Conclusion
67 The Notice of Contention should be upheld. Accordingly, the appeal should be dismissed with costs.
68 HANDLEY JA: In this appeal I have had the benefit of reading the judgment of the Chief Justice in draft. I agree with his Honour's reasons other than those dealing with the defendants' notice of contention.
69 The relevant point under the notice of contention concerns the true construction of the exception in cl 69(2) of the Regulation to the exemption in favour of tow truck operators licensed in another State or Territory. Clause 69(2) provides:
"Such an exemption does not apply to or in respect of any towing work that starts in this State."
70 The company carries on a specialised towing business from Rocklea in Queensland. After a semi-trailer owned by Cement Australia Pty Ltd overturned about 10km from Lismore the owner's transport manager asked the company to recover the vehicle and tow it to Queensland.
71 The company instructed the second defendant, one of its drivers, to undertake this task and he drove the recovery vehicle from Rocklea to the accident site, recovered the semi-trailer and towed it to Queensland. These activities gave rise to the subject charges and the question is whether they fell within the exemption under cl 69(1) or are excluded by sub-cl (2). That turns on whether the "towing work" started in Queensland or in New South Wales.
72 The company charged its customer for its time and the use of its equipment during the journey from Queensland to the accident site and back. It was performing its contract throughout this period and in particular during the journey to the accident site. Performance of the contract, which can fairly be characterised as a towing contract, undoubtedly started in Queensland. However it does not follow that towing work started in Queensland and was being performed during the southward journey.
73 "Towing work" is not defined in the Act or the Regulation but the Act (s 3) defines "tow", "tow truck", "operate" and "tow truck operator". These definitions also apply to the Regulation (Interpretation Act s 11). "Tow" is defined as including:
"(a) lift and tow, or lift and carry, and
(b) lift for the purpose of towing or carrying, and
(c) carry on a trailer, and
(d) place on a trailer for the purpose of carrying, and
(e) any other action prescribed by the regulations for the purposes of this definition,
but does not include any activity declared by the regulations not to be towing for the purposes of this Act."
74 The Regulation contains nothing relevant by way of inclusion or exclusion. This definition is not inclusive and the ordinary meaning of "tow" is also available. "Tow truck operator" is defined as meaning:
"… a person who conducts a business involving the operation of any tow truck for the purposes of towing."
75 Section 7 of the Interpretation Act provides that where there is a statutory definition "other parts of speech and grammatical forms have corresponding meanings". Towing is another grammatical form of "tow" and therefore has a corresponding meaning. The statutory definition of "tow" includes the preliminary activities at the accident site of lifting and placing for the purpose of towing, but not travelling to the accident site.
76 The defendants did not "tow" the overturned semi-trailer within the statutory definition while the recovery vehicle was travelling to the accident site and there was no towing, as defined, during that journey. This leaves for consideration the ordinary meaning of towing and the meaning of the composite expression "towing work". The Shorter Oxford Dictionary gives the meanings of tow, as a verb, as to draw by force, pull, drag, to drag by a line, to proceed by towing or being towed. The Macquarie Dictionary gives the meanings as to drag or pull, the act of towing. It is clear that travelling for the purpose of towing is not towing. "Towing work" does not have a wider meaning because "towing" itself involves work.
77 Although the recovery vehicle was travelling under contract for fee or reward as soon as it left Rocklea on its journey to the accident site it seems to me, as a matter of ordinary meaning, it was not then towing anything or doing towing work.
78 The dictionary meanings cover towing on land and at sea. Towing at sea has given rise to much litigation, and there are textbooks on the subject including Bucknill "Tug and Tow" 2nd ed 1927, Parkes and Cattell "The Law of Tug, Tow and Pilotage" 3rd ed 1994, and Rainey "The Law of Tug and Tow" 2nd ed 2002.
79 Many of the tug and tow cases turn on the wording of towage contracts and are not helpful, but some consider the ordinary meanings of tow, towage and towing. In the Princess Alice (1849) 3 W Rob 138, 139-40 [166 ER 914, 915] Dr Lushington said, distinguishing towing from salvage:
"Without attempting any definition which may be universally applied, a towage service may be described as the employment of one vessel to expedite the voyage of another, where nothing more is required than the accelerating her progress."
80 In The Auguste Legembre [1902] P 123, 128, a salvage case, Gorell Barnes J said:
"… although they went out in very bad weather, the vessel is built for the purpose, and after she got there there does not seem to have been any unusual risk in the towage, because it did not commence until the weather had moderated."
81 Finally in The Baltyk [1948] P 1, 7-8 Pilcher J said:
"A contractual service of towage or assistance rendered by a tug to a ship is essentially one in which in practice the physical operation of towing or guiding the ship is rarely continuous throughout the performance of the whole service."
82 Earlier he had said at 4-5, referring to the terms of the towage contract in that case:
"I have little doubt that technically the 'hiring' of the two tugs was completed on the telephone on July 13. It is clear that the two tugs entered on the performance of the agreed services at the latest when they commenced to tow or assist the Baltyk … The contract service was to tow and assist the Baltyk the whole way to Eastham and it would seem to follow that, having entered on the service contracted for the defendants are prima facie bound by the conditions of the contract …"
83 Although cases such as these must be used with care, they confirm the ordinary meaning of towing work and distinguish between hiring for towing and travelling for the purpose of towing on the one hand, and the commencement of towing, towage, or towing services on the other. I conclude therefore that the defendants have not brought themselves within the exception in cl 69(2) because the towing work commenced in New South Wales.
84 I agree with the Chief Justice that the Act does not directly or indirectly impose discriminatory burdens of a protectionist kind on interstate tow truck operators wishing to undertake towing work originating in New South Wales: Cole v Whitfield (1988) 165 CLR 360, 394, 395.
85 The problem, if there be one, arises from reg 69(2). Regulation 69(1) contains a general exemption in favour of persons holding licenses or permits issued under the law of another State or Territory. The company and its driver held appropriate licenses or permits under Queensland law and were entitled to the benefit of this exemption.
86 Before Cole v Whitfield the company could have invoked the prevailing doctrine that s 92 was a constitutional guarantee of the right of an individual to engage in interstate trade: Cole v Whitfield at 401. If this doctrine remained applicable the obligations on the company to become licensed under the Act, and pay annual licence and permit fees, would have been characterised as a burden on its freedom to undertake interstate towing work from New South Wales into Queensland. The difference is highlighted by Finemores Transport Pty Ltd v New South Wales (1978) 139 CLR 338 which involved a challenge to a non-discriminatory stamp duty of $115.15 payable annually on the certificate of registration of road transport vehicles. Barwick CJ said at 340:
"Transport for reward across State lines is part of that trade, commerce and intercourse which is constitutionally declared to be absolutely free … That freedom is invaded if that activity is inhibited or burdened by any act of any legislature or of any executive. Essential to the activity of interstate transportation is the use of the roads which lead to the crossing of State lines. A tax, as distinct from a recompense for services rendered or provided, exacted in connection with the registration of such vehicles so that they may be so used is such a burden … Interstate transportation is to be free of such burdens. That trade and commerce has been deliberately placed in what might be described as a privileged position. It is not to be relatively free, no more burdened than comparable intrastate activities: but absolutely free. Thus, as it has long been decided, s 92 cannot be limited to protection against discriminating burdens."
87 Regulation 69(2) qualifies the exemption under sub-reg (1) by excluding from its scope towing work that starts in New South Wales. It discriminates between interstate towing work originating outside the State and such work originating within it. Its practical effect, if valid, is to capture towing work originating within the State for operators licensed under the Act and excludes interstate operators not so licensed. The question is whether reg 69(2) which creates this prohibition is invalid for infringing the constitutional guarantee in s 92. In Cole v Whitfield the High Court said at 399:
"… discrimination commonly involves the notion of a departure from equality of treatment. It does not follow that every departure from equality of treatment imposes a burden or would infringe a constitutional guarantee of the freedom of interstate trade and commerce from discriminatory burdens".
88 As a result of reg 69(2) the company's driver committed the offence under s 23(1)(c) of driving an unlicensed tow truck on a road, without having a driver's certificate, as soon as he crossed into New South Wales and the company committed a related offence under s 59. The magistrate held, without serious challenge in this Court, that by sending its recovery vehicle into New South Wales and towing the damaged semi-trailer back to Queensland for reward the company carried on business as a tow truck operator in this State in breach of s 15. The prohibitions enforced by these offences undoubtedly burdened the company's interstate trade, commerce and commercial intercourse.
89 The Act does not place such burdens on the interstate trade of tow truck operators in New South Wales and Queensland who hold licenses and whose drivers hold permits. The discrimination is not against tow truck operators in other States as such but against all operators who are not licensed under the Act including those whose business is centred in this State.
90 The company could avoid these burdens on its interstate trade by becoming licensed under the Act, paying the annual licence fees, and obtaining permits for its drivers.
91 In Cole v Whitfield the Court said at 408:
"In the case of a State law, … resolution … must start with a consideration of the nature of the law impugned. If it applies to all trade and commerce, interstate and intrastate alike, it is less likely to be protectionist than if there is discrimination appearing on the face of the law. But where the law, in effect, if not in form, discriminates in favour of intrastate trade, it will nevertheless offend against s 92 if the discrimination is of a protectionist character."
92 The position under the Queensland legislation of an operator licensed under the Act, who undertakes towing work into Queensland, was not considered by the magistrate but information placed before this Court suggests that the operator has an exemption in Queensland.
93 The company could lawfully undertake this work if it complied with the regimes of both States. If a licensed New South Wales operator has the benefit of an exemption in Queensland, the company's interstate trade originating in this State would bear a double burden compared with the single burden on a New South Wales operator.
94 The argument for the company which succeeded before the magistrate was based on the constitutional guarantee of the freedom of interstate intercourse. The almost unqualified freedom of interstate intercourse of a non-commercial kind is not relevant in this case, as the Chief Justice has held, and the freedom enjoyed by interstate commercial intercourse is no wider that that enjoyed by interstate trade and commerce.
95 The defendants did not attempt to prove that the compliance costs imposed by the Act created in practice a discriminatory burden of a protectionist kind on the interstate trade and commerce of Queensland operators. There was no evidence before the magistrate of the cost of licenses and permits under the New South Wales and Queensland Acts and the effect of the added costs of complying with the Act on the company's interstate towing work that originated in this State. The only relevant evidence was that 2-3 per cent of its operations have been "interstate" (stated case book p 105). It is not clear whether this referred to towing work commencing in New South Wales, or to all towing work across the border.
96 Evidence of the direct costs of compliance with the New South Wales and Queensland Acts was placed before this Court in Appendix B to the National Competition Policy Review of the Act by the Tow Truck Authority of New South Wales of March 2004 and in a separate list of fees handed up by Mr Gageler SC who appeared for the respondents.
97 The economic impact of these fees on the company could only be evaluated in relation to its interstate business. The Court does not know its gross revenue for work originating in New South Wales and cannot assess the impact of the fees and other compliance costs imposed by the Act. Without such evidence there is no basis for a decision that the Act imposed a discriminatory burden of a protectionist kind on the company's interstate trade, commerce or commercial intercourse.
98 The company owned specialised air cushion recovery equipment which no other Australian company had at the time (book p 100). This provided the only safe means for quickly recovering this overturned semi-trailer. A heavy mobile crane could not be used because of the low slung powerlines overhead (book p 103). The task was well beyond the capacity of the typical tow truck used to recover private vehicles.
99 The company had a practical monopoly in the use of this equipment for the recovery of heavy road vehicles within an unknown radius from Rocklea defined by the outer limits of economic operation. This has a double significance. It establishes that reg 69(2) was not intended to protect a New South Wales operator with similar equipment from interstate competition. It also suggests that the company had the capacity to raise its prices and pass on the compliance costs imposed by the Act.
100 In Castlemaine Tooheys Ltd v South Australia (1990) 169 CLR 436 the plaintiffs challenged State legislation which encouraged the use of refillable beer bottles, and discouraged the use of other bottles, for the ostensible purposes of litter control and the conservation of energy and other resources. It was agreed (447) that beer is a price sensitive commodity and a small increase in the price of a brand will result in a disproportionately large decrease in its sales. The introduction of a 15 cent deposit on non-refillable beer bottles and the obligations imposed upon retailers to accept their return and refund the deposit prevented the plaintiffs, while they used such bottles, from obtaining more than a minimal market share in the State and it was not profitable for them to establish a brewing plant there (448-9). If they sought to comply with the Act in other ways their prices would be uneconomic (449).
101 The plaintiffs who brewed their beer in other States and exported it to South Australia claimed that the legislation imposed a discriminatory burden of a protectionist kind on their trade. The High Court agreed and held that the legislation infringed s 92. The judgment of five Justices stated at 464:
"The practical effect of the 1986 Act and regulations and the notice … was to prevent the Bond brewing companies obtaining a market share in packaged beer in South Australia in excess of 1 per cent whilst their competitors used refillable beer bottles. It is uneconomic for the Bond brewing companies to convert their existing interstate plants to use refillable bottles."
102 They continued at 471:
"… the fact that a law regulates interstate and intrastate trade evenhandedly by imposing a prohibition or requirement which takes effect without regard to considerations of whether the trade affected is interstate or intrastate suggests that the law is not protectionist. Likewise the fact that a law … does not necessarily benefit local traders, as distinct from other interstate traders, suggests that the purposes of the law are not protectionist."
103 The legislation was held invalid as discriminating in a protectionist sense in relation to the interstate trade of the plaintiffs because it subjected to them to serious competitive disadvantages (477). Such a finding is not open in the present case. On its face the licensing regime does not discriminate against out of state operators, and there was no evidence that it operated in practice to effect such discrimination. The prohibitions operated without discrimination on unlicensed operators local or interstate.
104 There was no evidence similar to that in Castlemaine Tooheys that the economic and practical effects of complying with the New South Wales regime made it uneconomic for the company to undertake interstate towing work that commenced in New South Wales. The evidence suggests that the company may have been able to pass on its compliance costs to its customers. It charged its customer's insurer $6228.76 including GST for its services (book pp 85-8, 104) performed over 18 hours (104).
105 Mr Gageler relied on the reasoning in Cunliffe v The Commonwealth (1994) 182 CLR 272 on the freedom of intercourse limb of s 92. The case did not deal with intercourse which formed part of wider interstate trade and commerce (Hospital Provident Fund Pty Ltd v Victoria (1953) 87 CLR 1, 14-15) and the tests applied are not relevant to interstate intercourse of the type here relevant.
106 I conclude that reg 69(2) is not contrary to s 92 of the Constitution and the appeal must be allowed.
107 The following orders should be made: