Cole v Whitfield

Cole v Whitfield - [1988] HCA 18 - HCA 1986 case summary — Zoe

[52]

No provision of the Constitution has been the source of greater judicial concern or the subject of greater judicial effort than s. 92. That notwithstanding, judicial exegesis of the section has yielded neither clarity of meaning nor certainty of operation. Over the years the Court has moved uneasily between one interpretation and another in its endeavours to solve the problems thrown up by the necessity to apply the very general language of the section to a wide variety of legislative and factual situations. Indeed, these shifts have been such as to make it difficult to speak of the section as having achieved a settled or accepted interpretation at any time since federation. The interpretation which came closest to achieving that degree of acceptance was that embodying the criterion of operation formula which we shall subsequently examine in some detail. That formula appeared to have the advantage of certainty, but that advantage proved to be illusory. Its disadvantage was that it was concerned only with the formal structure of an impugned law and ignored its real or substantive effect. It was in vogue during the twenty-five years that began with Hospital Provident Fund Pty. Ltd. v. Victoria [32] and continued through to Beal v. Marrickville Margarine Pty. Ltd. [33] and Bartter's Farms Pty. Ltd. v. Todd [34] , though the seeds of its decline were clearly visible in Pilkington v. Frank Hammond Pty. Ltd. [35] and North Eastern Dairy Co. Ltd. v. Dairy Industry Authority of N.S.W. [36] . In more recent years various members of the Court have declined to accept and apply the criterion of operation formula. This process culminated in the two decisions on the Wheat Stabilization Scheme - Clark King & Co. Pty. Ltd. v. Australian Wheat Board [37] and Uebergang v. Australian Wheat Board [38] - in which the members of the Court were unable to agree upon a common or a majority approach to the construction of the section. The divergence of opinion expressed in the judgments in Uebergang led Mason J. in Miller v. TCN Channel Nine Pty. Ltd. [39] to say that "there is now no interpretation of s. 92 that commands the acceptance of a majority of the Court". In the same case [40] , Deane J. observed with reference to the decisions of the Judicial Committee of the Privy Council and of this Court on s. 92 that:

[58]

To create a free trade area embracing the Australian colonies it was necessary for agreement to be reached about a uniform external tariff. Differing fiscal policies represented a formidable barrier to such agreement. Until 1873 there was another obstacle to the creation of a free trade area in the form of an Imperial prohibition against the imposition by any colony of duties "upon imports from "any particular country or place" which were not equally imposed on imports from "all other countries and places whatsoever" ": Quick & Garran, Annotated Constitution of the Australian Commonwealth (1901), p. 104 (Quick & Garran). The prohibition, which prevented preference to intercolonial trade, gave effect to the general policy adopted by the Imperial Government that tariffs be non-discriminatory. The policy was not opposed, however, to the creation of an Australian free trade area provided that any tariff upon entry into the area was non-discriminatory. By the Australian Colonies Duties Act 1873 Imp., the colonies were empowered to enter into reciprocal free trade arrangements. However, the diversity of their fiscal policies remained a stumbling block: see Quick & Garran, pp. 104-106. In particular, the Victorian tariff appeared to have the purpose of protecting local industry, whereas the tariff of New South Wales, which favoured free trade, was fixed for the purpose of satisfying budgetary requirements: see Patterson, The Tariff in the Australian Colonies 1856-1900 (1968), pp. 164-165. As the 1891 Report of the South Australian Royal Commission on Intercolonial Free Trade shows (p. vi), "intercolonial free trade, on the basis of a uniform tariff", was a commonly accepted ideal. Subsequently, the first report of a Victorian Board of Inquiry in 1894 expressed the belief "that the people of Victoria are practically unanimously in favour of free-trade between the colonies", though the report described the factors which were then impeding intercolonial trade: border taxes, differential railway freights designed to secure trade for Victorian lines and ports, and stock taxes levied to keep out cattle from interstate: First Report of the Victorian Board of Inquiry (1894), pp. 27-29. The report recommended that each colony be invited to join Victoria in a Customs Union: ibid., p. 29. In its second report the Board noted popular support for both protection of native industries and intercolonial free trade: Second Report of the Victorian Board of Inquiry (1895), p. x. Notwithstanding this popular support, concrete proposals for the implementation of free trade between the separate Australian colonies languished outside the growing movement towards federation.

[70]

So far as [the words of cl. 89] imply the removal of everything in the nature of an obstruction placed in the way of intercolonial trade by any state they have our hearty approval. The only question is whether the words in their present connexion and novel combination do not go further than the removal of obstructions, and imply the power to interfere in regard to matters which may be considered to affect absolute freedom of trade and intercourse. (Ibid., p. 2373.) Deakin secured Barton's agreement to examine the language of cl. 89 again, but it seems that the rhetoric of the provision, which Barton acknowledged to be "the language of three lawyers", proved so powerful that it passed virtually unchanged into the Constitution. In the course of making drafting amendments the word "commerce" was inserted after "trade" in cl. 89 by a drafting committee, but that amendment was not debated before acceptance. That cl. 89 was intended to eliminate all border customs duties is undoubted. That it might create other immunities from government control was foreseen, though there is no suggestion that it was intended to prevent the enactment of what Parkes had described in his original draft as regulations "necessary for the conduct of business". Indeed, before Barton undertook to limit cl. 89 to restriction or interference with trade throughout the Commonwealth by "any taxes, charges or imposts", he had expressed concern that the Commonwealth Parliament should not be "denuded of the powers it would otherwise have": LaNauze, Absolutely Free, p. 88 (quoting Convention Debates (Sydney, 1897), p. 1053). Higgins was anxious lest the clause should deprive the States of power to prohibit the introduction of diseased animals and plants: ibid. (quoting Convention Debates (Sydney, 1897), at pp. 1063-1064). But the Conventions did not define what regulations were to be permitted and what regulations were to be forbidden. Subject to an immaterial variation of the introductory words, the amended cl. 89 was adopted, without further elucidation or qualification to deal with its acknowledged obscurity and foreseen difficulty of application, as s. 92 of the Constitution. The delimitation of the precise scope and effect of the guarantee was left as an unresolved task for the future.

[77]

The two elements in s. 92 which provide an arguable foundation for giving the section a wider operation with respect to trade and commerce than that foreshadowed by its history are the reference to "intercourse" and the emphatic words "absolutely free". A constitutional guarantee of freedom of interstate intercourse, if it is to have substantial content, extends to a guarantee of personal freedom "to pass to and fro among the States without burden, hindrance or restriction": Gratwick v. Johnson [45] . If s. 92 were to be viewed in isolation from its history, the attachment of the guarantee to trade and commerce along with intercourse might suggest that interstate trade and commerce must also be left without any restriction or even regulatory burden or hindrance. That is not to suggest that every form of intercourse must be left without any restriction or regulation in order to satisfy the guarantee of freedom. For example, although personal movement across a border cannot, generally speaking, be impeded, it is legitimate to restrict a pedestrian's use of a highway for the purpose of his crossing or to authorize the arrest of a fugitive offender from one State at the moment of his departure into another State. It is not necessary now to consider the content of the guarantee of freedom of various forms of interstate intercourse. Much will depend on the form and circumstance of the intercourse involved. But it is clear that some forms of intercourse are so immune from legislative or executive interference that, if a like immunity were accorded to trade and commerce, anarchy would result. However, it has always been accepted that s. 92 does not guarantee freedom in this sense, i.e. in the sense of anarchy: see, e.g., Duncan v. Queensland [46] ; Freightlines & Construction Holding Ltd. v. New South Wales [47] . Once this is accepted, as it must be, there is no reason in logic or commonsense for insisting on a strict correspondence between the freedom guaranteed to interstate trade and commerce and that guaranteed to interstate intercourse.

[82]

The vice in the suggested argument lies in assuming that s. 92 forbids every interference with State trade and commerce; and this brings me to a consideration of the second question, namely, what is the exact nature of the freedom which the section vindicates? There are few epithets in the English language which extend over a larger area of meaning than the word "free" or vary more with the object qualified. The word "free" is often used to qualify the word "trade", and sometimes, though not so often, to qualify the word "commerce". When used with respect to trade and commerce among Sovereign States it ordinarily means no more than unrestricted by tariff or customs duties; it more rarely means free from all artificial restrictions or restraints conditioned on the international character of the trade or commerce; but freedom of trade and commerce never means freedom from regulation or control, or complete immunity from municipal law with respect to the acts which constitute such trade or commerce. No civilized nation has ever tolerated a trade or commerce, whether foreign or domestic, which was not subject to regulation and control both with respect to the method of carrying it on, and the general conduct of those who carried it on. It could not be contended that a treaty guaranteeing freedom of trade and commerce between two nations would enable the subjects of each, while carrying on such trade and commerce within the territory of the other, to ignore either the municipal laws regulating the general conduct of individuals within the State, or those prescribing the general conditions applicable to trade or commerce within the State. All that could be demanded under such a treaty would be equality of trading rights for the subjects of each nation in the territory of the other. I see no reason for attributing to the word "free" in s. 92 any larger meaning than that which it naturally bears in the collocation in which it is there used. Indeed, to do so would immediately create an inconsistency between s. 92 and s. 51(i), for it would leave no room for the operation of the latter. 1. (1920) 28 C.L.R. 530. 2. (1920) 28 C.L.R., at pp. 567-568.

[108]

We should refer, if only briefly, to the comments made by Dixon J. in the Banking Case [88] when his Honour gave his reasons for not accepting the interpretation of the trade and commerce provision in s. 92 which would limit it to measures imposing burdens of a discriminatory kind. He conceded that that interpretation "at one time proved attractive and it had strong support". However, he pointed out that by 1948 it seemed to have lost all support. His Honour then referred to the comment of Barton J. in Duncan v. Queensland [89] that if the restriction of interstate trade is included in the direct operation of an Act the fact that intrastate trade is also more or less affected does not diminish the restriction and that if the State legislature could make a burden apply alike to all the people of Australia as well as the people of the State, still the considerations of the case would not differ. This comment does not answer, and was not intended to answer, the argument that s. 92 was directed to guarantee freedom from measures imposing burdens of a discriminatory kind. Barton J. stated the view he took of the section at a later stage in his judgment [90] , concluding that the section could be paraphrased in the terms stated by Griffith C.J. in New South Wales v. The Commonwealth [91] : "Every owner of goods shall be at liberty to make such contracts for the transportation of goods from one State to another as he thinks fit without interference by law." The comment of Barton J. [89] is consistent with that view of the section, but it provides no independent answer to the argument in favour of an interpretation which proscribes measures imposing burdens of a discriminatory kind. Dixon J. then referred (the Banking Case [92] ) to the rejection of that interpretation by the Privy Council in James v. Cowan [93] and stated that Lord Wright rejected it in James v. The Commonwealth [94] when his Lordship said in a remark, which we have already referred to, that an Act "may contravene s. 92 though it operates in restriction both of intrastate and of interstate trade". The remark, like that of Barton J. in Duncan [95] , though inconsistent with the interpretation, is not a reason for rejecting it.

[125]

The regulation neither operates at the border or frontier nor distinguishes between local and interstate trade or produce. However, the limitation on the size of crayfish that may be sold or possessed in Tasmania is unquestionably a burden on the interstate trade and commerce in crayfish caught in South Australian waters and sold in Tasmania. But does it bear the character of being discriminatory against that interstate trade and commerce? The prohibitions against the sale and possession of undersized crayfish apply alike to crayfish caught in Tasmanian waters and to those that are imported. In that respect no discriminatory protectionist purpose appears on the face of the law. Furthermore, the object of the prohibitions, in conjunction with the prohibition against catching undersized crayfish, is to assist in the protection and conservation of an important and valuable natural resource, the stock of Tasmanian crayfish. Although the legislation operates in this way to protect the Tasmanian crayfish industry, it is not a form of protection that gives Tasmanian crayfish production or intrastate trade and commerce a competitive or market advantage over imported crayfish or the trade in such crayfish. And, even if the legislation were to give an advantage to the local trade by improving the competitive qualities of mature Tasmanian crayfish by eliminating undersized imported crayfish from the local market, the agreed facts make it clear that the extension of the prohibitions against sale and possession to imported crayfish is a necessary means of enforcing the prohibition against the catching of undersized crayfish in Tasmanian waters. The State cannot undertake inspections other than random inspections and the local crayfish are indistinguishable from those imported from South Australia. On the materials before the Court, the legislation and the burden which it imposes on interstate trade and commerce are not properly to be described as relevantly discriminatory and protectionist.

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Before

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Judgment (127 paragraphs)

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