Cann's Pty Ltd v Commonwealth [1946] HCA 5

Cann's Pty Ltd v Commonwealth [1946] HCA 5 - HCA 1946 case summary — Zoe

[21]

Tait K.C. (with him Phillips K.C.), for the plaintiff. Prices Regulation Order No. 1454 is the only order mentioned in the state- ment of claim and the demurrer and the only one relevant to the indictment. The plaintiff challenges the validity of pars. 5 and 6 of that Order; par. 4 is also material, as it contains definitions of expressions in the schedules to which pars. 5 and 6 refer. Order No. 1878 amends par. 4 (a) (definition of " actual cost of the material used ") of Order No. 1454 to correct an error. The original par. 4 (a) 'was meaningless, and it would still be open to the plaintiff to rely on that defect for the purposes of the indictment. All the amendment does is to insert the words " the cost of " after the words " one-tenth of " in the original par. 4 (a). Order No. 1878 also amends par. 6 of Order No. 1454, but not in such a way as to affect the plaintiff's con- tentions here. Whether in their original form or as amended, pars. 4 (a) and 6 (as well as par. 5 and other definitions in par. 4) are, in the plaintiffs submission, invalid because no principle, standard or rule is laid down from which a price can be calculated with exactness or cer- tainty. The methods prescribed by par. 5 and those prescribed by par. 6, when those paragraphs are read with the definitions in par. 4, involve matters of estimation, judgment and discretion which do not allow the ascertainment of prices with certainty, and, accordingly, each of those paragraphs is invalid (King Gee Clothing Co. Pty. Ltd. y. The Commonwealth (1)). The plaintiff has an interest in chal- lenging both par. 5 and par. 6. In the future it may or may not keep the records mentioned in par. 6. For the purposes of the indictment the plaintiff claims that it has kept the records, but the Crown alleges that it has not. For the future it will be concerned with par. 5 and with par. 6 according as it does or does not keep records. Referring first to par. 5, prices are fixed by the methods set out in the First Schedule to the Order. The schedule describes various garments, and for each of them the maximum price is to be the sum of a number of items. For some garments one of the items is the cost" of a specified length "of the material used"; for other garments the corresponding item is, in some instances, "actual cost ot material used" and, in others, "actual cost of material and linings." For the meaning of those expressions one must refer to the definitions in par. 4 of " Cost " (sub-par. 6), " Material " (sub-par. e), " Actual cost of the material used," &c. (sub-par. a). The definition

[26]

Barry K.C. (with him Gillard), for the defendants. The argument for the plaintiff fails to distinguish between the validity and the effectiveness of the Order. An order may bea perfectly valid exer- cise of power and yet, because of obscurity in its terms, fail to achieve its object. Uncertainty from the point of view of inter- pretation is not a test of validity, and the mere fact that an order presents difficulties in interpretation does not invalidate it: See Bendixen v. Coleman (1); Fraser Henleins Pty. Ltd. v. Cody (2) ; King Gee Clothing Co. Pty. Ltd.'s Case (3), per Dixon J.; Gill v. City of Prahran (4); Potts or Riddell v. Reid (5); Leyton Urban * District Council v. Chew (6). The definition of "cost" does not involve any matter of estimation. The phrase " properly attribut- able" calls for a mathematical computation excluding any question of estimation. Looking at a particular transaction, the question is whether any sum is " properly attributable." If no certain sum can be attributed, the case is simply one for which the Order does not provide. The difficulty of devising a fornvula to cover every situation may well have the result that some transactions are not covered, but that does not go to validity qua the transactions which are covered. Tt merely means that as regards some transactions the formula is not effectual. The formula must be regarded as having been designed to deal with the ordinary run of transactions. Its validity is not to be tested by imagining extraordinary cases in relation to which diffi- culties can be conceived. The plaintiff's contention that opinions might differ as to what was " properly attributable " is met by the submission that the definition is directed to computations that can be made upon which all reasonable people would agree, having regard to the facts of a particular transaction. Hien if the second branch of the definition of "cost" is bad for the reason advanced by the plaintiff, it is severable. There is no reason why the first branch - which, it is conceded, is not objectionable - should not

[135]

of the other paragraphs. But in order to dispose of the demurrer it is only necessary to deal expressly with pars. 5 and 6 and the definitions and schedules so far as they relate thereto. The former paragraph fixes and declares maximum prices for sales by manu- facturers where the prescribed records are not kept, while the latter fixes and declares such prices where the prescribed records are kept. It is established by the decisions of this Court that where the maximum price is fixed by means of a formula as in the present case the application of the formula to the facts must enable the price to be calculated with certainty. If, therefore, the formula prescribes ingredients which require estimation or the exercise of skill and judgment so that, as Dizon J. said in King Gee Clothing Co. Pty. Ltd. v. The Commonwealth (1), there can be " no exactness, certainty or common agreement in the result", no certain objective standard is prescribed and the formula is lacking in certainty. The prices fixed by par. 5 are the prices specified in the First Schedule. This schedule provides a number of formulae for calculating the maximum prices for sixteen items of outerwear. Except in the first four items, one of the ingredients in each formula is the actual cost of the material used or the actual cost of the material and linings used. In par. 4, these words are defined to mean " one-tenth of the cost of the shortest length of material or materials or material and lining or materials and lining of the same width as that used in the outerwear from which ten such articles of apparel may be cut." I agree with the contention that the words " may be cut " in this definition require an estimate to be made which would vary according to the degree of skill and experience of individual cutters so that no certain objective standard is prescribed, and these formulae therefore fail for uncertainty. 'An ingredient in each of the formulae for fixing the price in the case of the first four items is the cost of a certain amount of the material used. In the first item, for instance, it is the cost of two and three- quarter yards of the material used. A lesser or greater amount of material than that prescribed might in fact be used, but this makes no difference. Three objections were raised to the certainty of the formulae: (1) that the definition of "cost " is uncertain ; (2) that the definition of material is uncertain ; and (3) that, where the material used comprises two or more principal materials, the cost is uncertain. 'As to (1), the second part of the definition of " cost " prescribes that where material, linings or trimmings are purchased with other material, linings or trimmings or other goods the cost means that part of the total purchase price which is properly attributable to such first-mentioned material, linings or trimmings. I agree with the (1) Ante, p. 184.

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