Bierton v Higgins

According to the evidence the appellant, on 14th January 1960, entered into a contract with a New South Wales company to sell to it a large quantity of "peanuts in the shell of the seller's (1960) season production grown at Kingaroy". The contract required the peanuts to be matured, of good and sound condition, reasonably free from harvest thrash, sticks, soil and stones and with colour undamaged by rain. Delivery was to be made at the buyer's premises in New South Wales during the month of April 1960. The crop was harvested in that month and on 28th April officers of the Board in Queensland intercepted on a public road a vehicle which was loaded with 403 bags of the appellant's peanuts. As the magistrate found the removal of these peanuts from the appellant's premises "was made in pursuance of the intended fulfilment" of the contract in question and at the time of the interception of the vehicle they were being conveyed on a journey from Queensland to New South Wales for the purpose of delivery to the purchaser in the latter State. The peanuts were seized after being intercepted and taken to premises of the Board where they were subjected to a process of grading.

The process of grading as explained by the evidence goes somewhat further than the expression suggests to the uninformed mind. It subjects the peanuts, which are a root crop, to a series of mechanical contrivances where they are initially cleaned, dirt and waste is removed and they are then graded into various selected grades. Peanuts which do not comply with the requirements of any standard grade are rejected. The appellant's peanuts were, in fact, subjected to this process and the "out-turn" of his 403 bags of peanuts consisted of 231 bags of graded peanuts, mostly shelled, 13 bags containing separate quantities of what were called "box pickings, tail-overs, asp-waste, intake waste, dirt and stones", 23 bags of shells and 159 empty sacks. The "out-turn" was returned to the appellant sometime later but by no stretch of imagination could it be thought to answer the description of the goods for which the contract called. The cost to the appellant of the grading which, together with a levy of three-eighths of a penny per lb. (£34 13s. 4d. in all), he was compelled to pay to the Board as a condition of the delivery to him of the "out-turn", was £267 11s. 4d.

It is conceded by the respondent that at the time of their seizure the appellant's peanuts were the subject of trade commerce and intercourse among the States. No claim was or could be made that they had vested in the Board pursuant to the provisions of s. 9 of The Primary Producers' Organization and Marketing Act of 1926 (cf. Peanut Board v. Rockhampton Harbour Board [1] .) Nor was it suggested that the provisions of s. 15 of that Act, as amended by Order in Council of 5th December 1957, authorized the Board to compel the appellant to deliver the peanuts in question to it. In fact, no relevant "requirement" pursuant to this section was made. We may, therefore, commence our consideration of the case by assuming that at the time of their removal from the appellant's premises the peanuts in question were his property, that at the time of their interception they were the subject of trade commerce and intercourse among the States and that they were then in the process of being delivered pursuant to the requirements of the contract from the seller in Queensland to the buyer in New South Wales and, finally, that apart from the provisions of the proclamation of 27th April 1940, there was no provision, statutory or otherwise, which required the appellant to deliver the peanuts to the Board for grading. It is apparent that in these circumstances the seizing and grading of the appellant's goods not only hindered the performance of the contract which he had previously made, but, by taking the contract goods and subjecting them to the process of grading, the Board transformed them into goods of a quite different description. The problem in the case is, of course, whether legislation, subordinate or otherwise, which required the peanuts in question to be delivered to the Board for grading was compatible with that freedom which is assured by s. 92 of the Constitution to trade commerce and intercourse among the States.

At this stage it is not out of place to mention two submissions made on behalf of the respondent. The first is that there is no inter-State trade in ungraded peanuts. In effect, it was said, ungraded peanuts are extra commercium not only in relation to the trade in Queensland but also in relation to inter-State trade. The second is that the substance of the requirement that peanuts shall be delivered to the Board for grading, so far as it is to be found in the proclamation of 27th April 1940, is the prevention of the disposal of diseased peanuts in the interests of the industry in general. It may, of course, be observed that the first of these submissions is directly in conflict with the concession that at the time of their seizure the appellant's peanuts were, in fact, the subject of inter-State trade. But leaving this aside it is clear that the only ground upon which the submission can be founded is that a requirement that all peanuts shall be delivered to the Board for grading, itself, placed ungraded peanuts, as a commodity, outside the ordinary field of commerce. It may, of course, be assumed that the requirement as to grading was a wise prescription in the interests of those engaged in the peanut-growing industry but to say that State legislation may prohibit inter-State trade in a particular commodity if, antecedently, it purports to remove the commodity from the field of trade and commerce in order to serve the purposes of an organized marketing scheme, would be to strip s. 92 of any real effect (cf. Mansell v. Beck [1] ). Indeed, to attempt by legislation, so to remove a commodity from that field and then to prevent its disposal in the course of inter-State trade and commerce would constitute a direct and immediate infringement of s. 92. However, the question in this case is whether the requirement as to grading has any application at all to peanuts the subject of inter-State trade, and if it does not, the foundation for the first submission must disappear entirely. Examination of the second submission may be postponed for, as will be seen, the suggestion that the substance of the legislation under which the proclamation of 27th April 1940 was made was the prevention of the disposal of diseased peanuts can afford no assistance to the respondent in the decision of the case.

We are told, and as far as we can see, there is no provision of The Peanut Industry Protection and Preservation Act or any other Act which expressly requires growers of peanuts to forward their products to the Board for grading. But s. 6 (ii) of the specified Act provides that the Governor in Council may from time to time by proclamation declare that the removal of any peanuts from or out of any place, or from or out of one portion of any place to any other portion of the same place, shall be either absolutely prohibited or permitted only as prescribed and it was pursuant to this section that the proclamation of 27th April 1940 was made. The proclamation, it should be noticed, had the same effect as if its provisions had been enacted in the Act (s. 36). By s. 26 of the Act it is provided that no person shall sell or otherwise dispose of or buy any peanuts unless such peanuts have been graded by the Board. Upon a literal construction of this lastmentioned provision it is therefore unlawful not only for a grower to remove peanuts from his premises except for the purpose of grading but also for him to sell or agree to sell or to offer for sale any peanuts which have not been graded by the Board. How far the definition of "sell" is to be imported into the provisions of s. 26 is a matter of conjecture which need not be pursued here. But it is of some importance to notice that the Act is to be read and construed so as not to exceed the legislative power of the State (s. 2). If any enactment would, but for the provisions of s. 2, have been construed as being in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that power. In terms, it will be seen, s. 26 forbids sales of ungraded peanuts, whether made in the course of intra-State or inter-State trade and to preserve its validity it must be read so as not to apply to sales of the latter category. We do not understand this to be disputed and it is mentioned only as a preliminary to an examination of the provisions of s. 6 (ii). This, as already appears, was the sole source of authority for the proclamation of 27th April 1940 and, in terms, it also applies to all peanuts whether the subject of inter-State trade or not. No doubt the provisions of s. 2 of the Act apply in the construction of the proclamation which, by definition, is itself part of the Act (s. 3) and which takes effect as if it were enacted in the Act (s. 36). But a proclamation purporting to have been made under s. 6 (ii) is capable of having effect only if it is within the proclamation-making power. It is therefore of prime importance first of all to construe the provisions of s. 6 (ii) in order to ascertain the limits of that power.

Section 6 consists of three sub-sections and it is convenient to quote its provisions in full: "6. The Governor in Council may from time to time by Proclamation declare - (i) That the introduction into Queensland from another State in the Commonwealth, or into any portion of Queensland specified in such Proclamation, of any peanuts which are in his opinion likely to introduce any insect, fungus, or disease shall be either absolutely prohibited or permitted only as prescribed; (ii) That the removal of any peanuts from or out of any place, or from or out of one portion of any place to any other portion of the same place, shall be either absolutely prohibited or permitted only as prescribed; (iii) Any disease affecting peanuts to be a disease, or any fungus to be a fungus, or any insect to be an insect, respectively, within the meaning of this Act." It will be seen that the second sub-section is to be found in a section which is concerned primarily with the creation of powers to take appropriate action to prevent the spread of disease by the introduction into Queensland or parts of Queensland of diseased peanuts or of disease-causing insects or fungus. Sub-section (ii), itself, makes no mention of disease but it is within the general framework of the section that it operates to confer a power to declare, in substance, that the removal of any peanuts from one place to another shall be either absolutely prohibited or permitted only as prescribed. In that setting both its purpose and function are obvious; it appears as a provision, ancillary to sub-s. (i), which confers a power, in aid of that sub-section, to prohibit or regulate the removal of peanuts. So much, in our view, is reasonably clear from the terms of the section itself and the conclusion is fortified by the provisions of ss. 8 and 9. In particular we refer to the provisions of those sections which authorize the seizure of diseased peanuts or peanuts which are "suspected to be diseased" which are introduced into Queensland or removed from one part of Queensland to another part thereof. Now is it possible to say that a proclamation in the terms of that made on 27th April 1940 is within the authority conferred by the sub-section? The proclamation relates to ungraded peanuts simpliciter, it does not specify otherwise than in the most general terms any place or places from which such peanuts may be removed or to which they may be removed and it fails to specify any condition which can be regarded as referable to the act or process of removal. The place from which they may not be removed is where a grower happens to be found and the place to which they may be removed is wherever the Board is found to be represented. Upon examination it is clear that the substance of the proclamation was not a permission, "only as prescribed", to remove peanuts from one place to another but, on the contrary, complusion upon growers to deliver their crops from their premises to those of the Board for the purposes of grading. On this view the proclamation was not, in our opinion, an exercise of the power conferred by the section.

If on the other hand the view be taken that the provisions of s. (6) (ii) should be given an operation wide enough to justify the precise terms of the proclamation and, in effect, to justify subordinate legislation to require all growers to deliver their entire crops for grading the sub-section appears as a provision merely ancillary to a scheme for the organized marketing of peanuts. So regarded there would be no limits to the purposes for which the power to prohibit removal might be exercised or to the terms which might be imposed as a condition of removal from one place to another and the association of the provisions of the sub-section with the prevention of the spread of disease would disappear. But what is more important is that if the section is to be so construed and is to be taken to apply not only to goods the subject of trade within the State but also to goods the subject of inter-State trade and commerce it is clear that the legislation purported to vest in the Governor in Council a power which transcended the authority of the legislature itself. In our opinion, upon the true view of s. 6 (ii) it did nothing of the kind: the power which it conferred was of the much more limited character already suggested. But if, contrary to that view, the sub-section be given the wider meaning initially, then, pursuant to s. 2 of the Act, it must ultimately be construed as having no application to peanuts the subject of inter-State trade. That being so the Governor in Council, on neither view of the construction of s. 6 (ii), had authority to make the proclamation in question, or, to state the proposition consistently with the substance and effect of the proclamation, to compel the appellant to deliver his peanuts to the Board for grading.

So far no reference has been made to the decision in Hartley v. Walsh [1] upon which the respondent placed some reliance. But that case is clearly distinguishable from the present case. Here we are concerned with a statutory provision which on the narrower view cannot sustain the proclamation of 27th April 1940 whilst, on the wider view, its tenor is such as to authorize the widest and most drastic forms of interference with inter-State trade and, accordingly, it must be read down pursuant to the provisions of s. 2 of the Act. In the circumstances of the case it is therefore unnecessary for us to reconsider the decision in the earlier case though it is desirable to point out that it rests substantially upon principles which have not been regarded as acceptable in recent years and which do not afford any assistance in resolving the problem in the present case.

For these reasons the appeal should, in our opinion, be allowed and the conviction quashed.

(Note: The Honourable Mr. Justice Fullagar died at Melbourne before judgment in this appeal was delivered. - Ed.)