Damjanovic & Sons Pty Ltd v Commonwealth [1968] HCA 42;

Damjanovic & Sons Pty Ltd v Commonwealth [1968] HCA 42; - HCA 1968 case summary — Zoe

[10]

4. It is convenient, first, to refer to the relevant portions of the statutes under challenge. The Levy Act imposes a levy at a rate to be prescribed in respect of "hens kept for commercial purposes" on each prescribed day (ss. 5 and 6). I find no need to refer to the details of the Act by reference to which the prescribed day is to be determined. Suffice it to say that it is a recurrent day set at calculable intervals of time. "Hen" means, according to the definition in s. 4, "a female domesticated fowl that is not less than six months old". The levy is not payable by a person who on the day the levy is imposed does not own more than twenty hens, and it is only imposed "in respect of such number of hens owned by him on the day on which the levy is imposed as exceeds the sum of twenty and a number ascertained in accordance with" a formula expressed in the Act and designed to include in the count only those hens which are used for the production of eggs for sale as distinct from the production of eggs for hatching chickens which are not intended themselves to be used for the production of eggs: see s. 8. Before prescribing the amount of the levy, the Governor-General is to take into consideration any recommendation in that behalf made to the Minister by the Council of Egg Marketing Authorities of Australia (which, as far as I can ascertain, has no corporate existence or statutory basis); and shall not prescribe a rate of levy in excess of the then current recommendation of that Council. The Poultry Industry Assistance Act 1965 (the Assistance Act) sets up a Trust within the Consolidated Revenue Fund of the Commonwealth into which the collections of the levy shall be paid, and out of which payments may be made from time to time to a State by way of financial assistance to be applied by the State for the assistance of the poultry industry as directed by the Commonwealth Minister. The Collection Act provides for the collection of the levy by State egg boards under arrangements to be made between the Commonwealth and such boards. The amount of the levy is made a debt due to and recoverable by the Commonwealth, and the Collection Act provides for the making of regulations requiring the making of returns for the purposes of that Act. (at p394)

[14]

8. But the reasoning of the Court as expressed in the judgment, by which it came to the conclusions that manufacture is not trade or commerce, and that the statute in question did not operate directly to burden inter-State trade is, in my opinion, in a different case. In particular, it may not be used as a substitute for the Constitution. Always the Constitution remains the text. Reasoning towards decision, as distinct from the fundamental conclusions on which the order of the Court is founded is, in my respectful opinion, not in itself authoritative. It may, of course, be persuasive according to the circumstances when a different statute and other particular situations are under consideration. But, in the construction and application of an organic instrument, it seems to me not appropriate for this Court to attempt to build upon such reasons what might seem to be a logical development therefrom, and to apply it in circumstances other than the presice circumstance with which such reasons dealt or circumstances which are indistinguishable therefrom. The common law denied that such a course was warranted or acceptable in the development of the common law: Quinn v. Leathem [1901] UKHL 2; (1901) AC 495, at p 506 For myself, I should think that such a course is even less permissible in constitutional construction. But in thus expressing myself, I would not wish to be taken as suggesting that settled constitutional doctrine emerging from the decisions themselves and the ultimate conclusions on which they are based, should not generally be maintained, and only overturned or departed from when its error is clearly made out. However, apart from this criticism of the use which it was submitted should be made of parts of the reasons for judgment in Grannall v. Marrickville Margarine Pty. Ltd.(1955) [1955] HCA 6; 93 CLR 55, I can myself derive little, if any, assistance in the resolution of this demurrer from any of the parts of those reasons to which we were referred. (at p396)

[25]

4. In advancing this contention the plaintiff does not challenge the decision in Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55 What is asserted is that, substantially, s. 5 of the Act imposes a levy in respect of the hens kept by it in virtue of its trade in eggs and that, since its trade is part of inter-State trade, it is deprived of the protection which s. 92 affords. It is not suggested that the keeping of hens or the production of eggs in this State forms part of an activity protected by s. 92, but it is contended that the language of s. 5 of the Act distinguishes this case from the case just mentioned. Grannall's Case [1955] HCA 6; (1955) 93 CLR 55, it is said, did no more than prohibit the manufacture of margarine except under and in accordance with the conditions of a licence which might be issued or withheld at the discretion of the Minister. Of the provision which had this effect the Court said: "It deals entirely with the liberty of persons in New South Wales to bring a given commodity into existence by operations in that State, and its validity presumptively stands unaffected by other provisions of the Act. A person may not bring the commodity into existence unless licensed, and if licensed he may bring into existence no greater quantity than is mentioned in the licence. The right or liberty 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] HCA 7; (1948) 76 CLR 1, 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 [1955] HCA 6; (1955) 93 CLR 55, at pp 71, 72" The Court did not deny the proposition that a burden, prohibition or restriction imposed on an activity antecedent to, or subsequent to the termination of, activities which form part of inter-State trade, may infringe s. 92. Examples of such cases are to be found in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia(1926) [1926] HCA 47; 38 CLR 408, and Vacuum Oil Co Pty Ltd v Queensland [1934] HCA 5; [1934] HCA 5; (1934) 51 CLR 108, and these cases were examined in Wragg v. New South Wales [1953] HCA 34; (1953) 88 CLR 353, at pp 396-398 This proposition was clearly recognized and the Court observed: "But when the entire statute has been examined, when the tendency of its undeniable aims and their bearing upon validity have been fully canvassed, when the plan of the statute, its order of ideas and the provisions of which it is made up have been turned this way and that, and when every experiment with them has been made, it comes back in the end to the simple position stated. In other words, the complaint of the defendant company remains a complaint against a restriction upon the production of table margarine, not against a restriction on inter-State trade. What begins as a restriction upon the production of the commodity remains a restriction on production, the validity of which rests upon an independent foundation. No latent characteristics are brought forth, no secondary meaning and application are affixed to it, amounting to an impairment of the freedom of inter-State commerce (1955) 93 CLR, at p 72" (at p401)

[26]

5. In the present case, however, the plaintiff points to the language of s. 5 which purports to impose a levy on all hens kept for commercial purposes, and finds in the italicized words a sufficient indication that the levy is imposed in virtue of its trade. Liability to pay the levy is, it is agreed, not, however, fixed or ascertainable by reference to the extent of the owner's trade in eggs though it is imposed, it is said, in respect of hens kept for commercial purposes, and that must mean kept for the purpose of trade or commerce. It is the italicized words which make all the difference, and it is conceded that if they had been omitted, there could be no objection that the provisions of the Act would infringe s. 92. In my view it was a precisely similar situation which was considered in Grannall's Case[1955] HCA 6; (1955) 93 CLR 55 In terms the question to which the Court gave a negative answer was whether s. 22A of the Dairy Industry Act, 1915-1955 (N.S.W.) constituted an infringement of s. 92. But that section was considered as one of a catena of sections - ss. 22A, 22B, 22C and 22D - which were introduced into the Act in 1940. They formed, it was said, a "coherent set of provisions". It was pointed out that, under the Act as it stood previously to the amendment, no person could use any premises as a dairy produce factory unless he was the holder of a licence issued under the Act. "Dairy produce factory" was defined to mean a building or place where butter, cheese, dried milk, condensed milk, concentrated milk, malted milk, or any other prescribed product of milk, or margarine is prepared or manufactured, or where milk or cream is tested, graded, pasteurized or cooled preparatory to manufacture, or where butter or cheese is processed after manufacture. To these provisions ss. 22A, 22B, 22C and 22D were added so that the first of these sections forbade the manufacture or preparation of cooking or table margarine in a dairy produce factory except under and in accordance with a licence issued pursuant to s. 22A. It is quite impossible, I think, in these circumstances, to regard such a provision as other than one which plainly forbade the manufacture of margarine for commercial purposes, or for sale, and the reasons of the Court clearly recognized that this was so. Also for what it is worth, it may be noticed that although the Court gave reasons for thinking that s. 22C in its operation might, in some circumstances, infringe s. 92, no suggestion was made that the provisions of s. 22B were open to question on any such ground. That section provided that notwithstanding anything in the Act or in any licence, any person who holds a cooking margarine licence may manufacture for sale only to any prescribed person or class of persons in lumps of not less than fourteen pounds, margarine which contains beef fat or mutton fat, or beef fat and mutton fat in a quantity of between seventy-five and ninety per cent. by weight of the total quantity of fat and oil contained in such margarine. (at p402)

[34]

6. It is now established that legislation which does no more than control the production or manufacture of goods for sale and delivery in inter-State trade is not inconsistent with s. 92, unless it is legislation which overtly achieves the impairment of the freedom of inter-State trade in the goods produced or manufactured: Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55 and Beal v Marrickville Margarine Pty. Ltd.(1966) [1966] HCA 9; 114 CLR 283 In the earlier case, after an emphatic statement that the freedom of inter-State trade cannot be impaired by circuitous means or concealed design, there follows a passage which I think must be read as a whole. It is: "But in applying this doctrine it is necessary first to see steadily what freedom is the subject of impairment, detraction or restriction. If some fact or event or thing which itself forms part of trade, commerce or intercourse, or forms an essential attribute of that conception (essential in the sense that without it you cannot bring into being that particular example of trade, commerce or intercourse among the States) is made the subject of the operation of a law which by reference to it or in consequence of it imposes some restriction or burden or liability, it does not matter how circuitously it is done or how deviously or covertly. It will be considered sufficiently direct or immediate in its operation or application to inter-State trade, commerce and intercourse. Provided the prejudice is real or the impediment to inter-State transactions is appreciable, it will infringe upon s. 92: see Hospital Provident Fund Pty. Ltd. v. Victoria (1953) 8[1908] HCA 55; 7 CLR 1 But generally speaking, it will be quite otherwise if the thing with reference to or in consequence of which the law operates or which it restricts or burdens is no part of inter-State trade and commerce and in itself supplies no element or attribute essential to the conception. It will not be enough that it affects something which, because it is a sine qua non to the existence of some subject of the freedom which s. 92 guarantees, has a consequential effect on what might otherwise have been done in inter-State trade (1955) 93 CLR, at p 78" In conformity with this statement I consider the criterion here to be applied is whether the keeping of hens for commercial purposes, which is what the Acts burden, is properly to be described as "no part of inter-State trade and commerce" and as something which "in itself supplies no element or attribute essential to the conception", i.e., inter-State trade and commerce. (at p404)

[44]

I quote that as a reminder that it is the words of the Constitution in their relation to the facts alleged in the pleading the subject of the demurrer that we have to consider. In doing so we are not governed by words, formulae and sentences culled here and there from judgments in other cases on different facts. That does not mean that we are to ignore authoritative expositions in earlier cases, or disregard the facts of earlier cases, as illustrations of the operation of the section in the Constitution. These cases establish doctrine, expound principle and, by denotation, give a concrete content to the abstract and general words of the enactment. This restrains the predilections and idiosyncrasies of an individual judge from dominating his interpretation of the Constitution. It thus makes for a stable law and a stable economy. Speaking in a general sense, I therefore hold myself guided, if not strictly governed, by the earlier decisions of this Court on this topic. Nevertheless, when new facts arise for consideration, it is, I think, wise to have always first in mind the words of s. 92 itself. In this I follow, I hope, the advice Dixon J. gave in Gratwick v. Johnson [1945] HCA 7; (1945) 70 CLR 1, at p 19 I once said, in a different context, that to prefer the gloss to the text is an old and besetting temptation for lawyers (Kavanagh v. The Commonwealth(1960) [1960] HCA 25; 103 CLR 547, at p 578) The arguments we heard in this and other cases about s. 92 suggest to me that it is a temptation much yielded to. There is often not only a preference for new words instead of the old, but also a mistaken use of analogy. The text becomes submerged in the illustrations. Analogy - not in the strict mathematical sense, but in the sense of a resemblance of facts - has long had a great place in our system of law. It is at the base of the method of precedent in the common law. Perhaps it began with Bracton's "si similia evenerint per simile iudicentur". In modern times it was commented on by Austin. More recently it has been considered by many academic writers, including Professor Cross in his work Precedent in English Law (1961). And in America too it has been the subject of analysis and commentary. Much of this literature, by writers on jurisprudence and on what it has become the fashion to call the philosophy of law, is analytical, profound and abstruse, as for example the recent article by Professor McBride, "The Essential Role of Models and Analogies in the Philosophy of Law", in the New York University Law Review, vol. 43 (1968), p. 53. I would not enter upon a discussion of the topic here, even if I felt competent to do so. But there are two general observations I would make. The first is that in the lawyer's process of analogical reasoning, the discernment of differences is as important as the seeing of similarities. The result of that was summed up by Jordan C.J.: "It by no means follows that because a particular set of facts has been held to warrant or even to necessitate a particular conclusion, another set of facts which bears a considerable resemblance to the former calls for the same conclusion": Davidson v. Mould (1943) 44 SR (NSW) 113, at p 115. My second observation is that reasoning by analogy is a rather different process in the development of the common law from its use in the interpretation and application of a statute or of the Constitution. Sir Owen Dixon, in an extra-judicial address he delivered in 1933 (reprinted in Jesting Pilate (1965), p. 13), said of the common law that

[47]

6. I have said so much, and quoted so much, simply because I am unable to see how having to pay a tax calculated by reference to hens, a tax which would be payable in whatever State the hens were kept, can be said to impair the hen-keeper's freedom to send eggs in the course of trade and commerce from New South Wales to Victoria. It was said that it does so because the tax burdens an act of inter-State trade and commerce: that is to say burdens the movement of eggs from State to State. The word "burdens" has had great currency in the discussion of s. 92. It was I think overworked in the argument in this case. Doubtless one can say, metaphorically really, as has been said by high authority, that to burden an act or transaction may curtail the freedom of an individual to do that act or engage in that transaction. But the question is not resolved by asking is there a burden - and then saying that a tax is a burden. Of course it is, for the taxpayer, again in a metaphorical sense. Having to pay the poultry levy makes poultry farming less profitable than it would otherwise be, if the burden cannot be absorbed in the price which the consumer must pay. But that is not enough. A land tax or an excise duty could in other businesses have the same indirect effect. The freedom protected by s. 92 is a personal right. Any subject may complain in the courts that a law which contravenes it is invalid if it directly affects him. That has now been stated by the Privy Council. It had earlier been said, clearly enough, in this Court. But I am unable to see that s. 92 stands in the way of all forms of what Dicey called collectivism. I do not think that it enables every individual, by a judicious use of State boundaries, coupled with an appeal to utilitarian doctrines of laissez-faire and freedom of contract, to escape the obligations of any purely general law applying throughout Australia to a trade in which he is engaged. I may at this point go again to the United States and quote the salutary warning given by Holmes J. in Baldwin v. Missouri [1930] USSC 108; (1929) 281 US 586, at p 595 (74 Law Ed 1056, at p 1061), when, speaking of the Fourteenth Amendment, he said: "I cannot believe that the Amendment was intended to give us carte blanche to embody our economic or moral beliefs in its prohibitions." The same may, I think, be said of our s. 92. (at p410)

At a glance

Court

Decision date

Source

Judgment (49 paragraphs)

Damjanovic & Sons Pty Ltd v Commonwealth [1968] HCA 42; (1968) 117 CLR 390 (27 June 1968)

Parties

Legislation Cited (4)

Cases Cited (9)