State legislation that effectively prohibits the sale of wholesome goods imported from another State will be struck down under s 92 as a direct burden on interstate trade, even where framed as health or quality regulation, unless the measures are reasonably necessary and no more onerous than required to achieve the regulatory purpose.
Later decisions that cite North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW
Decisions cited by North Eastern Dairy Co Ltd v Dairy Industry Authority of NSW
NORTH EASTERN DAIRY CO. LTD. v. DAIRY INDUSTRY AUTHORITY OF N.S.W. ;
CARROLL'S FOOD MART PTY. LTD. v. DAIRY INDUSTRY AUTHORITY OF N.S.W. [1975] HCA 45; (1975) 134
CLR 559
Constitutional Law (Cth)
High Court of Australia
Barwick C.J.(1), McTiernan(2), Menzies, Gibbs(3), Stephen(4), Mason(5) and
Jacobs(6) JJ.
(THE RIGHT HONOURABLE MR. JUSTICE MENZIES died before judgment was delivered
in this case.)
CATCHWORDS
Constitutional Law (Cth) - Freedom of interstate trade and commerce - First sale by importer - Sale by agent - Whether part of interstate trade - Statutory control of milk industry in New South Wales - Vesting of milk in Dairy Authority - Licensing of dairymen and vendors - Prohibition of sale or supply of milk not pasteurized in New South Wales - Sales in New South Wales by Victorian dairy company and New South Wales agent of milk pasteurized in Victoria - Direct burden on sale - Direct burden in importation for purpose of sale - Prohibition or regulation - Whether scheme reasonably necessary to secure public health - The Constitution (63 & 64 Vict. c. 12), s. 92 - Dairy Industry Authority Act, 1970 (N.S.W.), ss. 23, 33; Pure Food Act, 1908 (N.S.W.), s. 54 - Pure Food Regulations, reg. 79(10)(c).
HEARING
Sydney, 1974, August 27-28;DECISION
1975, October 17.
2. The facts stated in each case stem from the same basic situation. The
cases were heard together by the whole Court before the
death of our late
brother Menzies. The arguments for the parties raised some fundamental
issues. It will be necessary in expressing
my reasons for the answers I
propose, to range somewhat generally over the construction and application of
s. 92. My reasons will be expressed to cover both cases. (at p571)
3. I shall first relate the basic facts which appear in the stated cases.
North Eastern Dairy Co. Ltd. ("the first plaintiff")
is a company
incorporated in the State of Victoria which carries on the business of
pasteurizing, homogenizing and otherwise processing
milk and of selling and
distributing such milk for human consumption, and also of selling and
distributing milk products. It has
its principal processing plant at Kiewa in
the State of Victoria, a place approximately seventeen miles south of the
southern bank
of the River Murray, which is the border between the States of
New South Wales and Victoria. It maintains depots at various locations
from
which its treated milk and its milk products are distributed. It has one such
depot in Wodonga in the State of Victoria and
another in Wagga Wagga, a city
in the southern part of the State of New South Wales. For many years past it
has supplied such treated
milk and milk products to persons in the city of
Albury in the State of New South Wales, and to persons in the environs of that
city.
It makes door to door sales of such treated milk and of milk products
daily through each week, Monday to Saturday, to householders
in Albury, using
its own employees and vehicles for that purpose. Those vehicles bring the
milk and milk products from its depot
in Wodonga to Albury for the purpose of
effecting those sales. (at p571)
4. The first plaintiff also delivers treated milk and milk products from its
Victorian depot in its own vehicles to several shopkeepers
in Albury who act
as its agent for the disposal of such milk under written agreements, of which
a specimen is annexed to the first
of the stated cases. Carrolls Food Mart
Pty. Ltd. ("the second plaintiff"), a company incorporated in the State of
Victoria, conducts
two supermarkets in Albury through which, under the agency
arrangements, the first plaintiff's treated milk and its milk products
are
sold. The terms of the agreement make it clear that the sales thus made are
sales by the first plaintiff through the agency of
the second plaintiff. (at
p571)
5. The first plaintiff also sells its treated milk and its milk products
through shopkeepers in Junee, a town in New South Wales
further north than
Wagga Wagga. These shopkeepers act for the first plaintiff under agency
agreements of which a specimen is annexed
to the first case stated. This milk
and these milk products are brought in the first plaintiff's vehicles from
Victoria to its depot
in Wagga Wagga and there transhipped into other of the
first plaintiff's vehicles for transport to the shopkeepers in Junee. Again,
the sales by the shopkeepers, having regard to the terms of the relevant
agreements, are sales by the first plaintiff through the
agency of the
particular shopkeeper. The treated milk and milk products are in every case
supplied and sold for human consumption.
The first plaintiff's business in
thus selling its treated milk and its milk products is conducted in
competition with milk vendors
registered under the provisions of the Dairy
Industry Authority Act. These vendors sell milk which has been pasteurized in
New South
Wales in pursuance of certificates issued under that Act and in
accordance with the regulations under the Pure Food Act. (at p572)
6. It will now be convenient to describe the operation of the Dairy Industry
Authority Act, 1970 ("the Act") and of the regulations
made under the Pure
Food Act. (at p572)
7. Part II of the Act establishes a statutory corporation called the Dairy
Industry Authority of New South Wales ("the Authority").
Its role is generally
described in s. 17 as "the regulation and control of the quality, supply and
distribution of milk for the purposes
of ensuring the wholesomeness and purity
of milk and dairy products in the interests of public health". Detailed
powers given to
the Authority include powers of inspecting and sampling milk
(s. 18), of directing the actions of dairymen or milk vendors (s. 18),
of
engaging directly in the trade and manufacture of milk and milk products (s.
19), to carry out research on improving the dairy
industry (s. 20), to
delegate the exercise of its powers (s. 21) and to acquire land and
undertakings (Pt VI). The Authority is given
control over milk, which becomes
vested absolutely in the Authority upon being supplied (s. 23). No definition
is given of the words
"supply" and "supplied", as to "milk supplied to the
Authority": see discussion in Andaloro v. Wyong Co-operative Dairy Society
Ltd. [1966] HCA 61; (1966) 119 CLR 278 . However, I am of opinion that, in relation to the
facts of the present cases, the treated
milk and milk
products
from Victoria
were supplied in New South Wales for human consumption there when they entered
New South Wales
from Victoria
in the
first plaintiff's vehicles, whether
destined for sale in Albury or Junee. At that point of time, assuming
validity
of the
Act, the
milk would become vested in the Authority. The
Authority may choose to accept delivery of the milk on terms fixed
by it
(s.
24),
and make payments to the dairymen (s. 25), or the Authority may refuse to
accept delivery of the milk. Where milk
supplied
in New
South Wales is not
accepted by the Authority, it remains vested in the Authority and the supplier
of the milk may
not sell
or dispose
of it for human consumption or for use by
man. The Authority is given sweeping protection from civil action
(see s.
26(5),
s. 29,
s. 32, s. 81), and may even conclusively certify fictitious
facts about any delivery to it (s. 26). Registration
of dairymen
and
milk
vendors is made compulsory (s. 33) and the Authority has a wide discretion as
to whom it issues certificates
or registration
(s. 34) and as to the
conditions to be attached to such certificates (s. 33(6)). It should be
observed that the
Authority itself
does not retail in milk. Section 35, which
came into effect on 1st January 1972, makes it an offence to sell other
than
to a milk
vendor, or to a dairy produce factory within the meaning of the
Dairy Industry Act, 1915, milk which has not been
pasteurized within
the
meaning of the Pure Food Act and regulations made thereunder, or treated in
the prescribed manner. By reason
of s. 14A of the
Interpretation Act,
1897-1972, s. 35 relates to the selling of milk in New South Wales. Part IV
of the Act provides
for the continuation
and extension of the existing
marketing quota system. Part V establishes a Dairy Industry Price Tribunal to
investigate and recommend
prices in the industry, which prices are then fixed
by order of the Governor. A Dairy Industry Artificial
Breeding Advisory Board
is established in Pt VII. The remaining provisions of the Act complete the
machinery of the scheme. Finally,
the Minister is given
power in s. 7 to
exempt people, premises, milk, or parts of the State from any provisions of
the Act (except
s. 35), but may not
exempt a person except as to milk obtained
from a dairy herd certified by the Chief of the Animal Husbandry Division
of
the Department
of Agriculture to be free of tuberculosis and other disease, to
which herd no animal has been admitted subsequent
to such certification:
see
s. 35(2). This conspectus of the Act indicates the scope and design of the
scheme it establishes controlling
all aspects of
the dairy industry in New
South Wales. (at p573)
8. Regulations were made under s. 54(1) of the Pure Food Act. Regulation
79(10) (c), published on 1st June 1973, prohibits as and
from 1st July 1973
the supply or sale of pasteurized milk for human consumption other than that
processed by a holder of a certificate
of registration under the Act that
authorizes the holder to carry on the activity of pasteurizing milk. By
definition, "sell" includes
"have in possession for sale, forward or deliver
for sale", and "selling", "sale" and "sold" have corresponding meanings (s.
4(1)).
It was contended that this regulation was not authorized by s. 54(1)
of the Pure Food Act. However, I am of opinion that it was
so authorized
being fairly regarded as a regulation to secure wholesomeness, cleanliness and
freedom from contamination and adulteration
of food. (at p574)
9. Regulation 24 provides the method by which milk is to be pasteurized. I
may note in passing that the Milk Pasteurization Act
1958 (Vict.) provides for
the licensing of premises for the pasteurization of milk and defines the
method by which it shall be pasteurized.
It is not suggested that such minor
differences between the method prescribed by the regulations and that
prescribed by the Victorian
Act have any consequence so far as concerns the
effectiveness of the pasteurization or as concerns the quality and
wholesomeness
of the treated milk. The first plaintiff holds the required
licences under the Victorian Act and pasteurizes its milk in accordance
with
the requirements of that Act. (at p574)
10. The first plaintiff at material times also held current certificates
under the Act as a milk vendor in relation to the areas
in which it sold milk
in New South Wales but those certificates were each subject to the condition
that the milk to be sold be obtained
from named registered pasteurizers in New
South Wales. The second-named plaintiff at material times held certificates
of registration
as a milk vendor in relation to each of its supermarkets but,
as from February 1974 when the conditions of such certificates were
varied,
those certificates were limited to the sale of milk which had been pasteurized
by a registered pasteurizer, i.e. pasteurized
in New South Wales. (at p574)
11. In March 1974 the Authority threatened the cancellation of certificates
of registration as a milk vendor of both the first and
second plaintiffs
unless, in the case of the first plaintiff, it confined its sales of milk to
milk pasteurized by registered pasteurizers,
i.e. in New South Wales; and, in
the case of the second plaintiff, unless it ceased to sell milk obtained from
the first plaintiff.
These threats by the Authority resulted in the
commencement of actions in the Supreme Court to test the validity of the
Authority's
actions and threatened actions. Hence the two stated cases. (at
p574)
12. The questions asked in each case can with one exception be conveniently
summarized in the following manner:
1. Is reg. 79(10) (c) of the Pure Food Regulations made under the Pure Food
Act, 1908 (N.S.W.) void for either and, if so, for
which of the following
reasons:
(a) that it is contrary to the provisions of s. 92 of the Constitution;
(b) that it is ultra vires the regulation making power given by s. 54 of the
Pure Food Act?
2. Are the provisions of reg. 79(10) (c) of the regulations made under the
Pure Food Act inapplicable by reason of the provisions
of s. 92 of the
Constitution to the sales of the first plaintiff referred to in pars 6, 7
and/or 8 of the first stated case, or to the sales of the second plaintiff
referred to in par. 4 of the second stated case?
3. Are the provisions of s. 23 of the Dairy Industry Authority Act
inapplicable by reason of the provisions of s. 92 of the Constitution to milk
supplied and sold in the manner described in pars 6, 7 and/or 8 of the first
stated case, or to the sales of the second plaintiff
referred to in par. 4 of
the second stated case?
4A. Is the condition numbered 3 to which the first plaintiff's Certificate
of Registration No. V1689 under the Dairy Industry
Authority Act, 1970 was
purportedly made subject by virtue of the variation dated 20th June 1973 by
reason of the provisions of s. 92 of the Constitution:
(a) invalid, or
(b) inapplicable to the sales of the first named plaintiff referred to in
pars 6, 7 and/or 8 of the first stated case?
4B. Is the condition to which the second plaintiff's Certificates of
Registration S38794 and S38795 under the Dairy Industry Authority
Act, 1970,
were purportedly made subject by virtue of the variations dated 22nd February
1974, by reason of the provisions of s. 92 of the Constitution:
(a) invalid, or
(b) inapplicable to the sales of the second plaintiff referred to in par. 4
of the second stated case?
5. Is either the first or second plaintiff, by reason of the provisions of
s. 92 of the Constitution entitled to sell milk in New South Wales in the
manner described in pars 6, 7 and/or 8 of the first stated case, or in par. 4
of
the second stated case, without being the holder of a certificate of
registration as a milk vendor that authorizes it to do so pursuant
to s. 33 of
the Dairy Industry Authority Act, 1970?
An additional question is asked in the first stated case, namely:
6. Is the restriction of the plaintiff's Certificate of Registration No.
V7712 under the Dairy Industry Authority Act, 1970, which
purports to restrict
the milk which the plaintiff is authorized to sell, to milk that has been
pasteurized by Haberfields Milk Pty.
Ltd., Albury, by reason of the provisions
of s. 92 of the Constitution:
(a) invalid, or
(b) inapplicable to:
(i) milk supplied and sold in the manner described in par.
6 of the stated case;
(ii) milk supplied and sold in the manner described in par.
7 of the stated case;
(iii) milk supplied and sold in the manner described in par.
8 of the stated case. (at p576)
13. It is quite apparent from the review of the Act and regulations that if
s. 23 is valid, the treated milk, so soon as the first
plaintiff brings it
across the border between New South Wales and Victoria in the course of its
business for the purpose of selling
it in New South Wales for human
consumption or use there, becomes vested in the Authority. If the Authority
chooses to accept it,
which on the facts it would appear to be unwilling to
do, the first plaintiff loses all control of it and may only receive from the
Authority the price the Authority fixes for the quantity the Authority
certifies that it has accepted. If, on the other hand, the
Authority declines
to accept the milk and milk products, the first plaintiff, though deprived of
the property in the milk and milk
products, would be able to dispose of the
milk or milk products subject to the written direction of the Authority in
some manner
otherwise than for human consumption or use as milk or for use in
the production or manufacture in New South Wales of dairy products,
which are
defined as any substance ordinarily used as a food for humans, not being milk,
in the production or manufacture of which
milk is used, or any substance
produced or manufactured from milk is used. In other words, the milk could not
be in any way disposed
of as milk for human consumption or use. (at p576)
14. Further, if s. 23 does not operate to expropriate the first plaintiff's
milk and milk products on their entry into New South
Wales, s. 35 would
prevent the sale of that milk and those milk products by the first-named
plaintiff to its customers either by
itself or through its agents. (at p576)
15. In any case, reg. 79(10) (c) would prevent any sale of the first
plaintiff's milk and milk products for human consumption or
use in New South
Wales, even to a milk vendor or dairy product factory referred to in s. 35(1),
because they are not pasteurized
as required by regs 24 and 79(10) (c). The
pasteurized milk could not be again pasteurized without damage to it: that
seems to
have been conceded in argument. (at p577)
16. The fundamental facts which emerge from my summary of the stated cases
and from this conspectus of the relevant statutory provisions
may briefly be
stated thus. The first plaintiff, by a transport operation, undertaken in the
course of its interstate trade in treated
milk and in milk products, brings
such milk and milk products from Victoria into New South Wales for sale in New
South Wales by one
or other of the three methods of disposal which I have
described. There can be no doubt whatever, in my opinion, that the transport
of the milk and milk products from Victoria to New South Wales for sale in New
South Wales is part of the first plaintiff's interstate
trade and commerce.
It is quite clear that when the milk and milk products enter New South Wales
they are committed to interstate
trade and commerce. Further, in my opinion,
the first plaintiff's operation of interstate trade and commerce is not
complete until
the milk and milk products so introduced into New South Wales
have been sold by it or on its behalf. It follows, in my opinion,
that the
activities of the second plaintiff as I have described them form part of the
first plaintiff's interstate trade in the treated
milk and milk products.
But, in any case, to forbid the agent to sell the first plaintiff's milk and
milk products at least places
a burden upon the first plaintiff's interstate
trade. Accordingly, if s. 92 protects the first plaintiff's interstate trade
in such
milk and milk products, it will protect the activities of the second
plaintiff in its handling of such milk and milk products as
agent of the first
plaintiff up to and including the sale and delivery of that milk and those
milk products on behalf of the first
plaintiff. (at p577)
17. In my opinion, the Act on its proper interpretation cannot be confined to
operations in relation to milk produced in New South
Wales. It clearly
operates, in my opinion, to make illegal the possession and sale in New South
Wales of milk produced in Victoria
and brought from that State for sale in New
South Wales. It does so, along with milk and milk products produced in New
South Wales.
But the generality of its operation will not save it from
invalidity in respect of interstate trade, that trade being within its
purview. The Act thus operates of its own force upon the plaintiff's activity
in bringing his milk into New South Wales from Victoria
and in consequently
possessing it in New South Wales with a view to its sale in that State.
Further, the expropriation of the milk
and milk products so soon as introduced
into New South Wales is clearly for the purpose of preventing their sale and
supply in the
ordinary course in New South Wales as milk or milk products for
human use and consumption. That purpose includes and is intended
to include
the sale and supply of the milk in the course of interstate trade and
commerce. (at p578)
18. It is, in my opinion, quite apparent that the sole purpose of any attempt
by expropriation or by prohibition of sale to prevent
the entry into New South
Wales from Victoria of milk and milk products is the protection of the
monopoly of supply which the producers
in New South Wales of milk and milk
products and the Authority itself would consequently enjoy: in other words,
the grounds of the
exclusion are economic. To use Sir John Latham's phrase in
Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd. ("the Milk Case")
[1939] HCA 28; (1939)
62 CLR 116 what, in my opinion, is sought by the statutory provisions, so far
as concerns milk produced and
pasteurized outside
New South Wales is a "cordon
economique". No question of a "cordon sanitaire" arises in these cases.
Nothing
in the Act or in ss.
23 and 24 suggests that the expropriation is
designed as a means and particularly as the only practical means
of protecting
the public
of New South Wales from the dangers of an impure commodity.
Rather, the language used in relation to the
earlier Milk Act, 1931-1936
is
appropriate: "This Act allows a board to give a monopoly of the sale of milk
... to New South Wales
producers ... They alone
will be permitted to earn a
living by producing and selling milk" (1939) 62 CLR, at p 123 . (at p578)
19. No doubt one of the purposes of the Act as a whole is to secure the
wholesomeness and freedom from contamination of milk for
human consumption and
use. But the possession and overall detailed control of the commodity and of
those who produce and handle
it is not the only practicable way of securing
that purpose. So far as intrastate activities are concerned, the provisions
of the
Act are within the competence of the State, whether or not less
stringent or less comprehensive measures could secure the public
against an
unwholesome and contaminated commodity. Other considerations arise, however,
in relation to interstate trade in milk
and milk products. In that case,
measures to ensure wholesomeness and freedom from contamination must be
reasonable and no more
onerous in their impact on interstate trade than may be
regarded as reasonably necessary to achieve that purpose. It cannot properly
be said, in my opinion, that expropriation of wholesome and uncontaminated
milk or a prohibition on its sale are reasonably necessary
to ensure that what
is sold is wholesome and uncontaminated. (at p579)
20. There can be do doubt whatsoever, in my view, that the movement of the
first plaintiff's milk and milk products from Victoria
to New South Wales was
part of a commercial transaction and itself constituted a part of interstate
trade and commerce. Further,
the possession for sale and the sale of the milk
in New South Wales as the purpose and end point of that interstate commercial
movement
would be itself, in my opinion, part and parcel of that interstate
trade. Indeed, that purpose established the commercial character
of the
transportation. (at p579)
21. It is also incontrovertible, in my opinion, that the statutory
provisions, s. 23, s. 24 and s. 35 of the Act, aided by regs
24 and 79(10) (c)
made under the Pure Food Act, of their own force, in the several respects I
have mentioned, effectively prevent
the plaintiffs from carrying out the
interstate trade and commerce which I have described. It is not suggested
that there is anything
in the nature, quality or condition of the first
plaintiff's treated milk and milk products which in any way renders them unfit
or
unsuitable for human consumption, or that there is anything in the conduct
of the plaintiff's relevant activities of a fraudulent
or dishonest nature.
(at p579)
22. The statutory provisions thus operate to prevent the sale by the trader
of the goods he brings into the second State for sale.
Long since, in Duncan
v. Queensland [1916] HCA 67; (1916) 22 CLR 556, at p 621 , as we are reminded by Sir John
Latham in the Milk
Case (1939) 62
CLR, at pp 122-123 , Sir Isaac Isaacs
described as a most obvious infringement of s. 92 a prohibition on sale by the
importer of
goods brought interstate for sale. Sir
Isaac Isaacs said [1916] HCA 67; (1916)
22 CLR 556, at p 621 :
"The moment the State says 'You may keep but shall not
sell your merchantable goods, not because they are deleterious,
but because they are not', then trade and commerce are
directly prohibited; and though this is still perfectly competent
to the State so far as relates to its purely internal
trade, it is, in my clear opinion, invalid if s. 92 is to have
any operation at all - as to inter-State trade." (at p579)
23. Any endeavour by a State to preserve for its citizens a monopoly of
dealing in any particular commodity would be an obvious
infraction of the
freedom of interstate trade. Such an attempt must be clearly distinguished
from action on the part of a State
to ensure that unhealthy, impure goods or
dishonest practices are not introduced into the State or indulged in there.
With that matter
I have already dealt. For any State to attempt to preserve
to its own citizens the right to deal in merchantable goods which were
not
deleterious and to do so by honest dealings is one of the obvious infractions
of s. 92. As Sir Wilfred Fullagar pointed out
in McCarter v. Brodie [1950] HCA 18; (1950) 80
CLR 432, at p 499 , "The protection of the industries of one State against
those
of another State
was, of course, one
of the primary things which s. 92
was designed to prevent ..." (at p580)
24. But, subsequent to the decision in Duncan v. Queensland [1916] HCA 67; (1916) 22 CLR 556
, some decisions of the Court diverged,
as I think,
from such a valid and
basic principle in the interpretation
and application of s. 92. They did so,
in my opinion, because,
rather
than find the permitted exceptions from the
disabling provisions
of s. 92 in the very concept itself of freedom, the
Court,
regarding
the constitutional prescription as freedom from something,
sought
to define, or provide, criteria for the identification
of that
from
which the section required the interstate trade and commerce
to be free. (at
p580)
25. Before entering a brief discussion of this tendency and its consequences,
I should deal with the question whether s. 23 can
validly operate to
expropriate the first plaintiff's milk and milk products upon their entry into
New South Wales. They were then
the subject of an operation of interstate
trade: or, in the language of some of the relevant decisions, they were then
committed
to that trade. It is well settled that an expropriation can offend
s. 92. Whether or not it does so in particular cases can give
rise to
difficulty. But, in this area of discourse, one thing is certain, namely,
that goods actually committed to an interstate
transaction cannot be
expropriated, there being no question of unwholesomeness of the commodity or
dishonesty in the manner of the
transaction. In my opinion, s. 23 cannot
validly operate to expropriate the first plaintiff's milk and milk products.
(at p580)
26. I return to the discussion of the proper application of s. 92. Various
attempts have been made to provide a criterion or a formula
by which
infringing statutory provisions may be identified. An early idea was that the
subject matter of the law would be decisive,
an idea derived from the period
when it was thought that s. 92 did not bind the Commonwealth. But, after the
decision in James v.
The Commonwealth [1936] HCA 32; (1936) AC 578; (1936) 55 CLR 1 , subject
matter could not provide an answer to the question whether
a statutory
provision was in
breach of the constitutional guarantee. Section 92 bound
both Commonwealth and States alike. There
then developed
the notion that
the
question whether statutory provisions infringed s. 92 could be decided by
determining the purpose
of the State
in enacting them.
A kindred notion was
that invalidity would ensue only where some purpose inimical to interstate
trade
can be discovered
in the legislation.
The emergence of these ideas can
be seen in the reasons for judgment in the Milk Case [1939]
HCA 28; (1939) 62 CLR 116 , a
case which I will later discuss. But these ideas have been exploded and
clearly are no longer acceptable.
(at p581)
27. After the many vicissitudes through which the application of s. 92 has
passed, we are left with a statement by the Privy Council
in Bank of New South
Wales v. The Commonwealth [1949] HCA 47; (1950) AC 235; (1949) 79 CLR 497 that it is what
the law does in
the circumstances
in which it was intended to operate,
provided
that merely remote consequences are ignored, which will determine
whether the law infringes
s. 92. Having applied the particular
statutory
provision according to its proper construction to the relevant
situation in
fact,
the question is whether its operation
thus explicated, leaves trade and
commerce free. It will do so although
it produces an impact
upon interstate
trade if its provisions
do not in their nature go beyond the adjustment of the
rights of man
and man in a free and
legally regulated society. The question
is not from what is the interstate trade and commerce to be free:
nor is it
from what kinds
of statutory provisions it is to be
free. The statutory
provisions must not infringe the freedom of interstate
trade and commerce.
The concept of freedom and the word
"free" carry within themselves their own
limitation. Perhaps the analogy
of freedom of speech
cannot be bettered. A
man enjoys
freedom of speech though he may not defame his fellows. The
relationship
of one man to another
in a civilized society furnishes
the basis
for the conclusion that inability to defame without consequence
is not an
impairment of
freedom, properly understood. The
freedom of the individual to
engage in interstate trade and commerce is
included in the freedom
of
interstate trade and commerce
which the Constitution guarantees. Thus laws to
ensure public health and honesty and fairness in commercial dealings form
examples of laws which the concept
of freedom of trade and commerce does not
deny. Consequently, laws, e.g., to secure public health, must have no impact
which is
reasonably unnecessary upon the activities of the individual in
interstate trade and commerce. The protection of the individual
is not merely
incidental or peripheral to the enforcement of the constitutional guarantee.
Indeed, whilst not exhausting the operation
of s. 92, it is central to it. (at
p582)
28. I have expressed myself as above in several earlier cases, e.g. Harper v.
Victoria [1966] HCA 26; (1966) 114 CLR 361 , Samuels
v. Readers'
Digest Association Pty. Ltd.
[1969] HCA 6; (1969) 120 CLR 1, at pp 14-18 , and S.O.S. (Mowbray) Pty. Ltd. v. Mead [1972]
HCA 18; (1972)
124 CLR 529, at pp 543-552
. I have
taken the opportunity, which consideration
of the instant cases has afforded
me, once more to traverse the ground covered
in my reasons
and those of my brother Justices who participated in the
decision of those
cases. With all due respect to those who
expressed a
contrary opinion to that which I have expressed, I remain convinced of the
fundamental correctness of what I there said.
However,
I shall take this
opportunity to expand on one or two aspects of the meaning
and operation of s.
92. This will involve reference to the latest criteria suggested for
identifying those statutes which alone are said to infringe the
constitutional
guarantee. (at p582)
29. But, first, I ought to examine the case of Milk Board (N.S.W.) v.
Metropolitan Cream Pty. Ltd. ("the Milk Case") [1939] HCA
28; (1939) 62 CLR
116 . The
decision in this case was pressed upon us not only as a precedent but as a
correct exposition of the
law.
The basic facts
of that case are not
significantly different from the facts in the first of the present cases. It
was decided
that
the State of
New South Wales without breach of s. 92 could
prevent the sale in New South Wales of milk produced in Victoria and
introduced into New South Wales for the purpose of such
sale. (at p582)
30. Sir John Latham decided in that sense because of his interpretation of
the decision of the Privy Council in James v. The Commonwealth
[1936] HCA 32; (1936) AC 578;
(1939) 55 CLR 1 . If I may say so, Sir John rightly concluded that their
Lordships did not accept
Sir Owen Dixon's
view expressed in Peanut Board v.
Rockhampton Harbour Board ("the Peanut Board Case") (1933) 48
CLR 266, at p
287 , and that it was
decided that "Inter-State trade and commerce is by
virtue of s. 92 free, but 'free' means 'governed by law'" (1939) 62 CLR, at p
126 . He concluded that therefore "there must be some criterion which
will
make it possible to distinguish between laws which may properly govern such
trade and commerce and other laws which, apart from
s. 92, could have governed
it, but which s. 92 prohibits" (1939) 62 CLR, at p 126 . Sir John enunciated
the proposition that "simple legislative prohibition ... as distinct from
regulation, of inter-State trade and commerce is invalid" (1939) 62 CLR, at p
127 . On the other side of that proposition, Sir John
said that "a law
prescribing rules as to the manner in which trade (including transport) is to
be conducted is not a mere prohibition
and may be valid ..." (1939) 62 CLR, at
p 127 . Subject to what is meant by "regulation", this proposition was borne
out in subsequent
cases. But Sir John ultimately found the criterion of
invalidity in the legislative purpose in the enactment of the statutory
provision
under challenge. He said: "In my opinion, in spite of what might
appear to be a contrary view expressed in the comment upon the
Peanut Board
Case (1933) 48 CLR 266, at p 287 which I have quoted, the view of their
Lordships of the Privy Council
was that a State
parliament could enact and
provide
for the administration of a compulsory marketing scheme so long as it
was not
directed against
inter-State trade and was not merely
a prohibition as
distinct from a regulation of such trade" (1939) 62 CLR, at
p 132 . (at p583)
31. Rich J. (1939) 62 CLR, at p 138 adhered to the Court's decision in
Crothers v. Sheil [1933] HCA 42; (1933) 49 CLR 399 , a
case which, with
due respect, in truth
had not really decided anything relevant to the facts and circumstances
under
consideration
in the case then
before the Court. (at p583)
32. Evatt J. thought that "it is impossible to accept the theory that, in
applying s. 92, one need not look past the mere operation of the State law
upon the inter-State trade, traveller or carrier and that one should
disregard
the nature and character of the State law which is impugned" (1939) 62 CLR, at
p 150 (citing his Honour's own judgment
in R. v. Vizzard; Ex parte Hill [1933] HCA 62; (1933)
50 CLR 30, at p 80 ). If his Honour had meant, which in my opinion clearly
he
did not, that
a law regulatory in character
in the appropriate sense of the
word "regulatory" may not offend the constitutional
provision, his
statement,
though indecisive in
itself, would have been borne out by subsequent
decisions. But, using Willard v.
Rawson (1933) 48
CLR 316 , R. v. Vizzard
[1933] HCA 62; (1933) 50 CLR 30 and O. Gilpin Ltd. v. Commissioner for
Road Transport and
Tramways (N.S.W.) [1935] HCA 8; (1935) 52 CLR
189 , as the basis of his remarks, his Honour,
in my opinion, was
treating the subject matter of the law as the relevant
criterion
of validity, or, at any rate, of critical significance in that
respect.
He later added (1939) 62 CLR, at p 150 : "The
fact that
a
legislative scheme of a State will have a direct and even disastrous
effect
upon the interstate marketing business of
certain individuals
does not
invalidate the scheme, providing its main objects and
purposes are disparate
from trade, commerce and
intercourse and the
scheme is not being administered
for the purpose of restricting
interstate marketing". This indicates the
adoption
of the same criterion
as that chosen by Sir John Latham. His Honour
takes the
object of the legislative scheme, rather than its
operation on
interstate
trade, as the criterion of validity. Further, his Honour
found
support in Hartley v. Walsh [1937] HCA 34; (1937) 57 CLR 372 , a case to which I
shall need
to refer. McTiernan J. adopted
the same criterion. He said: "It is clear
that
the Milk Act does not profess to expropriate
in order to hinder or burden
the passing
of milk ... from other States" (1939) 62 CLR,
at p 158 . His
Honour presumed that the purpose
of the legislation was "an expedient
one for
reasons only of health, hygiene, efficiency
and the economic benefit of
farmers in the
milk-producing districts" (1939) 62
CLR, at p 158 . I have
already indicated that it
is not enough that the motive of the expropriation
is the protection of health.
To be valid it would, in my opinion, need to be
reasonably necessary as compared with other available
expedients to achieve
that
purpose. (at p584)
33. These various expressions in the reasons for judgment in the Milk Case
[1939] HCA 28; (1939) 62 CLR 116 , not always consistent
within themselves,
in my opinion,
cannot stand in the light of the decisions in Bank of
New South Wales v. The
Commonwealth [1949]
HCA 47; (1950) AC 235; (1949) 79
CLR 497 and in Hughes & Vale Pty. Ltd.
v. New South Wales (No. 1) [1954] UKPCHCA 5; (1955) AC
241; (1954) 93 CLR 1 . I suggest
inconsistency in the
reasoning because, in the case of Sir John Latham's
reasons, the
notion of
regulation does not involve any concept of legislative
purpose in enacting the law: but that ultimately is the criterion
Sir John
suggests, without indicating how that purpose is to be
ascertained: and, in
the case of Evatt J.'s reasons, the criterion
of the
subject matter of the
Act, which clearly he espouses,
does not involve the legislative purpose which
his Honour ultimately
finds
decisive. (at p584)
34. The advance in the decision of Bank of New South Wales v. The
Commonwealth [1949] HCA 47; (1950) AC 235; (1949) 79 CLR 497
was the displacement
of these
various criteria, something not done with clarity in the decision
in James v.
The Commonwealth [1936]
HCA 32; (1936) AC 578; (1936) 55
CLR 1 , and the decision that the
operation of the Act upon interstate trade and commerce, whatever
its
subject
matter and whatever
the legislature's purpose in passing it, would itself be
decisive, if by that operation a burden
or hindrance
was placed upon
interstate
trade and commerce which was not regulatory in character,
regulatory being used in the special
sense of
which I have spoken elsewhere:
see Samuels v. Readers' Digest Association Pty. Ltd. (1969) 120 CLR, at p 16 ;
also per Kitto
J. in
Hughes v. Vale Pty. Ltd. v. New
South Wales (No. 2)
[1955] HCA 28; (1955) 93 CLR 127, at p 218 . The extreme statements of
Dixon J. in the Peanut
Board Case (1933) 48 CLR, at p
287 and of Evatt
J. in the Milk Case (1939) 62
CLR, at pp 150, 152 have been
displaced. Sir Owen Dixon's statement was:
"The words
'absolutely free'
admit of no qualification, but they are used with
reference
to governmental control and exclude all such control;
trade,
commerce
and intercourse among the States are made up of acts, transactions
and conduct which, considered as trade, commerce
and intercourse,
are free of
all ... governmental control whatsoever". I have earlier
referred to Evatt
J.'s first statement [1975] HCA 45; (1975)
134 CLR 559 at p 583 . His second statement was:
"... sec. 92 does
not prevent a State from socializing any one of its
industries
of production, converting the reward to the producer from a chance
of selling at a good or a bad price to a proportionate share in
the proceeds
arising from State control of the industry" (1939) 62
CLR, at p 152 . The
solution is found in comparing the result
produced by the operation of the law
with the freedom of interstate
trade which, properly understood, leaves room
for regulatory
provisions of the kind to which reference has been made. This
decision
in Bank of New South Wales v. The Commonwealth [1949] HCA 47; (1950) AC
235; (1949)
79 CLR 497 renders the reasoning, and as I
think the conclusion, in the Milk
Case [1939] HCA 28; (1939) 62 CLR 116 unacceptable. That
case should be treated, in my
opinion,
as having been overruled. (at p585)
35. I should now deal with the case of Hartley v. Walsh [1937] HCA 34; (1937) 57 CLR 372 ,
on which reliance was placed in the
argument of these
cases. A Victorian
statute forbad the purchase or sale
of dried fruits unless they had been
packed in a Victorian
packing shed.
It has been said that the decision
upholding the Victorian
law "was based upon the principle that the regulations
were directed
to procuring standards of quality, condition and grade and that
such regulations had been expressly recognized in James
v. The Commonwealth
[1936] HCA 32; (1936) AC 578; (1936) 55 CLR 1 " (Wynes, Legislative, Executive and Judicial
Powers in Australia,
4th ed. (1970), p. 257). It was
said in Bierton v.
Higgins [1961] HCA 41; (1961) 106 CLR 127, at p 135 , that "it is ... unnecessary
for us to
reconsider the decision in the earlier
case", i.e. Hartley
v. Walsh [1937] HCA 34; (1937) 57
CLR 372 , "though it is desirable
to point out that it rests substantially on
principles which
have not been regarded
as acceptable in recent years". The
regulation
under challenge in Hartley v. Walsh [1937] HCA 34; (1937) 57 CLR 372 was
destructive of all interstate trade in dried fruits, unless
they had first
been brought into Victoria for
packing or unless they
were first processed in
Victoria in a packed condition. They
could be purchased outside Victoria in
an unpacked
condition but could
not be sold or purchased in Victoria for
delivery from another
State: nor could unpacked fruit be sold in Victoria
for
delivery
into another State. The particular contracts in Hartley v. Walsh,
as
Dixon J. points out (1937) 57 CLR, at p 388 ,
were made in
Victoria and were
sales of unpacked dried fruits for delivery into
South Australia. "... in
each case the transaction
was one of
inter-State commerce". Whilst it was said
that the regulation was
a health or pure food provision, it was not maintained
that the
only reasonable method of protecting the Victorian public from
unwholesome
or contaminated fruit was to require their packing
in
a Victorian
shed. In my opinion, the regulation operated to burden interstate
trade both
in packed and unpacked dried fruits
and
was not in the relevant sense itself
of a regulatory nature. Wholesome and uncontaminated
dried fruit packed in
South Australia
or in New South Wales could not be sold in Victoria by its
importer from South Australia or
New South Wales, and unpacked dried fruit
could not be sold for delivery into South Australia or New South Wales. In my
opinion,
the decision in the case is inconsistent
with the principles affirmed
in the cases before the Privy Council and applied, e.g., in
Cam & Sons Pty.
Ltd. v. Chief Secretary
(N.S.W.) [1951] HCA 59; (1951) 84 CLR 442 and Fish Board v. Paradiso
[1956] HCA 60; (1956) 95 CLR 443 . The case of Hartley v. Walsh [1937] HCA 34; (1937) 57 CLR 372 ought
not
to be followed and should be regarded
as overruled. (at p586)
36. I should now deal with the way in which the notion of a criterion for
identifying offending laws was expressed in Grannall v.
Marrickville Margarine
Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55 . I have pointed out earlier that, at the time O.
Gilpin Ltd. v.
Commissioner
for Road Transport and Tramways
(N.S.W.) [1935] HCA 8; (1935) 52
CLR 189 was decided, the Court had adopted the view
that the subject matter
of
the impugned Act determined whether or
not it was an infraction of s. 92.
This view was adopted because
it was thought that that
section did not bind
the Commonwealth but
only the States. It had been decided also that a law
which worked
on the motor vehicle
or the carrier was not a law on the subject
of trade but only with respect to an instrument of trade and therefore
not an
infraction
of the constitutional provision. It was
in those circumstances
that Dixon J. in O. Gilpin Ltd. v. Commissioner
for Road Transport
and
Tramways (N.S.W.) (1935) 52 CLR, at
pp 204 et seq made the oft-quoted
pronouncement. He was aiming, as I
have said, to point
out that, in that case
you could scarcely
say that the law was merely operating on an instrument of
trade because
Gilpin was carrying
his own goods in the course of trade.
Therefore a law which said in effect that he could not carry his goods
in the
course of and
for the purpose of trade was fastening
on something which was
essentially an aspect of trade which, even on
the doctrines of the
Court as
they then stood, would make the
law a law about trade and thus satisfy the
decisions. It is very important,
in my opinion,
to observe that that is
precisely what
Dixon J. was then doing. He had been a dissenter throughout
the earlier period.
He had dissented
with a statement which, it seems
to me,
went too far and to which reference had already been made. But in O. Gilpin
Ltd. v. Commissioner
for Road Transport and Tramways
(N.S.W.) Dixon J. was, as
it were, accepting for the purpose of his statement
that the decisions
of the
Court were correct. (at p587)
37. Now there was no reference made by the respondents in their arguments in
Bank of New South Wales v. The Commonwealth [1949]
HCA 47; (1950)
AC 235; (1949) 79 CLR 497
at any stage to O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways
(N.S.W.)
[1935] HCA 8; (1935) 52 CLR 189
. There was a reference in that case made by the
appellant in its argument, but the reference was
of a historical
nature. It
was
not a case relied upon by the appellant, nor by the respondents: it is
not referred to either directly
or indirectly
in the judgment
of their
Lordships. However, properly understood, its positive statement as to a law
which will offend
the constitutional
provision
is not inconsistent with the
reasoning of their Lordships. A law which made an element of interstate
trade
the basis of
a prohibition
could clearly enough operate to burden interstate
trade depending on the substantive provisions
of the Act. What was
said by
Dixon
J. did not as originally expressed indicate, nor could it now be
regarded as indicating, a text
for a criterion for
identifying the
only laws
which may infringe s. 92. (at p587)
38. After the decision of Bank of New South Wales v. The Commonwealth [1949] HCA 47; (1950)
AC 235; (1949) 79 CLR 497 there came
another search,
as it were, as had
occurred after James v. The Commonwealth [1936] HCA 32; (1936) AC 578; (1936) 55 CLR 1 , for
some formula which would enable
it to be decided from what interstate trade
was to be free.
The real effect of the several cases
in the Privy Council
seems to me,
if I may respectfully say so, not to have been appreciated.
"Free" has its own limitations and
you decide whether the freedom is
infringed
by the operation of the law irrespective of the purpose,
its subject matter
and so on.
Of course, that leaves a nice problem
in each case where a law
places a burden on interstate trade
and commerce and to that I adverted
in my
reasons in Samuels v. Readers'
Digest Association Pty. Ltd. (1969) 120 CLR, at
p 15 . (at
p588)
39. But the limited positive statement in O. Gilpin v. Commissioner for Road
Transport and Tramways (N.S.W.) [1935] HCA 8; (1935)
52 CLR 189
seems to have been treated
as involving a negative and as describing the only laws which could be held to
offend
the
constitutional
provision. The formula expressed in Grannall v. C.
Geo. Kellaway and Sons Pty. Ltd. [1955] HCA 5; (1955) 93 CLR 36
, was a formula which in
reality,
in my opinion, set up the subject matter of the law as the criterion
of invalidity,
for a law which,
for its operation, fastens upon
a critical
aspect of trade must of its nature be a law on the subject of trade.
Again, as
a limited
statement it may be acceptable
that a law on the subject of trade
which burdens interstate trade and is not regulatory
in nature
will breach s.
92. But it does
not follow and, indeed, in my opinion, it is insupportable
that only such a law offends
the constitutional
guarantee. Quite obviously,
expropriation cases are not of that kind, particularly if found in a law on
the subject
of health.
It may be doubted whether the
standstill in Duncan v.
Queensland [1916] HCA 67; (1916) 22 CLR 556 would fit such a formulation:
and other
illustrations could be given. (at
p588)
40. The final matter with which I should deal is the submission that the
effect of the Act and the regulations upon the plaintiffs'
trade is merely
economic and not within the operation of the Act. I have adverted elsewhere
to this recurring theme in some of the
decided cases. The operation of an Act
is what it does in the situation in which it is to work according to its
proper construction.
An Act does not operate in a vacuum, so that you study
only its words in the abstract. It operates in and upon matters of fact,
which, if it is valid, modifies and causes by that modification further
changes. All these effects are within its operation until
the point of
remoteness is reached. In this area we are not involved in the difficulties
introduced in other areas by the concept
of foreseeability. The expression in
the decision of the Privy Council in Bank of New South Wales v. The
Commonwealth (1950) AC,
at p 310; (1949) 79 CLR, at p 639 , "some indirect or
consequential impediment which may fairly be regarded as remote", was clearly
a reference to remoteness as understood in various areas of the law. It was
not intended to exclude the consequences produced by
an Act operating upon the
facts which, according to its proper interpretation, it intended to affect.
The language of their Lordships'
decision lends no support whatever, in my
opinion, to the proposition that the economic result produced by an Act is not
within its
direct operation. When one remembers that the purpose of examining
the operation of an Act is relation to s. 92 is to determine
whether the
situation produced by that Act leaves trade and commerce free, it immediately
seems impossible to exclude the economic
product of the Act as irrelevant - as
outside the direct operation of the Act. In the instant cases, the matter to
my mind is particularly
plain. The legislative provisions directly produce
the result that a trader may not lawfully sell within the State a commodity of
commerce, except on terms dictated by or on behalf of the State. The fact
that these provisions put an end to the trade of the trader
cannot be regarded
as but an "economic" and thus irrelevant consequence of the legislation. It
is fairly and plainly within its
operations. (at p589)
41. In the present case, s. 35 of the Act and reg. 79(10)(c) operate as a
mere prohibition on sale: to prohibit the sale of perfectly
healthy milk in a
quite honest transaction cannot, on any view, in my opinion, be regarded as
being regulatory in nature. (at p589)
42. In my opinion, ss. 23, 24 and 35 cannot validly operate with respect to
the plaintiffs' trade in milk and milk products brought
from Victoria by the
first plaintiff for sale in New South Wales: nor can reg. 79(10)(c) so
operate. Having regard to s. 14A of the
Interpretation Act 1897-1972, total
invalidity of these provisions does not ensue on the conclusion that their
operation upon interstate
trade and commerce offends s. 92. (at p589)
43. I would answer the questions in the stated cases as follows:
1. Yes, as being contrary to s. 92, though otherwise authorized by s. 54 of
the Pure Food Act.
2. Unnecessary to answer.method of sale of the second plaintiff.
3. Yes, as to each method of sale of the first plaintiff and as to the
4A. Inapplicable to each method of sale of the first plaintiff.of sale of the second plaintiff.
4B. Inapplicable to the sales of the second plaintiff.
5. Yes, as to each method of sale of the first plaintiff and to the method
6. Inapplicable to each method of sale of the first plaintiff. (at p590)
McTIERNAN J. It is necessary to consider, in the first place, whether, by
reason of s. 92 of the Constitution, milk transported from Victoria across the
border to New South Wales is exempt from the provisions of the Dairy Industry
Authority
Act 1970 (N.S.W.). Until this question is answered it is not
possible to determine whether or not reg. 79(10)(c), a regulation made
under
the Pure Food Act 1908 (N.S.W.), is obnoxious to s. 92. (at p590)
2. The object of the Act, expressed in its long title is, "to constitute the
Dairy Industry Authority of New South Wales and to
confer and impose on that
Authority powers, authorities, duties and functions relating to the supply of
milk". A further purpose
of the Act expressed in its long title is, "to
repeal the Milk Act 1931". Section 3 repeals that Act. (at p590)
3. The object of the Milk Act 1931, expressed in its long title, was, "to
provide for the regulation and control of the supply and
distribution of milk
for consumption or use in the metropolitan milk distributing district
comprising certain areas in and around
the city of Sydney and in other milk
distributing districts to be established; to constitute a Milk Board and to
define its functions
and powers ..." (at p590)
4. Section 17 of the Dairy Industry Authority Act, 1970 reads: "The Authority
is hereby charged with the regulation and control
of the quality, supply and
distribution of milk for the purposes of ensuring the wholesomeness and purity
of milk and dairy products
in the interests of public health". (at p590)
5. Section 23(1) of the Act reads:
"Milk -
(a) supplied for human consumption, as milk, or for use by
humans, as milk, in New South Wales; or
(b) supplied for use in the production or manufacture, in
New South Wales, of dairy products,
is absolutely vested in and is the property of the Authority".
(at p590)
6. Section 24(1) reads:
"A registered dairyman may, subject to the provisions of"Dairyman" means "the occupier of dairy premises". "Dairy premises" means "any land or premises used for or in connection with the stalling, grazing, feeding or milking of cattle for the purpose of producing milk which is supplied or to be supplied for profit or sale". (Section 4(1)). (at p591)
this Act, deliver to the Authority any milk vested in the
Authority under section twenty-three of this Act."
7. Section 33(1) reads:
"A person who acts as a dairyman or carries on any
activities as a milk vendor, without being the holder of a
certificate of registration as a dairyman or milk vendor, as
the case may be, that authorises him to do so, is guilty of an
offence ..."
"Milk vendor" means -
"any person -
(a) who is the occupier of a milk store;
(b) who, otherwise than as an employee or a carrier, receives
or accepts milk to be supplied to another person;
or
(c) who sells milk to another person;"
(Section 4(1)). (at p591)
8. Section 33(6) reads:
"The conditions to which a certificate of registration may
be made subject may include -
(a) conditions as to the grade, class or description of milk
which the holder of the certificate is authorised to treat,
deposit, store, distribute, supply or sell;
(b) conditions prohibiting the holder of the certificate from
treating, depositing, storing, distributing, supplying or
selling milk otherwise than at a place or in an area or
in a manner specified in the certificate; and
(c) such other conditions as the Authority deems necessary
for the purpose of carrying out or giving effect to any
of the provisions of this Act." (at p591)
9. Section 35(1) reads:
"As on and from a day to be appointed by the GovernorTurning to the Milk Act, 1931-1936. Section 22 of that Act reads:
and notified by proclamation published in the Gazette (being
a day after the day appointed and notified under subsection
two of section one of this Act), any person who sells, otherwise
than to a milk vendor, or to a dairy produce factory
within the meaning of the Dairy Industry Act, 1915, milk
that has not been -
(a) pasteurised within the meaning of the Pure Food Act,
1908, and the regulations made under that Act; or
(b) treated in the prescribed manner,
is guilty of an offence against this Act."
"Subject to the provisions of this Act the Board is hereby
charged with the regulation and control of the supply and
distribution of milk within the metropolitan milk distributing
district and such other milk distribution districts as may
from time to time be established." (at p591)
10. Section 26(1) reads:
"From and after a day to be appointed by the Governor
and notified by proclamation published in the Gazette, milk
supplied for consumption or use within the metropolitan milk
distributing district or milk distributing sub-district thereof
specified in the proclamation shall become absolutely vested
in and be the property of the Board." (at p592)
11. Section 27(1) reads:
"Upon and after the date of the publication of any proclamation
under section twenty-six of this Act, all milk
supplied for consumption within the milk distributing district
or sub-district thereof specified in the proclamation shall be
delivered by the dairyman producing the same to the Board
in accordance with the provisions of this section."(at p592)
12. I refer to Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd. [1939] HCA 28; (1939) 62
CLR 116 . The crucial facts of this
action were that
cream had been supplied
in the metropolitan district of Sydney by
the defendant company in
contravention of the
Milk Act, and the
defendant company intended to continue
supplying milk as aforesaid
in contravention of the Act. The defendant's
affidavit showed
that the cream supplied came from Victoria and sought to
justify its
action by relying on s. 92 of the Constitution. (at p592)
13. The headnote of the case reads:
"Milk produced in Victoria and supplied for use in a milk-distributing
district constituted under the Milk Act, 1931-1936
(N.S.W.) is subject to the provisions of that Act and
therefore cannot be sold within such a district except in
accordance with the marketing scheme provided by the Act.
The Act, so construed, does not contravene s. 92 of the
Constitution.
So held by Latham C.J., Rich, Evatt and McTiernan JJ.
(Starke J. dissenting)." (at p592)
14. Latham C.J. said in his reasons for judgment (1939) 62 CLR, at p 126 :
"If inter-State trade and commerce can be governed byCLR 1 ,
any law which a parliament chooses to enact, such trade and
commerce is no more free than any other potential subject
matter of legislation. Thus, there must be some criterion
which will make it possible to distinguish between laws which
may properly govern such trade and commerce and other
laws which, apart from s. 92, could have governed it, but
which s. 92 prohibits. James v. The Commonwealth [1936] HCA 32; (1936) AC 578; (1936) 55
which it is the duty of this court to follow, tells us that theHe continued (1939) 62 CLR, at p 127 :
application of laws of the first class will still leave inter-State
trade and commerce free."
"One proposition which I regard as established is thatHe further said (1939) 62 CLR, at p 131 :
simple legislative prohibition (Federal or State), as distinct
from regulation, of inter-State trade and commerce is invalid.
Further, a law which is 'directed against' inter-State trade
and commerce is invalid. Such a law does not regulate such
trade, it merely prevents it. But a law prescribing rules as to
the manner in which trade (including transport) is to be
conducted is not a mere prohibition and may be valid in its
application to inter-State trade notwithstanding s. 92."
"In the present case, however, the question is, I think,compulsory
squarely raised whether it is possible for a State parliament,
operating within its territorial limitations, to introduce what
James v. The Commonwealth [1936] HCA 32; (1936) AC 578; (1936) 55 CLR 1 describes as
regulation and control of all trade, including inter-State
trade."
"The Milk Act is an Act which expropriates property, andLatham C.J. continued (1939) 62 CLR, at p 133 :
that expropriation is made for the purpose of controlling
trade, and, upon the construction of the Act which I am
assuming to be correct, inter-State trade is included in the
trade to be controlled."
"In the present case there is nothing to show that the Act
is directed against inter-State trade or that the real object of
the Act is to interfere with inter-State trade"
"Thus, in my opinion, James v. The Commonwealth [1936] HCA 32; (1936) AC 578;only
(1936) 55 CLR 1 makes it possible to uphold the validity of the Act not
as to the expropriation provisions which it contains, but also
as a whole. A court should always take the view, if it is fairly
open, that an Act of parliament is valid rather than that it
is invalid." (at p593)
15. The limitation of the Act to certain "distributing districts" did not in
any way conduce to the conclusion at which the majority
of the Court arrived
in that case. (at p593)
16. I am not in any doubt that the present Act is like the Milk Act,
1931-1936 in that it is regulatory and not a prohibitory law.
(at p593)
17. It is important to notice that in The Commonwealth v. Bank of New South
Wales (1950) AC 235, at p 270 counsel for the respondents
said in argument,
"It is submitted, next, that the Milk Board Case [1939] HCA 28; (1939) 62 CLR 116 was
wrongly decided." The
reference of course
is to the decision of the majority
of the High Court in Milk Board
(N.S.W.) v. Metropolitan Cream Pty. Ltd.
(1939)
62 CLR, at p 127
. Their Lordships, as appears from their reasons, did
not decide
that this Court wrongly decided the Milk Board
Case. Indeed their
Lordships adopted the statement of Latham C.J. in the Milk Board
Case, above
quoted and which reads (1950) AC,
at pp 310-311; (1949)
79 CLR, at p 640 :
"One proposition which I regard as established is that
simple legislative prohibition (Federal or State), as distinct
from regulation, of inter-State trade and commerce is invalid.
Further, a law which is 'directed against' inter-State trade
and commerce is invalid. Such a law does not regulate such
trade, it merely prevents it. But a law prescribing rules as to
the manner in which trade (including transport) is to be
conducted is not a mere prohibition and may be valid in its
application to inter-State trade notwithstanding sec. 92." (at p594)
18. Surely the Government of the State of New South Wales acted wisely in
adopting the regulatory plan of the Milk Act, 1931-1936
for the Dairy Industry
Authority Act 1970, the former Act having passed the test of judicial scrutiny
in this Court and in the Privy
Council. (at p594)
19. In my opinion ss. 23, 24 and 33, which are the heart of the plan, are
not, in their application to milk transported from another
State and supplied
for human consumption in New South Wales, obnoxious to s. 92 of the
Constitution. (at p594)
20. Regulation 79(10) of regulations under the Pure Food Act, 1908 (N.S.W.)
is a regulation "For Securing the Cleanliness and Freedom from Contamination
of Milk". Clause 10 reads as follows:
"(a) No person shall deliver milk or cream in wholesale
quantity to a milk vendor for retail sale at any place other
than a milk store in relation to which such milk vendor is
registered pursuant to the Dairy Industry Authority Act,
1970.
(b) For the purposes of subclause (a) of this clause, the
depositing of any containers, cans, churns, bottles or other
receptacles containing milk or cream on any footpath or
roadway whether or not adjacent to the milk store referred
to in such subclause, or on any open space, whether or not
in or upon such milk store, shall not constitute a delivery of
milk or cream at such milk store.
(c) As on and from 1st July 1973, no person shall supply
or sell pasteurised milk for human consumption or use by
man in New South Wales that has not been pasteurised by a
holder of a certificate of registration issued under the provisions
of the Dairy Industry Authority Act, 1970, that
authorises that holder to carry on the activity of pasteurising
milk." (at p595)
21. By s. 54 of the Pure Food Act, regulations are only adopted by the
Government of New South Wales if they are made by the Health
Commission of the
State on the advice of the advisory committee, appointed, for the purposes of
the Pure Food Act, 1908, by the Government.
The Health Commission of New
South Wales was created by the Health Commission Act, 1972. The members of
the advisory committee
include the Professor of Chemistry in the University of
Sydney, a bacteriologist, a legally qualified medical practitioner, the
Government
Analyst, a representative of the Chamber of Commerce, a
representative of the Chamber of Manufacturers, and persons "conversant with
trade requirements". (at p595)
22. The word "treatment" is defined in s. 4(1) of the Dairy Industry
Authority Act, 1970, in relation to milk to include: "The
examination,
cleansing, pasteurisation, modification, homogenisation, separation,
sterilisation, alteration or manufacture into another
form of milk or into a
dairy product, packaging, testing, grading, cooling, refrigerating, bottling,
or packing, and 'treat' has
a corresponding meaning." (at p595)
23. Section 33(2) of the Act provides that a certificate of registration may
authorize a milk vendor to carry on only such activities
as are specified in
the certificate. (at p595)
24. Clause 10(c) deals with supply or sale of pasteurized milk for human
consumption or use by man. Where pasteurized milk is supplied
for such
consumption or use in New South Wales it is, by s. 23 of the Dairy Industry
Authority Act, vested in, and is the absolute
property of the Board. It
follows that sub-cl. (c) is applicable only to the Board. If any person
should supply or sell any milk
in New South Wales, the property of the Board,
as if the milk was his property but was not pasteurized as required by the
subclause,
he would be in breach of the subclause. (at p595)
25. For my part, I do not see the relevance of s. 92 in any situation
contemplated by sub-cl. (c) if, in truth, there is no conflict
between the
Dairy Industry Authority Act and s. 92. (at p595)
26. I would answer all the constitutional questions in each case stated in
favour of the Dairy Industry Authority of New South Wales
and remit all the
merely ultra vires questions to the Supreme Court of New South Wales. (at
p595)
GIBBS J. These two cases stated, which have been heard together, raise for
decision the questions whether three statutory provisions
- reg. 79(10) (c) of
the regulations made under the Pure Food Act, 1908 (N.S.W.), as amended, and
ss. 23 and 33 of the Dairy Industry
Authority Act, 1970 (N.S.W.) ("the Act") -
are valid and applicable to sales made, or milk supplied and sold, as the case
may be,
by the plaintiffs, having regard to the effect of s. 92 of the
Constitution. The first plaintiff (North Eastern Dairy Co. Ltd.) carries on
the business of processing milk and selling and distributing milk
and milk
products. Its principal processing plant is at Kiewa in Victoria. It engages
in three courses of dealing which give rise
to the present questions. First,
milk and milk products processed and packaged by the first plaintiff at Kiewa
are loaded on to
the first plaintiff's motor vehicles at Wodonga in Victoria
and carried to Albury in New South Wales where the first plaintiff makes
door-to-door sales to householders. Secondly, milk and milk products processed
and packaged by the first plaintiff at Kiewa are similarly
loaded at Wodonga
and carried to Albury where they are delivered to the proprietors of a number
of shops each of whom has executed
an agreement with the first plaintiff. By
each of these agreements the first plaintiff appoints the shopkeeper as its
agent to sell
the milk or milk products which it agrees to deliver to the
agent and the agent agrees to store the milk and to endeavour to sell
it as
agent for the first plaintiff to customers in New South Wales. The agreement
states that no property in the milk delivered
shall pass to the agent and that
neither the agreement nor anything done under it constitutes a sale by the
first plaintiff to the
agent. The agent is entitled to commission on milk
sold and the first plaintiff agrees to retake delivery of possession of milk
delivered to the agent and unsold. The milk and milk products are sold by
shopkeepers to customers in the ordinary course of business.
The second
plaintiff (Carroll's Food Mart Pty. Ltd.) is the proprietor of two
supermarkets in Albury and has entered into agreements
of this kind with the
first plaintiff and sells in its supermarkets milk and milk products delivered
by the first plaintiff in the
manner mentioned. Thirdly, the first plaintiff
delivers milk and milk products to shopkeepers in the area of Junee in New
South
Wales who have entered into agreements of the kind described and who
sell the milk and milk products to customers in New South Wales.
In this case
the milk and milk products, although processed and packaged at Kiewa, are
delivered by employees of the first plaintiff
to the first plaintiff's depot
at Wagga Wagga in New South Wales where they are transhipped to other vehicles
of the first plaintiff
and delivered by other employees of the first plaintiff
to the shops in the Junee area. (at p597)
2. By s. 23 of the Act it is provided as follows:
"(1) Milk -It is made plain by s. 24(2) and (3) that the Authority is not obliged to accept any milk. Moreover, it appears from s. 24(1) and s. 25(1) that only milk delivered by a registered dairyman will be accepted. It is provided by s. 24(5) that where milk is not accepted by the Authority the person who, but for s. 23, would have been its owner may dispose of the milk in any manner specified in an instrument in writing authorizing him to do so issued to him by the Authority and shall, unless the Authority otherwise determines and notifies him in writing, be deemed to have been authorized to dispose of the milk in any manner otherwise than by supplying it for human consumption, as milk, or for use by humans, as milk, in New South Wales, or for use in the production or manufacture, in New South Wales, of dairy products. Section 33(1) of the Act provides as follows:
(a) supplied for human consumption, as milk, or for use by
humans, as milk, in New South Wales; or
(b) supplied for use in the production or manufacture, in
New South Wales, of dairy products,
is absolutely vested in and is the property of the Authority"
(i.e., the Dairy Industry Authority of New South Wales constituted
under the Act).
"(2) Milk vested in the Authority by the operation of subsection
one of this section and accepted by the Authority at
a place where the Authority accepts milk is so vested, freed
from all mortgages, charges, liens, pledges, interests, and
trusts affecting it, and the rights and interests of every person
in that milk are converted into a claim for payment for the
quantity of milk so accepted."
"A person who acts as a dairyman or carries on anySection 4 contains a number of definitions. "Dairyman" is defined to mean "the occupier of dairy premises", and "dairy premises" means "any land or premises used for or in connection with the stalling, grazing, feeding or milking of cattle for the purpose of producing milk which is supplied or to be supplied for profit or sale". The expression "milk vendor" means any person -
activities as a milk vendor, without being the holder of a
certificate of registration as a dairyman or milk vendor, as
the case may be, that authorises him to do so, is guilty of an
offence against this Act."
"(a) who is the occupier of a milk store;"Milk store" means "any building or place at or upon which milk is treated, deposited, or stored, and includes any building or place at or from which milk is supplied ...". By s. 33(4) it is provided that the Authority may approve an application for a certificate of registration as a dairyman or milk vendor subject to such conditions as it thinks fit or may refuse the application. Section 34(1) provides that the Authority may refuse to issue a certificate of registration to, or may cancel the certificate of registration issued to, any person (inter alia) -
(b) who, otherwise than as an employee or a carrier,
receives or accepts milk to be supplied to another
person; or
(c) who sells milk to another person."
"(d) if in the opinion of the Authority it is necessary orBy s. 35 it is an offence for any person to sell, otherwise than to a milk vendor or to a dairy produce factory, milk that has not been pasteurized within the meaning of the Pure Food Act, 1908 (N.S.W.), as amended, and the regulations made under that Act, or treated in the prescribed manner. Regulation 79(10)(c) of the regulations made under the Pure Food Act, 1908 (N.S.W.), as amended, reads as follows:
desirable, in the public interest or to enable the
Authority to effectively carry out or give effect to
any of the provisions of this Act, to refuse to issue or
to cancel the certificate."
"As on and from 1st July, 1973, no person shall supply or
sell pasteurised milk for human consumption or use by man
in New South Wales that has not been pasteurised by a
holder of a certificate of registration issued under the provisions
of the Dairy Industry Authority Act, 1970, that
authorises that holder to carry on the activity of pasteurising
milk." (at p598)
3. The first plaintiff is not the holder of a certificate of registration
under the provisions of the Act that authorizes it to
carry on the activity of
pasteurizing milk but does hold a pasteurization licence issued under the Milk
Pasteurization Act 1958 (Vict.).
Both the first plaintiff and the second
plaintiff hold certificates of registration under the Act authorizing them to
sell
milk
but each such certificate is subject to a condition whose effect is
that milk pasteurized by the first plaintiff cannot be sold
under
the
authority of the certificate. (at p598)
4. Before turning to the main questions in the case I should notice a
submission made on behalf of the plaintiffs that reg. 79(10)(c)
is not
authorized by s. 54 of the Pure Food Act. That section gives the Health
Commission of New South Wales, on the recommendation
of an advisory committee,
power to make regulations (inter alia) "for securing the wholesomeness,
cleanliness, freedom from contamination,
and adulteration of any food ...". A
regulation requiring milk sold for human consumption to be pasteurized by an
authorized person
appears to me to be calculated to secure the wholesomeness
and freedom from contamination and adulteration of the milk. This argument
must fail. (at p599)
5. I turn then to the submissions as to the effect of s. 92 of the
Constitution. Quite recently, in S.O.S. (Mowbray) Pty. Ltd. v. Mead (1972)
124 CLR 529 , I expressed my opinion on questions
similar to those
that arise
in the present case; I adhere to what I there said and need not repeat the
discussion. I can therefore
express quite briefly,
and with little further
citation of authority, the reasons that lead me to the conclusions that I have
reached
in the present case.
There can be no doubt that in taking milk over
the border for the purpose of selling it the first plaintiff
was engaging in
interstate
trade. On the other hand, in my opinion the sales made within New
South Wales to customers who made no
stipulation that the milk
should come
from Victoria, and who were indeed quite indifferent as to the origin of the
milk, were, considered
by themselves, intrastate
sales. However, as Walsh J.
said in S.O.S. (Mowbray) Pty. Ltd. v. Mead (1972) 124 CLR, at p 582 , in a
passage to which I referred
in Pilkington v. Frank Hammond Pty. Ltd. [1974] HCA 13; (1974)
131 CLR 124, at p 176 , in many cases
an act may have a double aspect, being
in one
aspect an act which forms part of intrastate
trade, and in another
aspect an act which
forms part of interstate trade. Viewed from
the point of
view of the plaintiffs' trade,
each sale was at least "an inseparable
concomitant
or consequence of that transaction"
(cf. Fergusson v. Stevenson
[1951] HCA 49; (1951) 84 CLR 421, at p 435 ). The trade in which
the first plaintiff engaged
did not consist merely
in bringing the milk across
the border - it carried the
milk from one State to
another to sell it in the latter State. Trade is
not
limited merely to carriage.
The essential object of s. 92 would be defeated
if a State could, by the enactment of legislative provisions such as those now
in question, entirely exclude from
sale the products of another State. The
present case is clearly distinguishable from S.O.S. (Mowbray) Pty. Ltd. v.
Mead [1972] HCA
18; (1972) 124
CLR 529 . In that case the statutory burden was placed on the
first sale made in Tasmania by a shopkeeper to whom
goods
had been
consigned
by the manufacturer in Sydney; the statute did not prevent the New South Wales
seller and the Tasmanian
buyer
from completing
their interstate transaction
and the only effect which the statute had on interstate trade was an economic
or commercial
one. In
the present case the person selling the goods within
the State is the very person who has brought the goods
across the border
for
that purpose, and the legislation prevents the plaintiffs' interstate
transactions from being carried to their
conclusion. The
second
plaintiff's
activities occur entirely within New South Wales, but form an essential and
integral step in
the transactions
of the
first plaintiff, and take their
colour accordingly - cf. Reg. v. Wilkinson; Ex parte Brazell, Garlick and
Co.
[1952] HCA 6; (1952) 85 CLR 467 .
It should be added that it was not shown that any element
of sham or contrivance attached
to the relationship
between the first
plaintiff and its agents. (at p600)
6. Any one of the laws now under consideration, if valid and applicable,
would have prevented the first plaintiff from selling within
New South Wales
the goods which it brought there for sale. Section 33 and reg. 79(10)(c)
forbid the sales because the plaintiffs do not hold certificates of
registration in appropriate terms and because
the milk has not been
pasteurized by the holder of an appropriate certificate. Indeed s. 33 appears
to go further and to prevent the plaintiffs from storing the milk in New South
Wales. It is true that the prohibition imposed
by those provisions is not
absolute but conditional on the absence of the requisite certificate, but the
Authority has a wide and
almost unfettered discretion to refuse to grant a
certificate - its discretion is limited only by its own opinion as to what is
desirable
in the public interest. For the purposes of considering whether such
provisions, if applicable, would infringe s. 92 they may therefore be treated
as though they impose an absolute prohibition on the sales. Section 23, if
valid and applicable, prevents the sales from being made because it has the
effect that the milk the subject of any sale is expropriated,
at latest, at
the moment when it is supplied to a customer. If these provisions applied to
a transaction of interstate trade, they
would restrict it directly and
immediately. (at p600)
7. It is not possible to justify any of these statutory prohibitions on the
ground that they are necessary to protect the health
of the public or on the
ground that they are regulatory. No one would doubt that it is necessary to
have controls on the production,
processing and distribution of milk in order
to prevent it from becoming contaminated or polluted. Nor can it be doubted
that one
purpose of reg. 79(10)(c) is to ensure that milk sold is of proper
quality. However, reg. 79 goes far beyond what is reasonably necessary
for the
purpose of ensuring that no milk is sold which is likely to constitute a
danger to health. It has not been established that
milk pasteurized in
accordance with the law of Victoria would be less wholesome than that
pasteurized in New South Wales. I would
not doubt that a law of New South
Wales might validly prescribe standards of purity of milk sold in that State,
even if imported
by the seller from another State, and might insist that the
milk should have been pasteurized in accordance with a prescribed procedure,
assuming the prescription to be reasonable. However, reg. 79(10)(c) enables
the Authority to prevent entirely the sale in New South
Wales of any milk
pasteurized elsewhere, however free from defect it may be. Moreover, none of
the provisions can be described as
merely regulatory - each goes far beyond
mere control of the incidents of the transactions in question. (at p601)
8. For these reasons, on principle it seems to me that any one of the
statutory provisions in question, if applicable, would operate
as a direct and
impermissible burden on the interstate trade of the plaintiffs. The
conclusion that I have reached is no doubt inconsistent
with the decision in
Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd. [1939] HCA 28; (1939) 62 CLR 116 , but
the reasoning on
which that decision
was based can no longer be regarded as
acceptable in the light of the
more recent decisions that have authoritatively
expounded the
meaning and effect of s. 92. (at p601)
9. I accordingly consider that any one of the statutory provisions now under
consideration would, if it operated on any of the three
courses of dealing to
which I have referred, contravene s. 92 of the Constitution. However, s. 14A
of the Interpretation Act, 1897 (N.S.W.), as amended, requires ss. 23 and 33
of the Act to be read and construed
so as not to exceed the legislative powers
of the State, so that a provision which would otherwise have been construed as
being in
excess of those powers is to be valid to the extent to which it is
not in excess of those powers. Those sections, therefore, on the
construction
which s. 14A requires to be given to them, are not applicable to the courses
of dealing in question in these cases.
Section 14A does not apply to the
construction of regulations, but it was contended on behalf of the Authority
that reg. 79(10)(c)
should be given a limited construction that would render
it valid, in accordance with the principle referred to in Attorney-General
(N.S.W.) v. Stocks and Holdings (Constructors) Pty. Ltd. [1970] HCA 58; (1970) 124 CLR 262,
at p 274 . I think it unnecessary to
decide whether
that contention is
correct; if the regulation is valid
because it is given a restricted
application it will not affect
the three
courses of dealing at issue in these
cases, and it therefore
need not be decided whether the regulation is totally
invalid.
(at p602)
10. I would answer the questions asked in the cases stated in accordance with
these reasons. (at p602)
STEPHEN J. I have had the advantage of reading the reasons for judgment
prepared by the Chief Justice. I agree with those reasons
and with the
answers there proposed to the questions raised by the stated cases. (at p602)
MASON J.NORTH EASTERN DAIRY CO. LTD. v. DAIRY INDUSTRY AUTHORITY OF N.S.W.
Shorn of its superficial details the issue raised by this case stated by a
judge of the Supreme Court of New South Wales is whether
the Dairy Industry
Authority Act, 1970 (N.S.W.) and reg. 79(10)(c) made under the Pure Food Act,
1908 (N.S.W.), as amended, regulate
the trade in pasteurized milk in that
State by protecting consumers from deleterious products, as the defendant
asserts that it does,
or whether the legislation merely protects New South
Wales producers of pasteurized milk from the competition in that State of
Victorian
pasteurized milk, as the plaintiff claims that it does. If the
plaintiff's claim is correct then the legislation infringes s. 92 of the
Constitution and is invalid. (at p602)
2. The plaintiff, which is a company incorporated in Victoria and is the
holder of two certificates of registration as a milk vendor
under s. 33 of the
Dairy Industry Authority Act, has for many years sold and supplied in New
South Wales milk and milk products,
including pasteurized milk, processed and
packaged at its plant situated at Kiewa in Victoria. The plaintiff holds a
pasteurization
licence issued under the Milk Pasteurization Act 1958 (Vict.),
but it does not hold a certificate of registration under the New South
Wales
Act authorizing it to carry on the activity
of pasteurizing milk. (at p602)
3. The defendant, a statutory authority established by the Act and charged by
s. 17 with "the regulation and control of the quality,
supply and distribution
of milk for the purposes of ensuring the wholesomeness and purity of milk and
dairy products in the interests
of public health", claims that the sale and
supply by the plaintiff in New South Wales of milk pasteurized in Victoria is
illegal
as it is not authorized by the two certificates of registration held
by the plaintiff. These certificates restrict the plaintiff
to the supply in
the Albury area of milk which has been pasteurized at Albury by Haberfield's
Milk Pty. Ltd., a competitor of the
plaintiff (which holds a certificate
authorizing it to pasteurize milk), and to the supply in the Wagga Wagga area
of milk pasteurized
at Wagga Wagga by Inland Dairies Pty. Ltd., another
competitor of the plaintiff (which also holds a certificate authorizing it to
pasteurize milk). In the case of Wagga Wagga the restriction arose as a
result of a variation made on 6th July 1973 by which an
additional condition
was added to the plaintiff's certificate. The defendant also asserts that the
sale or supply of pasteurized
milk for human consumption that has not been
pasteurized by the holder of a certificate of registration authorizing the
holder to
carry on the activity of pasteurizing milk is an offence against
reg. 79(10)(c) of the regulations made under the Pure Food Act.
The defendant
therefore threatens to cancel the two certificates of registration held by the
plaintiff. The plaintiff's answer
is to say that its sale and supply of
Victorian pasteurized milk in New South Wales forms part of interstate trade
and commerce,
that as such it is not affected by reg. (79)(10)(c) either
because the regulation is invalid on the ground that it infringes s. 92
or is
otherwise ultra vires or because it should be read so as not to apply to
interstate trade. The plaintiff further submits that
the relevant provisions
of the Dairy Industry Authority Act, in particular s. 23 (which vests in the
Authority milk supplied for
human consumption or use by man) and s. 33 (which
authorizes the issue of certificates of registration subject to conditions)
have
no application to the plaintiff's interstate trade because they infringe
s. 92 or because they should be read down so as to comply
with the
constitutional prohibition. (at p603)
4. The case raises four broad issues which may be stated in this way:
(1) Is the plaintiff engaged in interstate trade and commerce?be read as having no application to the plaintiff's interstate trade in pasteurized milk?
(2) (a) If the answer to (1) is yes, is reg. 79(10)(c) invalid or is it to
5. These issues may be conveniently considered in the order in which they
have been stated. (1) Is the plaintiff engaged in interstate
trade and
commerce? (at p604)
6. In the Albury area the plaintiff delivers pasteurized milk to householders
and to shops. In the case of householders the milk
is processed and packaged
at Kiewa and is sold by employees of the plaintiff using motor vehicles owned
by the plaintiff. The motor
vehicles are loaded with milk at the plaintiff's
depot at Wodonga in Victoria. Deliveries by the plaintiff to shops in the
Albury
area are made under agreements in a standard form with shopkeepers. An
example is provided by the agreement dated 28th February
1974 between the
plaintiff and Carroll's Food Mart Pty. Ltd. ("Carroll's"). This agreement
provides that the plaintiff appoints
Carroll's as its agent to sell for it
packaged milk produced in Victoria and which will be of a standard of quality
and packaging
to comply with the requirements of the statute. Carroll's
promises that it will store separately on its premises the milk delivered
by
the plaintiff and that it will use its best endeavours to sell that milk as
agent for the plaintiff to customers in New South
Wales. It is expressly
stipulated that no property in the milk will pass to Carroll's and that
nothing done under the agreement
will constitute a sale by the plaintiff to
Carroll's. It is acknowledged that delivery is accepted of possession of the
milk for
sale on behalf of the plaintiff. Carroll's is paid a commission on
sales effected. As in the case of sales to householders, deliveries
are made
by employees of the plaintiff using motor vehicles owned by the plaintiff.
The vehicles are loaded with milk at the plaintiff's
depot at Wodonga, the
milk being transhipped from other vehicles which have delivered it from Kiewa.
(at p604)
7. Agreements in the same standard form regulate deliveries by the plaintiff
of milk and milk products to shops in the Junee area.
In this instance the
milk is delivered by the plaintiff's vehicles from Kiewa to the plaintiff's
depot at Wagga Wagga. It is there
transhipped to other vehicles of the
plaintiff and delivered by its employees to the shops. (at p604)
8. Whether in these circumstances it is correct to conclude that the sales
made by the plaintiff to householders and to shops are
interstate sales raises
a question on which different opinions have been expressed - see S.O.S.
(Mowbray) Pty. Ltd. v. Mead [1972]
HCA 18; (1972)
124 CLR 529, at pp 543-544, 557-558, 598 .
It is not a question which needs at this time to be pursued to a conclusion
because on
the view which I take of this matter the plaintiff can successfully
bring itself within the protection afforded by s.
92 by another
avenue. The
importation by the plaintiff of pasteurized milk from Victoria into New South
Wales for the purpose of
sale there forms
part of interstate trade, even if
the sale which is the end purpose of the importation is held not to form part
of that trade in
accordance with Harper v. Victoria [1966] HCA 26; (1966) 114 CLR 361 . The
issue for subsequent consideration
is whether the legislation imposes
a
relevant burden on that trade.
(2) (a) Is reg. 79(10)(c) invalid or is it to be read as having no
application to the plaintiff's interstate trade in pasteurized
milk? (at
p605)
9. The suggestion that quite apart from considerations of constitutional
validity the regulation was not authorized by the regulation-making
power
contained in s. 54 is, I think, without any substance. The section empowers
regulations to be made.
"generally for carrying out the provisions of this Act,The regulation provides:
and for securing the wholesomeness, cleanliness, freedom
from contamination, and adulteration of any food or
article ..."
"As on and from 1st July 1973, no person shall supplyprohibition against the sale of milk not pasteurized by an authorized pasteurizer is in my view a regulation carrying out the provisions of the Pure Food Act and for that matter one which secures the wholesomeness and freedom from contamination and adulteration of milk. (at p605)
or sell pasteurised milk for human consumption or use by
man in New South Wales that has not been pasteurised by
a holder of a certificate of registration issued under the provisions
of the Dairy Industry Authority Act, 1970, that
authorises that holder to carry on the activity of pasteurising
milk."
10. It is necessary, then, to proceed to the question of constitutional
validity. If the first sale within a State of goods imported
there for the
purpose of sale forms part of interstate trade for the reasons given by
Barwick C.J. in S.O.S. (Mowbray) Pty. Ltd.
v. Mead (1972) 124 CLR, at pp
543-544 , then a prohibition against the sale or supply of goods extending to
imported goods is a burden
on interstate trade, unless the prohibition can be
classified as regulatory. But it does not follow that if the first sale by
the
importer is not part of interstate trade, a general prohibition against
sale is consistent with s. 92. The prohibition may be held
to constitute a
burden on interstate trade either because the sale is inseparably connected
with that trade or because it may appear
that the effect of the prohibition is
to destroy that trade: see Vacuum Oil Co. Pty. Ltd. v. Queensland [1934] HCA 5; (1934) 51
CLR 108 ; Fish
Board v. Paradiso [1956] HCA 60; (1956) 95 CLR 443 ; O'Sullivan v. Miracle
Foods (S.A.) Pty. Ltd.
[1966] HCA 64; (1966) 115 CLR 177 . I regard each of these cases,
as
did Walsh J. in S.O.S. (Mowbray) Pty. Ltd. v. Mead (1972) 124 CLR, at pp
587-590 , as authority for the proposition that a prohibition
applying to the
first sale by an importer within a State may constitute
a burden on interstate
trade. To the extent to which the
observations in Wragg v. New South Wales
[1953] HCA 34; (1953) 88 CLR
353 may be thought to be inconsistent with this proposition I
would not follow
them. (at p606)
11. The distinction drawn by the Privy Council in the Banking Case (1950) AC
235, at p 310; [1949] HCA 47; (1949) 79 CLR 497, at
p 639 , was between
laws which operated
directly and immediately to restrict or burden interstate trade and
laws which
created some
"indirect or consequential
impediment which may fairly be
regarded as remote". In deciding whether a given
law falls within one
category rather than the other,
their Lordships did not intend in my view to
exclude from consideration the
practical effect of the
law. It is said that
this is
a gloss added by the later cases, although it has been acknowledged
that a
law may operate as "a circuitous
means" of burdening operations
of a
kind that s. 92 protects: see Hospital Provident Fund Pty.
Ltd. v. Victoria
[1953] HCA 8; (1953)
87 CLR 1, at p 36 ; Grannall v. Marrickville
Margarine Pty. Ltd. [1955] HCA 6; (1955)
93 CLR 55, at p 78 ; Mansell v. Beck [1956]
HCA 70; (1956) 95 CLR 550, at p 565 ; and R. v.
Connare; Ex parte Wawn [1939] HCA 18; (1939)
61 CLR 596, at p 618 where Dixon
J. said: "...
an attempt to place a burden upon the first sale of goods after their
introduction
into a State well might be obnoxious
to s. 92 because of its
tendency to prevent or discourage the importation of such goods from
another
State". (at p606)
12. This approach takes account of the practical effect of a law. The
contrary view has no secure base in s. 92 itself and it subtracts
significantly from the freedom which the section guarantees. To say that
consistently with s. 92 it is permissible to enact laws
whose practical effect
is to burden interstate trade is to reduce the constitutional prohibition to a
legal formulation which may
be readily circumvented. (at p607)
13. So long as reg. 79(10)(c) remains in force milk pasteurized in Victoria
cannot be sold for human consumption or use by humans
in New South Wales. It
is the fact that milk once pasteurized cannot be pasteurized again and the
defendant does not suggest that
it could, or would, issue a certificate of
registration under the Dairy Industry Authority Act to pasteurize its milk in
Victoria.
The practical effect of the regulation is therefore to put an end
to the interstate trade in Victorian pasteurized milk and to discriminate
against the Victorian product and the Victorian producer. In the conventional
language of the cases it imposes a burden on the importer
of Victorian
pasteurized milk by preventing him from selling his product in the State.
This results in my opinion from the direct
and immediate operation of the law.
It is not a mere economic or social consequence of the regulation (S.O.S.
(Mowbray) Pty. Ltd.
v. Mead (1972) 124 CLR, at p 594 ). To say that the
prohibition does not directly destroy the importation of pasteurized milk
because
it leaves the importer free to import it, though unable to sell it,
seems to me to desert reality. (at p607)
14. The regulation prohibits the sale of the product of another State whilst
permitting the sale of the competitive product produced
within the State. As
the prohibition discriminates against the products of other States, unless it
can be justified as a regulation
of interstate trade, it falls within the
field of operation of s. 92. (at p607)
15. The freedom which s. 92 confers is, notwithstanding its language, a
qualified freedom. Other decisions apart, the Banking Case
[1949] HCA 47; (1950) AC 235;
(1949) 79 CLR 497 acknowledges that s. 92 does not prevent the enactment of
laws which are no more
than regulatory.
In this context there is no need to
explore the limits of what is permissible regulation, although as will appear
later, the vesting
provisions of the Dairy Industry Authority Act require some
reference to that topic. A law which does no more
than protect the community
from hazards affecting health is regulatory in the relevant sense. A law
which prohibits the supply or
sale of noxious foods within
a State does not
offend against s. 92. Likewise, a law which prohibits the supply of milk for
human
consumption which has not been
pasteurized by certificated pasteurizers
may well be a law which protects the community from the risks
of infection
arising from
the sale or supply of contaminated milk. But reg. 79(10)(c)
travels beyond such a law. Because it prohibits
the sale of Victorian
milk
pasteurized according to Victorian requirement (which are in all respects
comparable with those prescribed
in New South Wales)
it is impossible in my
view to say reg. 79(10)(c) is a permissible regulation of interstate trade.
(at p608)
16. The defendant argued that it was a reasonable regulation of the trade in
pasteurized milk to require that pasteurization should
take place in approved
premises within the State so that they could be regularly inspected by
departmental officers to ensure compliance
with prescribed standards and so
that the requirements of the law could be enforced in the courts of the State.
Why departmental
officers are unable to inspect premises in Victoria was not
explained. Nor was it explained why observance of prescribed standards
could
not be made a condition of a certificate so as to enable cancellation of the
certificate should non-compliance occur. (at p608)
17. An alternative means of achieving a similar result would be to make it an
offence to sell pasteurized milk which had not been
pasteurized to the
prescribed standard. Again no persuasive reason was advanced why such a
method of regulation was inadequate to
maintain the desired purity of
pasteurized milk. The defendant's case was that it was for the legislature to
choose the method of
regulation which it thought necessary or desirable. This
is to disregard the constitutional injunction as it has been interpreted
by
the Court. It is for the defendant to show that the regulation is permissible
and, to do so, it must satisfy the Court as a matter
of fact that the method
of regulation selected, because it protects public health, is a reasonable
regulation of interstate trade.
(at p608)
18. Here the legislature has selected a mode of regulation which, perhaps
advisedly, is calculated to burden, indeed to destroy,
the interstate trade in
pasteurized milk, in preference to other modes of regulation which would
involve no discrimination against
the Victorian product. As the defendant has
failed to show that the discriminatory mode of regulation selected is
necessary for
the protection of public health, it is in my judgment not a
reasonable regulation of the interstate trade in pasteurized milk. (at
p608)
19. The regulation is not saved from invalidity by s. 14A of the
Interpretation Act of 1897, as amended, which applies only to statutes.
The
earlier view that s. 92 does not invalidate legislation but merely makes it
inapplicable to interstate transactions (see W.
& A. McArthur Ltd. v.
Queensland [1920] HCA 77; (1920) 28 CLR 530, at pp 558-559 ) has given way to the accepted
doctrine that
legislation inconsistent
with the section is invalid.
The
extent of the invalidity which thereby results depends upon severability,
and
in the absence of
a provision such as s. 14A the
presumption is that the
provision was intended to take effect in its entirety
(Wilcox Mofflin Ltd.
v.
New South Wales [1952] HCA 17; (1952) 85 CLR 488, at p 523 ). True it is, as the defendant
contends, there
is a general rule of construction
that a statutory
instrument
will be read, where possible, so as not to exceed the legislative power
in the
exercise of which the
instrument was enacted.
But this rule of construction
must take account of the presumption against
divisibility. This is
particularly
so in the case of
a prohibition expressed in absolute terms where
the context suggests, as here,
that it was intended that interstate
transactions
should fall within its embrace. (at p609)
20. Consequently, reg. 79(10) (c) is in my opinion invalid.
(2) (b) Is s. 33 of the Dairy Industry Authority Act invalid or should it
also be read as having no application to the plaintiff's
interstate trade in
pasteurized milk? (at p609)
21. The Dairy Industry Authority Act ("the Act") establishes the defendant
and entrusts to it the responsibility of regulating and
controlling the
quality, supply and distribution of milk for the purpose of ensuring the
wholesomeness and purity of milk and dairy
products in the interests of public
health (s. 17). The defendant is required to perform certain functions (s. 20)
and it is armed
with various powers (ss. 18, 19), some of which are
exercisable only with the approval of the Governor, as for example the power
to engage in the collection, treatment or wholesale or retail distribution of
milk (s. 19(a)), the power to manufacture, distribute
and sell milk and dairy
products (s. 19 (d)) and the power to purchase milk for resale or use (s.
19(e)). (at p609)
22. Section 23 vests in the defendant all milk which is supplied for human
consumption or for use by humans in the State or which
is supplied for use in
the production or manufacture in the State of dairy products. Notwithstanding
this provision the defendant
is not bound to accept milk delivered to it (s.
24(2)). The defendant may fix the quantity of milk which may be delivered by
a dairyman
and accepted by it (s. 24 (3) ) and it may dispose of milk which it
has accepted to milk vendors or other persons (s. 24(4)). Where
milk is not
accepted by the defendant, the person who would have been the owner, but for
s. 23, is entitled to dispose of the milk
in any manner, and subject to
conditions, specified in writing by the defendant (s. 24(5) (a)) and shall be
deemed, unless notified
to the contrary in writing, to have been authorized to
dispose of the milk in any manner otherwise than by supplying it for human
consumption or for use by humans in the State or for use in the production or
manufacture in the State of dairy products. It is
an offence for a dairyman
to dispose of milk vested in the defendant otherwise than in accordance with
s. 24(5) (s. 24(6)). (at p610)
23. Provision is made by Pt V of the Act for the fixation by the Minister of
minimum prices to be paid to dairymen for various grades
of milk. The minimum
prices are fixed after the consideration by the Minister of recommendations by
the Dairy Industry Prices Tribunal,
a tribunal constituted by s. 42 of the
Act. The defendant is bound to pay to each dairyman in respect of milk
delivered to and accepted
by the Authority the minimum price applicable to
that milk (s. 25(5)). (at p610)
24. Division 3 of Pt III of the Act establishes a licensing system. It
commences with s. 33(1) which prohibits a person from acting
as a dairyman or
carrying on any activities as a milk vendor without being the holder of a
certificate of registration. A certificate
may authorize a milk vendor to
carry on such activities as a milk vendor as are specified (s. 33(2)). The
defendant may approve
an application for a certificate subject to conditions
or refuse it (s. 33(4)). The conditions to which a certificate may be made
subject include -
"(a) conditions as to the grade, class or description of milkThe defendant is empowered to vary the conditions attaching to a certificate and to impose additional conditions (s. 33(7)). Non-compliance with a condition is an offence (s. 33(8)). A certificate may be refused or cancelled on various specified grounds which include the following (s. 34(1)):
which the holder of the certificate is authorised to treat,
deposit, store, distribute, supply or sell;
(b) conditions prohibiting the holder of the certificate from
treating, depositing, storing, distributing, supplying or
selling milk otherwise than at a place or in an area or
in a manner specified in the certificate; and
(c) such other conditions as the Authority deems necessary
for the purpose of carrying out or giving effect to any
of the provisions of this Act."
"(b) if in the opinion of the Authority he (i.e. the applicant)
is not a fit and proper person to hold such a certificate;
...
(d) if in the opinion of the Authority it is necessary or
desirable, in the public interest or to enable the Authority
to effectively carry out or give effect to any of
the provisions of this Act, to refuse to issue or to
cancel the certificate." (at p611)
25. Section 35 makes it an offence to sell as from a date proclaimed
otherwise than to a milk vendor or to a dairy produce factory
milk that has
not been pasteurized or treated in the prescribed manner. (at p611)
26. Part IV of the Act makes provision for the annual allocation by the
defendant of a base market quantity of milk in the form
of quotas applicable
to particular dairy premises for the purpose of determining the quantity of
milk that may be delivered to and
accepted by the defendant. (at p611)
27. From all this it will be discerned that the Act, notwithstanding its long
title, does not confine its attention to ensuring
the wholesomeness and purity
of milk and milk products. The provisions relating to production quotas are
unrelated to considerations
of quality and hygiene, as indeed are the
provisions respecting price. They are no doubt designed to ensure a reasonable
return to
the producer and to maintain stability in the industry by achieving
a sufficient, yet not excessive, supply of milk for human consumption
and for
the production of dairy products within the State or such parts of it as are
not excluded from the operation of the Act.
(at p611)
28. Although all milk supplied for human consumption in the State or for use
by humans is vested in the defendant, the purpose of
the vesting goes beyond
ensuring that milk sold to the public is of a high quality and free from
impurity. The defendant differs
from the conventional collective marketing
board in that it neither distributes nor disposes of all the milk which is
vested in it.
It disposes only of milk accepted by it, leaving the producer
whose milk is not accepted to dispose of it in effect as the defendant
may
direct. He is unable to sell his milk for human consumption, use by humans or
use for production or manufacture in the State
of dairy products in the State,
unless authorized so to do. (at p611)
29. Although it is empowered to engage in the retail distribution of milk
with the approval of the Governor (s. 19(a)), it seems
that the retail
distribution of milk is undertaken largely, if not wholly, by registered milk
vendors who draw their supplies either
from the defendant, registered dairymen
or other registered milk vendors. (at p611)
30. It is against this background that the provisions of ss. 33 and 34 are to
be considered. The prohibition contained in s. 33(1),
unless it is read so as
not to apply to interstate trade, would apply to sales made in the course of
interstate trade, such as those
made by the plaintiff. The prohibition would
in this event contravene s. 92 unless the licensing system set up by the Act
constitutes
a permissible regulation of the interstate trade in milk. The
provisions of s. 33(6) and s. 34(b) and (d), which are vague and imprecise,
go
beyond what is a permissible regulation of interstate trade because they do
not sufficiently limit the executive discretion.
They enable the defendant
arbitrarily to refuse registration to a person engaged in that trade or to
grant registration subject to
the condition that milk drawn from another State
will not be supplied. The criterion in s. 33(6) (c) and s. 34(1) (b) and (d)
is
the opinion of the defendant, thereby disabling the applicant from
establishing by judicial decision that the facts are such that
no ground of
objection, conformably with s. 928 can be taken to the grant of unconditional
registration. Consequently, unless ss.
33 and 34 are read down so as not to
apply to interstate trade in accordance with s. 14A of the Interpretation Act
of 1897, as amended,
they would collide with s. 92 - see Hughes & Vale Pty.
Ltd. v. New South Wales (No. 2) [1955] HCA 28; (1955) 93 CLR 127 ; Collier
Garland Ltd. v.
Hotchkiss [1957] HCA 40; (1957) 97 CLR 475 .
(2) (c) Is s. 23 of the Dairy Industry Authority Act invalid or should it
also be read as having no application to the plaintiff's
interstate trade in
pasteurized milk? (at p612)
31. By s. 23 "milk supplied for human consumption, as milk, or use by humans,
as milk, in New South Wales", as well as milk supplied
for use in the
production or manufacture in the State of dairy products, is vested in the
defendant: when vested and accepted by
the defendant it is freed of all
encumbrances, and the rights and interests of any person in the milk are
converted into a claim
for payment in accordance with prices notified by the
Minister. Only a registered dairyman may deliver milk to the defendant and,
as I have already observed, the defendant is not bound to accept any milk
delivered to it (s. 24(1) and (2) ), although it may determine
the quantity of
milk per week which may be supplied by a dairyman and which it will accept.
(at p612)
32. In my view, s. 23 vests the milk to which it refers in the defendant at
the time of its supply for any of the purposes there
mentioned, whether it is
accepted by the defendant or not, and in those cases where it is accepted by
the defendant, before that
acceptance. I would give to the word "supplied" in
s. 23(1) a meaning similar to that which Barwick C.J. gave to the same word in
Andaloro v. Wyong Co-operative Dairy Society Ltd. [1966] HCA 61; (1966) 119 CLR 278, at p 292
, when he said that the word signified
"that point
of time at which the milk
is committed for the purpose
of sale for consumption or use within a milk
distributing district".
Here
it must be read as referring to the time when it
is committed
to any of the purposes mentioned in s. 23(1) within the State.
In the
Andaloro Case Barwick C.J. and McTiernan J., who concurred,
were in the
minority. However, the new Act, though similar to
the Milk
Act, 1931-1965
(N.S.W.), differs in its expression in such
a way as to make the earlier
decision of this Court distinguishable.
There
are three factors which lead me
to this conclusion. Section
23(2) indicates that vesting precedes and is in
no sense dependent
on
acceptance by the defendant of the milk. Section 24(1)
makes
it plain that vesting precedes and is in no sense dependent on delivery
of the milk by a dairyman to the defendant. Milk not accepted
by the defendant
is nevertheless treated by s. 24(5) as milk which
is vested in the defendant,
requiring its express or deemed authority
for disposition by the supplier. (at
p613)
33. In terms, then, s. 23(1) would operate to divest the plaintiff's property
in its pasteurized milk after it crosses the border
as it is then appropriated
for human consumption. The question is whether such a divesting is consistent
with s. 92 and, if not,
whether s. 23 should be read down in order to conform
with s. 14A of the Interpretation Act. (at p613)
34. To support the valid application of s. 23 to the plaintiff's pasteurized
milk the defendant relies on the decision of this Court
in Milk Board (N.S.W.)
v. Metropolitan Cream Pty. Ltd. [1939] HCA 28; (1939) 62 CLR 116 , in which it was held that
the Milk Act,
containing an
expropriation provision (s. 26) similar to the
present
s. 23, did not infringe s. 92. The two grounds upon which the
members
of
the Court who formed the majority based their decision
were that the
validity of the scheme established by the Act had
earlier been
upheld in
Crothers v. Sheil [1933] HCA 42; (1933) 49 CLR 399 and that the Act was not directed against
interstate
trade because it applied equally
to interstate and intrastate
trade. Neither ground can now be supported. In Crothers v. Sheil
the
decision was not that the scheme
did not contravene s. 92,
but that it was not
established that the case involved an interstate
transaction. And subsequent
decisions
such as Cam & Sons
Pty. Ltd. v. Chief Secretary (N.S.W.) [1951] HCA 59; (1951) 84
CLR
442 and Fish Board v. Paradiso [1956] HCA 60; (1956) 95 CLR 443 have shown
it is not
enough to save a State Act from the operation
of s. 92 that it applies alike
to interstate
and intrastate trade by divesting
property in a commodity from
those within the State
as well as from those who bring it into the
State in
the course of interstate
trade. For these reasons Milk Board (N.S.W.) v.
Metropolitan
Cream Pty. Ltd. [1939] HCA 28; (1939) 62 CLR 116 should not now be followed. (at
p614)
35. A State law which expropriates property in a commodity from a person who
brings it into New South Wales from Victoria for the
purpose of sale in New
South Wales has an effect similar to a State law which prohibits the
importation of that commodity into New
South Wales from Victoria.
Accordingly, unless it can be justified as an element in a scheme which
constitutes a regulation of interstate
trade, expropriation of goods in the
course of that trade (cf. Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955)
93 CLR 55 ), like
prohibition, runs counter to s. 92 because its effect is to
destroy that trade. (at p614)
36. It has been generally recognized that the absolute freedom of which s. 92
speaks must admit of some qualification. The conception
of trade, commerce
and intercourse in a community regulated by law, as the Privy Council observed
in the Banking Case (1950) AC,
at p 310; (1949) 79 CLR, at p 639 ,
"presupposes some degree of restriction upon the individual", with the
consequence that the regulation
of interstate trade is compatible with s. 92.
It is the character and extent of the regulation which may be undertaken
conformably
with s. 92 that as always remains in question. (at p614)
37. Past experience has demonstrated that in deciding whether an attempted
regulation of interstate trade falls foul of the section
various factors need
to be taken into account and that their significance depends upon the nature
of the particular trade and the
character of the regulation in question. All
this makes it difficult to state in precise terms a criterion which will
distinguish
permissible regulation from that which is inconsistent with the
section. (at p614)
38. Nevertheless, some assistance in elucidating this problem is to be gained
by recalling, as I had occasion to point out in Pilkington
v. Frank Hammond
Pty. Ltd. [1974] HCA 13; (1974) 131 CLR 124, at p 186 , that s. 92 has a predominant public
character and that
the protection which
it gives to the rights
of the
individual is incidental to and consequential upon the protection which is
given
to the entire concept
of interstate trade.
Once the predominant public
character of the provision is recognized it is more easily
perceived that
regulation
of interstate trade,
for the benefit of the community may be
consistent with the freedom which is guaranteed
and that it may not
necessarily involve any
collision with the derivative protection which the
section gives to individual rights.
(at p615)
39. The freedom guaranteed by s. 92 is not a concept of freedom to be
ascertained by reference to the doctrines of political economy
which prevailed
in 1900; it is a concept of freedom which should be related to a developing
society and to its needs as they evolve
from time to time. Section 92 finds
its place in a Constitution which was intended to operate beyond the limits of
then foreseeable time - it would be a serious mistake to read the guarantee or
immunity which it offers as one which necessarily and rigidly reflects ideas
accepted almost a century ago. Instead, the section
should be seen as a
provision whose operation may fluctuate as the community develops and as the
need for new and different modes
of regulation of trade and commerce become
apparent. (at p615)
40. So much was, I think, acknowledged by the Privy Council in the Banking
Case (1950) AC, at p 311; (1949) 79 CLR, at pp 640-641
. Lord Porter there
said:
"For their Lordships do not intend to lay it down that in
no circumstances could the exclusion of competition so as to
create a monopoly either in a State or Commonwealth
agency or in some other body be justified. Every case must
be judged on its own facts and in its own setting of time
and circumstance, and it may be that in regard to some
economic activities and at some stage of social development
it might be maintained that prohibition with a view to State
monopoly was the only practical and reasonable manner of
regulation, and that inter-State trade, commerce and intercourse
thus prohibited and thus monopolized remained absolutely
free." (at p675)
41. As I remarked earlier, regulation of interstate trade the effect of which
is to protect the public from the risk of contaminated
or impure milk does not
contravene s. 92 so long as it appears that the detriment which it works to
interstate trade is reasonably necessary to protect the interests of the
public. There is, of course, no reason why the class of regulation consistent
with the section should be limited to laws the effect
of which is to protect
public health. There are many other fields in which interstate trade may be
regulated in the interests of
the public in conformity with s. 92. (at p616)
42. In the passage which I have quoted from the Banking Case (1950) AC, at p
311; (1949) 79 CLR, at pp 640-641 , Lord Porter was
there speaking of the
creation of a government monopoly which involved a prohibition against
engagement in interstate trade. Even
so, it was acknowledged that at some
stage a total prohibition against engagement in interstate trade in the course
of establishing
a government monopoly might conceivably be consistent with s.
92. (at p616)
43. It is clear enough that it would be no easy task to bring a legislative
scheme involving expropriation or monopoly safely home
beyond the reach of s.
92. It would need to appear that the scheme was "the only practical and
reasonable manner of regulation", to use the words of Lord Porter,
or that it
was part of the "legal framework" within which s. 92 contemplated interstate
trade as being freely carried on, to reiterate what Kitto J. said in Greutner
v. Everard
[1960] HCA 33; (1960) 103 CLR 177,
at p 188 - see also Hughes & Vale Pty. Ltd. v.
New South Wales (No. 2) (1955) 93 CLR, at pp 217-219 . (at
p616)
44. Yet these considerations are of no avail to the defendant in the present
case. It does not appear that the vesting of milk
in the defendant is
necessarily related to functions undertaken by it so as to protect the public
from the dangers of contaminated
or impure milk. For the most part it seems
that, despite the vesting, milk remains in the possession of dairymen and milk
vendors
and that the precautions taken to prevent contamination and to
maintain purity are taken by dairymen and vendors. Pasteurization,
for
example, is undertaken by those to whom certificates are issued under s. 33.
It is not shown therefore that the vesting of milk in the defendant is the
only practical and reasonable mode of regulating the trade
in milk so as to
ensure high quality and to protect public health. (at p616)
45. Indeed, it is a fair inference from the provisions of the Act that the
vesting of milk in the defendant is designed not to ensure
high quality and to
protect public health, but to play a part in the rationalization of production
of milk within the State, a field
in which I suspect there is no intended role
for the importer of milk from Victoria except in the event that New South
Wales supplies
prove deficient and then to the extent of the deficiency only.
(at p616)
46. In the result, in order to save s. 23 from contravening s. 92, it is
necessary to read it down in accordance with s. 14A of
the Interpretation Act
so as not to apply it to the plaintiff's milk brought into the State in the
course of interstate trade. (at
p617)
47. I would therefore answer the questions asked in the stated case as
follows:
1. Is reg.79(10) (c) of the Pure Food Regulations made under the Pure Food
Act, 1908 (N.S.W.) void for either, and if so, for
which of the following
reasons:
(a) that it is contrary to the provisions of s. 92 of the Constitution;the Pure Food Act?
(b) that it is ultra vires the regulation-making power given by s. 54 of
Answer: Yes, for the reason stated in par. (a).Pure Food Act inapplicable by reason of the provisions of s. 92 of the Constitution to:
2. Are the provisions of reg.79(10) (c) of the Regulations made under the
(a) the sales of the plaintiff referred to in par. 6 of the stated case;3. Are the provisions of s. 23 of the Dairy Industry Authority Act inapplicable by reason of the provisions of s. 92 of the Constitution to:
(b) the sales referred to in par. 7 of the stated case;
(c) the sales referred to in par. 8 of the stated case?
Answer: Not answered.
Answer: (a) Yes. (b) Yes. (c) Yes.registration No. V1689 under the Dairy Industry Authority Act, 1970 was purportedly made subject by virtue of the variation dated 20th June 1973, by reason of the provisions of s. 92 of the Constitution:
4. Is the condition numbered 3 to which the plaintiff's certificate of
(a) invalid, orAnswer: (b) Yes.
(b) inapplicable to:
(i) the sales of the plaintiff referred to in par. 6 of the stated case;
(ii) the sales referred to in par. 7 of the stated case;
(iii) the sales referred to in par. 8 of the stated case?194050
(a) invalid, orcase;
(b) inapplicable to:
(i) milk supplied and sold in the manner described in par. 6 of the stated
Answer: (b) Yes.Constitution entitled to sell milk in New South Wales in the manner described in:
6. Is the plaintiff, by reason of the provisions of s. 92 of the
(a) Paragraph 6 of the stated case;without being the holder of a certificate of registration as a milk vendor that authorizes it to do so pursuant to s. 33 of the Dairy Industry Authority Act, 1970?
(b) Paragraph 7 of the stated case;
(c) Paragraph 8 of the stated case
Answer: (a) Yes. (b) Yes. (c) Yes. (at p618)
CARROLL'S FOOD MART PTY. LTD. v. DAIRY INDUSTRY AUTHORITY OF N.S.W.
48. The questions and facts recited in this stated case are similar to those
considered in North Eastern Dairy Co. Ltd. v. Dairy
Industry Authority of New
South Wales. North Eastern Dairy Co. Ltd. ("NEDCO") supplies milk
pasteurized at Kiewa in Victoria to
the plaintiff at its supermarkets at 447
Dean Street, Albury and at the Albury Village Shopping Centre where the
plaintiff sells
the milk by retail to the public. The supply of milk by NEDCO
to the plaintiff is governed by two agreements dated 28th February
1974
between the parties. The first agreement relates to the supply of milk to the
supermarket in Dean Street; its terms have been
sufficiently stated in the
earlier case. The second agreement relates to the supply of milk to the
supermarket in the Albury Village
Shopping Centre and it is expressed in terms
which are almost identical. (at p618)
49. The plaintiff holds a certificate of registration as a milk vendor in
respect of each of the supermarkets. By notice dated
22nd February 1974 the
defendant varied the conditions to which each of the certificates was subject
by making it a condition that
the plaintiff would not sell milk that has not
been delivered by a milk vendor authorized to sell milk that has been
pasteurized
by a milk vendor who is the holder of a certificate of
registration under the Dairy Industry Authority Act authorizing him to
pasteurize
milk. (at p619)
50. The only distinction which emerges between the two cases is that in this
instance it is the agent of the importer and interstate
supplier who seeks the
protection of s. 92. Although the plaintiff is not itself engaged in
interstate trade, the restrictions sought
to be placed upon it by the
defendant are as destructive of the interstate trade in milk, and in
particular of NEDCO's interstate
trade in milk, as the conditions which the
defendant has sought to impose on NEDCO's certificates of registration as a
milk vendor.
And as the plaintiff in selling NEDCO's milk acts as its agent
and for that purpose holds the certificates of registration, it can
avail
itself of the protection of s. 92. Any other view would in my opinion operate
as a negation of the protection which the section
gives to interstate trade
generally and to NEDCO's trade in particular. (at p619)
51. I would therefore answer the questions as follows:
1. Is reg. 79(10)(c) of the Pure Food Regulations made under the Pure Food
Act, 1908 (N.S.W.) void for either, and if so, for
which of the following
reasons:
(a) that it is contrary to the provisions of s. 92 of the Constitution;Pure Food Act?
(b) that it is ultra vires the regulation-making power given by s. 54 of the
(a) invalid, orstated case?
(b) inapplicable to the sales of the plaintiff referred to in par. 4 of the
JACOBS J. The determination of the meaning and application of the
apparently simple words of s. 92 has proved notoriously difficult.
Its
meaning has been definitively explored in earlier authority of this Court and
of the Privy Council and thereby this difficulty
is reduced, if not resolved,
but its application to the multitude of factual situations which arise and
will continue to arise frequently
presents problems of great difficulty. In
the course of this difficult task it is necessary always to go back to the
words of the
section as they have been construed and to set them against the
factual situation, actual or envisaged, with which the Court is faced
in the
particular case. Section 92 operates upon factual situations, actual or
envisaged, of trade, commerce, and intercourse among
the States. It is not in
terms an injunction against the enactment of laws. However, it happens that
most commonly it falls to
the courts to examine the operation of a law in
order to determine whether and in what way that operation will affect acts or
events
of trade, commerce, and intercourse among the States; then, if it
affects those acts or events in such a way that they are not absolutely
free
within the meaning of s. 92, that law is found incapable of affecting those
acts or events. Section 92 prevails. Legislative
power is denied, not
directly, but indirectly, as a consequence. (at p620)
2. What has long been recognized is that by the words "absolutely free" there
is not conferred upon any and every act or event of
trade, commerce, and
intercourse among the States, an immunity from all controls, an absolute
licence. This construction of the
section, in the face of its words read
literally, has been forced on the Court by the sheer necessity of life in an
organized society
as that society exists and evolves. But obviously, once
this necessity is recognized, something must be added or implied in the
construction of the two apparently peremptory words. The implication has been
expressed by taking the antonyms of freedom, namely
burden or restriction, and
by describing the type of burden or restriction which is not antithetical to
being absolutely free within
the meaning assigned to those words in s. 92.
Though previously in decisions of this Court not dissimilar statements had
been made,
the implication was definitively stated in the Banking Case [1949] HCA 47; (1950)
AC 235; (1949) 79 CLR 497 . The burden or restriction
which is
inconsistent
with absolute freedom is one which operates directly
and immediately and not
so indirectly or consequentially
that it
may fairly be regarded as remote. It
must operate upon the act
or event which is an act or event of trade,
commerce, and
intercourse
among the States and it must be one which on
analysis cannot
fairly be described as "regulatory" in character. The
difficulties
arise in the application of this test or these tests to
particular
circumstances, in the characterization of the operation of any
particular law or other act upon the act or event of trade, commerce,
and
intercourse in order to determine whether or not it is
a burden or restriction
which is inconsistent with the absolute freedom
which s. 92 enjoins. (at
p621)
3. The difficulties, I think, are reduced, though not removed, if it is
realized that, although the meaning of s. 92 is a question
of law, the
question whether by the operation of any impugned legislative or other act an
act or event of trade, commerce, or intercourse
among the States is in the
particular circumstances not absolutely free is a question of fact and
different answers to very similar
questions may need to be given at different
times and in different generations. For instance, the difference between
Australia at
war and Australia at peace may result in different answers to the
question proposed. The degree to which the exigencies of modern
industrial
society may require the governments of our society to control or participate
in the trade, commerce, and intercourse of
that society may likewise require
different answers to the question of fact to be given at different times and
in different ages.
Another consequence is that since the elucidation of the
question in each case involves judgment upon a question of fact, it is
inevitable and has been recognized to be inevitable that judicial minds will
differ on the answer to be given. None of this results
in uncertainty in the
law so long as the factual basis of the decisions is recognized.
Nevertheless, it is inevitable and proper
that such decisions should result in
a pattern emerging, a pattern which will remain applicable in a given time and
condition of
our society. There is nothing novel in this. The indeterminate
tests for the establishment of breach of legal right or duty, of
which
reasonableness is perhaps the best known, are familiar to lawyers trained in
the common law, who are equally familiar with
the need constantly to bear in
mind the danger of elevating the reasoned conclusion of fact into an immutable
principle of law. (at
p622)
4. The court reaches the necessary conclusions of fact largely on the basis
of its knowledge of the society of which it is a part.
The supplementing of
that knowledge is a process which does not readily lend itself to the normal
procedures for the reception of
evidence. The special nature of the knowledge
sought to be imparted to the court has led to difficulties which have been the
subject
of learned writing. I only wish to state my view that parties should
not feel bound to channel the information which they or any
of them desire to
have before the court into a pleading or statement of agreed facts or stated
case (as was done in the instant cases).
All material relevant (in a general,
not a technical, sense) to the matter under consideration may be brought to
the court's attention,
though it is obviously desirable that it should be
previously exchanged between the parties. (at p622)
5. Where, as in the instant cases, the impugned burden or restriction flows
from legislation, Acts and regulations, the operation
of that legislation must
be examined in order to determine its impact, if any, on trade, commerce, and
intercourse among the States
and to determine whether that impact is
impermissible within the meaning which has been assigned to the words of s.
92. This inquiry
is not a literal but a practical inquiry in both its
principal aspects, namely, whether the operation of the legislation creates
an
impediment on trade, commerce, and intercourse between the States which is a
direct one (that is to say, not a consequential impediment
which may fairly be
regarded as remote), and whether the legislation can properly be regarded as
regulatory. One must look for the
burden or restriction not only in the
language of the legislation but in the operation of the legislation. This is
made clear by
the words of the Judicial Committee in the Banking Case (1950)
AC, at p 310; (1949) 79 CLR, at p 639 . Their Lordships said:
"...s. 92 is violated only when a legislative or executive
act operates to restrict such trade commerce and intercourse
directly and immediately as distinct from creating
some indirect or consequential impediment which may fairly
be regarded as remote." (at p623)
6. They did not say "when a legislative or executive act restricts such
trade, commerce, and intercourse directly" and I would not
assume that the
language used was a circumlocution for the latter form of expression.
Moreover, the distinction was not one with
every consequential impediment but
with a consequential impediment "which may fairly be regarded as remote". (at
p623)
7. The principle enunciated finds, perhaps, its clearest illustration in the
operation of legislative or other acts which are in
terms discriminatory
against trade, commerce, or intercourse with another State or other States.
Examples of a legislative act discriminatory
in its terms are naturally rare
but one such example is Fox v. Robbins [1909] HCA 81; (1909) 8 CLR 115 . More commonly,
however,
it is not the
operation of the legislative act gleaned from its
express terms but its
actual operation in the community which results
in the
discrimination.
The fact that the result of the operation of the legislative
act is discrimination is, it may be generally
stated, sufficient to
show that
that act operates to restrict trade, commerce, and
intercourse among the
States directly and immediately.
Discrimination
as a cause of invalidity is
not an exception to some otherwise
generally applicable principle but is a
most glaring
example of the
application of the relevant principle itself. (at
p623)
8. I would next state the necessity to bear in mind that the act of trade,
commerce, and intercourse among the States may not be
the act of the party who
seeks to assert the freedom which s. 92 enjoins. That party may rely on a
burden placed upon the trade,
commerce, or intercourse of another because s.
92 establishes a national constitutional injunction against any impermissible
burden.
This is subject only to the party having a sufficient interest to
maintain the action. Once the act or event which forms part of
trade,
commerce, and intercourse among the States is identified then attention must
be concentrated on that act or event in applying
s. 92 to it. (at p623)
9. The directness of the burden or restriction on an act or event of trade,
commerce, and intercourse among the States is related
to the character of the
burden or restriction - on whether it is prohibitive or regulatory. The
questions of directness and of regulatory
character are "cognate" problems, to
use the word of the Judicial Committee in the Banking Case (1950) AC, at p
309; (1949) 79 CLR,
at p 639 . Thus, a State statute may in many instances
validly impose a requirement on an intrastate sale whatever be the source
of
the subject goods but that requirement may be an illegitimate restriction on
the actual interstate sale of those same goods.
The directness of the burden
or restriction operating upon the act or event of trade, commerce or
intercourse among the States at
the instance of one only of those States is
sufficient in itself to attract the injunction of s. 92. On the other hand,
in some
instances the restriction on the interstate sale itself may be
legitimate because its regulatory character is recognizably permissible
despite the directness of the burden. In other cases still the nature of the
burden imposed on the intrastate sale may be such that
it operates as a burden
on the prior interstate transaction. (at p624)
10. But in every case it is necessary to examine the nature and quality of
the restriction in the light of the known and proved
economic social and other
circumstances of its imposition and of the community in which it is imposed.
The operation of the restriction
is thus determined without any need to
speculate about the motives of the legislation. The purpose and effect of the
legislation
must be examined in the circumstances of its enactment and in the
light of its operation in those circumstances of time and place.
(at p624)
11. Where the restriction operates on a resale within a State of goods the
subject of a previous interstate sale, the restriction
will be closely
scrutinized by the Court in order to make sure that the effect on that
previous interstate sale is so indirect or
consequential that it may fairly be
described as remote. As a broad generalization it may be stated that, though
the actual interstate
sale must generally be left free of impediment imposed
unilaterally by the State, once the subject goods have been sold and delivered
into the other State they are subject to the laws of that State which regulate
the sale of all such goods in that State. However,
this can only be stated as
a broad generalization. Moreover, the particular law of the importing State
may be such that it effectively
prevents the resale of the imported goods in
circumstances unrelated to any criterion or regulation of sale, but related
rather to
prohibition of sale. Such prohibitions of resale, as distinct from
regulation thereof, will frequently on examination be found to
operate upon
the prior interstate sale by way of direct impediment rather than "indirect or
consequential impediment which may fairly
be regarded as remote" and will not
easily escape the injunction of s. 92 unless the interstate sale itself would
have escaped that
injunction. Where the effect of State legislation in its
operation is to give preference or advantage to the same or a competing
class
of goods produced in that State that legislation is more likely than not to be
found to create a direct impediment to the interstate
sale of those goods even
though the legislation in its terms appears to place a burden only on sales or
other dealings with the goods
in that State. (at p625)
12. I have attempted to set out as shortly and simply as I can, in the light
of the authorities, the approach which should be made
to such a set of facts
as is now presented to the Court. It is necessary to say something of those
authorities which deal with facts
similar to the present cases or said to do
so. It is not necessary to refer to cases on kindred but distinguishable
circumstances,
cases for instance, on monopoly or manufacture in one State for
purposes of trade with another State or on expropriation legislation
where a
whole class of goods is expropriated. (at p625)
13. Wragg v. New South Wales [1953] HCA 34; (1953) 88 CLR 353 has naturally and properly
been regarded as a case of great importance
in the history
of judicial
interpretation
and application of s. 92. Before I come to it I would refer to
certain earlier decisions.
The first
is W. & A. McArthur v.
Queensland [1920] HCA 77; (1920)
28 CLR 530 . That case dealt with contracts for the sale
of unascertained
goods. I would
summarize the conclusion as follows.
Where the source of
those goods was intended by the contract
to be another State, the contract
itself was an act of trade, commerce,
and intercourse among the States. Where
the source of goods
was no part of the contract, the
contract said nothing on
the subject
matter of trade, commerce, and intercourse among the States.
On
the other hand, Vacuum Oil
Co. Pty. Ltd. v. Queensland [1934] HCA 5; (1934) 51 CLR 108 was
a case where the sale was by the
person who introduced the goods into the
State
of Queensland for the purposes
of sale and the imposition was held in
the circumstances
to be an impermissible burden on such a person.
The same may
be said of
The Commonwealth and Commonwealth Oil Refineries Ltd. v.
South
Australia [1926] HCA 47; (1926) 38 CLR 408 . (at p625)
14. I shall pass by Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd.
[1939] HCA 28; (1939) 62 CLR 116 in order to return to
it later and I
come now to Wragg's
Case [1953] HCA 34; (1953) 88 CLR 353 . That case stressed the importance of identifying the
act or event of trade, commerce,
and intercourse among
the States and of
examining whether there is imposed by the impugned legislation
a direct
impediment of an
impermissible kind on
that act or event. It declared that in
the case of an impediment imposed on intrastate
sales it was not sufficient
in
order to obtain
relief from that impediment by virtue of s. 92 merely to find
that the goods in question
had been the subject
of a prior interstate
sale.
In particular it was held that State price fixing of intrastate sales had no
direct
effect on the freedom
of a prior act of
interstate sale. The price
fixing on the intrastate sale produced no more than "economic
consequences
prejudicing
importation because
it effects the domestic price which an
importer can afford to pay" per Dixon C.J. (1953)
88 CLR, at p 387 .
This was
not sufficient:
"... 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"
per Taylor J. (1953) 88 CLR, at
p 398 . These carefully chosen words fall far
short of erecting
a complete
dichotomy between direct
effect and economic consequence and this is borne out
by the later passage
(1953) 88 CLR, at
p 399 : "The conclusion might well
be
different if it were established in any particular case that a Prices
Regulation
Order relating
to intra-State sales had been
promulgated for the
purpose of preventing or impeding or otherwise burdening the business
of
importing
such goods into New South
Wales from another State." The purpose
here referred to is the purpose to be gathered from
the legislation
and is the
same as the
effect of the legislation. This is well established. (at p626)
15. There is another aspect of Wragg's Case [1953] HCA 34; (1953) 88 CLR 353 - the sales by
"primary wholesalers" who were importers.
Dixon C.J.
dealt with the position
of "primary wholesalers"
generally (1953) 88 CLR, at p 383 . He did not
advert to the position
of "primary
wholesalers" whose course of dealing was
related
in par. 18 of the stated case (1953) 88 CLR, at pp 360-361 . Taylor
J. dealt with
"primary wholesalers" and said (1953) 88 CLR,
at p 399 :
"With respect to sales by 'primary wholesalers' who areTaylor J. was here dealing with all relevant primary wholesalers because in one or another sense of the term they were all importers of Tasmanian potatoes. He was not dealing only with those whose course of dealing was described in par. 18 of the stated case. The word "importer" is used to describe persons in two different situations. If I order goods from abroad, or from another State, and pursuant to that order goods are shipped and then completion of the sale takes place by delivery and payment on arrival I am commonly described as an importer of the goods. But if by that is meant an importer of my own goods, that is not always or even usually correct. The vendor brings the goods in to my order and completes the sale to me in this State. However, if I send or bring my own goods into the State, I am also described as an importer. At the same time however I am exporter from the place whence the goods are sent. (at p627)
importers there may be stronger grounds for invoking s. 92,
for some of these sales may actually be made in the course
of inter-State trade. But before the plaintiffs can invoke
s. 92 they must establish that, at least, some of those sales
are of such a character as to be within the protection of
s. 92. In my opinion, the facts leave this matter completely
open. It 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."
16. Now in Wragg's Case [1953] HCA 34; (1953) 88 CLR 353 the impugned sales in New South
Wales were in no instance established
as sales mad eby
a company which had
sent
or brought its own potatoes into the State for the purposes of selling
them. They were
all, so far as is
now relevant, sales made
in New South Wales
by a company which had bought from a Tasmanian exporter. I would not
like to
think that
the distinction which
I make turns primarily on when the property
in the potatoes passed. What is an act or event
of trade, commerce,
and
intercourse
among the States must be determined as a matter of commercial
reality rather than of mere legal
form. However, I
would point out
that, even
in the case of the few sales made direct between the Tasmanian exporter and
the New
South Wales primary
wholesaler, it
was not established that the
primary wholesaler was bringing into the State of New South Wales
potatoes the
property
in which had
already passed to it in the State of Tasmania. The
property would not generally pass until payment
against delivery
of shipping
documents: Halsbury's Laws of England, 3rd ed., vol. 34, pp. 165, 173-174:
and there was no evidence
of when payment
and delivery
of shipping documents
took place. The so-called importer was not bringing in its own potatoes from
Tasmania and then
selling them
in New South Wales. The exporter from Tasmania
was either the importer in the strict sense into New
South Wales or
else in
other
cases the first sale between the two States was to P.I.C. Pty. Ltd.
Therefore, Wragg's Case (1953) 88
CLR, at p 353
does not deal
with the power
of the State to restrict the first sale by an exporter-importer. It does not
deal with
sales by importers
who are
also exporters from the other States, as
in the case now before the Court. In my view the words of Dixon
C.J. in
Wragg's
Case (1953)
88 CLR, at p 387 must be read in the light of those
facts. He never acceded to the proposition that
a man who brought
goods into
a State from another State for the purpose of selling them ended his
interstate transaction when he
brought the goods
in but before
he sold them.
Nor can I read the language of Taylor J. in this important judgment as so
holding.
He was dealing with
importers who
were not also exporters from the
other State and with sales in New South Wales by those importers.
He showed
clearly
that the interstate
transaction was the export-import transaction of
sale and delivery and not the subsequent
sale in New South Wales
by the
so-called
importer. However, neither the conclusion, nor in my respectful view
the reasoning, establish
that export-import
separated from the
sale which is
the purpose of the export-import is the only act or event of trade, commerce,
and intercourse among
the States. I repeat
that an act or event of trade,
commerce, and intercourse among the States must be looked
at in its commercial
reality. If a man buys
goods in one State and has them sent to him in another
State, the interstate act or event
extends from the
sale to the delivery.
When the goods are received the interstate transaction is completed. That is
what I understand
Wragg's Case
to have decided. It
does not decide that the
interstate transaction is not still current so long as an exporter is selling
or attempting
to sell his
goods from one State in another. I would interpose
here that I find it impossible to distinguish between
an exporter
who sends
his
goods to another State pursuant to a contract of sale with a purchaser in
that State and an exporter who
accompanies
his goods, in
person or by his
agent, to another State in the hope of selling them there. In neither case at
that stage
are the
goods committed
to the intra-State trade of the importing
State. Indeed in the second case the exporter may not find a purchaser
and
may perforce
send or take the goods back whence they came. (at p628)
17. Three years later Fish Board v. Paradiso [1956] HCA 60; (1956) 95 CLR 443 was decided.
It was a case of an "importer", not
an exporter-importer.
The actual
interstate transaction was
the contract of sale and delivery from New South
Wales into Queensland.
Nevertheless, the
majority of the Court took the view
that
an Act prohibiting the resale of the fish by that purchaser importer
operated to restrict
the trade and commerce between New South
Wales and
Queensland directly and immediately. Wragg's Case [1953]
HCA 34; (1953) 88 CLR 353 could be
distinguished by applying the test laid down in the Banking Case [1949] HCA 47; (1950) AC
235;
(1949) 79 CLR 497 in such a way as to look beyond
the immediate legal
effect of the Act to what was held to be its
direct operation
upon the
interstate transaction. (at p629)
18. In the meantime Kitto J. had decided Williams v. Metropolitan and Export
Abattoirs Board [1953] HCA 93; (1953) 89 CLR 66 .
The facts in that
case were in my
respectful opinion significantly different from those in Wragg's Case [1953] HCA 34; (1953)
88
CLR 353 . There had been a threat
to forfeit goods of a Victorian trader
whose goods from Victoria were in South Australia
in course
of transit to his
South Australian
agent for the satisfaction of orders obtained from customers
in South Australia. A declaration
was sought inter alia that the South
Australian statute did not authorize the seizure of the goods of the Victorian
trader. The
ground was that the goods were in the
course of trade, commerce,
and intercourse among the States. Kitto J. held that they were not
because the
contracts of sale between
the Victorian trader and the Adelaide merchants had
not included a term that the source of
the goods should be another State. But
with great respect it appears to me that the Victorian trader's transactions
had passed beyond
the stage of a contract for the sale
of unascertained goods.
At the time of the threat to forfeit under the South Australia law Victorian
goods were in course of transit
from Victoria to South Australia either for
sale generally or in fulfilment of prior contracts.
The import into South
Australia
and the sale there were part and parcel of the same transaction. I
am unable to separate the import
from the purpose of that import
- the purpose
of selling or of fulfilment of a prior contract of sale. I respectfully agree
with
the analysis of this case by Barwick
C.J. in S.O.S. (Mowbray) Pty. Ltd.
v. Mead (1972) 124 CLR, at pp 547-549 . (at p629)
19. Harper v. Victoria [1966] HCA 26; (1966) 114 CLR 361 is an instance of a restriction
placed primarily upon an intrastate sale
where the goods
had been the subject
to a previous interstate transaction which had been completed. In Harper v.
Victoria [1966]
HCA 26; (1966) 114 CLR 361 the
effect upon trade, commerce, and intercourse
among the States was considered and it was held that
the effect
was not one
which could
be described as direct, rather than a remotely consequential, one.
On the other hand, in O'Sullivan
v. Miracle
Foods (S.A.) Pty.
Ltd. [1966] HCA 64; (1966) 115
CLR 177 it was held that, although the immediate burden of s. 23 of
the
Margarine Act, 1939-1956 (S.A.) was placed
upon
intrastate acts and
transactions, nevertheless the law operated in such a way
as to impose an
illegitimate burden upon prior
interstate
transactions in that the effect on
the latter transactions was direct rather
than remotely consequential. It may
well
be that the
factual test applied in reaching this conclusion was whether
the legislation
in its operation resulted in a preference
or advantage
to a
competing class of goods produced in the State imposing the burden by
prohibiting the sale of the other goods or
by imposing
conditions of sale or
resale unrelated to any criterion of regulation. But
it was essentially a
decision on the facts,
namely, the
operation of the law in the circumstances
of the time and place. The difference
of result in S.O.S. (Mowbray) Pty. Ltd.
v. Mead
(1972) 124 CLR 529 must be regarded as a difference flowing from
the
different operation of a different law in different
circumstances.
The
different conclusions may be difficult to explain but
it is only to make
confusion worse confounded to attempt
a reconcilation
by enunciation of
immutable propositions of law, or to regard
one as rightly and the other
wrongly decided in law.
At the most there
were different evaluations of
factual situations. (at p630)
20. Cantarella v. Egg Marketing Board (N.S.W.) [1972] HCA 16; (1972) 124 CLR 605 requires
especial considerations. In so far
as it was held that
the conditions imposed
on the interstate sale
of eggs were regulatory it was a decision depending on
all the
facts and circumstances.
However, if it was decided that there was
no
relevant interstate transaction (and therefore no relevant
trade, commerce,
and intercourse
among the States) on the ground that
the interstate
transaction consisted only of the carriage of
the eggs from Queensland to New
South Wales and did not extend to the
sale in New South Wales by the
Queensland exporter McLean (through
his agents Peter and Carmel
Cantarella)
which was the purpose
of the carriage, then with respect I do not think that
the decision
should be followed. I think,
however, that that was not a ratio
decidendi of the majority but was that of Walsh J. only. He placed
reliance
upon the fact that
there was no preceding contract of
sale while the eggs were
in Queensland, therefore no interstate sale
of eggs and therefore no
transaction of trade, commerce, and
intercourse among the States, other than
the making of the interstate
journey which was at an
end before the sale took
place in Sydney
between the Queensland exporter and the New South Wales
purchaser.
With great respect I
cannot accept the proposition that such trade,
commerce, and intercourse between Queensland and New South Wales
as the
Queensland
exporter had was limited to the journey. It extended
to the purpose
of that journey, namely, sale. That was the
only reason why
he sent his eggs
from Queensland to New South Wales.
The journey and the subsequent sale were
part of one enterprise
of trade, commerce,
and intercourse among the States of
Queensland
and New South Wales. The decision can only be sustained on the
basis that the conditions
imposed were an essentially reasonable
regulation
applicable to the sale of all eggs to which they applied
and which had no
vitiating
character in their operation, such
as, for instance, conferring a
preference or advantage in fact on New
South Wales traders over
traders from
other States. (at p631)
21. The same cannot be said of the New South Wales Act which presently falls
to be considered by this Court. The Dairy Industry
Authority Act, 1970
(N.S.W.) is plainly an Act regulating the supply of milk in New South Wales
for the purpose of controlling the
extent of its production, even though a
legislative intention is disclosed that a purpose of the Authority should be
that of ensuring
the wholesomeness and purity of milk and dairy products in
the interests of public health (s. 17). The legislative intention is
-
(1) that the Authority should acquire title to all milk intended for human
consumption or use, as milk, or for use in the production
or manufacture of
dairying products (s. 23);
(2) that the Authority should acquire that title from registered dairymen
and no one else (s. 24(1));
(3) that the quantity to be acquired by the Authority from a registered
dairyman should be determined by the Authority (s. 18 (1)
(d) and s. 26)
within the special quota provisions in Pt IV of the Act;
(4) that all sales of milk other than a deemed sale to the Authority under
s. 25(2) should be by registered milk vendors (s. 33);
(5) that as a consequence registered milk vendors should sell only milk to
which the Authority had acquired title;
(6) that any treatment of milk, as by pasteurization, should be done by the
Authority (s. 19(a)) or by a registered milk vendor
whose certificate of
registration authorized him to carry on that activity (s. 33);
(7) that no land or premises should be used as dairy premises, that is to
say, used for or in connexion with the stalling, grazing,
feeding or milking
of cattle for the purpose of producing milk which is supplied for profit or
sale except land occupied by a registered
dairyman (ss. 4 and 33); and
(8) that the dairy premises of a dairyman should be situated in New South
Wales: Interpretation Act, 1897 (N.S.W.), s. 17. (at
p632)
22. Thus only milk produced from dairy premises in New South Wales can be
sold in New South Wales for human consumption. The Act
does not provide a
scheme for the marketing of milk wherever it may be produced. The effect of
the legislation is that the plaintiff
North Eastern Dairy Co. Limited cannot
sell its milk produced in Victoria anywhere in New South Wales for human
consumption, as milk,
or for use by humans as milk or for use in the
production or manufacture in New South Wales of dairy products (s. 24(5)).
The language
of s. 24 in relation to s. 23 is difficult but it may be taken
that the milk of this plaintiff is not accepted by the Dairy Industry
Authority - indeed it cannot be as this plaintiff is not a registered dairyman
- and therefore s. 24 (5) is applicable. This plaintiff
cannot supply, sell,
or deliver the milk in its raw state even to a pasteurizing company (s. 24(6)
and s. 33(1)). It cannot sell
its pasteurized milk by virtue of the same
provisions. It is doubtful whether it could sell the milk other than for
human consumption
or use as milk or for use in the production or manufacture
of dairy produce (s. 24(5)), as such a sale would be a sale of milk, and
the
plaintiff would be a milk vendor carrying on an activity as such without being
the holder of a certificate of registration authorizing
him so to do (s. 33).
The only possibility of this plaintiff selling its milk in New South Wales is
if the Authority with the approval
of the Governor should exercise its power
under s. 19(e) to purchase the milk. (at p632)
23. Legislation which so operates is, in my view, plainly obnoxious to the
injunction of s. 92 and is therefore incapable of application
to the sale or
supply by the plaintiff North Eastern Dairy Co. Ltd. either directly or by its
agent of its milk in New South Wales,
subject only to the question whether a
purpose in the legislation of assuring purity and wholesomeness of milk makes
that legislation
permissible where it would otherwise be impermissible. For
the moment I leave this question aside and will return to it when at
the same
time I consider the applicability to the plaintiffs of reg. 79(10)(c) of the
regulations made under the Pure Food Act, 1908
(N.S.W.). (at p633)
24. For reasons which appear from what I have stated earlier I am of the
opinion that the plaintiff North Eastern Dairy Co. Ltd.
directly and through
its agent Carroll's Food Mart Pty. Ltd. engages in a transaction of trade,
commerce, and intercourse between
the States of Victoria and New South Wales
when it transports milk from Victoria to New South Wales for the purpose of
selling the
milk in New South Wales either directly or through its agent and
when it sells the milk to purchasers in New South Wales. The transport,
the
purpose thereof and the effectuation of the purpose are not severable.
Subject to the question whether the burden is permissible
even on this
transaction because of a regulatory character thereof, that is the end of the
matter on the facts presented before the
Court. It has been strongly urged
that Wragg's Case [1953] HCA 34; (1953) 88 CLR 353 is applicable but that case has little,
if
anything, to say
on a transaction of the kind presently being considered.
In Wragg's Case the sales by all concerned were sales of
potatoes in New
South
Wales after the conclusion of the interstate sales.
They were resales, just
as sales by purchasers from the
plaintiff North
Eastern Dairy Co. Ltd. in New
South Wales would be resales.
It was held that the effect on the interstate
transaction
was remotely
consequential. There was still complete freedom to
export
potatoes to New South Wales; there was only the economic
consequence
affecting
the price at which such exports could be effected.
None of this is
true in the present case, even if the relevant
sales were or
should be
regarded as intrastate sales. If either
sale or resale within New South Wales
of the plaintiff Victorian
company's milk
falls within the Dairy Industry
Authority Act, 1970
(N.S.W.), then that Act operates directly and in no way
indirectly
or consequently
upon any interstate transaction between the
Victorian
company and any New South Wales consumers or resellers. There
cannot practically
be any such transactions. The interstate trade
would for
all practical purposes be brought to an end. There is
nothing remote or
consequential about that, especially when the
impugned Act by such an
operation has the effect of preferring New
South Wales milk
producers to those
such as the plaintiff who
produce milk in another State. In no way, therefore,
are the principles
enunciated in
Wragg's Case [1953] HCA 34; (1953) 88 CLR 353 applicable to
the circumstances of the present case. I should add that
I say nothing of the
case
where the legislation
provides for compulsory resale within the importing
State. That is not the present
case. Even if the Victorian
milk vests in the
Authority by virtue of s. 23 there is no provision whereby the Authority is
bound
to pay for it. If it does not
vest, then there
is a simple prohibition
on resale. On both views the interstate trade is directly
burdened. (at
p634)
25. There is next the question whether the impugned provisions of the Act are
regulatory in character so that the burden imposed
on the acts and events of
trade, commerce, and intercourse between Victoria and New South Wales is
permissible. Clearly they are
not in themselves regulatory only. It would be
fanciful to suggest that the purpose expressed in s. 17 colours the operation
of
the whole Act so far as it operates upon the supply and distribution of
milk generally. It is in its operation a milk supply Act
which goes far
beyond what is necessary and reasonable to ensure the wholesomeness and purity
of milk and dairy products in the interests
of public health. Even if it
were, it selects as its criterion of operation factors which negate the
possibility of continued trade
and commerce between Victoria and New South
Wales in milk and dairy products. (at p634)
26. It is convenient now to turn to reg. 79(10)(c) of the regulations made
under the Pure Food Act, 1908 (N.S.W.). It is as follows:
"As on and from 1st July 1973, no person shall supply or
sell pasteurised milk for human consumption or use by man
in New South Wales that has not been pasteurised by a
holder of a certificate of registration issued under the provisions
of the Dairy Industry Authority Act, 1970, that
authorises that holder to carry on the activity of pasteurising
milk." (at p634)
27. This regulation cannot consistently with s. 92 be allowed on the facts
and in the circumstances disclosed in the stated cases
to operate so that no
milk from Victoria can be sold in New South Wales. This is so for a number of
reasons. The regulation selects
as the measure of control the application of
the provisions of an Act which in its integral structure offends against the
injunction
of s. 92. This is impermissible in itself. The submission of the
defendant Authority is that milk is a product which must be produced
and
treated under especially hygienic conditions and that it is a permissible
regulation of trade in that product within the State
of New South Wales that
only milk from sources under the control of that State and its inspectors
should be supplied and sold in
New South Wales. But this submission cannot be
sustained. It does not explain the purpose and effect of the Dairy Industry
Authority
Act itself. It goes some way to explaining reg. 79(10) (c) but not
far enough. There is nothing in the cases or the material before
the Court to
suggest that Victoria has a defective or ineffective system of hygienic
control of its milk production and treatment.
Indeed the contrary is the true
position. The requirements of the Milk Pasteurization Act 1958 (Vict.)
demonstrably achieve the
purpose of proper milk pasteurization which may be
accepted as the purpose of reg. 79 (10) (c).
In those circumstances the
latter
cannot be allowed to operate so as to prohibit the supply and sale of
Victorian pasteurized milk
in New South Wales. The impediment
to trade,
commerce, and intercourse is in such circumstances direct prohibition, not
regulation.
(at p635)
28. What, then, of Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd. [1939] HCA 28; (1939)
62 CLR 116 ? That was a decision
on the Milk Act,
1931 (N.S.W.). It is to be
noted that the circumstances were different
from those now appearing in that
the sales
by the defendant
company were of cream supplied to it from Victoria.
It purchased the
cream there and took delivery in Sydney. See
per Starke J.
(1939) 62 CLR, at p 138 . This interstate sale and delivery was a prior
transaction. (at p635)
29. The argument of the plaintiff Milk Board was that the cream being sold by
the defendant company, being cream which had been
purchased from Victorian
vendors, was vested in the Board and an injunction was sought to restrain its
resale by the defendant company
in the metropolitan milk distributing district
of Sydney upon the ground that the cream was the property of the Board. See
per Latham
C.J. (1939) 62 CLR, at pp 120-121 . The Milk Board expressly
recognized its obligation to pay for the cream so vested in it. See
per
Latham C.J. (1939) 62 CLR, at p 136 . That was a different set of facts
altogether. Whether differences in the Acts justified
such a different view of
this operation of the Milk Act from that now propounded as the operation of
the Dairy Industry Authority
Act I am not concerned to inquire. One thing is
clear, namely, that the Dairy Industry Authority has no intention of paying
the
plaintiff Victorian milk producer for all the milk and dairy products
which it sees fit to export to New South Wales, and the Act
does not provide
that it shall do so. There is thus an absolute prohibition on sale or resale,
with no provision for compulsory
sale or resale on terms which do not destroy
the practical possibility of the continuance of the plaintiffs' trade,
commerce, and
intercourse between Victoria and New South Wales in milk and
dairy products. I would expressly leave open the question whether, on
the
assumptions of fact as to the operation of the Milk Act, 1931 which were the
basis of the decision in the Metropolitan Cream
Case [1939] HCA 28; (1939) 62 CLR 116 , that
case was correctly decided. (at p636)
30. I would answer the questions in the stated case as follows:
North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of New South Wales.
1. Not answered. 2. Yes. 3. Yes. 4. Not answered. 5. Not answered.
6. Yes.
Carroll's Food Mart Pty. Ltd. v. Dairy Industry Authority of New South Wales.
1. Not answered. 2. Yes. 3. Yes. 4. Not answered. 5. Yes.(at p636)
ORDER
NORTH EASTERN DAIRY CO. LTD. v. DAIRY INDUSTRY AUTHORITY OF N.S.W.(a) that it is contrary to the provisions of s. 92 of the Constitution;Pure Food Act?
(b) that it is ultra vires the regulation-making power given by s. 54 of the
(a) the sales of the plaintiff referred to in par. 6 of the Stated Case;Unnecessary to answer.
(b) the sales referred to in par. 7 of the Stated Case;
(c) the sales referred to in par. 8 of the Stated Case?
(b) Yes.Registration No. V1689 under the Dairy Industry Authority Act, 1970 was purportedly made subject by virtue of the variation dated 20th June 1973, by reason of the provisions of s. 92 of the Constitution:
(c) Yes.
4. Is the condition numbered 3 to which the plaintiff's Certificate of
(a) invalid, orAnswer: (b) (i) Yes.
(b) inapplicable to:
(i) the sales of the plaintiff referred to in par. 6 of the Stated Case;
(ii) the sales referred to in par. 7 of the Stated Case;
(iii) the sales referred to in par. 8 of the Stated Case?
(ii) Yes.V7712 under the Dairy Industry Authority Act, 1970, which purports to restrict the milk which the plaintiff is authorized to sell, to milk that has been pasteurized by Haberfields Milk Pty. Limited, Albury by reason of the provisions of s. 92 of the Constitution:
(iii) Yes.
5. Is the restriction of the plaintiff's Certificate of Registration No.
(a) invalid, orCase;
(b) inapplicable to:
(i) milk supplied and sold in the manner described in par. 6 of the Stated
(ii) Yes.Constitution entitled to sell milk in New South Wales in the manner described in:
(iii) Yes.
6. Is the plaintiff, by reason of the provisions of s. 92 of the
(a) Paragraph 6 of the Stated Case;certificate of registration as a milk vendor that authorizes it to do so pursuant to s. 33 of the Dairy Industry Authority Act, 1970.
(b) Paragraph 7 of the Stated Case;
(c) Paragraph 8 of the Stated Case without being the holder of a
(b) Yes.CARROLLS FOOD MART PTY. LTD. v. DAIRY INDUSTRY AUTHORITY OF N.S.W.
(c) Yes.
(a) that it is contrary to the provisions of s. 92 of the Constitution;the Pure Food Act?
(b) that it is ultra vires the regulation-making power given by s. 54 of
(a) invalid, orStated Case?
(b) inapplicable to the sales of the plaintiff referred to in par. 4 of the