject potatoes was P.I.C. Pty. Ltd. or Cameron & McFadyen Ltd. There is not any information in the stated case to support a conclusion that the sale by the primary wholesaler was a transaction of inter-State trade. There is not anv inflexible rule of law that the first sale after importation is of necessity a transaction of inter-State trade. The decisions in Vacuum, Oil Co. Pty. Ltd. v. Queensland (12); The Common wealth and Commonwealth Oil Refineries Ltd. v. South Australia (13) and Roughley v. New South Wales (9) are cpiite inconsistent with the vieŵ that once there is a sale after import, that is inter-State trade. There is not any suggestion to be gathered from McArthur s Case (14) of a doctrine that any sale of imports -partakes of tlie

(1) (19.50) A.C., at p. .310; (1949) 79

(8) (1939) 62 C.L.R. 457.

C.L.R., at p. 6.39.

(9) (1928) 42 C.L.R. 162.

(2) (19.35) 52 C.L.R. 189.(10) (1928) 42 C.L.R. 209.

(3) (19.50) 80 C.L.R. 432.(11) (1909) 8 C.L.R. 115.

(4) (193.3) ,50 C.L.R. 30.(12) (19.34) 51 C.L.R. 108.

(5) (1937) 57 C.L.R. .327.(13) (1926) 38 C.L.R. 408.

(6) (1915) 20 C.L.R. .54.(14) (1920) 28 C.L.R. 530.

(7) (1939) 61 C.L.R. 596.

88 C.L.R.] OF AUSTRALIA.

385

character of inter-State trade. The decision in McArthur s Case

H. C. OF A.

(]) does not touch any of the transactions which are now 1953.

before the Court; this case starts where McArthur s Case (1)

W bagg

finished, namely, the importation of goods into New South Wales.

State of

McArthur s Case (1) wrongly decided that the general price-fixing

N ew South

law could not apply to a transaction which was itself an inter-State

Wa les .

sale, that s. 92 prevented the State of Queensland from fixing prices at which goods could be sold in the course of inter-State trade. That part of the decision in Me Arthur’s Case (1) which deprived Queensland of the right to regulate internal prices, was condemned by the Privy Council in James v. The Commonwealth (2); see McCarter v. Brodie (3) ; Australian National Ainvays Pty. Ltd.

person may sell goods which have been brought into one State from another and making it an offence for him to be in possession of goods brought from one State to another.

The Commonwealth (4) and R. v. Vizzard ; Ex parte Hill (5).

[D ix o n C.J. referred to Fergusson v. Stevenson (6).]

G. E. Barwich Q.C., in reply.

Cur. adv. vult.

The following written judgments were delivered :—

June 9.

D ix o n C.J. I have had the advantage of reading the judgment prepared by Taylor J. and agree in the conclusions which his Honour has expressed and in the reasoning upon which they are founded. But I desire to make the following observations upon the case.

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 importa tion and purchase by the actual consumer. I t 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 connection with the importation of the article from another State. The distinction which is drawn between inter-State

(1) (1920) 28 C.L.R. 530.

(4) (1946) 71 C.L.R. 29, at pp. 105

(2) (1936) A.C., at pp. 619, 631 ; 55

106.

C.L.R., at pp. 48,. 59.

(5) (1933) 50 C.L.R., at pp. 46 et

(3) (1950) 80 C.L.R., at pp. 463, 4.58.

seep

(6) (1951) 84 C.L.R., at p. 435.

VOL.

L x x x v m . — 25

.')\S(3 HIGH COURT

[1953.

H. ('. t)i' A. and the domestic trade of a State for the purpose of the power *'*'*'̂ - conferred upon the Parliament by s. 51 (i.) to make laws with respect

Wu A GC ito ii'a.de and commerce with other countries and among the States

V.may well be considered artificial and unsuitable to modern times.

i\rw Sm'iTii distinction adopted by the Constitution and it must be

W ' a i . h s . ol)served however much inter-dependence may now exist between

the two divisions of trade and commerce which the Constitution tims distinguislies. A legislative power, however, with respect to any subject matter contains within itself authority over whatever is incidental to the subject matter of the power and enables the legislature to include within laws made in pursuance of the power provisions which can only be justified as ancillary or incidental. But even in the application of this principle to the grant of legislative power made by s. 51 (i.) the distinction which the Constitution makes between the two branches of trade and commerce must be maintained. Its existence makes impossible any operation of the incidental power which would obliterate the distinction. Section 92 does not confer power but restricts it. I t is commonly said that it confers an immunity. For it denies power to the legislatures to impair the freedom of trade, commerce and intercourse among the States. The argument for the plaintiffs presents all the appearance of an attempt to take the principles relating to the inclusion in a grant of power of what is incidental or ancillary to its fulfilment, and, by applying such principles to the denial of power which is involved in s. 92, to extend the area of the immunity. Moreover, the extension of the area of immunity proposed by the argument is inconsistent with the maintenance of the distinction which s. 92 makes as clearly as does s. 51 (i.).

nixun C.,1.

I t may be conceded that in general it is true that to fix the price at which commodities may be sold at any of the successive stages be tween production or importation and consumption will produce some economic effect upon production or importation, as the case may be. But that is to say little more than that the course of trade and com merce in a commodity is not divisible and that one transaction is interdependent with another. The economic interdependence of trade and commerce among the States with the domestic trade of a State cannot lead to a weakening of the legal distinction Â hich the Constitution itself makes. Some closer connection must appear than the interdependence of domestic transactions within a State with the importation which itself amounts to inter-State trade in the commodity. Difficulties doubtless exist in saying when the importation which amounts to inter-State trade is complete, so that any further dealing with the commodity, whether by way of

88 C.L.R.] OF AUSTRALIA.

387

handling, sale or other disposition, does not belong to the inter- H- C- oi’ A.

State transaction.

I t may be conceded that what is indispensable

to the completion of the actual importation is within the protection

weagg

of s. 92. An illustration or analogy is supplied by our decision

in Fergusson v. Stevenson (1). There possession of the article was jstb̂ ^South

penalized by State law. We said : “ The transaction in which the

W a l e s .

defendant’s company engaged was essentially one of inter-State

trade and the possession which the informant makes the ground of the prosecution was an inseparable concomitant or consequence of that transaction Accordingly we held that s. 92 protected possession from the penal consequence which the State law sought to affix.

I t 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. 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. I t does not limit the legal freedom to import potatoes or to contract to buy them for shipment from Tasmania. Its opera tion 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. When it is said that s. 92 gives protection against restrictions upon trade, commerce and intercourse among the States which are direct as distinguished from laws or governmental acts which involve some indirect or consequential prejudice, it is this kind of thing that is contemplated. On the other hand if the operation of the law is upon acts, matters or things which in themselves form part of inter state trade I do not suppose that it matters that it is done by circuitous or devious means. I t is a time-honoured principle that

(1) (1951) 84 C.L.R., a t p. 435.

388 HIGH COURT

[1953.

H . ( ' . O K A . you cannot do indirectly wliat you are forbidden to do directly. 195;?.I t would he strange if the principle did not apply to the effectuation Wk.vouof a. constitutional limitation or restriction like s. 92. But no such

(picstion a.rises in the present case. Apart from the special position

S t ATK Ob'

N iow Nor'i'n

ol' tlu' ])rimary wholesaler this case seems to me to depend simply

W a mo s .on an a,ttcmpt to push the operation of s. 92 into the domestic trade

ni.Miii c.,1.of a. vState on the ground that inter-State importation must depend

on that trad(‘.

1 caimot see how that can be done.

But there remains the special position of the primary wholesaler. No doubt from a practical point of view it is of small consequezice whether the first sale, the sale made by him, is protected from price fixing, if the succeeding sales are not. The ground for suggesting that the first sale may be protected lies in the course of business in importing yzotatoes from Tasmania to Sydney as it is described in the case stated. Is it the result of that course of business that the first sale made in New South Wales is part and parcel of the process of importation because without it potatoes wmuld remain at the ship’s side and not go into intra-State trade ? Paragraph 17 (c) of the case stated as amended is as follows :—

“ On arrival at Sydney the potatoes shipped are allotted by the P. I. C. Pty. Ltd. among Sydney merchants who are primary wholesalers within the meaning of the Prices Regulation Orders, and who sell potatoes exclusively, or almost exclusively, to persons in New South Wales who are secondary wholesalers within the meaning of the said Orders. Except in the case of the small propor tion sold otherwise than to secondary wholesalers, the merchant does not take the imported potatoes into store, but sells them ex wharf, and delivery is taken by the purchaser at the wharf ”.

Does this mean that the sale by the primary wholesaler is an inseparable part of the inter-State transaction ? In my opinion the facts stated are insufifcient to justify that conclusion. I think that they show no more than a course of business in which it is convenient to make the first intra-State sale from the wharf.

I am therefore of opinion that nothing appears which prevents the Prices Regulation Acts 1948-1949 (N.S.W.) operating upon the declarations and orders referred to in the case stated so that they apply to the sales of potatoes by the plaintiffs.

After the case was stated the orders went out of force. I t is perhaps desirable to add that, even had my opinion been that they could not, while in force, validly apply to the selling of Tasmanian potatoes in New South Wales, I should doubt whether we ought in such circumstances to make any declaration of right in the plaintiff’s favour concerning the operation of the revoked orders. However, this is not a matter which I need pursue.

88 C.L.R.] OF AUSTRALIA.

389

Mc T ie r n a n j . I agree with the reasons for judgment of the Chief Justice and my brother Taylor, and I am of opinion that the

questions asked in the case stated should be answered accordingly.

-Weagg

W il l ia m s J.

I agree substantially with the reasons of the Chief

Justice and Taylor J. and that leads me also to agree with the W a l e s .

answers to the cjuestions in the case stated proposed by Taylor J.

W e b b J. I would find as a fact that s. 92 is not infringed by this State general price-fixing legislation, or by anything done or proposed to be done under it ; and I would answer the questions in the case in the negative.

In James v. The CommonweaTth (1) the Privy Council intimated that State general price-fixing legislation, did not infringe s. 92. I t is true that their Lordships based this view on price-fixing being a sovereign right of the States, and on s. 92 not being intended to give a preference to inter-State trade over intra-State tra d e ; whereas in The Commojiivealth v. Bank of New South Wales (2) the application of s. 92 was said by the Privy Council to depend on whether the legislation in question has a direct and not merely a remote effect on inter-State trade ; and if it has a direct effect then whether in its true character it is regulatory. However, in my opinion, it is by no means clear that their Lordships in the James' Case (3) did not apply the test afterwards stated in the Banks' Case (4). I t is, I think, open to us to conclude that their Lordships thought that, if or although general price-fixing legislation had a direct effect, still it was merely regulatory, and so was the exercise of a sovereign right of the State enacting it if, like this legislation, it did not discriminate against inter-State trade. At all events, I do not think that their Lordships said anything from which it must necessarily be deduced that they took a view inconsistent with that expressed in the Banks' Case (4).

In W. A . McArthur Ltd. v. Queensland (5) general price-fixing legislation of the State of Queensland was formally held by this Court to infringe s. 92 only where the contract stipulated that the goods were to be brought from New South Wales to Queensland ; although some of the reasoning of their Honours suggests that s. 92 would have been infringed even where the goods had been brought from the one State to the other without any such stipulation (6).

(1) (19.36) A.C., at p. 620 ; 55 C.L.R.,

(4) (1950) A.C. 235 ; (1949) 79 C.L.R.

at p. 49.

497.

(2) (1950) A.C. 227, a tp . 313 ; (1949)

(5) (1920) 28 C.L.R., at p. 559.

79 C.L.R., at p. 642.

(6) (1920) 28 C.L.R., at p. 545.

(3) (1936) A.C. 578; 55 C.L.R. 1.

:?90 HIGH COURT

[1953.

H. C. OF

Their Lordships in the Jarms Case (1) could not have overlooked

I i)r>3.that. Yet they t ^ t that this Court

m. McArthur's Case {2)

A\'rA(.!()

denied a sovereign right of the State of Queensland.

As in dealing with the transport legislation, so in dealing with

St.\T.I0 Oh'

New Sof'I'h this general price-fixing legislation, or any other legislation claimed

AN'a l e s .to infringe s. 92, I am content to adopt and apply the views of the

Webb ,1.Privy Council on the legislation once they have been intimated, whether obiter or otherwise, and until they are modified, unless it is incontestable that such views are erroneous. I say this because counsel supporting this general price-fixing legislation did not rely either wholly or mainly on the observations of their Lordships in the James Case (3). But if those observations are to be dis regarded, then 1 think that State general price-fixing legislation, because of its terms or its operation, may well be found to infringe s. 92 and not merely to the limited extent indicated by the formal order in McArthur's Case (4). In Field Peas Marketing Board (Tas.) V. Clements & Marshall Pty. Ltd. (5) the buyers of the commodity in the producing State were able to retain it against the State’s procla mation of compulsory acquisition of the commodity, even when there was no stipulation in the contract with the producers that the commodity should be taken to another State. But the effect of s. 92 does not end in the producing State. As pointed out by Evatt J. in Vacuum Oil Co. Pty. Ltd. v. Queensland “ the main element in the inter-State trade is the marketing of the goods in the second State ” (6). Section 92 may then protect against a maximum price declared under State legislation not only the first sale but also subsequent sales in the second State until the commodity loses its identity as the produce of the first State, whether by being mixed with other similar produce or otherwise ; at all events where, as here, the maximum prices on the subsequent sales are based on the maximum price on the first sale. In deciding as a question of fact whether s. 92 is infringed such economic considerations are relevant: the Banks' Case (7).

However, this general price-fixing legislation provides in s. 1 (3) that it is to be construed “ subject to the Commonwealth of Australia Constitution Act ” and so it does not purport to give a power to interfere with inter-State trade. Then the only question that arises if the observations in the James Case (8) are disregarded

(]) (1936) A.C. 578 ; 55 C.L.R. 1.(6) (1934) 51 C.L.R., at p. 134.

(2) (1920) 28 C.L.R. 530.

(7) (1950) A.C., at p. 310; (1949)

(3) (1936) A.C., a tp . 620 ; 55 C.L.R.^

79 C.L.R., at p. 639.

at ]). 49.

(8) (1936) A.C., at p. 620 ; 55 C.L.R.,

(4) (1920) 28 C.L.R. 5.30.

a t ]). 4 9 .

(5) (1948) 76 C.L.R. 414.

88 C.L.R.] OF AUSTRALIA.

391

is whether declarations, notifications or other action purporting to

H. C. OF A.

be made or taken under the legislation infringes s. 92. But unless 1953.

the contrary appears it must be assumed that any such declaration,

W ragg

notification or action has, like the legislation itself, no application

State

to inter-State trade, if otherwise it would prohibit or restrict that N ew

South

trade or purport to confer a power so to do. There are at present

W a l e s .

no declarations or notifications under this general price-fixing

Webb J.

legislation applying to potatoes : they have been revoked or cancelled. However, it is said that the Minister administering this legislation has intimated that they may be reissued. Even if they were reissued they would not necessarily infringe s. 92, either in their terms or in their operation. Nor is there any threat of action in relation to particular potatoes such as warranted the Court’s intervention in Cam <& Sons Pty. Ltd. v. Chief Secretary (N.*S.TF.) (1).

F u l l a g a r j . In this case I agree with ihe judgment of Taylor J. and with the observations of the Chief Justice.

K it t o j .

I am of the same opinion, and have nothing to add.

T a y l o r J. The case stated by Fidlagar J. in this matter raises a number of questions for the consideration of the Full Court but before referring to them it is convenient to advert to the circumstances in which these questions arise.

The plaintiffs Wragg, Brown, Wing and Malley are growers of potatoes in the State of Tasmania, whilst Clements & Marshall Pty. Ltd. is a company, incorporated in that State, which there carries on the business of a merchant dealing in potatoes. The plaintiff Cameron & McFadyen Pty. Ltd. is a company incorpor ated in New South M'ales and there carries on the business of a merchant dealing, inter alia, in potatoes grown in Tasmania and imported into New South Wales. I t is common ground that potatoes grown in Tasmania, where, in general, the production exceeds the demand, are and have, for a number of years, been imported into New South Wales in considerable quantities, and that there is an extensive trade in such potatoes between merchants in this State and growers or their representatives in Tasmania and also between importers and wholesalers and retailers in New South Wales. I t is in these circumstances that the plaintiffs sought declarations concerning the validity of the Prices Regulation Act 1948-194:9 (N.S.W.) and Prices Regidation Order No. 322 made thereunder claiming that they infringed the provisions of s. 92 of the Consti

tution.

•

(1) (1951) 84 C.L.R. 442.

HIGH COUl^T

[1953.

C. OK A. The Prices Jiefjulation A cl, purports to be an Act to make provision

I O o ; } .

for the regulatioji of prices and rates of certain goods and services.

W'HAUUHy s. llO the prices commissioner is entitled, at his absolute dis

cretion, to fix and declare maximum prices at which any declared

Sta t u

goods may be sold generally, or in any part of the State, and to

X nw

S outh

W alks .dechire that the maximum price at which any such goods may

be sold by any person shall be such price as is fixed by the com

' I ' a y lu r ,1

missioner by notice in writing to that person. Maximum prices may be hxed under this section upon any basis determined by the conunissioner. This power, as appears from what I have said, applies only with, respect to declared goods and the power to declare any goods to be “ declared goods ” for the purposes of the Act is reposed in tlie Minister administering the Act. The Act does not prescribe any limitations to these generally expressed powers to declare goods and to fix maximum prices, but, apart from the provisions of s. 1 (3), it is reasonably clear that declarations made thereunder may extend to all existing or future goods in New South Wales and that maximum prices may be prescribed in relation to all sales in New South AVales of declared goods. (See Bradshaw v. Gilbert’s {Australasian) Agency (Vic.) Pty. Ltd. (1) ). But such an operation of the provisions of the Act would be sufficiently wide to embrace sales made in New South AVales of goods imported from or to be forwarded by a seller in another State or of goods to be forwarded to a purchaser in another State. The prescription of maximum prices with respect to such sales, it is claimed, would constitute an infringement of s. 92 and accordingly, it is said, the provisions referred to should be read down pursuant to s. 1 (3). But the plaintiffs, as subsequently appears, sought to advance their argument beyond this point.

At the time of the commencement of the suit potatoes were declared goods for the purposes of the Act, and Prices Regulation Order No. 322, which was promulgated on 6th March, 1953, and which related to the maximum prices which might be charged upon sales of potatoes, was in force. But when this appeal came on to be heard the order was no longer in force and potatoes were no longer declared goods. This circumstance, however, does not disentitle the plaintiffs to have considered the questions which have been stated in the case.

Prices Regulation Order No. 322 prescribed the maximum prices for potatoes upon sales by retail, sales by “ primary wholesalers ” and sales by “ secondary wholesalers ” . The expression “ primary wholesaler ” was defined by the order to mean “ in relation to

(1) (1952) 86 C.L.R. 209.

•

88 C.L.R.] OF AUSTRALIA.

393

the sale of any potatoes, a person who sells those potatoes to a

H. C. o r A.

person other than a retailer and who—(a) is registered as a primary 1953.

wholesale potato merchant with the Potato Marketing Board ; . . .

W kagg

(b) or has bought or in any way acquired those potatoes from a

State

o r

grower in New South Wales . . . ; (c) or has imported those potatoes N ew

South

from a source outside New South Wales ” . “ Secondary whole

W a l e s .

saler ” was defined to mean “ in relation to the sale of any potatoes, Taylor

J .

a person other than a primary wholesaler who sells potatoes by wholesale ” . The definitions of these expressions raise difficulties of their own, but it is unnecessary in this case to advert to them, for it is reasonably clear that the order purported to fix prices upon the sale of potatoes, whether imported or not, at every stage of the trade until they found their way into the hands of the consumer. A maximum price is fixed in relation to any sale by the importer, upon any subsequent sale by a wholesaler and upon the ultimate sale by retail to the consumer. I t is reasonably obvious that if maximum prices may validly be prescribed for all sales by retail or for all sales by wholesale a declaration that an importer of Tasmanian potatoes is entitled to make his purchases free of any restrictions imposed by the Act, would not advantage the plaintiffs for the bare prescription of a price at which potatoes may be sold by retail would in a substantial measure determine the price which the importer, and any subsequent wholesaler, would be able, economically, to pay to their immediate suppliers. No such declaration is sought, nor did the order purport to fix maximum prices upon purchases by importers from their suppliers in any other State. But 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. AVith this view, I am unable to agree. I t is, no doubt, true that when potatoes are imported into New South AÂ ates they are imported in order that they may ultimately be sold to consumers, but it does not necessarily follow that the prescription of a maximum price upon a sale at any stage of their marketing constitutes a direct burden upon or impediment to trade, commerce and inter course among the States or otherwise impairs the freedom guaranteed by s. 92. No doubt the prescription of a maximum price for retail sales might, as already indicated, have an economic effect upon the importing business, but the effect would vary, if not frorh day to day, then from time to time.

:i<)4 HIGH COURT

[1953.

H. 0. Ol'' A. relation to s. 92 of Ic'gislation operating to fix maximum prices for goods generally was considered in W. <T A. McArthur (1): And it is of importance to note that the

(^oui't was there concerned with transactions, some of which it

n'̂ ov Soli'm formed part of trade, commerce and intercourse among W.-uacs. the States and some of which it thought did not. In that case, Tn̂ oi-,T lihnirt was concerm'd with the question of the validity of a notification whicli })urported, under statutory authority, to fix maximum prices at wliich certain goods could be sold in the State of Queensland. The case has been referred to as one which establishes the proposition that the legislature of one State is debarred by s. 92 from authorising the fixing of prices which may be charged in that State for goods imported from another State, but as far as I can see McArthur s Case did not establish any such wide proposition. The pleadings in the case specified four different classes of transactions with which the plaintiff was concerned and it is convenient to set out the material allegations from the statement of claim (2) ;—

, “ 7. The plaintiff Company has in New South Wales stocks of woollen goods, blankets, sheetings, millinery and all kinds of textile materials and including {inter alia) calico sheeting, sheets and men’s felt hats.

8. The plaintiff Company employs its travellers or agents in the State of Queensland for the purpose of selling its said goods there, and such travellers or ageirts there offer goods of the said descriptions for sale to persons in the said State for delivery in Queensland.

9. The said travellers or agents as agents for the plaintiff also obtain from persons in Queensland offers to purchase goods of the said descriptions for delivery in Queensland, and the said travellers or agents forward to the plaintiff such offers and the plaintiff in Sydney accepts the same and despatches the goods to the said persons in Queensland to supply the said offers.

10. The said travellers or agents also as agents for the plaintiff agree in Queensland to sell goods of the said descriptions to such persons in Queensland for delivery in Queensland.

If. The said travellers or agents as agents for the plaintiff also agree in Queensland to sell goods of the said descriptions to persons in Queensland, the goods to be despatched from the plaintiff’s warehouse in Sydney and to be delivered by plaintiff to purchasers in Queensland

(i) (1920) 28 C.L.R. 530.

(2) (1920) 28 C.L.R., at p. 5.32.

88 C.L.R.] OF AUSTRALIA.

395

H. C. OF A.

In their joint judgment Knox C.J. and Isaacs and Starke JJ ., after full consideration, said “ The prohibition by a State Legislature

1953.

of inter-State sales of commodities either absolutely or subject

W eagg

to conditions imposed by State law is, in our opinion, a direct

State

contravention of sec. 92 of the Constitution, and the freedom X ew

South

guaranteed by that section is so fundamental a provision of the W a l e s .

Constitution that it is not permissible for a majority of a Full

Taylor J.

Bench of this Court in full agreement as to constitutional principle and interpretation to follow the decision in Duncan’s Case (1) if in their opinion it is wrong in law ” (2). But their Honours did not hold that each class of transactions above referred to constituted a part of trade, commerce and intercourse among the States and, for the application of the general proposition which they pro pounded, found it necessary to consider “ whether any of the four methods of transacting business above detailed are outside the operation of the Act, because they are of an inter-State character ” (3). On this point they said : “ The first (par. 8) and third (par. 10) of these methods do not necessarily involve any act done outside Queensland or any transaction of an inter-State character. The goods offered for sale or agreed to be sold are not stated to be either by express stipulation or necessary implication supplied from New South Wales, or anywhere out side Queensland. A contract of sale if effected or the deliverv of goods agreed to be sold might, at the option of the vendor, for all that appears, be consummated entirely within the State of Queensland. If so, it is impossible to say these transactions are of an inter-State character. . . . The first and third methods, as alleged, are consistent with either domestic or inter-State character. If the vendor elects to supply the goods from New South Wales, the actual movement of the goods from State to State would, of course, be inter-State trade and commerce ; and would be protected accordingly. But the ‘ offer for sale ’ and the ‘ agreement for sale ’ would not be changed in character, and they are all we are concerned with as to the two methods mentioned. As to the second (par. 9) method, the traveller in Queensland does an act by which he aids or abets or becomes knowingly concerned in the making of a contract in New South W'ales which, if done in Queensland, would be an offence under sec. 12. By the terms of sec. 29 (7) he is deemed to have committed the offence itself, and is punishable accordingly. Now, the thing done outside Queensland which is imputed to the traveller, namely, a contract made according to the second method.

(1) (1916) 22 C.L.R. 556.(3) (1920) 28 C.L.R., at p. 559.

(2) (1920) 28 C.L.R., at p. 555.

3(K) HIGH COURT

[1953.

If. C. t)i!' A.is siiiiilar to the first and tiiird methods ; that is, it is a contract

for ; '̂oods wliich neither iiy the expressed terms of the contract

WUACKinor by its implications are necessarily deliverable from any State

(>.

but (^lueensland, ami, tlierefore, is not shown to be an inter-State

Sta'I'K ok

A' icw iSopTii tra.nsaction. Ihie offence, consequently, as far as appears is one

W a l k s .rehiting to purely domestic trade. The fourth (par. 11) method,

Taylor .F.a.ccording to the criterion of inter-State trade, commerce and

intercourse above stated, is distinctly an inter-State trans

action ” (1).

VVitii this view Rich J. (2) agreed and Higgins J. expressly held that the Act was invalid only “ so far as it imposes a penalty on travellers in Queensland of a New South Wales firm, for selling, agreeing to sell or offering for sale goods to be sent from the firm’s warehouse in Sydney ” (3).

These passages indicate to my mind that the Court did not in McArthur’s Case (4) hold that the legislature of the State of Queens land was not entitled to regulate its own domestic prices, though the Judicial Committee of the Privy Council appears, in James v. The Commonwealth (5), to have taken the view that the decision “ deprived Queensland of its sovereign right to regulate its internal prices ” (6). As I read McArthur’s Case (4) it is an express decision to the effect that the Queensland legislature has power to fix maximum prices upon all sales in Queensland, except those made in the course of trade, commerce and intercourse among the States. But, however this may be, there is nothing in Jawes' Case (5) to throw any doubt upon the view that the State of Queensland could validly prescribe the maximum prices which might be charged in that State for all goods other than those the subject of sales in the course of inter-State trade, nor upon the further proposition that where “ a contract of sale if effected or the delivery of goods to be sold might, at the option of the vendor, for all that appears, be consummated entirely within the State of Queensland . . . it is impossible to say these transactions are of an inter-State

character

” .

The second of these propositions does not appear to be, as was suggested in argument, in conflict with the view-s expressed in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia (7), 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

(1) (1920) 28 C.L.R., at pp. 559, 560.(5) (1936) A.C. 578; 55 C.L.R. 1.

(2) (1920) 28 C.L.R., at pp. 669, 570.

(6) (1936) A.C., at p. 620 ; 55 C.L.R.

(3) (1920) 28 C.L.R., at p. 563.

at p. 49.

(4) (1920) 28 C.L.R. 530.

(7) (1926) 38 C.L.R. 408.

88 C.L.R.] OF AUSTRALIA.

397

tax on the goods in the importers’ hands, nor with the reasons for the

H. e. O F A.

decision in Vacuum Oil Co. Pty. Ltd. v. Queensland (1) in which case a 1953.

majority of the Court held the Queensland legislation to be in conflict

W eagg

with s. 92, not because the first sale of petrol in Queensland was itself

State

a part of trade, commerce and intercourse among the States, but X ew

South

rather because “ the person chosen for the imposition of the liability W.4LES.

is selected because he is the importer ” (per Rich J. (2) ), or because

Taylor J.

the legislation “ imposes upon the person, who introduces petrol into the State for sale, a burden to which he would not otherwise be subject ” (per Dixon C.J. (3) ). McTiernan J. expressly pointed out that the validity, of the Queensland legislation under s. 92 did not depend upon whether the operation of the Act was confined solely to intra-State sales and went on to say that the Act imposed “ a burden on the plaintiff in respect of the first ‘ sale ’ made by it in Queensland of motor spirit which it brings there from some other State in carrying on its business in the manner alleged in the statement of claim ” (4). 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. Upon this view it was not material that the burden was imposed at a stage when the goods themselves may have ceased to be the subject of inter-State trade for as Dixon C.J. observed in Field Peas Marketing Board {Tas.) v. Clements and Marshall Pty. Ltd. (5), “ freedom.‘ as at the border’, freedom of passage across State lines, means a freedom from restrictions and burdens operating against transference from one State to another at whatever point the burden or restriction is imposed. I t may be before or after the actual movement from one State to another. I t may be in the State in which the trade originates or in that where it terminates. It may be a prior restraint or a subsequent burden ” .

The restrictions which result from the provisions of the Prices Regukition Act are of a character entirely different from the imposts considered in The Commonwealth and Commonwealth Oil Refineries Ltd. V. South Australia (6) and Vacuum Oil Co. Pty. Litd. v. Queens land (1). They do not result in the levying of a tax upon goods or upon importers, nor in the imposition of an impost or burden upon

(1) (19.34) 51 C.L.R. 108.(4) (1934) 51 C.L.R., a t p. 141.

(2) (19.34) 51 C.L.R., a t p. 118. (5) (1948) 76 C.L.R. 414, at p. 423

(.3) (19.34) 51 C.L.R., a t p. 126.

(6) (1926) ,38 C.L.R. 408.

HIGH COURT

[1953.

I f . ( I O K A . a. pc'rsou because lie has introduced goods from one State into I !»5; ianother. The prescription generally of a maximum selling price W ' h a o ofor any commodity does not subject any person to a burden or

iin])ost or other disability because he is the importer of particular

S ' J ' A O K

X k w S o u t h

goods ; he is subject to the restrictions in his dealings in the com

\ \ ' A r , K s .

modity whether he is an importer or not.

T a y l o r . f .In the present case the facts show that some of the sales are made

by importers whilst subsec|uent sales are made by persons who do not bill within this category. Sales by the latter persons are clearly not part of inter-State trade and McArthur’s Case (1) is clear authority for the proposition that local price fixing legislation may validly apply to them. 1 have already said that there is nothing in James’ Case (2) to weaken the authority of this proposition, but tlie plaintiffs’ arguments require that it should be re-examined in the light of the decision of the Judicial Committee in The Commonwealth V . Bank of New South Wales (3). The substance of the plaintiffs’ 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. I t is an effect which, as I have already said, will vary from time to time. Indeed, this is recognised by the allegation in the statement of claim that by reason of the maximum price which it is able to offer the plaintiff Cameron & McFadyen Pty. Ltd. “ is at times unable to obtain its full requirements of Tasmanian potatoes ” . The italics are mine and serve to emphasize the proposi tion that the disadvantage alleged did not result directly from the operation of the provisions of the Act or of the Price Fixing Order but was the indeterminate and variable product from time to time of a number of economic factors of which the existence of the order was but one. I cannot regard any such effect as the “ necessary legal effect ” as distinct from “ the ulterior effect, economically or socially ”, or as distinct from “ some indirect or consequential impediment which may fairly be regarded as remote

(1) (]920) 28 C.L.R. 530.

(3) (1950) A.C. 235; (1949) 79

(2) (1936) A.C. 578 ; 55 C.L.R. 1.

C.L.R. 497.

88 C.L.R.] OF AUSTRALIA.

399

The conclusion might well be different if it were established in

H. C. OF A.

any particular case that a Prices Regulation Order relating to intra1953.

State sales had been promulgated for the purpose of preventing or

W ragg

impeding or otherwise burdening the business of importing such

goods into New South Wales from another State.iStatb of

X ew South

W a l e s .

With respect to sales by “ primary wholesalers ” who are im porters there may be stronger grounds for invoking s. 92, for

Taylor J.

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, a t least, some of those sales are of such a character as to be within the protection of s. 92. In my opinion, the facts leave this matter completely open. I t is true that, except in the case of the small proportion sold by primary wholesalers otherwise than to secondary wholesalers^, the primary wholesaler does not take the imported potatoes into store but sells them ex-wharf and delivery is taken by the purchaser at the wharf, but such sales are not necessarily part of inter-State trade. Possibly, upon examination, some may be found to fall within this category, but this is not sufficient to entitle the plaintiffs to any declaration based on the assumption that all or any of them constitute a part of trade, commerce and intercourse between the States even if, by reason of s. 92 such sales are not subject to the provisions of the legislation —a point which the views above expressed leave completely open. For the reasons which I have given I am of the opinion that the

questions asked should be answered as follows :—

Question 1. Are the plaintiffs or any and which of them entitled to any and which of the declarations claimed by the statement of claim or to any other and what relief by reason of the facts and matters herein stated ? Answer : None of the plaintiffs is entitled to any part of the relief claimed.

2. May potatoes imported from Tasmania be lawfully sold in New South Wales—

(a)

by the plaintiff Cameron & McFadyen Pty. Ltd. and other primary wholesalers :

(b) by secondary wholesalers :

at prices in excess of the maximum prices respectively fixed from time to time by Orders made under the Prices Regulation Act

of New South Wales ?

Answer : (a) No. (b) No. (c) No.

3. Would the plaintiffs or any and which of them, if not other wise entitled to relief in this action, be entitled to relief if the facts alleged in the pars, or proposed pars, of the statement of claim

400

H K I H C O l J i r i ’

11953.

ir. ('. oii' A. which arc s('t out in

25 and 27 hereof were estal)Iished by

evidence? Answ('r : No.

W'li.ACd

Questions in the case stated answered as foUoivs :—

S ta 'I'h

1)1

1. None of the plaintiffs is entitled to any 'part of

N n\v

S o r r i i

W'a u o s .

the relief claimed.

2. («.) No. [b) No. (c) No.

3. No.

(ta.'ie .stated, remitted to F'uUayar J . 'with these answers.

Costs of the case stated to abide the order of the judge on

the further hearing of the S'uit.

Solicitors for the plaintiffs, A. N. Harding & Breden.

Solicitor for the defendants, F. F. 'McRae, Crown Solicitor for

New South Wales.

Solicitor for the Commonwealth, intervenant, D. D. Bell, Crown Solicitor for the Commonwealth.

Solicitor for the State of Victoria, intervenant, F. G. Menzies, Crown Solicitor for Victoria.

J. Ih

Wragg v State of New South Wales

9 June 1953

Key Legal Topics

Areas of Law

Constitutional Law

Statutory Interpretation

Legal Concepts

Jurisdiction

Statutory Construction