Australian Coarse Grains Pool Pty Ltd v Barley Marketing Board [1985] HCA 38; (1985) 157 CLR 605 (18 June 1985)

HIGH COURT OF AUSTRALIA

THE AUSTRALIAN COARSE GRAINS POOL PROPRIETARY LIMITED v. THE BARLEY MARKETING BOARD [1985] HCA 38; (1985) 157 CLR 605

Constitutional Law (Cth)

High Court of Australia

Gibbs C.J.(1), Mason(2), Wilson(3), Brennan(4) and Dawson(5) JJ.

CATCHWORDS

Constitutional Law (Cth) - Freedom of interstate trade, commerce and intercourse - Barley marketing - Barley vested in State marketing board - Time of vesting - Growers required to deliver barley to board - Prohibition against sale and delivery otherwise than to board - Contracts to buy barley in growers' State - Term requiring buyer to take grain out of State and deliver to buyers from it in another State - Whether contracts part of buyer's interstate trade - The Constitution (63 & 64 Vict. c. 12), s. 92 - Primary Producers' Organisation and Marketing Act 1926 (Q.), ss. 1A, 9(2), 15, 18, 20(3), 21A, 21B, 21F.

HEARING

Brisbane, 1984, June 26;

Canberra, 1985, June 18. 18:6:1985

CASE STATED.

DECISION

1985, June 18.

The following written judgments were delivered: -

GIBBS C.J. Before the Court is a stated case which raises for the decision effect of the Primary Producers' Organisation and Marketing Act 1926 (Q.), as amended ("the Act"), as affected by certain Orders in Council. The general scheme of the Act has been the subject of consideration by this Court in Peanut Board v. Rockhampton Harbour Board (1933) 48 CLR 266' Carter v. Potato Marketing Board [1951] HCA 60; (1951) 84 CLR 460 and Egg Marketing Board v. Bonnie Doone Trading Co. (N.S.W.) Pty. Ltd. [1962] HCA 3; (1962) 107 CLR 27. The effect of the provisions relevant for present purposes may be shortly stated as follows. By an Order in Council made on 24 April 1930 and modified and extended by later Orders in Council from time to time "all barley the produce of the soil within any part of the State of Queensland" is declared to be a commodity under and for the purposes of the Act (cl. 1), there is constituted a Barley Marketing Board ("the Board") (cll. 2 and 3) and "the whole of the said commodity shall forthwith, upon the making of this Order, be divested from the growers" and vested in the Board (cl. 5). These Orders in Council are made under s. 9 of the Act, and s. 9(2), under which cl. 5 is made, contains the following proviso:

"Provided that such Order in Council shall not have effect so as

to prejudice any interstate contract for the sale of the

commodity entered into prior to the date of the acquisition by the

Board of the commodity under such Order."

Subject to certain immaterial exemptions, the growers must deliver all the commodity to the Board or its agents, or forward or consign it to such destination as the Board requires (s. 15(1)), and it is an offence for anyone to sell or deliver any of the commodity to, or buy or receive any of the commodity from, any person other than the Board "and such sale delivery or purchase shall be void and of no effect whatsoever": s. 15(3). The Board must accept from any grower any of the commodity which is up to standard (s. 18(1)) and must make payments to the growers out of the proceeds of the commodity disposed of by the Board: s. 18(2). Subject to the exemptions under s. 15, and except under licence from the Board, no one may carry any of the commodity except for the purpose of delivering it to the Board or its agent or of forwarding or consigning it to a destination as required by the Board (s. 21A) and an inspector appointed by the Board may seize and detain any part of the commodity which he suspects is being carried contrary to the provisions of the Act (s. 21B(1)), and may seize and detain any of the commodity which he finds on any land or building and which he suspects is there "contrary in any respect to the requirements of this Act": s. 21F. The Act contains two provisions - the proviso to s. 9(2) and s. 20(3) - designed to protect any "interstate contract" but in Peanut Board v. Rockhampton Harbour Board those provisions were held to be ineffectual to save the Act from coming into conflict with s. 92 of the Constitution (1933) 48 CLR, at p 314. Since that decision the Act has been amended by the insertion of s. 1A, which provides as follows:

"This Act and any Proclamation, Order in Council or regulation

made thereunder shall be read and construed subject to

the Commonwealth of Australia Constitution Act, and so as

not to exceed the legislative power of the State, to the intent

that where any enactment contained in this Act or provision

contained in any such Proclamation, Order in Council, or

regulation would but for this section have been construed as

being in excess of that power, it shall nevertheless be a valid

enactment or provision to the extent to which it is not in excess

of that power." (at p612)

2. The plaintiff, a Victorian company, is a wholly owned subsidiary of the Victorian Oat Growers Pool and Marketing Co. Ltd., a company which deals in grain and which has an understanding with a number of its customers in Victoria that it will supply them with malting barley in quantities between the upper and lower limits notified to it. In 1982 malting barley was in short supply in Victoria and the Victorian Oat Growers Pool and Marketing Co. Ltd. determined to seek sources elsewhere, including in Queensland. In November and December of that year the plaintiff, having acquired premises at Warwick, entered into contracts (through local agents) to buy barley grown in Queensland from persons who were growers of barley in Queensland. When the contract was made in each case the barley was ready (or almost ready) for harvest but was still standing in the field. Each contract was in a standard form. It required the seller (grower) to deliver the grain to the plaintiff's premises at Warwick and contained amongst other things the following conditions:

"(b) The Buyer will, within a reasonable time after taking

delivery from the Seller, take the said grain out of the State in

which it is grown and deliver it to a Buyer in a State other than

the State in which it is grown and in the meantime, will not

deal with the grain in any manner inconsistent with such

obligation.

(c) The Buyer will not bring the grain back into the State in

which it was grown." (at p612)

3. Pursuant to the contracts, barley was carried from the growers' farms to the plaintiff's premises, where it was stored in silos with other barley of similar quality received under the contracts but segregated from other grain. On or about 11 December 1982 one of the Board's inspectors served on an agent of the plaintiff at the plaintiff's premises at Warwick a document by which he asserted that he seized and detained 362.64 tonnes of barley which he suspected was barley which should have been delivered to the Board. At that time the plaintiff had not entered into any contract to sell or dispose of the barley. At all material times, however, the plaintiff's intention was that the barley was to be taken out of Queensland for delivery to a buyer in a State other than Queensland and the barley was eventually all taken out of Queensland. (at p612)

4. The plaintiff has brought proceedings in this Court seeking declaratory and injunctive relief against the Board. The fundamental question is whether the application of the provisions of the Act and Orders in Council to the barley the subject of the contracts is prevented by s. 92 of the Constitution. (at p613)

5. Two questions that were raised in argument may be disposed of very shortly. First it was submitted on behalf of the Board that the growing barley became a commodity either at the "shot blade" stage (the stage at which the crops became covered under an insurance scheme set up by regulations under the Act) or, at latest, when it became ripe for harvest, so that it was vested in the Board before the contracts were made between the plaintiff and the growers. The effect of the Orders in Council was that the barley was vested in the Board prospectively as and when it came into existence and answered the description of the commodity: cf. Peanut Board v. Rockhampton Harbour Board (1933) 48 CLR, at pp 274, 280. It is clear from the provisions to which I have referred that the commodity is something which becomes vested in the Board as soon as it comes into existence and is then capable of being delivered, carried, sold, seized and detained. It is only when the growing grain is severed from the soil and harvested that it becomes capable of being so dealt with. The time when the crops become covered by insurance would provide no indication of when the growing grain becomes a commodity for the purposes of the Act, even if it were right to have regard to the regulations made under the Act for the purpose of deciding that question. There is no indication in the provisions of the Act or Orders in Council that the barley becomes a commodity when it is ready for harvest. On the proper construction of those provisions, the barley becomes a commodity only when it is harvested. (at p613)

6. Then it was submitted, this time by the plaintiff, that an "interstate contract" within s. 9 (2) of the Act is any contract which has an interstate element. That is not what the words naturally mean, but, in my opinion, it is unnecessary to consider the scope of the proviso to s. 9 (2). The provisions of s. 1A have the effect that the Act and Orders in Council do not apply in any situation where their application would amount to an infringement of s. 92 of the Constitution. It is apparent that the proviso to s. 9 (2) is not intended to have any wider effect, and Peanut Board v. Rockhampton Harbour Board is authority for the proposition that it has a narrow effect. Since the proviso to s. 9 (2) cannot produce any relevant consequence that is not produced by s. 1A, it is unnecessary to answer the question whether any contracts in the present case fall within the proviso to s. 9 (2). (at p613)

7. The question then is whether the plaintiff was engaged in interstate trade or commerce when it entered into the contracts with the growers and took delivery of the barley. If so, it cannot be doubted that if the Act and Orders in Council applied their effect would be to infringe the right guaranteed to the plaintiff by s. 92 of the Constitution to engage freely in interstate trade and commerce. The Act and Orders in Council would have the direct effect of prohibiting the plaintiff from buying or taking delivery of the barley in which it traded, and thus of completely preventing the plaintiff from engaging in that trade or commerce. If the making of the contracts and the delivery of the barley to the plaintiff form part of the plaintiff's interstate trade or commerce, the provisions of s. 1A will accordingly require the provisions of the Act and Orders in Council to be read so as not to apply to the barley the subject of the contracts and to the acts of the growers in selling and delivering, and those of the plaintiff in buying and taking delivery of, that barley. (at p614)

8. The contracts which the plaintiff made with the growers required it to move the barley interstate and it genuinely intended to do so for commercial reasons. The transportation of the barley from Queensland to another State, when it occurred, would of course be an act of interstate trade or commerce. The critical question is whether the contracts, and the deliveries pursuant to them, were part of the plaintiff's interstate trade and commerce or merely preparatory to it. (at p614)

9. The decision of this Court in Reg. v. Wilkinson; Ex parte Brazell, Garlick and Coy [1952] HCA 6; (1952) 85 CLR 467 is clear authority in favour of the view that the growers and the plaintiff were engaged in interstate trade when they respectively delivered and took delivery of the barley. In that case a grower at Dorrigo in New South Wales agreed with agents at Dorrigo to sell potatoes to a firm of produce merchants whose head office was at Jennings in New South Wales and to deliver the potatoes onto railway trucks at Dorrigo. According to the majority of the Court it was a term of the agreement that the potatoes should be consigned to a Queensland place of destination. The potatoes were put on railway trucks at Dorrigo for conveyance to Wallangarra in Queensland; the produce merchants subsequently sold them to purchasers in other parts of Queensland. The grower was convicted of disposing, and the agents of receiving, potatoes contrary to s. 11 (3) of the Marketing of Primary Products Act 1927 (N.S.W.), as amended, which excepted sales and deliveries "in the course of trade or commerce between the States". It was held that the disposal of the potatoes by the grower, and the receiving of them by the agents at Dorrigo, were done "in the course of trade or commerce between the States" within the meaning of the exception in s. 11 (3). Dixon, McTiernan, Fullagar and Kitto JJ. said (1952) 85 CLR, at p 480:

"Under the agreement for the sale and purchase of the potatoes

the agents buying were required to consign the potatoes to a

railway station in Queensland, and they did so consign them.

For the purpose of the exception the delivery of the potatoes

from the lorry into the railway truck can bear only the aspect of

an essential and integral, even if initial, step in the

transportation of the potatoes to Queensland. Yet it is the very

thing which forms the foundation of the charges of disposal and

receiving."

That reasoning is equally applicable to the present case, and leads to the conclusion that the delivery of the barley to the plaintiff's premises was an essential and integral step in the transportation of the barley from Queensland to other States. (at p615)

10. However, an anterior question arises. If the barley became vested in the Board before it became the subject of a transaction of interstate trade or commerce, it is difficult to see how any subsequent sale or delivery by a grower to the plaintiff could be effectual. Assuming a valid acquisition, the grower could not thereafter enter into any transaction, whether interstate or intrastate, in respect of a commodity which was no longer his. The question therefore becomes whether the contracts of sale made between the growers and the plaintiff formed parts of an interstate transaction. The contracts were made before the barley was harvested, and therefore before any vesting in the Board could occur. If the making of those contracts committed the barley in question to interstate trade or commerce, the Act and Orders in Council, which were given a distributable application by s. 1A of the Act, would be inapplicable to that barley, which would then not be divested from the growers and vested in the Board. In Reg. v. Wilkinson; Ex parte Brazell, Garlick & Coy there was in force a proclamation which vested potatoes in a marketing board, but made an exception in favour of "any portion of such commodity as is the subject of trade or commerce between the States or as is required by the producers thereof for the purposes of trade or commerce between the States or intended by the producers thereof to be used for such trade or commerce". The majority of the Court regarded the vesting provisions as of so little importance that they did not refer to them in their judgment. Williams J. appears to have thought that the potatoes vested in the Board but that the vesting provisions were irrelevant to the question whether there had been a breach of s. 11 (3) of the Marketing of Primary Products Act 1927 (N.S.W.), as amended (1952) 85 CLR, at p 482. Later in his judgment, however, he held that when the transaction was regarded as a whole, the acts done by the grower and the agents in that case were done in the course of trade and commerce between the States (1952) 85 CLR, at pp 483-484 Webb J. held that there had been no vesting. He thought that there was no legislative power to interfere with the right of the grower to choose whether he would sell his potatoes interstate or intrastate, with the possible result that potatoes could be compulsorily acquired with certainty only while they were in the course of passing from one owner to another in an intrastate transaction (1952) 85 CLR, at p485. With all respect that reasoning cannot be accepted; it is inconsistent with what was said in such cases as Wilcox Mofflin Ltd. v. New South Wales [1952] HCA 17; (1952) 85 CLR 488, at p 516 and Ex parte H. Brazil & Co. Pty. Ltd. [1978] HCA 25; (1978) 138 CLR 194, at p 198. (at p616)

11. Similar reasoning to that by which the majority in Reg. v. Wilkinson; Ex parte Brazell, Garlick and Coy [1952] HCA 6; (1952) 85 CLR 467 reached the conclusion that the delivery of the potatoes was an essential and integral step in their transportation interstate should, in my opinion, equally lead us to conclude in the present case that the contracts of sale were essential and integral steps in an interstate transaction. It would seem artificial to distinguish between the deliveries and the contracts of sale pursuant to which the deliveries were made. The deliveries depended on the contracts of sale. The contracts were the first steps by which the plaintiff commenced its interstate trade or commerce in relation to the barley. They were essential steps in that trade or commerce because without them the trade or commerce could not have been carried on and they were integral steps because there was an inseverable connexion between the contracts of sale, the deliveries made thereunder, and the interstate movement of the barley. The reasoning in North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. [1975] HCA 45; (1975) 134 CLR 559, where it was held that a sale of milk in New South Wales by a person who had carried the milk from Victoria for the purpose of selling it in the former State was part of a transaction of interstate trade or commerce, is consistent with this view. I find it unnecessary to consider whether the position would have been different if the contracts had not contained a stipulation requiring the plaintiff to take the barley interstate. (at p616)

12. The question whether one act or transaction is inseparably connected with another, or is merely preparatory or antecedent to it, often involves questions of fact and degree. This is clearly shown by a comparison of the cases in which it has been considered whether carriage from one point within a State to another is no more than a preliminary to a possible or probable act of interstate transportation or is part of a continuous movement interstate: cf. Tamar Timber Trading Co. Pty. Ltd. v. Pilkington [1968] HCA 15; (1968) 117 CLR 353 with Pilkington v. Frank Hammond Pty. Ltd. [1974] HCA 13; (1974) 131 CLR 124. In some cases the decisions have authoritatively established where the line should be drawn. Thus manufacture does not attract the protection of s. 92, even though it is carried on for the purpose of fulfilling contracts to supply the manufactured goods interstate: see Beal v. Marrickville Margarine Pty. Ltd. [1966] HCA 9; (1966) 114 CLR 283. There is, however, no authority that requires us to hold that the contracts of sale in the present case, which, viewed in isolation, may be regarded as purely of an intrastate character, did not form part of the entire transaction which is clearly of an interstate character. (at p617)

13. I would answer the questions raised by the stated case as follows:



(a) Was the barley the subject of the contracts the subject of trade, commerce and intercourse between the States within the protection of s. 92 of the Constitution?

Answer: Yes.

(b) Are the contracts referred to interstate contracts for sale of barley entered into prior to date of acquisition by the defendant of the commodity barley within the meaning of the proviso to s. 9(2) of the Primary Producers' Organisation and Marketing Act 1926 (Q.), as amended?

Answer: Unnecessary to answer.

(c Has the barley harvested in the 1982 barley harvest season and which barley was the subject of the contracts been divested from the growers and has it vested in the defendant pursuant to cl. 5 of the Order in Council dated 24 April 1930, as amended, or at all?

Answer: No.

(d) Is par. 5 of the Order in Council dated 24 April 1930 invalid in so far as it operates to divest barley the subject of trade, commerce and intercourse between the States from the growers thereof and to vest it in and remain the property of the defendant as the owners thereof?



Answer: The provision would be invalid if it had such operation but by virtue of s. 1A of the Primary Producers' Organisation and Marketing Act 1926 (Q.) it does not so operate.



(e) Are ss. 21B and 21F of the Primary Producers' Organisation and Marketing Act 1926 (Q.) invalid in so far as they operate to give the defendant or any inspector of the defendant the power to seize barley, the subject of trade, commerce and intercourse between the States?



Answer: The sections would be invalid if they had such operation but by virtue of s. 1A of the Primary Producers' Organisation and Marketing Act 1926 (Q.) they do not so operate. (at p618)

MASON J. The issue raised by this case stated by the Chief Justice is whether barley, which the plaintiff acquired from growers in Queensland under standard form contracts requiring the plaintiff within a reasonable time of taking delivery from the grower to take the grain out of Queensland and deliver it to buyers in another State, became by virtue of those contracts the subject of interstate trade and commerce within the meaning of s. 92 of the Constitution and as such stood outside the compulsory acquisition provisions of the Primary Producers' Organisation and Marketing Act 1926 (Q.), as amended ("the Act"). (at p618)

2. The operation of the Act was examined in Peanut Board v. Rockhampton Harbour Board (1933) 48 CLR 266 and in Carter v. Potato Marketing Board [1951] HCA 60; (1951) 84 CLR 460. The Act makes provision for the establishment of Commodity or Marketing Boards in relation to declared commodities and for the divesting from growers of property in a commodity and the vesting of it in the relevant Board. To this end the Governor in Council may from time to time, if requested so to do by a petition signed by fifty or an approved number of growers of a particular commodity, declare that any grain is and shall be a commodity under and for the purposes of the Act. By the same or a subsequent Order in Council the Governor in Council may constitute a Board in relation to the commodity and extend the provisions of the Act, with modifications or additions, to the commodity and the Board and all persons, things and matters concerned (s. 9(1)). (at p618)

3. The Governor in Council may by Order in Council -

". . . declare that the commodity shall forthwith, upon the

making of such Order or on and from a date to be fixed by such

Order or upon the fulfilment of such conditions as are therein

mentioned, be divested from the growers thereof and become

vested in and be the property of the Board as the owners

thereof; and may make such further provision as will enable the

Board effectively to obtain possession of the commodity as such

owners and to deal with the same as may be deemed necessary

or convenient in order to give full effect to the objects and

purposes for which the Board is constituted:

Provided that such Order in Council shall not have effect so

as to prejudice any interstate contract for the sale of the

commodity entered into prior to the date of the acquisition by

the Board of the commodity under such Order." (s. 9(2)). (at p619)

4. A Marketing Board may sell or arrange for the sale of the commodity (s. 14). Subject to exceptions which are not presently material, "all the commodity shall be delivered by the growers thereof to the Marketing Board or their authorised agents within such times, at such places, and in such manner as the Board may fix, or as may be prescribed" (s. 15(1)). All the commodity so delivered is deemed to have been delivered to the Board for sale by the Board on behalf of the growers (s. 15(2)). Subject to certain exemptions, it is an offence to sell or deliver any of the commodity to or buy or receive any of the commodity from any person other than the Board (s. 15(3)). A Marketing Board cannot refuse to accept any of the commodity which is of the prescribed quality or which conforms to the prescribed standard or for which a certificate of merchantable quality has been obtained and tendered with the commodity, provided that the commodity is delivered in accordance with the Act within such reasonable times as may be fixed by the Board, and property in it is vested in the Board by virtue of the Act and it is required to be delivered to the Board (s. 18(1)). (at p619)

5. The Board is required to pay the grower out of the net proceeds of sale of the commodity, the grower being entitled to a proportion of the net proceeds equal to the proportion which the commodity which he supplies to the Board bears to the whole commodity sold (s. 18(2)). The Board has power, with the prior approval of the Minister, to make a levy in respect of the commodity (s. 29(1)). The proceeds of such a levy must be applied in the manner provided by s. 29(2), as, for example, in payment of administrative expenses of the Board and in establishing a fund or funds for the purpose of effecting or providing insurance against fire, pests, hail, flood or other casualty for the class or classes of growers as may be prescribed (s. 29(2)). (at p619)

6. By s. 1A of the Act it is provided:

"This Act and any Proclamation, Order in Council or

regulation made thereunder shall be read and construed subject

to the Commonwealth of Australia Constitution Act, and so as

not to exceed the legislative power of the State, to the intent

that where any enactment contained in this Act or provision

contained in any such Proclamation, Order in Council, or

regulation would but for this section have been construed as

being in excess of that power, it shall nevertheless be a valid

enactment or provision to the extent to which it

is not in excess of that power." (at p619)

7. The Barley Marketing Board was constituted under the Act and barley was declared as a commodity by an Order in Council on 24 April 1930 which has been amended from time to time. The Board was initially constituted for a period of seven years. That time has been extended by subsequent Orders in Council. The functions of the Board have been extended and barley has been declared as a commodity until 23 April 2002. Clauses 1, 3, 5 and 6 of the Order in Council on 24 April 1930 provided:

"1. All barley the produce of the soil within any part of the

State of Queensland is and shall be a commodity under and for

the purposes of the Acts.

. . .

3. The Board shall be a Marketing Board.

. . .

5. The whole of the said commodity shall forthwith, upon the

making of this Order, be divested from the growers thereof and

become vested in and be the property of the Board as the

owners thereof.

6. The provisions of the Acts are hereby extended to the said

commodity and the said Board and all persons, things, and

matters concerned." (at p620)

8. By later Orders in Council a number of modifications and additions were made to the provisions of the Act in their application to barley, the Barley Marketing Board and all persons, things, and matters concerned. With the exception of the insertion of ss. 21A-21H by an Order in Council on 31 October 1957, those modifications and additions are not significant for the purposes of this case. The relevant effect of ss. 21A-21H may be shortly stated. Any inspector is empowered to seize and detain any part of the commodity which he suspects is being carried or removed contrary to the provisions of the Act: s. 21B(1). Any part of the commodity so seized and detained by an inspector under the Act shall be delivered by the inspector to the Board. The costs and expenses of and incidental to such removal, delivery and storage shall be a charge in favour of the Board against any of the commodity so seized and detained: s. 21B(3). Any inspector or member of the police force may without notice enter at all times upon, search, inspect and examine any land, buildings and premises, and all structures, vehicles and things where he suspects there was or might be any of the commodity there, and if he finds any of the commodity which he suspects is there contrary in any respect to the requirements of the Act or which is connected with a contravention of the Act he may seize and detain it in which event the provisions of s. 21B shall apply (s. 21F(1)). (at p620)

9. According to the facts recited in the stated case the plaintiff, a company incorporated in Victoria, is a wholly-owned subsidiary of the Victorian Oat Growers Pool and Marketing Co. Ltd. ("Victorian Oat Growers"). That company has, on occasions operating through wholly-owned subsidiaries such as the plaintiff, carried on the business of dealing in grain, including malting barley, for some twenty-seven years. In 1982 Victorian Oat Growers determined to look to sources of supply less affected by drought than its traditional areas of supply in Victoria and New South Wales. In July 1982 the plaintiff purchased premises at Warwick in Queensland consisting of a large tin shed, 500 tonne capacity steel storage silos, a weighbridge and a smaller shed with an office. (at p621)

10. In or about November 1982 the plaintiff began to carry on business in Queensland as a dealer in barley when it bought barley from growers. In acquiring barley in the Warwick district, the plaintiff engaged the services of local agents. Each agent was given a standard form of contract to be signed by growers who agreed to supply barley to the plaintiff and a series of interim receipts which were to be completed and handed to the plaintiff's servants when each load of grain was delivered to the plaintiff's storage facility in Warwick. In November and December 1982 the plaintiff entered into twelve contracts for the purchase of barley from growers in Queensland. The contracts were signed on behalf of the plaintiff by persons who acted as agents for the plaintiff. When each contract was signed, the barley to which it related was fully developed but was still standing in the field; it was either ready for harvest or soon would be ready for harvest. Between 23 November and 19 December 1982 a total of 431.05 tonnes (approximately) of Queensland barley was delivered to the plaintiff's premises in Warwick pursuant to the twelve contracts. The barley was transported from the grower's farm to the plaintiff's premises in Warwick in some cases by the grower, in others by a carrier and in the remainder by a combination of the two methods. Although the contracts required the grower to deliver the barley to the nominated storage, the plaintiff paid the freight as a gesture of goodwill when a carrier was engaged. (at p621)

11. Under a typical contract the grower agreed to sell and the plaintiff to buy the entire production from a specified area up to a nominated maximum. The contract provided:

"The title to the grain shall pass to the Buyer when placed upon

the vehicle for delivery to the Buyer subject to the special

condition that such transfer of title is restricted to grain which

is in conformity with the quality specifications referred to in the

schedule."

The special conditions contained the following provisions:

"(a) The subject grain shall be delivered by the Seller to the

Buyer or its agent at the address shown above.

(b) The Buyer will, within a reasonable time after taking

delivery from the Seller, take the said grain out of the

State in which it is grown and deliver it to a Buyer in a

State other than the State in which it is grown and in the

meantime, will not deal with the grain in any manner

inconsistent with such obligation.

(c) The Buyer will not bring the grain back into the State in

which it was grown."

Both the plaintiff and the growers were entitled to and did treat delivery of barley in excess of the quantity specified by individual contracts as delivered under the contracts. (at p622)

12. When a load of barley was delivered to the plaintiff's premises, the plaintiff's mill-hand required each driver to provide him with an interim receipt relevant to the particular load. He then checked the grain for quality and weight, recording the details in the weighbridge receipt book. The grain was then placed according to type in one of the silos numbered 4 (which was divided into two, A and B) or 5 where it was kept until it was loaded for delivery interstate. From the time the barley in question was received at the plaintiff's premises in Warwick to the time it left them it was kept segregated from any other grain on these premises. The silos identified as 4 and 5 were not the only silos available for the storage of grain on the premises. The barley was classified as either malting, milling, or manufacturing quality, and was then stored in one or other of the said silos with other barley of the same or similar quality, the subject of the said contracts. (at p622)

13. On or about 11 December 1982 an inspector employed by the Board served a document issued by him on an agent of the plaintiff at the plaintiff's premises in Warwick. The document is entitled "Order for Seizing and Detaining". After reciting that the inspector found barley which he suspected should have been delivered to the Board, the notice states:

"I . . . hereby seize and detain such barley . . . and I hereby

order you to deliver 362.64 tonnes barley to The Barley

Marketing Board at Allora SWB Depot forthwith (on or before

4 a.m./p.m. on Saturday the eleventh day of December 1982)." (at p622)

14. At no time up to and including the time when the said document was served had the plaintiff entered into any contract with any person to sell or otherwise dispose of any of the said barley in silos 4A, 4B and 5. (at p622)

15. Victorian Oat Growers is a party to a long-term understanding with a number of customers in Victoria for the supply to them of malting barley. Victorian Oat Growers is notified of tonnages representing an upper and lower limit which it might be called upon to supply during the coming season. During the course of a season Victorian Oat Growers would be called upon to supply particular quantities within the scope of "fundamental agreements" to particular customers at a price arrived at on each occasion. The business of Victorian Oat Growers was conducted in the expectation that it would be called upon from time to time to supply customers with the specific amounts within the scope of the various "fundamental agreements" and it ordered its business accordingly. At all material times and in respect of all contracts the plaintiff's intention was that the barley was to be taken out of Queensland for delivery to a buyer in a State other than Queensland. The barley in question was in fact also taken out of Queensland after 6 October 1983. (at p623)

16. The stated case asks the following questions:

(a) Was the barley the subject of the contracts the subject of

trade, commerce and intercourse between the States within the

protection of s. 92 of the Constitution?

(b) Are the contracts referred to interstate contracts for sale

of barley entered into prior to the date of acquisition by the

defendant of the commodity barley within the meaning of the

proviso to s. 9(2) of the Primary Producers' Organisation and

Marketing Act 1926, as amended?

(c) Has the barley harvested in the 1982 barley harvest

season and which barley was the subject of the contracts been

divested from the growers and has it vested in the defendant

pursuant to cl. 5 of the Order in Council dated 24 April 1930,

as amended, or at all?

(d) Is par. 5 of the Order in Council dated 24 April 1930

invalid in so far as it operates to divest barley the subject of

trade, commerce and intercourse between the States from the

growers thereof and to vest it in and remain the property of the

defendant as the owners thereof?

(e) Are ss. 21B and 21F of the Primary Producers'

Organisation and Marketing Act 1926, as amended, invalid in so far as

they operate to give the defendant or any inspector of the

defendant the power to seize barley the subject of trade,

commerce and intercourse between the States? (at p623)

17. At the outset it is necessary to reject summarily the plaintiff's submission that the proviso to s. 9(2) when it refers to "any interstate contract for the sale of the commodity" protects a contract having any interstate element from the divesting provisions of that sub-section. The argument is that because s. 1A of the Act, which provides that the Act is to be read and construed subject to the Constitution and seeks to confine the Act to an application within the limits of constitutional power, protects interstate trade and commerce from the operation of the Act, the proviso must be understood as having a different and wider application. The short answer is that the argument overlooks the circumstance that the proviso formed part of the original Act when it was enacted in 1926, whereas s. 1A was introduced by Act No. 35 of 1935 in consequence of this Court's decision in the Peanut Case (1933) 48 CLR 266 (see Carter (1951) 84 CLR, at p 481.) In the Peanut Case, it was held that s. 9 of the Act as applied by the Order in Council contravened s. 92 of the Constitution, notwithstanding the presence of the proviso to s. 9(2). The matter was expressly dealt with by McTiernan J. who, after discussing s. 92 at length, said (1933) 48 CLR, at p 314. "The proviso to s. 9(2) and s. 20(3) relating to inter-State contracts are (sic) clearly not sufficient to protect this constitutional right." The decision is therefore authority for the converse of the plaintiff's submission: that the protection given by the proviso was less than that given by s. 92. (at p624)

18. The plaintiff's principal submission is that the barley which was the subject of the twelve contracts became part of the interstate trade in barley when it was harvested because the contracts, which were entered into before the barley was severed from the land, committed the barley to interstate trade by imposing an obligation on the plaintiff as purchaser to enter into a contract or contracts with some other person or persons to deliver the barley into a State or States other than Queensland, it being the intention of the plaintiff at all relevant times to sell the barley under such contracts. The submission therefore presents for consideration an important question in relation to the content of the concept of interstate trade and commerce under the Constitution. (at p624)

19. Before examining this question, I should deal with the defendant's contention, designed to outflank the plaintiff's principal submission, that the effect of the legislation and the Order in Council is to divest property in the crop before it is harvested, when it has "grown to the shot blade stage" within the meaning of reg. 265 of the Barley Marketing Board Hail Insurance Regulations made under the Act, or alternatively when it is ready for harvest. The effect of this contention, if correct, so it is claimed, is that divesting occurred at a point of time before the plaintiff entered into its contracts with the growers and before property passed from the grower to the plaintiff under the relevant contracts of sale, i.e., upon delivery of the barley to the plaintiff. It seems to me that, even if the contention be correct, it may not have the effect claimed. And it seems to me that even if the Order in Council divests property from the grower when the crop is ready for harvest this is not an answer to the plaintiff's case. According to the stated case, the contracts were entered into when the crop was ready for harvest or soon would be. It would not matter that property passed under the contract at a later time if the barley was already effectively committed to interstate trade. (at p625)

20. But I need not pursue this question further because the contention is to my mind without foundation. Clause 1 of the Order in Council refers to "All barley the produce of the soil" and cl. 5 divests the "whole of the commodity . . . forthwith upon the making" of the Order. Neither of these provisions, nor the Act itself, specifically identifies the moment of time when property in a commodity is divested from the grower. However, the object of the Act is to establish Commodity and Marketing Boards and to promote orderly marketing in the interests of growers. In conformity with this object the references in the Act to "commodity" should be understood as signifying a "commodity" after it has been harvested. For this reason, apart from any other, the Order in Council should be read as divesting property from the grower at the time when the barley is harvested and severed from the land. It is at that time that the crop becomes a commodity. (at p625)

21. The inconvenience which would result from the opposing view is a further reason for adopting the construction which I favour. First, there is the problem of ascertaining the particular stage at which property would pass to a Board in the case of a crop, if it were to pass at any time before harvesting. To say that divesting occurs when a crop is ready for harvest is to introduce a large element of uncertainty because there may be room for a divergence of opinion as to the time when a crop is ready for harvest. And the introduction of uncertainty into the application of the divesting provisions would create serious problems in relation to completion of contracts for the sale of land on which crops are standing. Indeed, if we were to accept the defendant's submission on this point, in some instances the contract might itself amount to a disposition of the crop in contravention of the Act. (at p625)

22. The Barley Marketing Board Hail Insurance Regulations throw no light upon the question for the reason that it is not legitimate to construe the statute by reference to the regulations. However, it is legitimate to have regard to the power conferred by s. 29 upon the Board to make a levy in respect of the commodity and the power to apply moneys so raised in establishing and maintaining a fund for the provision of insurance against fire, pests, hail, flood or other casualty for the benefit of such class or classes of growers as may be prescribed. But the provisions of s. 29 are of no assistance in determining the time of divesting. They demonstrate that the Board may make a levy and apply the proceeds in providing insurance against losses that growers may sustain in relation to their crops, i.e., at a time when property in the crop enures in the grower. (at p626)

In the Peanut Case (1933) 48 CLR, at p 288 Dixon J. considered that property in the peanuts was vested in the Board "as and when they come into existence". Rich J. (1933) 48 CLR, at p 274, Starke J. (1933) 48 CLR, at p 280 and, it seems, McTiernan J. (1933) 48 CLR, at pp. 314-315, took the same view. Evatt J. thought that property passed in the peanuts "as and when they come into existence as products for sale" (1933) 48 CLR, at p 292. In that case the Order in Council described the declared commodity as "all peanuts the produce of the soil . . . and produced or to be produced for sale" and went on to provide that:

". . . the whole of the said commodity at the time of the making

of this Order in Council and all and every part of such

commodity which shall be produced during the subsistence of

this Order in Council shall forthwith upon the making of this

Order in Council be divested from the growers thereof and

become vested in and be the property of the board as the

owners thereof". (1933) 48 CLR, at p 291.

There is a difference in expression between that Order in Council and the Order in Council in the present case but I do not think that the difference is sufficient to warrant making a distinction. The views of the Court in that case were expressed in the course of rejecting the primary judge's finding that the Order in Council did not vest in the Board property in peanuts not in existence at the time of the making of the Order in Council. There was accordingly no occasion, as there is here, for their Honours to identify the time of vesting more precisely. I do not regard the observations in the Peanut Case as being inconsistent with the view which I have expressed as to the time of vesting in the present case. (at p626)

24. I return to the plaintiff's principal submission. It is understandable that the concept of trade and commerce among the States, whether for the purposes of s. 51(i) or s. 92, has not proved to be susceptible of precise definition. However, as early as 1920, it was accepted (1) that transportation of merchandise across State borders was at the heart of interstate trade and commerce, and (2) that all commercial transactions of which transportation is the direct and necessary result form part of trade and commerce: W. & A. McArthur Ltd. v. Queensland [1920] HCA 77; (1920) 28 CLR 530, at pp 546-547. Later, in Australian National Airways Pty. Ltd. v. The Commonwealth [1945] HCA 41; (1945) 71 CLR 29 ("the A.N.A. Case"), and Hughes & Vale Pty. Ltd. v. New South Wales (No. 1) [1954] UKPCHCA 5; (1954) 93 CLR 1, the competing view that transportation was not trade and commerce but merely the means by which trade and commerce are conducted was decisively rejected. (at p627)

25. In rejecting this view, Starke J. said in the A.N.A. Case (1945) 71 CLR, at pp 76-77:

"Trade and commerce among the States is not an isolated

journey across a State boundary line (see Willis on Constitution

Law, p. 288), but the flow of business among the States. It

includes the movement of goods or persons from one State to

another, transportation by land, sea or air, and it also includes

something more such as sales of goods tangible or intangible by

persons in one State to persons in another. Or as was said in

this Court in W. & A. McArthur Ltd. v. Queensland

(1920) 28 CLR, at pp 546-547:

'"Trade and commerce" between different countries - we

leave out for the present the word "intercourse" - has never

been confined to the mere act of transportation of merchandise

over the frontier. That the words include that act is, of course,

a truism. But that they go far beyond it is a fact quite as

undoubted. All the commercial arrangements of which

transportation is the direct and necessary result form part of

"trade and commerce".'"

To the same effect were the observations of Latham C.J. (1945) 71 CLR, at p 56, and Dixon J. observed that in the constitutional conception of interstate trade and commerce "the place given to the carriage of goods and persons, transportation, is anything but subsidiary" (1945) 71 CLR, at p 82 and denied that it was merely ancillary or incidental to the commercial interchange of goods (1945) 71 CLR, at p 83. (at p627)

26. Much earlier, in R. v. Gates; Ex parte Maling [1928] HCA 39; (1928) 41 CLR 519, at pp 530-531, Starke J. had expressed a comprehensive conception of overseas trade and commerce, in terms similar to his comments already quoted, in the A.N.A. Case. Taking McArthur as his foundation, he said:

"Foreign trade . . . 'comprehends intercourse for the purposes of

trade in any and all its forms, including the transportation,

purchase, sale, and exchange of commodities between the

citizens of our country and the citizens or subjects of other

countries' (Welton v. Missouri

[1875] USSC 187; (1875) 91 US 275, at p 280 (23 Law Ed 347, at p 349)).

Every movement of commodities

between Australia and England, and every negotiation,

contract and dealing looking to that movement falls

within its scope. The expression 'foreign trade' embraces not

only the movement of commodities, but also the carriage of

persons and the interchange of information between Australia

and other countries (Western Union Telegraph Co. v.

Pendleton [1887] USSC 221; (1887) 122 US 347 (30 Law Ed 1187)).

'All the commercial dealings and all the

accessory methods . . . to initiate, continue and effectuate the

movement of persons and things' between Australia and other

countries are 'parts of the concept, because they are essential

for accomplishing the acknowledged end' (McArthur's

Case (1920) 28 CLR, at p 549).

Foreign trade 'is a practical conception', and the

character of a given transaction must be determined, as a

matter of fact, in each particular case." (at p628)

27. It is now well settled that interstate trade and commerce includes intangibles as well as the movement of goods and persons. Thus, it covers the telegraph, the telephone, broadcasting, television, communications, the transmission of intelligence and those aspects of banking and the provision of services which involve movement across State boundaries. Indeed the expression "trade, commerce and intercourse" among the States includes "all forms and variety of interstate transactions whether by way of commercial dealing or of personal converse or passage" (Bank of N.S.W. v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1, at pp 381-382): see also McGraw-Hinds (Aust.) Pty. Ltd. v. Smith [1979] HCA 19; (1974) 144 CLR 633, at pp 645, 659. (at p628)

28. This concept of interstate trade and commerce is naturally reflected in the characteristics which, according to the decided cases, distinguish those contracts which form part of interstate trade and commerce from those which do not. Just as movement across State borders is central to that concept, so it is essential to a contract forming part of interstate trade and commerce that it involves or looks to movement across State borders. It was decided in McArthur (1920) 28 CLR, at pp 540, 559-560 that of four methods of doing business only one gave rise to an interstate transaction - the making of agreements to sell goods providing that the goods were to be despatched from the plaintiff's warehouse in Sydney and delivered by the plaintiff to purchasers in Queensland. The other three methods did not involve performance by interstate delivery. It was apparently regarded as immaterial that the promissor had an option and that he chose to perform that option by making an interstate delivery. Although the interstate delivery was part of interstate trade, the delivery did not endow the contract with the same character. (at p628)

29. The McArthur doctrine has been frequently applied or referred to with approval in the later cases: Carter (1951) 84 CLR, at pp 478-479; Wragg v. New South Wales [1953] HCA 34; (1953) 88 CLR 353, at pp 393-396, 398; Mansell v. Beck [1956] HCA 70; (1956) 95 CLR 550, at p 593; Chapman v. Suttie [1963] HCA 9; (1963) 110 CLR 321, at pp 337-338, 341, 344; S.O.S. (Mowbray) Pty. Ltd. v. Mead (1972) 124 CLR 529; Mikasa (NSW) Pty. Ltd. v. Festival Stores [1972] HCA 69; (1972) 127 CLR 617, at pp 628, 639; H. C. Sleigh Ltd. v. South Australia (1977) 136 CLR 475, at pp 495, 507-508; Smith v. Capewell [1979] HCA 48; (1979) 142 CLR 509, at pp 519-520, 522, 527, cf. pp. 513-514, 529-530. But the cases in which the McArthur doctrine has been applied have rarely raised for consideration the question whether McArthur amounts to an exclusive or exhaustive statement of the essential elements of an interstate contract. That it does not amount to such a statement is now apparent from the recent decisions of this Court relating to the sale by an importer of goods brought into a State from another State. (at p629)

30. After a long history of controversy, in North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. [1975] HCA 45; (1975) 134 CLR 559, a majority held that the first sale by the importer in that case was a part of interstate trade or inseparably connected with it so as to be entitled to the protection of s. 92. The decision amounted to a rejection of the earlier prevailing view that, generally speaking, the first sale by an importer is not part of interstate trade and is not inseparably connected with it. This rejection was reinforced by Permewan Wright Consolidated Pty. Ltd. v. Trewhitt [1979] HCA 58; (1979) 145 CLR 1, where the retail sales in Victoria by the appellant of eggs imported from New South Wales, the appellant acting as agent for the egg producer in New South Wales, were held to constitute part of interstate trade. The case is important for two reasons. First, the judgments of Barwick C.J. (1979) 145 CLR, at p 12, Stephen J. (1979) 145 CLR, at p 22 and Aickin J. (1979) 145 CLR, at p 63 support the proposition that, in general, the first sale in State A by an importer who has imported goods from State B for the purpose of selling them in State A is part of the interstate trade of the importer, rather than an intrastate transaction which is inseparably connected with the importer's interstate trade. It is a proposition which should now be accepted because as a matter of commercial reality the importer's sale is the transaction which marks the end point of interstate trade in relation to the goods, whether the focus of attention is on the importer or on the goods. The concept of inseparable connexion or concomitant raises other questions which are not easily answered. Secondly, the judgments in Permewan Wright give no support to the suggestion made earlier (North Eastern Dairy (1975) 134 CLR, at pp. 599-600, 633-634) that the first sale by an importer who has exported the goods from another State does form part of interstate trade whereas the first sale by an importer who has not acted as exporter of those goods does not form part of that trade. Indeed, the judgment of Aickin J. (1979) 145 CLR, at p 60 expressly refutes the suggested distinction. Subsequently in Smith v. Capewell [1979] HCA 48; (1979) 142 CLR 509, it seems to have been accepted or assumed that the sale by an importer-exporter formed part of interstate trade though two members of the Court considered that proposition had no application to the facts of that case. (at p630)

31. Although it is perhaps going too far to say that Permewan Wright or Smith v. Capewell stands as decisive authority for the proposition stated in the preceding paragraph, it should be accepted as correct. It now commands strong support and it represents an important staging post in the evolution of the concept of interstate trade and commerce under the Constitution. For present purposes it has additional significance because it demonstrates that the McArthur doctrine is not exhaustive. (at p630)

32. Whether the doctrine is exhaustive outside the field of importers' sales has been a continuing source of contention. Statements may be found in the cases which appear to accord it that status. Wragg [1953] HCA 34; (1953) 88 CLR 353 and the cases which followed it are examples of this approach. Putting them to one side I shall confine my discussion to those cases in which the question has been explicitly adverted to. I begin out of chronological order with the comments of Dixon C.J. in Hospital Provident Fund Pty. Ltd. v. Victoria [1953] HCA 8; (1953) 87 CLR 1, because his Honour's remarks in that case, especially in the last sentence which I am about to quote, contain the seeds of an approach later expounded by Barwick C.J. Dixon C.J. said (1953) 87 CLR, at pp 14-15:

"For a company to contract with a man that, in consideration

of the latter making payments to it at any given place, the

company will in a specified contingency make a payment to

him at some other place is not to engage in inter-State

commerce. Neither the making of the contract nor the performance

of the contract by either side involves any step or dealing

which of itself forms part of inter-State commerce even if a

State line runs between the two places. If it is found necessary

or convenient by either party to communicate with the other

across a boundary between two States in the course of making

the contract, that is an accidental feature which cannot make it

an inter-State contract, although the sending of the communication

itself will, of course, form an act of inter-State commerce

or intercourse. In the same way, if either party finds it

necessary to transmit money across such a boundary, so that he

may make a payment in pursuance of the obligation of the

contract, the transmission of the money will be an act of

interState commerce, but that will not make the performance of the

contract an inter-State transaction.

Neither the contract nor its performance contemplates or of

its nature involves the movement from one place to another of

things tangible or intangible, and certainly not from a place in

one State to a place in another." (Emphasis supplied.) (at p631)

33. One year earlier Reg. v. Wilkinson; Ex parte Brazell, Garlick and Coy [1952] HCA 6; (1952) 85 CLR 467 had decided that a promise by the buyer to consign interstate the goods the subject of the contract of sale was sufficient to bring into existence an interstate contract. According to the joint judgment of Dixon, McTiernan, Fullagar and Kitto JJ., it was a term of the contract between the grower and the agents in New South Wales that the potatoes would be consigned to Wallangarra in Queensland (1952) 85 CLR, at p 479. They were so consigned, the delivery to the agents in New South Wales being an initial and essential step in this interstate transportation for which the contract provided. However, Williams and Webb JJ., though agreeing that the contract and the delivery were transactions forming part of interstate trade, appear to have thought that the contract did not provide for consignment of the potatoes interstate or that, if it did, this was not a material factor. For them it was enought that the grower intended to put the potatoes into interstate trade and that his intention was carried into effect (1952) 85 CLR, at pp 483, 486. (at p631)

34. Williams and Webb JJ. regarded the reasoning of Dixon and Williams JJ. in Clements and Marshall Pty. Ltd. v. Field Peas Marketing Board (Tas.) [1947] HCA 61; (1947) 76 CLR 401, at pp 409-410, 429, as supporting the approach which they took. There the company's contracts with the growers called for delivery within the State and made no reference to the consignment interstate, though it was well known that the bulk of the Tasmanian field pea crop was marketed outside the State. The company's resale transactions with merchants were interstate contracts. In this situation Dixon J. stated (1947) 76 CLR, at p 429:

"We should, for the purpose of s. 92, regard the company's

position not from the point of view of the legal character of the

right to goods the contracts give or to the geographical point at

which delivery in fulfilment of the contracts may be effected.

We should consider the commercial significance of transactions

and whether they form an integral part of a continuous flow or

course of trade, which, apart from theoretical legal possibilities,

must commercially involve transfer from one State to another."

This view, apart from its adoption by Williams and Webb JJ. in Wilkinson, has not attracted support in the later cases, except in so far as the recent recognition that the status of the sale of goods by an importer may in the ultimate analysis derive from an acceptance of it or of some similar approach involving an emphasis on the economic characteristics of interstate trade rather than the legal forms in which particular transactions are expressed - a matter which may require consideration in the future. (at p632)

35. On the other hand the proposition advanced by Williams and Webb JJ. in Wilkinson - that s. 92 protects transactions by which a grower intends to put goods into interstate trade - has been the subject of contention. It is not altogether consistent with the judgment of the Court in Carter delivered five months earlier (1951) 84 CLR, at pp 485-486. And the insistence of Dixon, McTiernan and Fullagar JJ. in Wilcox Mofflin Ltd. v. New South Wales [1952] HCA 17; (1952) 85 CLR 488, at p 519, on an overt act which will, or upon a contingency may, result in a dealing or movement interstate, amounted to a rejection of the proposition. However, in Carter the owner of the goods did not have a present intention of committing his goods into interstate trade and in Wilcox Mofflin s. 9 of the relevant statute excepted from acquisition hides intended or required for interstate trade though the effect of the statute was such that the owner had only twenty-eight days to decide whether he would commit his hides to that trade (1952) 85 CLR, at pp 518-519. (at p632)

36. Shortly after, in Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55, the Court rejected the argument that the manufacture of a product with the intention of committing part of it to interstate trade formed part of that delivery or was entitled to the protection of s. 92. The ground of the rejection, affirmed in Beal v. Marrickville Margarine Pty. Ltd. [1966] HCA 9; (1966) 114 CLR 283; Damjanovic & Sons Pty. Ltd. v. The Commonwealth [1968] HCA 42; (1968) 117 CLR 390 and Bartter's Farms Pty. Ltd. v. Todd [1978] HCA 36; (1978) 139 CLR 499, was that manufacture was antecedent to delivery - there can be no trade in the goods until they came into existence. The authority of these decisions in rejecting the relevance of present intention is therefore limited to circumstances in which the goods have not come into existence. (at p633)

37. In Damjanovic (1968) 117 CLR, at p 397, Barwick C.J., after making the point that the invalidity of Acts providing for expropriation of a chattel has not been limited to expropriation of a chattel in actual movement in interstate trade, or the subject of an actual interstate transaction, observed:

"But it has been decided, and as I respectfully think, rightly,

that a law which expropriates a chattel as to which no present

intention exists to commit it to inter-State trade or commerce is

valid: Carter [1951] HCA 60; (1951) 84 CLR 460

. . . . It may be otherwise when such an

intention exists, cf. Wilkinson [1952] HCA 6; (1952) 85 CLR 467

. . . . I do not think that an

intention to adventure the unproduced egg when produced into

inter-State trade would be sufficient to deny to the

Commonwealth or a State the power to expropriate the hen from whom

it was hoped the egg would come." (at p633)

38. Just as prohibition against manufacture of goods intended for interstate trade has not infringed s. 92 so has prohibition against importation of goods intended for use in that trade: Reg. v. Anderson; Ex parte Ipec-Air Pty. Ltd. [1965] HCA 27; (1965) 113 CLR 177; Ansett Transport Industries (Operations) Pty. Ltd. v. Th e Commonwealth [1977] HCA 71; (1977) 139 CLR 54 In the case of importation there is a present intention to venture existing goods into interstate trade. However, importation stands outside the protection given by s. 92 on the ground that the Constitution gives the Commonwealth an unqualified power and control over policy in relation to imports and exports and over customs duties. As Aickin J. observed in Ansett (1977) 139 CLR, at p 113:

"The operative provisions of s. 92 are dependent upon the

introduction of uniform duties of customs. The imposition of

customs duties on goods at a rate which would be commercially

'prohibitive' would have the same operation in fact as an

express prohibition on the import of those goods." (at p633)

39. More recently in Smith v. Capewell (1979) 142 CLR, at p 513, Barwick C.J. said that, although as a generalization only a contract which stipulates for interstate movement will form part of interstate trade, a contract will form part of that trade when it appears from the nature of the transaction or the course of dealing that it is the common contemplation of the parties that the subject-matter of the agreement would be transported interstate. His Honour reiterated these remarks, which echoed the earlier comment of Dixon C.J. in Hospital Provident Fund (1953) 87 CLR, at pp 14-15, in Uebergang v. Australian Wheat Board [1980] HCA 40; (1980) 145 CLR 266, at p 280 And in Smith v. Capewell (1979) 142 CLR, at pp 529-530 Aickin J. agreed with Barwick CJ, observing that the fourth mode of doing business considered in McArthur was not an exclusive statement of the manner in which interstate trade of goods may occur. Barwick C.J. invoked Wilkinson as an authority in support of his view though the contract in that case called for consignment by the buyer across the State border. Field Peas [1947] HCA 61; (1947) 76 CLR 401 would have been a more appropriate citation. (at p634)

40. Barwick C.J.'s proposition falls short of endorsing the suggestion that intention to put goods into interstate trade is enough to invest the transaction with an interstate character so long as the goods in fact move interstate. The significance of the comment is that it expands the McArthur concept of an interstate contract by including a contract which contemplates interstate transportation as well as one which requires such transportation. The question, though it may not be crucial to the disposition of the present case, is whether the proposition should now be accepted as a true reflection of the constitutional conception of interstate trade and commerce. My answer to this question is that a contract which, viewed in the setting in which it is made, contemplates interstate transportation of the goods as a likely means of performance is a contract forming part of interstate trade, at least when the goods move interstate. (at p634)

41. Indeed, I would go further and say that the purchase of goods by a trader for the purpose of exporting them to another State or delivering them to a buyer in another State is a transaction forming part of interstate trade and commerce, even though that purpose is not within the contemplation of the seller, provided at any rate that the existence of the intention is evidenced or accompanied by overt acts indicating that the goods have been purchased for that purpose. It conforms to a broad conception of interstate trade and commerce, consistent with its character as the subject-matter of a grant of legislative power and of a constitutional guarantee, to treat it as embracing the first transaction by which goods are committed to the course of interstate trade. Just as the Court has recognized that the course of interstate trade does not end with the movement of goods across a State border and their arrival at the importer's place of business but extends to include his sale of the goods as the terminal point of interstate trade, so the Court should acknowledge that the purchase of goods by an interstate trader for the purpose of that trade is the point of commencement of interstate trade. And just as the Court has disregarded the domestic or intrastate character of the importer's sale, viewed as an isolated transaction, so it should disregard the domestic or intrastate character of the purchase of goods by an interstate trader for the purpose of his trade. Interstate and intrastate trade and commerce are not mutually exclusive independent concepts under the Constitution. The Constitution draws no distinction between them except in so far as interstate trade and commerce is the subject of the grant of legislative power under s. 51(i) and of the guarantee in s. 92, there being no reference at all to intrastate trade and commerce: see Koowarta v. Bjelke-Petersen [1982] HCA 27; (1982) 153 CLR 168, at p 226 The consequence is that a transaction which, taken in isolation, has an intrastate character, may nevertheless form part of interstate trade and commerce. (at p635)

42. No-one would deny that the plaintiff in the present case is engaged in interstate trade and commerce. Viewed from its stand-point, its interstate trade comprises the acquisition of barley in Queensland and the sale and delivery of that barley to buyers in Victoria under contracts with them. To say that the plaintiff's relevant trading activities consist of an intrastate trade (the making and carrying into effect of the growers' contracts) and an interstate trade (the making and carrying into effect of the contracts with Victorian buyers) is to mis-describe these activities by imputing an artificial disconnexion between two integral elements in one entire trading undertaking. And if, instead of looking at the matter from the standpoint of the plaintiff's trading activities, we focus our attention on the commodity, we are bound to recognize that the growers' contracts, considered in the light of the plaintiff's business arrangements, were the initial transactions which committed the barley to a continuous movement in the course of interstate trade ending with delivery to Victorian sub-purchasers, interrupted only by the need to store and grade the barley at Warwick before allocation to sub-purchasers under contracts with them. (at p635)

43. The authorities do not specifically deny that a contract which contemplates interstate trade in goods forms part of interstate trade. And although the authorities do not support the proposition that a purchase of goods by an interstate trader for the purpose of putting the goods into interstate trade is an interstate transaction the relevant authorities antedate the recognition of the status of the importer's sale. Consequently they should not be accepted as having decisive influence on the answer to the question. (at p635)

44. Tamar Timber Trading Co. Pty. Ltd. v. Pilkington [1968] HCA 15; (1968) 117 CLR 353 was cited by the defendant as authority for the proposition that a very strong probability that goods will go interstate is not enough to bring a contract into the course of interstate trade - see pp. 366-367, per Kitto J. This is to torture from the decision a proposition which on a correct reading it does not voluntarily concede. The issue in Tamar was whether the transport of timber from point A to point B in Tasmania was interstate transportation. The answer to that question turned on the significance of the racking of the timber at point B, where it might wait for up to two years before, subject to a contingency, being delivered to another State. The significance of the racking at point B turned partly on the effect of a marketing contract between the Tamar companies who carried on business as sawmillers and another company which the Tamar companies appointed as their sole agent for the sale of interstate timber racked in the yards at point B. The issue was not whether the contract formed part of interstate trade, though Barwick C.J. (1968) 117 CLR, at pp 362-363 in his dissenting judgment considered that the transport of the timber was but a step on the part of a merchant in the course of carrying on his interstate trade in timber under the contract. The view of the majority which has its focus on the aspect of transportation is illustrated by the comments of Kitto J. (1968) 117 CLR, at p 367:

"The carriage of the goods to the racking yard was therefore at

most a step taken with a view to their probably being made the

subject of an inter-State movement the commencement of

which would have to wait upon a future contingency; and that

being so it is irrelevant that the contingency was very likely to

happen."

The contract in Tamar seems therefore not to have been a matter of decisive importance. To the extent to which it may be taken as impliedly reflecting the McArthur doctrine it has been overtaken by the more recent recognition of the status of the importer's sale. (at p636)

45. The principal problem is presented by the decisions involving manufacture such as Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55 and Beal v. Marrickville Margarine Pty. Ltd. [1966] HCA 9; (1966) 114 CLR 283 and that element in the reasoning on which they are based which denies the materiality of the manufacturer's intention, or even his contract, to put his future goods, when produced, into interstate trade. But this denial should be seen in its relevant context, a context in which according to the currently received doctrine, manufacture and production are not "essential attributes" of interstate trade: see the discussion in Perre v. Pollitt [1976] HCA 27; (1976) 135 CLR 139, at pp 153-154. The manufacturer's intention, or his contract to deliver the goods interstate, when produced, though it may have been effective to commit the goods, when produced, to interstate trade was ineffective to make the goods in their embryonic condition, at any time before production, the subject of interstate trade. Accordingly neither the intention nor the contract operated to protect the goods in that condition from a statutory prohibition or restriction which came into operation before the goods were brought into existence and could become the subject of interstate trade. (at p637)

46. Here the growers' contracts were contracts for the sale of a future or unascertained commodity. Although property in the barley did not pass under the contracts to the plaintiff until it was placed on the vehicle for delivery to the plaintiff, the stipulated quantities of barley were committed by the contracts to the course of interstate trade from the moment when the barley came into existence as a commodity upon its being severed from the land. The terms of the contracts, especially special conditions (b) and (c), clearly demonstrate that the contracts contemplated that the barley was thereby launched into interstate trade. The barley accordingly became the subject of interstate trade at the very moment when the Order in Council sought to vest it in the Board. The consequence, so it seems to me, is that the Order in Council is ineffective to vest the barley in the Board. The barley, because it becomes the subject of interstate trade as soon as it comes into existence, is immune from acquisition. But for s. 1A of the Act the Order in Council would be invalid. The Order in Council could only take effect in relation to the barley if it vested the barley in the Board before it was committed to interstate trade. It is not enough that vesting purports to take place at the same time as the barley is committed to that trade. (at p637)

47. In the result the questions asked in the stated case should be answered as follows: (a) Yes. (b) No. (c) No. (d) The provision would be invalid if it had such operation but by virtue of s. 1A of the Primary Producers' Organisation and Marketing Act 1926 (Q.), as amended, it does not so operate. (e) The sections would be invalid if they had such operation but by virtue of s. 1A of the Primary Producers' Organisation Marketing Act 1926 (Q.), as amended, they do not so operate. (at p637)

WILSON J. The reasons for judgment prepared by Mason J., which I have had the advantage of reading, provide a broad outline of the legislative scheme, as it applies to barley, contained in the Primary Producers' Organisation and Marketing Act 1926 (Q.), as amended ("the Act") and the relevant Orders in Council. His Honour also outlines the facts which are set out in the stated case and the questions which the Court is asked to answer. Being thereby relieved of the necessity of repeating these matters, I can turn at once to a consideration of the issues. (at p638)

2. At the outset, an important question arises for determination, namely, when does the barley become a commodity and therefore subject to the operation of the Act? Mr. Hughes, counsel for the plaintiff, argues that the barley is not a commodity for the purposes of the Act until it is severed from the soil. Until the barley is harvested it forms part of the land and as such is not a thing capable of being delivered. (at p638)

3. On the other hand, Mr. Cooke, counsel for the defendant Board ("the Board") argues that the barley becomes a commodity at the earliest when it reaches the "shot-blade" stage of its development as a growing crop and at the latest when it is ripe for harvest. One has merely to state the submission to appreciate the difficulties that lie in the path of its acceptance. The scheme of the legislation is to vest the commodity in the Board from the moment when it satisfies that description. "Commodity" is defined in s. 2 of the Act to mean, inter alia, any grain, cereal, fruit, vegetable or other product of the soil in Queensland. Barley which is the subject of an interstate contract is exempted from the vesting provisions provided that the contract is entered into prior to the date of acquisition by the Board. It does not say a great deal for the clarity of the legislation on a topic of such vital importance that the Board is unable to point with certainty to the moment in time when the Board acquires the ownership of the barley. Mr. Cooke finds support for his submission in the provisions relating to insurance of the growing crop against hail damage. The scheme is that such insurance may cover the crop from the time when it reaches the shot-blade stage and be financed by a levy on growers measured by the amount of the commodity delivered to the Board in the previous season. The argument is that the Board must be credited with an insurable interest in the barley from the shot-blade stage. But it is the statute which itself provides the insurable interest. It lies in the general protection of the interests of growers of the commodity which it is the object of the marketing scheme to provide. The shot-blade stage is significant for purposes of insurance presumably because from that stage of growth the crop is more vulnerable to hail damage. The Act makes it an offence for a grower to sell or deliver the commodity to a person other than the Board (s. 15(3)), thus carrying the consequence, if the Board's argument be correct, that if a grower sells his land while it has upon it a growing crop of barley which has passed the shot-blade stage then he may be committing an offence. Another indication is that the Act furnishes the Board with powers to search for and seize, detain and remove the commodity (ss. 21B and 21F) but there are no powers given to the Board to harvest the crop. There is no compulsion on the grower to harvest the crop with the result that on the Board's argument the crop has vested in the Board but there is no means provided by the Act whereby it can secure possession of it. Be all these things as they may, the telling point is the one first mentioned, namely, that in fairness to the grower and to those who might wish to deal with him in the course of interstate trade the Act must yield a definitive answer to the question as to when the grower's freedom to determine whether or not to commit his crop to interstate trade is at an end. In my opinion, that point is reached as and when the crop is harvested. Unless already committed to interstate trade, it is then a commodity, capable of delivery to the Board in which, by force of the Order in Council, it is vested. (at p639)

4. It follows from that conclusion that the contracts by which the plaintiff acquired the barley, having been entered into prior to the harvesting of the crop, will not be prejudiced by the operation of the Order in Council provided that the contracts are interstate contracts for the sale of the commodity (cf. s. 9(2) of the Act) or are otherwise within the protection of s. 92. (at p639)

5. I turn next to the question whether they were interstate contracts. Section 9(2) provides for an Order in Council to vest the commodity in the Board and concludes with a proviso in the following terms:

"Provided that such Order in Council shall not have effect so as

to prejudice any interstate contract for the sale of the

commodity entered into prior to the date of the acquisition by the

Board of the commodity under such Order."

Mr. Hughes argues that an interstate contract, a term which is not defined in the Act, is any contract which has an interstate element. He submits that such a definition is satisfied in the present case by reason of special conditions (b) and (c), which read as follows:

"(b) The Buyer will, within a reasonable time after taking

delivery from the Seller, take the said grain out of the State in

which it is grown and deliver it to a Buyer in a State other than

the State in which it is grown and in the meantime, will not

deal with the grain in any manner inconsistent with such

obligation.

(c) The Buyer will not bring the grain back into the State in

which it was grown."

In Peanut Board v. Rockhampton Harbour Board (1933) 48 CLR 266 it was unnecessary for the Court to consider the scope of the proviso to s. 9(2) because as McTiernan J. remarked (1933) 48 CLR, at p. 314, after referring to the constitutional right to freedom of interstate trade and commerce conferred by s. 92:

"The proviso to s. 9(2) . . . relating to inter-State contracts are

(sic) clearly not sufficient to protect this constitutional right."

But that was because the peanuts with which the case was concerned were not the subject of any contract at all. The evidence tendered at the hearing before Webb J. showed no more than that the peanuts had been deposited on the wharf by or on behalf of the growers to be transported to other States for purposes of sale. In those circumstances, the Court, by majority, held that s. 92 protected the peanuts from seizure by the Board. It was in consequence of this decision that the legislature subsequently inserted s. 1A into the Act to preserve the operation of the Act consistently with s. 92. (at p640)

6. I am not disposed to accept Mr. Hughes' submission. I do not care to speculate on the range of matters which might satisfy the description in counsel's submission of "interstate element". In my opinion, the Act contemplates a more precise concept when it uses the phrase "any interstate contract for the sale of the commodity". It comprehends a contract of the fourth kind described in W. & A. McArthur Ltd. v. Queensland [1920] HCA 77; (1920) 28 CLR 530, at p. 540, namely, a contract which itself stipulates either expressly or by implication for delivery from one State to another: cf. also Smith v. Capewell [1979] HCA 48; (1979) 142 CLR 509, at pp 512-513, per Barwick C.J. I do not think the present contracts satisfy this test. Each of the transactions of sale effected by the contracts is wholly an intrastate transaction. A commodity grown in Queensland is sold by a grower in Queensland to a buyer in Queensland and delivery is effected in Queensland. The obligations assumed by the buyer in accordance with special conditions (b) and (c) of the contract may be relevant to the relationship of the commodity to the subject-matter of s. 92 but they cannot change the essence of the contract itself from an intrastate contract into an interstate contract for sale of the commodity. The contract itself does not become part of interstate trade, even though the special conditions may effectively commit the commodity to interstate trade. (at p640)

7. It therefore becomes necessary to consider the larger question whether the transactions are protected by s. 92. In this regard, Mr. Hughes relies heavily on the decision of this Court in Reg. v. Wilkinson; Ex parte Brazell, Garlick & Coy [1952] HCA 6; (1952) 85 CLR 467. Indeed, he described the decision as his sheet-anchor. The case concerned the propriety of a conviction of a grower (Brazell) for disposing of potatoes to a person other than the Marketing Board and of the agents (Garlick and Coy) of the buyer for receiving the potatoes, contrary to s. 11(3) of the Marketing of Primary Products Act 1927-1940 (N.S.W.). The sub-section excepted transactions "in the course of trade or commerce between the States". I take my description of the facts from the joint judgment of Dixon, McTiernan, Fullagar and Kitto JJ. In May 1950 Brazell verbally agreed with Garlick and Coy to sell about forty-eight bags of seed potatoes and to deliver them on to railway trucks at Dorrigo in New South Wales. In agreeing to buy the potatoes Garlick and Coy were acting for J.E. Long & Co., a firm of produce merchants carrying on business on the border of New South Wales and Queensland. Their head office was at Jennings, which is the name of the New South Wales town adjoining Wallangarra situated on the Queensland side of the border. The railway terminal for both towns is in Wallangarra. In June 1950 Brazell duly delivered the potatoes to Dorrigo and transferred them from his lorry on to a railway truck. Coy made out the consignment note, citing J.E. Long & Co. as both consignor and consignee and the destination as Wallangarra. A Board inspector observed the delivery of the potatoes at Dorrigo and the prosecutions resulted. In due course, the potatoes arrived in Wallangarra and were reconsigned to other destinations in Queensland where presumably they were sold. In those circumstances, it is clear that the oral agreement made in May was not an interstate contract in the sense I have already discussed. It was wholly an intrastate contract of sale which was completed with delivery of the potatoes to Garlick and Coy at Dorrigo. Nor was a contrary proposition contended for by counsel for the prosecutors; their submission was that the exception contained in s. 11(3) was not confined to interstate contracts and that the magistrate had erred in adopting the view that it was so limited. Nevertheless, in the joint judgment their Honours recognize that it was a term of the verbal agreement that the potatoes should be consigned to a destination in Queensland and obviously regard the term as bearing on their conclusion, although Williams J. and Webb J., the other members of the Court, appear to be less certain that such an obligation was imposed on the buyer. The joint judgment concludes:

"In our opinion on the foregoing facts the disposal and the

receiving made the subject of the informations were in the

course of trade and commerce between the States, within the

meaning of the exception in s. 11(3). Under the agreement for

the sale and purchase of the potatoes the agents buying were

required to consign the potatoes to a railway station in

Queensland, and they did so consign them. For the purpose of

the exception the delivery of the potatoes from the lorry into

the railway truck can bear only the aspect of an essential and

integral, even if initial, step in the transportation of the potatoes

to Queensland. Yet it is the very thing which forms the

foundation of the charges of disposal and receiving."

(1952) 85 CLR, at p 480.

Williams J. held that the exception was not limited to interstate contracts, but was intended to cover every sale, disposition and delivery which occurs in the course of a transaction which in fact proves to be an interstate transaction. Webb J. considered the exception to be inapplicable but held the prosecutors to be protected by s. 92 because the potatoes were intended by Brazell to be put into interstate trade and his intention was carried out. It is unnecessary to consider the acceptability of the reasoning of Williams J. and Webb J. because the significance of the case for present purposes rests in the joint judgment. (at p642)

8. I find the authority of the decision in Wilkinson [1952] HCA 6; (1952) 85 CLR 467 to be determinative of the present case. Mr. Cooke argues that it should be distinguished because the potatoes were en route from the grower in one State to the buyer in another State. But that is not so. The grower was divested of any property in the potatoes when they were delivered at Dorrigo and the transaction of sale was then complete. It was as much an intrastate transaction as each of the sales from the growers of the barley to the plaintiff in the present case. The second factor which provides the striking similarity between Wilkinson and the present case is that in each there is a contractual obligation on the buyer to transport the commodity to a State other than that in which the transaction of sale occurred. Just as in Wilkinson the delivery of the potatoes by Brazell at Dorrigo was held to be in the course of trade and commerce between the States because in the words of the joint judgment it could bear "only the aspect of an essential and integral, even if initial, step in the transportation of the potatoes to Queensland" [1952] HCA 6; (1952) 85 CLR 467, so here the special conditions are effective to commit the barley to movement interstate. Not only was it the intention of the plaintiff to move the barley interstate, not only was it in fact so moved albeit after the commencement of these proceedings but the plaintiff was under a contractual obligation to move it. If one considers the matter from the point of view of the growers, it was of the utmost importance to each grower that his crop was by virtue of the contract committed to interstate trade. If it was not, then by delivering the barley to a person other than the Board he was guilty of an offence, as also was the plaintiff. The special conditions ensured, so far as it was contractually possible to do so, that the barley would proceed interstate. Reliance is placed by counsel for the Board upon Beal v. Marrickville Margarine Pty. Ltd. [1966] HCA 9; (1966) 114 CLR 283. Whilst it is true that the margarine which was the subject of that case was intended for interstate trade the trade had not commenced. Therefore a law which controlled the manufacture of margarine was not affected by s. 92. The process of manufacture was described truly as at most a preparation for interstate trade. The same may be said of Tamar Timber Trading Co. Pty. Ltd. v. Pilkington [1968] HCA 15; (1968) 117 CLR 353, a case which is relied upon by Mr. de Jersey, who intervened for the Attorney-General for Queensland. At the time the timber was transported to the stacking sheds it was not the subject of any contracts of sale; the most that could be said was that in due course most of the timber would become the subject of interstate trade. Here the barley was already the subject of trade and commerce and the only question is whether at the material time it was the subject of interstate trade. On the authority of Wilkinson, I believe it was. It has not been suggested that Wilkinson was wrongly decided and the Court has not been asked to reconsider its correctness. (at p643)

9. It is therefore my opinion that by virtue of s. 1A of the Act neither the Order in Council nor the Act applied to the barley in question. (at p643)

10. In conclusion, I would stress that I am not to be taken as indicating my support for any wider view of s. 92 than is required for the purpose of resolving the present case. I found my decision in favour of the plaintiff on the presence in the contracts of special conditions (b) and (c) and on the authority of Wilkinson. I feel no compulsion to discuss the wider ramifications of s. 92. (at p643)

11. I would answer the questions asked in the stated case as follows: (a) Yes. (b) No. (c) No. (d) The provision would be invalid if it had such operation but by virtue of s. 1A of the Primary Producers' Organisation and Marketing Act 1926 (Q.), as amended, it does not so operate. (e) The sections would be invalid if they had such operation but by virtue of s. 1A of the Primary Producers' Organisation and Marketing Act 1926 (Q.), as amended, they do not so operate. (at p644)

BRENNAN J. Barley is a "commodity" under and for the purposes of the Primary Producers' Organisation and Marketing Act 1926 (Q.), as amended ("the Act") and of the relevant Orders in Council made under the Act. Pursuant to s. 9(2) of the Act, the Governor in Council by an Order in Council of 24 April 1930 (continued in force by subsequent Orders in Council), provided and declared that all barley the produce of the soil in Queensland be divested from the growers thereof and become vested in and be the property of the Barley Marketing Board ("the Board") as the owners thereof "forthwith, upon the making of this Order". In Peanut Board v. Rockhampton Harbour Board (1933) 48 CLR 266, an Order in Council in similar terms was constued to mean that a commodity produced during the currency of an Order in Council made under s. 9(2) vests in the Board as and when it comes into existence (1933) 48 CLR, at pp 274, 280, 288, 292, 314-315. In my opinion, barley the produce of Queensland soil becomes a commodity for the purposes of the Act and the Order in Council as and when it is harvested. I agree with the reasons of Mason J. for so holding. (at p644)

2. By s. 15(1) of the Act as it applies to barley - a provision substituted by an Order in Council for the s. 15(1) enacted by Parliament to apply to commodities generally - all barley must be delivered by the growers thereof to the Board or its authorized agents. A grower is prohibited from removing from his premises any of the commodity grown by him without the Board's prior written consent. Section 15(3) of the Act provides that it is an offence for any person to sell or to deliver any of a commodity to, or to buy or to receive any of a commodity from, a person other than the relevant Board and, in the case of barley, "such sale delivery or purchase shall be void and of no effect whatsoever" (Order in Council of 31 October 1957). Section 15(3) is extremely wide but, wherever its true limits may be drawn, it is clearly intended in conjunction with s. 15(1) to prohibit a grower of barley from selling or delivering the commodity to any person other than the Board. It is part of a legislative scheme for compulsorily acquiring barley produced by growers in Queensland so that the Board may control the sale and distribution of the barley acquired and account to the growers for the net proceeds of its sales. The prohibition against sale and delivery of barley to a person other than the Board complements the provisions of the Act and the Order in Council which vest the commodity in the Board; it precludes dealings with the barley acquired that are inconsistent with the Board's title. (at p644)

3. Prior to the harvesting of the barley the subject of this action, the respective growers mentioned in the stated case had entered into contracts with the plaintiff to sell and deliver to it the barley which would be harvested from agreed areas up to an agreed maximum tonnage. The barley to be sold under the contracts was to conform to certain quality specifications. The growers were bound to deliver the harvested barley to the plaintiff's storage premises at Warwick in Queensland, unless the plaintiff, at the grower's request, arranged for a carrier to cart it. In that event the plaintiff was to guarantee the delivery of the barley to its storage premises at Warwick. Title was to pass when the barley was loaded on a vehicle for delivery to the plaintiff. The price was to be paid to the grower within fourteen days of delivery of the whole of the barley agreed to be sold. The barley the subject of this action had been delivered by the respective growers to the plaintiff pursuant to those contracts. The contracts, which were in common form, contained special conditions, including-

"(b) The Buyer will, within a reasonable time after taking

delivery from the Seller, take the said grain out of the State in

which it is grown and deliver it to a Buyer in a State other than

the State in which it is grown and in the meantime, will not

deal with the grain in any manner inconsistent with such

obligation.

(c) The Buyer will not bring the grain back into the State in

which it was grown."

When a grower delivered barley under one of these contracts to the plaintiff's premises, the barley was classified as either malting, milling, or manufacturing quality, and was then stored in particular silos with other barley of the same or similar quality which had been delivered under similar contracts made with other growers. The barley was kept segregated from other grain on the plaintiff's premises pending its being loaded for delivery interstate. (at p645)

4. The plaintiff is a wholly owned subsidiary of the Victorian Oat Growers Pool and Marketing Co. Ltd. which is a party to a long-term understanding with a number of its customers in Victoria (notably Carlton United Breweries) for the supply to them of malting barley pursuant to what are described as "fundamental" agreements". Victorian Oat Growers was notified of the quantity of malting barley which it might be called on to supply during a season. During the course of a season, it would be called upon to supply particular quantities within the scope of the "fundamental agreements" to particular customers at a price arrived at on each occasion. The business of Victorian Oat Growers was conducted in the expectation that it would be called upon from time to time to supply customers with barley pursuant to the "fundamental agreements" and it ordered its business accordingly. It was always the plaintiff's intention that the barley delivered to it under the growers' contracts would be taken out of the State of Queensland for delivery to a buyer in a State other than Queensland. (at p646)

5. On or about 11 December 1982, while the barley the subject of this action was in silos in the plaintiff's premises at Warwick, a Board inspector issued and served on the plaintiff's agent a notice of seizure requiring delivery of the barley to the Board. The notice was issued in purported exercise of the powers conferred on him by ss. 21Band 21F of the Act (inserted by Order in Council of 31 October 1957). At no time up to and including the time when the notice was served had the plaintiff entered into any contract with any person to sell or otherwise dispose of any of the barley delivered to it by growers. This action was brought to restrain the seizure of the barley pursuant to the notice and to obtain a declaration, inter alia, that the barley the subject of the growers' contracts was the subject of trade, commerce and intercourse between the States. After the action was commenced, the barley was taken out of the State of Queensland following an order made by the Chief Justice on 6 October 1983. (at p646)

6. If the operation of s. 15(3) is not restricted by any other provision of the Act, it would prohibit the sale of barley after harvest. An executory agreement for the sale of barley after harvest would be void, though it be made before harvesting. A grower would be unable to give a buyer title to barley after harvest which the grower had agreed to sell prior to harvest, ownership of the barley being vested in the Board as and when it is harvested. To assert its title to the barley the subject of this action, the plaintiff relies on agreements by the growers to sell the barley and on provisions of the Act which are said to exclude the barley from acquisition and to restrict the operation of s. 15. (at p646)

7. The first of those provisions is the proviso to s. 9(2) which reads:

"Provided that such Order in Council (that is, the Order in

Council which vests the barley in the Board as owners) shall not

have effect so as to prejudice any interstate contract for the sale

of the commodity entered into prior to the date of the

acquisition by the Board of the commodity under such Order."

The term "interstate contract" is not elsewhere defined. It appears also in s. 20(3) which provides that s. 20 does not apply "to a commodity the subject of an interstate contract". Section 20 is concerned with avoiding any contract for the sale of a commodity "which is made in or outside of Queensland. . . so far as it relates to the sale of the commodity for delivery in or out of Queensland": s. 20(1). Section 20 applies generally to contracts for the sale of commodities but, as we have seen, the avoiding of contracts for the sale of barley to persons other than the Board is specially provided for by s. 15(3) as amended in its application to such contracts by the Order in Council of 31 October 1957. Nevertheless s. 20 gives the only statutory indication of the meaning of the term "interstate contract". Section 20(3) is "apparently based on the assumption that what puts a commodity into inter-State trade is 'an inter-State contract' and that thereupon all transactions in reference to it are protected by s. 92 from invalidation by State law": Carter v. The Potato Marketing Board [1951] HCA 60; (1951) 84 CLR 460, at p484. The term "interstate contract" might not necessarily comprehend every contract which puts a commodity into interstate trade and every contract performance of which is protected as a transaction in interstate trade, commerce or intercourse, but in the Peanut Case (1933) 48 CLR, at p 314 McTiernan J. thought that the provisos to s. 9(2) and s. 20(3) were "clearly not sufficient" to protect the "constitutional right" conferred by s. 92 of the Constitution. There is no reason to suppose that the provisos to s. 9(2) and s. 20(3) create any wider area of protection than the area of protection created by s. 92. An extremely narrow view of the operation of these provisions was taken in the Peanut Case: so narrow, indeed, that McTiernan J. (1933) 48 CLR, at p 310 was able to say that "the primary object or real object" of the Act and Order in Council in that case included giving to the Peanut Marketing Board the "exclusive right to engage in trade and commerce in peanuts, whether inter-State, intra-State, or overseas,(and making) it unlawful for any other person to engage in this trade and commerce . . .". However the object of the Act and Order in Council may have been defined at the time of the Peanut Case, the legislature took the precaution thereafter to insert s. 1A so that, if the proviso to s. 9(2) gives no protection to a sale of barley by a grower to a buyer other than the Board, it is necessary to consider whether the guarantee given by s. 92 will protect the sale. The operation of the Act and of any relevant Order in Council on a particular transaction is restricted by s. 1A, in so far as those provisions would otherwise impose on that transaction a burden which offends s. 92: Carter (1951) 84 CLR, at pp 488-489. I would therefore conclude that, if the plaintiff is to assert successfully its title against the Board, it must invoke the protection of s. 92 - either directly or, by reason of s. 1A of the Act, indirectly - rather than the more limited protection which the proviso to s. 9(2) may afford. (at p647)

8. The purpose of s. 92 is to create and maintain a free trade area throughout the States of the Commonwealth: an economic union, as Jacobs J. called it (in Bartter's Farms Pty. Ltd. v. Todd [1978] HCA 36; (1978) 139 CLR 499, at p. 523) which Barwick C.J. thought to be "vital in a federation with a common external tariff": Clark King & Co. Pty. Ltd. v. Australian Wheat Board [1978] HCA 34; (1978) 140 CLR 120, at p 153 A free trade area could not be maintained by force of the Constitution if the powers of the Commonwealth and of the States were not restricted in some respects. It would not be sufficient to eliminate fiscal burdens on interstate trade, for freedom of trade can be impaired by burdens of a non-fiscal kind: see W. & A. McArthur Ltd. v. Queensland [1920] HCA 77; (1920) 28 CLR 530, at p. 554. If a State were to prohibit the sale of goods imported from another State in order to protect the production of such goods in the State into which they are imported, that State would erect as substantial a barrier against free trade as it might erect if it could impose a prohibitive customs tariff. (at p648)

9. The immunity from legislative and executive measures created by s. 92 does not extend beyond what is necessary to ensure the freedom of trade, commerce and intercourse among the State. I am unable to agree with the observation of Windeyer J. in Damjanovic & Sons Pty. Ltd. v. The Commonwealth [1968] HCA 42; (1968) 117 CLR 390, at p 406 that s. 92, in addition to guarding and guaranteeing free trade, has a further reach. Section 92 restricts the powers of the Commonwealth and the States and there is no warrant for extending the restriction beyond what is necessary to achieve its purpose. The scope of the immunity created by s. 92 depends in part on what is included within the conception of "trade, commerce and intercourse among the States", and in part on what burdens are thought to be inconsistent with the freedom guaranteed by s. 92. The meaning of the terms used in s. 92 is notoriously imprecise. The conception of "trade, commerce and intercourse" includes at once the general social or economic phenomena which those words are apt to describe and each of the particular transactions which are part of those phenomena. The criteria by reference to which the validity of legislative or executive measures may be determined may differ according to whether the impugned restriction affects the phenomenon of interstate trade or commerce or intercourse as a whole, or whether it affects a particular transaction in interstate trade, commerce or intercourse that has been engaged in or that will be engaged in. If a law restricts the opportunities that would otherwise be open to engage in transactions in interstate trade, commerce or intercourse, the law may infringe the freedom guaranteed by s. 92 although it leaves free the particular interstate transactions that do not fall within the restriction it imposes. A legislative restriction on the number of persons who may use a public road which crosses a border may infringe s. 92 although no more than the prescribed number seek to use the road. Conversely, it seems now to be established that some laws which, by expropriating movable property, deny the former owners an opportunity to venture that property in interstate trade or commerce, do not infringe the freedom guaranteed by s. 92. The criteria for determining the validity of such a law are far from settled: see, in recent times, Clark King (1978) 140 CLR, at pp 148, 173, 188-193, 194; Uebergang v. Australian Wheat Board [1980] HCA 40; (1980) 145 CLR 266, at pp. 285, 299, 306, 307, 327. There is a distinction between a legislative or an executive measure which denies an individual the opportunity to engage in an interstate trading transaction and a measure which leaves an individual free to engage in an interstate trading transaction but burdens the transaction in which he engages. The distinction may evoke specific criteria for determining the validity of marketing schemes which, by expropriating property, deny a former owner an opportunity which he might have taken to venture his property in interstate trade or commerce. (at p649)

10. Where a legislative or executive measure operates to burden a particular transaction, an examination of the validity of the measure calls first for an examination of the character of the transaction: is it part of interstate trade, commerce or intercourse? Interstate trading transactions - "commerce" and "intercourse" are not presently relevant - are the subject of immunity, not antecedent or subsequent transactions except where the burden imposed on an antecedent or subsequent transaction invalidly burdens the interstate transaction: see Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55, at pp 71-72, 79; Damjanovic (1968) 117 CLR, at p. 400; Clark King (1978) 140 CLR, at p 187. The subject of immunity is trade, not persons, although a trader who engages in an interstate trading transaction which is immune from an invalid burden is entitled to the benefit of that immunity. I respectfully agree with what Mason and Jacobs JJ. said in Clark King (1978) 140 CLR, at p 188:

"It is true that s. 92 protects the trade of individuals. If there is

imposed an invalid burden on trade commerce or intercourse

among the States, an individual can ignore the legislative

burden and he and any other person interested can invoke the

judicial power to prevent the application to their interstate

trade and commerce of the invalid law. In this way s. 92

confers rights on an individual."

The individual rights which s. 92 confers are no more than rights to invoke the jurisdiction of the courts to enforce the immunity which s. 92 creates. It creates no new juristic rights: The Commonwealth v. Bank of N.S.W. [1949] HCA 47; (1949) 79 CLR 497, at p 635: (1950) AC 235, at p 305 It is only because individuals engage in transactions that s. 92 can be regarded as a source of individual rights, and the individual rights conferred correspond with the area of immunity created by s. 92, whether the immunity relates to interstate trade as a whole or to particular transactions that are part of interstate trade. (at p650)

11. The area of immunity from legislative and executive measures that is created by s. 92 does not extend to all aspects of the dealings or activities of which an interstate trading transaction is a part. The freedom which s. 92 guarantees is a freedom to engage in interstate trade, not a freedom to engage in trade in which an interstate trading transaction occurs: cf. per Windeyer J. in Damjanovic (1968) 117 CLR, at p 410. In Wilcox Mofflin Ltd. v. New South Wales [1952] HCA 17; (1952) 85 CLR 488, at p 516 Dixon, McTiernan and Fullagar JJ. said:

"The important thing is to see what the marketing plan does in

the restriction of inter-State commerce, and to keep steadily in

mind that only the freedom of trade, commerce and intercourse

between the States is the concern of s. 92, not freedom of

commercial dealing, freedom of choice between one course of

trade and another or any other liberty. It has been said before

that it was part of the purposes of s. 92 to remove from the

possibility of legislative and governmental restriction activities

conducted across State boundaries and to do so rather because

of their inter-State character than of any special claim to

immunity from interference that particular activities might

have except their inter-State character (Field Peas Marketing

Board (Tas.) v. Clements and Marshall Pty. Ltd.

[1948] HCA 10; (1948) 76 CLR 414). It is easy

to slip into the error of treating commercial dealings as having a

special claim to immunity as such and of regarding the

requirement that they shall be or perhaps include inter-State

transactions as nothing but a further condition of the

application, or a restriction upon the operation, of the immunity.

The important thing therefore is to exclude from consideration

any operation of a marketing plan except its bearing upon

interState transactions." (at p650)

12. Section 92 does not confer a personal right on one who wishes to engage in interstate trade in a commodity to override any legislative or executive impediment against his doing so. Thus s. 92 confers no immunity against prohibition or regulation of the production or manufacture of goods, even if the producer or manufacturer intended the goods to be used in interstate trade: Carter (1951) 84 CLR, at pp. 485-486; Grannall (1955) 93 CLR, at pp 78-79; Beal v. Marrickville Margarine Pty. Ltd. [1966] HCA 9; (1966) 114 CLR 283, at pp 304, 313; Ex parte H. Brazil & Co. Pty. Ltd. [1978] HCA 25; [1978] HCA 25; (1978) 138 CLR 194, at p. 198; Bartter's Farms (1978) 139 CLR, at pp 509-510, 516, 524, 526. (at p651)

13. In Grannall and in Beal a manufacturer of margarine which intended to sell and deliver part of its production to interstate buyers found no protection in s. 92 against a State law imposing a production quota. Dixon C.J., McTiernan, Webb and Kitto JJ. said in Grannall (1955) 93 CLR, at pp 71-72:

"The right or liberty (to manufacture) which is thus restricted

forms no part of the freedom of the individual to engage in

activities conducted across State boundaries, that is to say the

freedom which s. 92 gives to transportation, movement,

transfer, interchange and communication between one State

and another and to all other forms and variety of inter-State

transaction whether by way of commercial dealing or of

personal converse or passage: Bank of New South Wales v. The

Commonwealth (1948) 76 CLR, at pp 381, 382.

No doubt goods are the subject-matter of

the freedom to sell and deliver or transport across State borders

and if, by reason of legislative restrictions, goods of a given

description do not come into existence and are not imported

into Australia, there is to that extent no subject-matter. It is of

course obvious that without goods there can be no inter-State

or any other trade in goods. In that sense manufacture or

production within, or importation into, the Commonwealth is

an essential preliminary condition to trade and commerce

between the States in merchandise. But that does not make

manufacture, production or importation trade and commerce

among the States. It is no reason for extending the freedom

which s. 92 confers upon trade and commerce among the States

to something which precedes it and is outside the freedom

conferred." (at p651)

14. No doubt the plaintiff needs to acquire barley if it is to engage in interstate trade in barley, but it does not follow that its intention to sell barley interstate when the barley is acquired gives it a personal right to buy barley from the growers contrary to the provisions of the Act. Acquisition of barley in Queensland from Queensland growers is an "essential preliminary condition" to, not an integral part of, the plaintiff's interstate trade in barley. Indeed, at the time when the Board's officer issued the notice of seizure on 11 December 1982, the plaintiff had made no contract for the sale of the barley, though it intended to do so in the future. Its acquisition of the barley from the growers is akin to the production or manufacture of goods by a person who wishes to engage in interstate trade in those goods - something which "precedes (interstate trade) and is outside the freedom conferred". As Kitto J. said in Tamar Timber Trading Co. Pty. Ltd. v. Pilkington [1968] HCA 15; (1968) 117 CLR 353, at p 367:

"The point is that s. 92 decrees freedom, not for every step a

person may take with a view or for the purpose of preparing to

carry out an example of inter-State trade, but only for a step

which itself is in the course of, or for the purpose of actually

carrying out, an example of inter-State trade; and that therefore

a step which is only a prerequisite of the initiation of such an

example is outside the subject matter of the protection. It is

inconsistent with the doctrine elaborated in those cases, and it

only confuses the issue, to add together all a person's prerequisite

steps and all the examples of inter-State trade in which he

engages, to treat the whole as his inter-State trade, and then to

say that the freedom extends to every act done in the course or

for the purposes of that trade."

The Act does not restrict the plaintiff's freedom to sell barley to an interstate buyer; it restricts his freedom to acquire barley under an intrastate transaction. (at p652)

15. On the other hand, the Act and Order in Council prevent a grower of barley who wishes to venture that barley in interstate trade from doing so: except pursuant to an "interstate contract" or unless protected by s. 92. Where goods have been produced or manufactured and they are available for interstate trade, the view has been taken (see, e.g., Grannall (1955) 93 CLR, at p 75) that a prohibition against their owner selling such goods from one State into another State infringes the freedom guaranteed by s. 92. But the prohibition imposed on the sale of barley by s. 15(3) of the Act is not a prohibition against the sale of a commodity by its owner; it is a prohibition against the sale of a commodity which is vested in the Board. Leaving aside the provisions of the Act relating to interstate contracts, the Board becomes the owner of barley produced in Queensland as soon as it is harvested and becomes a commodity. Therefore a valid sale of barley after harvest or a valid agreement to sell barley after harvest can be made only by the Board or, perhaps, by one whom the Board has authorized in that behalf. The question is not whether the barley marketing scheme would prohibit an owner of barley from selling it into another State after harvest if s. 1A did not restrict the operation of the scheme; the question is whether an owner of barley who, before harvest, enters into one of the growers' contracts to sell barley to the plaintiff attracts immunity from acquisition of that barley by the Board. (at p653)

16. It cannot be said that s. 92, either directly or indirectly through s. 1A, confers on the grower of barley a general immunity from compulsory acquisition of his crop when harvested so as to give him an opportunity to venture the barley in interstate trade. As Dixon, McTiernan and Fullagar JJ. said in Wilcox Mofflin (1952) 85 CLR, at p 519:

"It is pressing s. 92 far beyond its meaning and purpose if the

immunity it confers is extended to the preservation of movable

property against compulsory acquisition, although no overt act

has been done with reference to such property which will, or

upon a contingency may, result in a dealing or movement

interState. We cannot assent to the view that because ownership

may be considered a prerequisite of the sale of goods, therefore

no trader to whom inter-State trade in the goods would

otherwise be open can be deprived of ownership consistently

with s. 92. There may be many situations where to take a

trader's goods is inconsistent with s. 92. But that depends on

some closer connexion with inter-State trade than the two facts

that to engage in inter-State trade is open to him if he chooses

and that the goods are his property.

Such a view would mean that all vendible commodities

would be outside the effective reach of the powers of compulsory

acquisition of States and Commonwealth in peace and in

war."

Expropriation of movable property necessarily interferes with the previous owner's personal right to trade in that property - whether in intrastate, interstate, or overseas trade - but it cannot be right to regard s. 92 as invalidating every legislative or executive measure which, by expropriating goods, deprives the owner of a mere opportunity to venture those goods in interstate trade. Even if an owner of goods, by an overt act manifests his intention or wish to venture his goods in interstate trade, there may be a question whether an expropriation of his goods which prevents him from engaging in interstate trade is supportable: cf. per Mason and Jacobs JJ. in Clark King (1978) 140 CLR, at p 188. But where an owner of goods, by an overt act manifests his intention or wish to venture his goods in intrastate trade, expropriation of those goods cannot restrict interstate trade as a whole nor affect any interstate trading transaction in which the owner intended to engage: see Carter (1951) 84 CLR, at p 489; and cf Egg Marketing Board v. Bonnie Doone Trading Co. (N.S.W.) Pty. Ltd. [1962] HCA 3; (1962) 107 CLR 27. If the contracts between the growers and the plaintiff - the "overt acts" of which their Honours speak purport to commit the barley to intrastate trade, that barley is amenable to expropriation. (at p654)

17. The contracts called for delivery of the barley in Queensland; the title to the barley was to pass to the plaintiff in Queensland; the price was payable to the growers in Queensland. The sale of the barley was an intrastate transaction and, in my opinion, the sale did not lose that character because the contract in performance of which the sale was made contained a term requiring the plaintiff to sell the barley interstate after the grower passes title and gives possession to the plaintiff. There is a difference between a stipulation in a contract of sale calling for the seller to deliver the goods across a border and a stipulation calling for the buyer to transport them after the sale is complete. A stipulation which binds the seller to deliver interstate gives the sale an interstate character because one of its essential elements - delivery - is a movement across a State border. A stipulation that the buyer will sell the goods interstate after the first sale is complete says nothing as to the character of the first sale. A subsequent interstate sale by the buyer in accordance with the stipulation neither converts the first sale into an interstate sale nor merges the two sales into a single transaction. In such a case, the protection which s. 92 gives to the second sale does not extend to the first. There may be cases where the stipulation for resale is part of a contract which so connects a sale and resale as to make them inseparable parts of one transaction. In such a case it may be right to treat a stipulation for interstate delivery of the goods on resale as stamping the whole transaction with an interstate character. Here, the growers had no trading or commercial interest in the plaintiff's resale except in so far as the stipulation for resale attempts to attract the protection of s. 92 to their sales of barley to the plaintiff. The plaintiff was at liberty to resell at whatever time at whatever price and on whatever conditions it might choose. There is nothing in the growers' contracts which makes the sale or the agreement to sell to the plaintiff and resale by the plaintiff inseparable parts of one transaction. (at p654)

18. Of course, it does not solve the present problem merely to assert or deny that the plaintiff's purchase and interstate resale of barley is one transaction; the problem is to identify what is the relevant transaction: see Beal (1966) 114 CLR, at pp 303, 309. In this case, as in Beal, there is the clearest break between the sale and delivery of barley to the plaintiff which is complete on the acceptance of the barley into the plaintiff's silos, and the interstate sale of barley out of the mass of barley set apart to answer the requirements of any interstate sales that the plaintiff would make in the future. There are here two distinct transactions which, though both were essential parts of the plaintiff's trade, cannot properly be regarded as "one continuous piece of trade". At the time when the barley was harvested, it had been committed by the growers to intrastate trade and it was then amenable to expropriation and was acquired by the Board. (at p655)

19. The plaintiff founded a contrary argument on Reg. v. Wilkinson; Ex parte Brazell, Garlick & Coy [1952] HCA 6; (1952) 85 CLR 467, a case which turned on s. 11(3) of the Marketing of Primary Products Act 1927-1940 (N.S.W.). That provision prohibited, inter alia, a producer from disposing of, and any other person from receiving, a commodity in respect of which a Board had been appointed "except in the course of trade or commerce between the states". A New South Wales producer delivered bags of seed potatoes, a commodity, in the railway yards at Dorrigo in New South Wales, by removing them from his lorry for transfer to a railway truck obtained by a produce agent who had agreed to buy the potatoes on behalf of a principal. The produce agent consigned the potatoes, as had been intended by both the agent and the producer, to the agent's principal at Wallangarra in Queensland for sale in Queensland. The delivery of the potatoes from the lorry onto the railway truck was the step alleged to constitute both a disposal by the producer and a receipt by the produce agent in contravention of s. 11(3). The question was whether that step was a step "in the course of trade or commerce between the states". It was held to be "an essential and integral, even if initial, step in the transportation of the potatoes in Queensland". That was sufficient to bring the case within the exception. The single step was at once an act done by the producer in completion of his sale of potatoes and the initial step in the produce agent's moving of the potatoes from New South Wales to Queensland. The act charged had a double character and it sufficed that in one character it was an act in the course of interstate trade: see per Gibbs J. in North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. [1975] HCA 45; (1975) 134 CLR 559, at pp 599-600 Ex parte Brazell, Garlick & Coy is distinguishable from the present. Here the sale and delivery of barley to the plaintiff was complete before the plaintiff began to move the barley interstate, and the plaintiff's interstate trade began only with its movement of barley in satisfaction of its interstate sales. In my opinion, the case is no authority for the proposition that a producer's intention (or, a fortiori, a producer's contract) that the buyer of goods delivered intrastate should move them interstate after delivery makes the sale part of interstate trade and within the immunity created by s. 92. I am unable to accept the interpretation of the case adopted by Barwick C.J. in Clark King (1978) 140 CLR, at p 142, in Smith v. Capewell [1979] HCA 48; (1979) 142 CLR 509, at p 513, and in Uebergang (1980) 145 CLR, at p. 280. (at p656)

20. The answers to the questions in the stated case should be limited to answers to questions (a), (b) and (c). Questions (d) and (e) inquire as to the validity of particular provisions of the Act in their application to barley the subject of trade, commerce and intercourse between the States. As the barley the subject of this action does not answer that description, questions (d) and (e) are hypothetical. I would answer the questions as follows:

(a) Was the barley the subject of the contracts the

subject of trade, commerce and intercourse between the

States within the protection of s. 92 of the

Constitution?

Answer: No.

(b) Are the contracts referred to interstate contracts

for sale of barley entered into prior to date of

acquisition by the defendant of the commodity barley

within the meaning of the proviso to s. 9(2) of the

Primary Producers' Organisation and Marketing Act 1926

(Q.), as amended?

Answer: No.

(c) Has the barley harvested in the 1982 barley

harvest season and which barley was the subject of the

contracts been divested from the growers and has it

vested in the defendant pursuant to cl. 5 of the Order

in Council dated 24 April 1930, as amended, or at all?

Answer: Yes.

(d) Is par. 5 of the Order in Council dated 24 April

1930 invalid in so far as it operates to divest barley

the subject of trade, commerce and intercourse between

the States from the growers thereof and to vest it in

and remain the property of the defendant as the owners

thereof?

Answer: Unnecessary to answer.

(e) Are ss. 21B and 21F of the Primary Producers'

Organisation and Marketing Act 1926 (Q.) invalid in so

far as they operate to give the defendant or any

inspector of the defendant the power to seize barley,

the subject of trade, commerce and intercourse between

the States?

Answer: Unnecessary to answer. (at p656)

DAWSON J. Section 9(1) of the Primary Producers' Organisation and Marketing Act 1926 (Q.) ("the Act") provides that the Governor in Council may, upon a petition by a specified number of growers, ". . . declare that any grain, cereal, fruit, vegetable, or other product of the soil in Queensland . . . is and shall be a commodity under and for the purposes of this Act". By the same or a subsequent Order, the Governor in Council may constitute a Board in relation to the commodity so declared and may, under s. 9(2), if the petition contains an appropriate request, provide and declare that ". . . the commodity shall forthwith . . . be divested from the growers thereof and become vested in and be the property of the Board as the owners thereof". There is a proviso that such an Order ". . . shall not have effect so as to prejudice any interstate contract for the sale of the commodity entered into prior to the date of the acquisition of the commodity under such Order". (at p657)

2. By an Order in Council made on 24 April 1930, barley was declared to be a commodity and the Barley Marketing Board, as it is now called, was constituted in relation to it. The Order, as amended from time to time, provides, so far as is relevant, as follows:

"1. All barley the produce of the soil within any part of the

State of Queensland is and shall be a commodity under and for

the purposes of the Acts . . .

2. There is hereby constituted a Board in relation to such

commodity . . .

3. The Board shall be a Marketing Board.

. . .

5. The whole of the said commodity shall forthwith, upon the

making of this Order, be divested from the growers thereof and

become vested in and be the property of the Board as owners

thereof." (at p657)

3. The details of the scheme under which Marketing Boards operate under the Act are set out in the judgment of Mason J., which I have had the advantage of reading, and I shall not repeat them here. It is, however, relevant to note that a power of seizure of any part of the relevant commodity, which in this case is barley, is given where the commodity is suspected of being carried or removed contrary to the provisions of the Act: see ss. 21B and 21F, which were inserted by Order in Council pursuant to s. 9(7B) of the Act. On 11 December 1982 an inspector purported to seize on behalf of the defendant, the Barley Marketing Board, 362.4 tonnes of barley held by the plaintiff which was suspected of being barley which should have been delivered to the defendant. The barley held by the plaintiff had been harvested during the 1982 barley harvest season and was purchased by it from growers pursuant to contracts to which I shall refer later. (at p657)

4. The plaintiff commenced this action against the defendant and the Chief Justice stated a case incorporating facts which were found by the Supreme Court of Queensland upon the action being remitted to that Court for that purpose. The questions asked by the case stated are:

(a) Was the barley the subject of the contracts the subject of

trade, commerce and intercourse between the States within the

protection of s. 92 of the Constitution?

(b) Are the contracts referred to interstate contracts for sale

of barley entered into prior to the date of acquisition by the

defendant of the commodity barley within the meaning of the

proviso to s. 9(2) of the Primary Producers' Organisation and

Marketing Act?

(c) Has the barley harvested in the 1982 barley harvest

season and which barley was the subject of the contracts been

divested from the growers and has it vested in the defendant

pursuant to cl. 5 of the Order in Council dated 24 April 1930,

as amended, or at all?

(d) Is par. 5 of the Order in Council dated 24 April 1930

invalid in so far as it operates to divest barley the subject of

trade, commerce and intercourse between the States from the

growers thereof and to vest it in and remain the property of the

defendant as the owners thereof?

(e) Are ss. 21B and 21F of the Primary Producers' Organisation

and Marketing Act invalid in so far as they operate to

give the defendant or any inspector of the defendant the power

to seize barley, the subject of trade, commerce and intercourse

between the States? (at p658)

5. The facts stated reveal that the plaintiff is a wholly-owned subsidiary of the Victorian Oat Growers Pool and Marketing Co. Ltd. ("Victorian Oat Growers"), which in 1982 sought malting barley in Queensland because it was in short supply in New South Wales and Victoria as the result of drought. The plaintiff purchased premises in Warwick in Queensland which were equipped with storage silos and related equipment. During November and December 1982 it purchased barley from growers in the district before the grain was harvested. It did so pursuant to contracts each of which was in the same form. (at p658)

6. Each grower contracted to sell and the plaintiff contracted to buy the entire production of a stipulated number of hectares at a specified location up to a maximum amount. Each contract provided that the title to the grain should pass to the plaintiff when placed upon the vehicle for delivery to the plaintiff subject to the special condition that such transfer of title was restricted to grain which was in conformity with a specified quality. A minimum price per tonne was specified and the grower was obliged to deliver the grain to the plaintiff's premises at Warwick. It was a special condition of each contract that the plaintiff would, within a reasonable time after taking delivery from the grower, take the grain purchased out of Queensland and in the meantime would not deal with it in any manner inconsistent with such obligation. It was a further special condition that the plaintiff would not bring the grain back into Queensland. (at p659)

7. Some of the barley sold was transported by the grower from his farm to the plaintiff's premises. In other cases it was transported there by a local carrier or both means of delivery were used. Although the contracts obliged the growers to deliver the grain to the plaintiff's premises, the plaintiff paid the freight when a carrier was used. (at p659)

8. The grain delivered to the plaintiff's premises pursuant to the contracts was graded and placed in separate silos where it was kept until it was loaded for delivery interstate. From the time the barley in question was received at the plaintiff's premises in Warwick until it left them, it was kept segregated from any other grain on those premises. (at p659)

9. According to the case stated, Victorian Oat Growers was a party to a long-term understanding with a number of its customers in Victoria (notably Carlton United Breweries) for the supply to them of malting barley. There existed with Carlton United Breweries and other long-standing customers what were described as "fundamental agreements". Under these fundamental agreements, Victorian Oat Growers were notified of tonnages representing an upper and lower limit of the quantity of malting barley which it might be called upon to supply during the coming season. (at p659)

10. During the course of the season in question, Victorian Oat Growers would be called upon to supply particular quantities within the scope of the fundamental agreements to particular customers at a price arrived at on each occasion. The business of Victorian Oat Growers was conducted in the expectation that it would be called upon from time to time to supply customers with specific amounts within the scope of the various fundamental agreements and it ordered its business accordingly. (at p659)

11. It was at all material times the plaintiff's intention to take the barley purchased from the growers in Queensland out of that State for delivery to a buyer in another State. The barley was in fact taken out of Queensland, subject to conditions imposed by an interlocutory order made in this Court. (at p659)

12. The plaintiff contended that the barley could not be a commodity for the purposes of the Act or the relevant Order in Council until it was harvested. In order to be a commodity it had to be a product of the soil, so the argument ran, and it could not be so regarded whilst it was still a standing crop and part of the land. The contracts relating to the barley were said to be executory agreements for the sale of an unascertained quantity of barley which became ascertained at the time grain of the requisite quality was harvested. At that time, it was submitted, the grain was committed to interstate trade. (at p660)

13. The defendant denied that the barley was a commodity for the purposes of the Act and the Order only when it was harvested. On the contrary, it was submitted, the barley become a commodity at the earliest when it reached the shot-blade stage or at the latest when it was ripe for harvest. The shot-blade stage is defined by the regulations to which I shall refer as occurring when the ear of the barley has formed but is not yet visible and the sheath of the last leaf has not completely grown out. (at p660)

14. The use of the term "grain as a product of the soil" in both the Act and the Order tends to favour the plaintiff's submissions. The type of marketing scheme set up by the Act was examined in Peanut Board v. Rockhampton Harbour Board (1933) 48 CLR 266 where it was pointed out that a Board acquires the property in a commodity (in that case peanuts) as and when it comes into existence: see per Starke J. (1933) 48 CLR, at p 280; per Dixon J. (1933) 48 CLR, at p 288. If grain as a product of the soil is to mean something different from harvested grain, there is an obvious difficulty in finding some criterion which will indicate the time or stage at which it may be regarded separately from the crop of which it forms part. The Act affords no such criterion. The reference in s. 9(1) to "any grain, cereal, fruit, vegetable or other product of the soil" suggests commodities each of which has a separate and distinct existence. Moreover, s. 9(1) goes on to speak of eggs as a commodity and it is clear enough that an egg cannot exist as a commodity until it is separated from the hen in which it has its origin: Damjanovic & Sons Pty. Ltd. v. The Commonwealth [1968] HCA 42; (1968) 117 CLR 390. The provisions of the Act providing for delivery of a commodity to a Board and for the prescription of a particular quality or standard for acceptability (see ss. 15-18) suggest that a commodity is something which does not require harvesting or further development before it may be said to have a separate existence as produce. (at p660)

15. The defendant sought to overcome these difficulties by pointing to s. 29(1) of the Act which empowers a Board to make a levy in respect of a commodity and s. 29(2)(iii) which empowers it to apply moneys raised by way of levy in establishing and maintaining a fund for the purpose of providing insurance for the benefit of growers against various disasters. The particular insurance scheme upon which the defendant relied was the Barley Marketing Board Hail Insurance Scheme which was set up under regulations made pursuant to s. 33 of the Act. That scheme establishes a fund, created by a levy against all growers calculated on the quantity of barley harvested, to be used to insure crops against damage by hail. The insurance is, under the relevant regulations, to cover only crops which have grown to the shot-blade stage and the tonnes per hectare allowable as the basis of compensation are specified according to the stage of development before the crop in question is destroyed by hail. Crops which are only partially destroyed are required to be harvested. (at p661)

16. Apart from the obvious and insuperable difficulties involved in the use of regulations in the construction of the Act, the regulations do not even establish the point which the defendant sought to make. The Barley Marketing Board Hail Insurance Scheme is a scheme to insure crops which have reached a certain stage of maturity - the shot-blade stage - and is not a scheme to insure the commodity which is the final produce of the crop. It has nothing to say about the point at which the commodity comes into existence. (at p661)

17. In my view, there is nothing to displace the natural meaning of the Act that a commodity, when it is the product of the soil in the form of grain, is the grain itself when it has been harvested and has come into existence as grain and does not include the crop which yields the grain. (at p661)

18. As I have said, the proviso to s. 9(2) of the Act provides that the Order in Council shall not prejudice any interstate contract for the sale of the commodity entered into prior to the date of acquisition by the Board of the commodity under such Order. This wording is somewhat imprecise but may be taken to refer to the date of acquisition by the Board if the Board had otherwise acquired the commodity under the Order. The proviso raises the question whether the contracts in this case were interstate contracts for the sale of barley. In addition, s. 1A of the Act provides that it and any Order in Council made under it shall be read and construed subject to the Commonwealth of Australia Constitution Act and so as not to exceed the legislative power of the State to the extent that where any enactment contained in the Act or provision contained in an Order in Council would, but for the section, have been construed as being in excess of that power, it shall nevertheless be a valid enactment or provision to the extent to which it is not in excess of that power. (at p662)

19. Section 1A was added to the Act some two years after the decision in Peanut Board v. Rockhampton Harbour Board (1933) 48 CLR 266 and has its origins in s. 15A of the Acts Interpretation Act 1901 (Cth) and s. 2 of the Acts Interpretation Act 1930 (Vict.). The decision in Peanut Board v. Rockhampton Harbour Board was that the Act, which, apart from the proviso to s. 9(2), then contained no protection of growers' rights to dispose of their product in interstate trade, contravened s. 92 of the Constitution. Obviously the proviso to s. 9(2), which was then part of the sub-section, was not considered to go far enough in this regard. It would appear, therefore, that s. 1A was added to overcome any inconsistency which the Act had with s. 92, although its terms extend to all constitutional inhibitions. So far as s. 92 is concerned (and that would be the relevant constitutional provision in this case), s. 1A requires the provisions of the Act to be given a distributive operation which excludes interstate trade or any interference with its freedom. That is to say, the relevant section in this case, which is s. 9, must be read as applying to each and every grower in respect of so much of the commodity as he has produced and if the protection of s. 92 is attracted in any instance, s. 1A of the Act will apply to exclude the commodity from the operation of s. 9, leaving the section with a valid application in those instances which do not fall within s. 92. But the proviso to s. 9(2) of the Act itself excludes from the operation of that sub-section, and consequently from the acquisition by the Board, so much of the commodity as is the subject of an interstate contract. The proviso, therefore, covers some of the ground which would otherwise be covered by s. 92. To the extent that the proviso to s. 9(2) applies, there is no need to resort to s. 1A of the Act and for that reason it is convenient to turn to the proviso first. (at p662)

20. It seeks to protect against prejudice "any interstate contract for the sale of the commodity" entered into before the relevant date. The words "interstate contract" appear elsewhere in the Act. Section 20(1) provides the means, by notification in the Gazette, of avoiding a contract, whether made in or outside Queensland, so far as it relates to the sale of a commodity for delivery in or out of Queensland. Sub-section (3) of s. 20 provides that nothing in the section shall apply to a commodity the subject of an interstate contract. It was observed in Carter v. Potato Marketing Board [1951] HCA 60; (1951) 84 CLR 460, at p 484, that s. 20(3) excludes, not interstate contracts, but a commodity subject to an interstate contract and is apparently based upon the assumption that what puts a commodity into interstate trade is an "interstate contract" so that all transactions in reference to it are protected from invalidation by s. 92. This seems to me to be a reasonable conclusion, for the sub-section would achieve little if an "interstate contract" merely meant a contract made across State boundaries. Such a contract in relation to a commodity may or may not involve interstate trade in that commodity (see W. & A. McArthur Ltd. v. Queensland [1920] HCA 77; (1920) 28 CLR 530, at pp 540, 559) and s. 20(3) is, because of s. 92, clearly aimed at protecting interstate trade in the commodity against the operation which sub-s. (1) of that section would otherwise have. (at p663)

21. There is no reason to think that the term "interstate contract" in the proviso to s. 9(2) is used in any different sense and the term as used there is, therefore, apt to include any contract which puts the commodity to which it relates into interstate trade. Each of the contracts in this case falls, in my view, into that category. Putting on one side the express stipulation that the grain should be sent out of Queensland, each contract, viewed in isolation and from the point of the grower, amounts to no more than an intrastate sale. But as Gibbs J. pointed out in North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. [1975] HCA 45; (1975) 134 CLR 559, at p 599, a sale 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. As I shall explain in a moment, viewed from the point of view of the plaintiff, each contract was the beginning, and a necessary part, of his interstate trade in the barley in question. But it would seem to be enough to enable the proviso to s. 9(2) to be applied that, having regard to the nature of the plaintiff's business, the contracts were the means by which the barley was put into interstate trade and when regard is had in addition to the stipulation in each contract that the grain should be sent out of Queensland and not be returned, the conclusion is, I think, unavoidable that the contracts were interstate contracts within the meaning of the proviso. (at p663)

22. That is enough to dispose of the case, because the result is that the power of seizure under ss. 21B or 21F did not, in the circumstances, apply, there being no contravention of the Act in the delivery of the barley to the plaintiff. But it is desirable, I think, that I should go on to say that in my view if the proviso to s. 9(2) did not have the operation which I have concluded it does, s. 1A would achieve the same result by requiring s. 9(2) to be read down to exclude the vesting of the barley in the Board in order to avoid conflict with s. 92 of the Constitution. Some of the remarks which I shall make will, of course, strengthen my conclusion that the contracts in question were interstate contracts within the meaning of the proviso to s. 9(2). (at p664)

23. Since the decision in W. & A. McArthur Ltd. v. Queensland in 1920 there has been a tendency in determining whether the performance of a contract is itself part of interstate trade or commerce, to have regard to the terms of the contract to see whether they require something to be done which can be characterized as interstate trade or commerce. It is not enough that the contract itself is an interstate, commercial transaction in the sense that it is made across State boundaries. It is not enough that the contract may be performed by the interstate movement of goods or services. According to this line of reasoning, what is required before a contract (even a contract made across State boundaries) can be regarded as giving rise to interstate trade or commerce, is that the terms of the contract themselves should require something to take place which can itself be regarded as interstate trade or commerce. (at p664)

24. In the setting of McArthur's Case [1920] HCA 77; (1920) 28 CLR 530, this approach is understandable. Having regard to the four types of agreement to do business in Queensland which the plaintiff in that case employed, only the fourth type necessarily involved interstate trade because the terms of the contract left no option for its performance other than the movement of goods interstate. That was the only method of doing business which, upon proceedings by way of demurrer, could necessarily be seen, by reason of s. 92, to lie outside any prohibition which s. 12(1) of the Profiteering Prevention Act 1920 (Q.) could impose. But that is as far as the case went and it is necessary, I think, to recognize that whilst the method provides a clear example of interstate trade or commerce, it is not exhaustive. A particular transaction may be part of interstate trade or commerce according to whether that transaction forms part of the flow of business among the States as a matter of fact whether or not it is also a matter of contractual obligation: see Australian National Airways Pty. Ltd. v. The Commonwealth [1945] HCA 41; (1945) 71 CLR 29, at p 76, per Starke J. (at p664)

25. Compulsory acquisition cases have required this Court to decide upon a number of occasions where interstate commerce begins and ends. It is clear enough that it may begin before the movement of goods interstate. The view has long been abandoned that the compulsory acquisition of goods does not infringe s. 92 because it operates upon ownership and not upon any transaction in the course of trade and commerce. This notion lay behind the decision in the Wheat Case [1915] HCA 17; (1915) 20 CLR 54, but in James v. Cowan [1932] UKPCHCA 2; (1932) 47 CLR 386, it was rejected in favour of the view that s. 92 is infringed if the effect of an acquisition is such as to interfere directly with an individual's freedom to deal with his goods in the course of interstate trade. On the other hand, it is not an individual's freedom to choose his method of trade, intrastate or interstate, which is protected by s. 92: see Wilcox Mofflin Ltd. v. New South Wales [1952] HCA 17; (1952) 85 CLR 488, at p 516. Before the compulsory acquisition of goods can be said to infringe s. 92, it must be apparent that the expropriation constitutes an actual interference with some act or transaction in relation to those goods which forms part of interstate trade or commerce. But once that can be shown, the protection of s. 92 may be invoked for, as Barwick C.J. observed in North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. (1975) 134 CLR, at p 580, goods actually committed to an interstate transaction cannot be expropriated. And it matters not whose act or transaction is impeded, whether it be that of the grower or vendor or that of the purchaser, so long as it is part of the flow or course of interstate trade. (at p665)

26. In Reg. v. Wilkinson; Ex parte Brazell, Garlick & Coy [1952] HCA 6; (1952) 85 CLR 467 the question was whether the sale of some bags of potatoes by a grower to a produce merchant was in the course of trade or commerce between the States so that disposal of them to the purchaser's agent and the receipt of them by the agent did not constitute offences under s. 11(3) of the Marketing of Primary Products Act 1927-1940 (N.S.W.). The contract of sale was concluded in New South Wales and delivery of the potatoes took place there. Property passed upon delivery. The majority held that it was a term of the contract that the potatoes should be consigned to a Queensland place of destination. Because of this term, they held that the delivery of the potatoes (which constituted the disposal and receipt) was "an essential and integral, even if initial, step in the transportation of the potatoes to Queensland" (1952) 85 CLR, at p 480. In my view, Reg. v. Wilkinson; Ex parte Brazell, Garlick & Coy is a sufficient authority upon which to determine this case in favour of the plaintiff. Here, as in the case, there was a contractual obligation on the part of the purchaser to take the goods out of one State into another. Harvesting of the grain, no less than delivery, was an essential, if initial step, to enable the plaintiff to perform its obligation. At the time of its production the grain was committed to interstate trade. (at p665)

27. But I should add that I do not think that the absence of the contractual obligation on the part of the plaintiff would automatically produce any different result. The relevant special condition requiring the plaintiff to take the grain out of Queensland no doubt makes the contracts in question analogous to the fourth type of agreement dealt with in McArthur's Case [1920] HCA 77; (1920) 28 CLR 530, notwithstanding that the obligation to undertake an interstate transaction rested upon the purchaser in each case rather than the seller. But as I have said, McArthur's Case does not set the limits of interstate trade or commerce and it is clear that there were other circumstances in this case to justify the conclusion that the harvesting and delivery of the barley were the beginning of interstate trade and commerce and so within the protection of s. 92. The contracts under which the plaintiff purchased the barley were concluded by it for the purpose of meeting its obligations, whether strictly contractual or not, to deliver the product to buyers in a State other than Queensland. It required the product for that purpose. It was at all times the plaintiff's intention to take the barley out of Queensland in the course of its business. In Reg. v. Wilkinson; Ex parte Brazell, Garlick & Coy Williams and Webb JJ., unlike the majority, did not decide the case upon the basis of the contractual term that the potatoes should be consigned to a Queensland place of destination. They decided it upon the basis that the delivery of the potatoes was in fact part of interstate trade. As Webb J. (1952) 85 CLR, at p 486 put it, ". . . a legal nexus with inter-State trade, by a contract with the grower, is not required to secure the immunity given by s. 92 . . .". (at p666)

28. In the Field Peas Case [1948] HCA 10; (1948) 76 CLR 414, at pp 428-429 Dixon J. pointed out that there is no mechanical test which will determine whether an expropriation of goods is an impediment to interstate trade or commerce. Merely because goods are intercepted and acquired before they can go into interstate trade does not mean that interstate trade is unhindered or free. In dealing with the right of the purchaser from the grower of goods (in that case, field peas) to maintain a suit for relief, he said (1948) 76 CLR, at p 429:

"We should, for the purpose of s. 92, regard the company's

position not from the point of view of the legal character of the

right to goods the contracts give or to the geographical point at

which delivery in fulfilment of the contracts may be effected.

We should consider the commercial significance of transactions

and whether they form an integral part of a continuous flow or

course of trade, which, apart from theoretical legal possibilities,

must commercially involve transfer from one State to another." (at p667)

29. As Mason J. comments in his reasons for judgment in this case, this view did not attract support in subsequent cases, although more recent decisions would suggest that it is the correct approach. In North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. [1975] HCA 45; (1975) 134 CLR 559 it was held that the interstate trade of the importer of milk from Victoria to New South Wales included the sale by the importer of the milk in New South Wales although the contract of sale contained no stipulation that the milk should come from outside New South Wales. That case was accepted and distinguished in Permewan Wright Consolidated Pty. Ltd. v. Trewhitt [1979] HCA 58; (1979) 145 CLR 1 Although he was in dissent in the result, Aickin J. expressed the new approach thus (1979) 145 CLR, at p 63:

"To prevent goods which cross State borders from entering into

the stream of commerce in the State of destination by

prohibiting their sale is to prevent interstate trade from taking

place as effectively as would a prohibition on the actual

crossing of the border."

And in Smith v. Capewell [1979] HCA 48; (1979) 142 CLR 509 the majority held that a dealer in skins who satisfied orders obtained in New South Wales with skins which he brought from Queensland and delivered in New South Wales was engaged in interstate trade in the performance of these contracts, even though the contracts did not stipulate that the skins be brought from Queensland. Barwick C.J., in whose judgment Aickin J. concurred, observed that the instance of interstate trade given in McArthur's Case was not exhaustive and said (1979) 142 CLR, at pp 512-513:

"If the existence of the (interstate) trade is to be made out by

proof of contractual arrangements, probably, though perhaps

not necessarily, some part of the steps to form the contract

would have taken place in each State. But to establish the

existence of the trade merely by the existence of a contract, the

transport of the subject matter from one State to another must

necessarily occur if the contract is to be duly performed. Thus,

in general, the evidence of the interstate trade by means only of

a contract will only be possible if delivery from one State to

another is a term of the contract, express or implied. Of course,

if a contract of sale so stipulates, the contract itself is part of

interstate trade and commerce.

But it would seem such a trade may be established where it is

implicit in the nature of the transaction relied upon to establish

such trade or by a course of dealing, that it was the common

contemplation of the parties that the subject matter of their

agreement would be transported interstate. Reg. v. Wilkinson;

Ex parte Brazell, Garlick & Coy

[1952] HCA 6; (1952) 85 CLR 467 is, in my opinion, an

illustration of such an occasion." (at p668)

30. It remains to observe that, although there may be no mechanical test, the cases do indicate the confines of interstate trade and commerce. Those confines serve, of course, to identify those contracts which, by their terms or the circumstances in which they were made or must be performed, have as their subject-matter interstate trade or commerce and are for that reason protected by s. 92. It is only acts or transactions of interstate trade or commerce which are protected. As Dixon, McTiernan and Fullagar JJ. pointed out in Wilcox Mofflin Ltd. v. New South Wales (1952) 85 CLR, at p 516, it is only freedom of trade, commerce and intercourse between the States that is the concern of s. 92, not freedom of commercial dealing, freedom of choice between one course of trade and another or any other liberty. (at p668)

31. Of particular relevance in indicating the limits in such a case as the present one are those cases which deal with acts or transactions which are preliminary to, even if a prerequisite of, interstate trade or commerce. Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55 and Beal v. Marrickville Margarine Pty. Ltd. [1966] HCA 9; (1966) 114 CLR 283 established that the manufacture or preparation of goods within a State was not itself an act of interstate trade or commerce, even if the goods were kept separate and intended for interstate trade. The same is the case with goods imported with the intention of using them in interstate trade or commerce; the act of importation is not itself an act of interstate trade or commerce and is not protected by s. 92: Reg. v. Anderson; Ex parte Ipec-Air Pty. Ltd. [1965] HCA 27; (1965) 113 CLR 177; Ansett Transport Industries (Operations) Pty. Ltd. v. The Commonwealth [1977] HCA 71; (1977) 139 CLR 54.(at p668)

32. Reliance was placed by the defendant upon Tamar Timber Trading Co. Pty. Ltd. v. Pilkington [1968] HCA 15; (1968) 117 CLR 353 where the carriage of timber between two places within the one State was held not to be in the course of or for the purpose of interstate trade or commerce notwithstanding that, after being racked at its destination for some nine months to two years, it would in the ordinary course of business be despatched interstate. But the case upon its facts was regarded as one in which the transport of the timber and the racking of it was merely a preliminary to interstate trade and that fact was not altered by the probability, very high as it was, that the timber would end up in interstate trade. In this case the barley was committed to interstate trade at the time of harvesting both as a matter of commercial reality and as a matter of contractual obligation. Its delivery to the plaintiff in the course of that trade was therefore protected by s. 92. (at p669)

33. I would answer the questions as follows: (a) Yes. (b) Yes. (c) No. (d) The provision would be invalid if it had such operation but by virtue of s. 1A of the Primary Producers' Organisation and Marketing Act 1926 (Q.) it does not so operate. (e) The sections would be invalid if they had such operation but by virtue of s. 1A of the Primary Producers' Organisation and Marketing Act 1926 (Q.) they do not so operate. (at p669)

ORDER

Answer the questions as follows:

(a) Was the barley the subject of the

contracts the subject of trade, commerce

and intercourse between the States

within the protection of s. 92 of the

Constitution?

Answer: Yes.

(b) Are the contracts referred to interstate

contracts for sale of barley entered into

prior to date of acquisition by the

defendant of the commodity barley within

the meaning of the proviso to s. 9(2) of

the Primary Producers' Organisation

and Marketing Act 1926 (Q.), as

amended?

Answer: No.

(c) Has the barley harvested in the 1982

barley harvest season and which barley

was the subject of the contracts been

divested from the growers and has it

vested in the defendant pursuant to cl. 5

of the Order in Council dated 24 April

1930, as amended, or at all?

Answer: No.

(d) Is par. 5 of the Order in Council dated

24 April 1930 invalid in so far as it

operates to divest barley the subject of

trade, commerce and intercourse

between the States from the growers

thereof and to vest it in and remain the

property of the defendant as the owners

thereof?

Answer: The provision would be invalid if it

had such operation but by virtue

of s. 1A of the Primary Producers'

Organisation and Marketing Act

1926 (Q.) it does not so operate.

(e) Are ss. 21B and 21F of the Primary

Producers' Organisation and Marketing

Act 1926 (Q.) invalid in so far as they

operate to give the defendant or any

inspector of the defendant the power to

seize barley, the subject of trade, commerce

and intercourse between the

States?

Answer: The sections would be invalid if

they had such operation but by

virtue of s. 1A of the Primary

Producers' Organisation and

Marketing Act 1926 (Q.) they do not so

operate.

Order that the defendant pay to the plaintiff its taxed costs of the case stated.