Hospital Provident Fund Pty Ltd v Victoria

Hospital Provident Fund Pty Ltd v Victoria - [1953] HCA 8 - HCA 1953 case summary — Zoe

[6]

The Benefit Associations Act 1951 Vict. is, according to its long title, an Act to provide for the registration of sickness, hospital, medical and funeral benefit associations. There are some curious features about the statute. For example, although its provisions seem only appropriate to incorporated or unincorporated bodies of persons and are expressed to apply to "associations", the word "association" is defined to mean not only a body of persons, but also any person, undertaking or carrying on sickness, hospital, medical or funeral benefit business in Victoria. Then there are some anomalies in the provisions which apply if the Registrar refuses registration of an association of the defined description which is carrying on business at the commencement of the Act. Such an association cannot carry on business unless it obtains registration within six months: s. 3 (1). If the Registrar refuses registration, as he did in the case of the plaintiff company, an appeal from his refusal lies to the Minister: s. 10. But there is nothing to fix the time for applying or for the Registrar's refusal or to extend the six months pending an appeal. As a consequence the company in the present case had lost its appeal, though whose fault it was is a matter of dispute. Another anomaly comes from the form which a provision takes for winding up in the event of failure to obtain registration. It is s. 26 (2), and it requires the Minister to order the winding up of an association carrying on sickness, hospital, medical or funeral benefit business, if within six months of the commencement of the Act it is not registered. The provision is cast in a form which, if it is to receive its literal meaning, appears to vest all property of the body in the Registrar, even if it is a vast undertaking in which the sickness, hospital, medical or funeral benefit business is only a subordinate incident, and to require the Registrar, after discharging debts and obligations, to distribute the net proceeds of realization among the contributors. Perhaps such a reading of the provision is so incredible that a literal interpretation cannot be sustained.

[10]

An association may be registered to undertake all or any of these businesses: s. 3 (2). Certain bodies are exempt from the necessity of registration. They are friendly societies registered under the Friendly Societies Acts Vict., associations carrying on life insurance business, if registered under the Life Insurance Act 1945-1950 Cth., trade unions registered under the Trade Unions Act 1928 Vict., registered organizations under the Conciliation and Arbitration Act 1904-1950 and any association (not carrying on funeral business) declared exempt by order in council. An association seeking registration must have rules which provide for the establishment and maintenance of separate benefit trust funds for sickness benefit business, hospital benefit business, medical benefit business and funeral benefit business (s. 6 (1) (a)). The rules must give the control of each benefit trust fund to not less than three trustees, one of whom must be nominated by the Registrar (s. 6 (1) (b)). Provisions must also be contained in the rules in respect of the terms under which persons may become contributors, the nature of the benefits and the extent to which they will be available after payment of contributions has ceased, the proportion of each contribution of a contributor which is to be paid to the trustees of each benefit trust fund of the association and in respect of certain matters relating to investment, accounting and audit. The rules must also contain the forms of agreement approved by the Registrar to be made between the association and contributors for the respective kinds of benefits (s. 6 (1)). Limitations of what may be thought a stringent kind must be imposed by the rules on the amounts of the benefits to be provided. The benefit for sickness may not exceed £3 a week; for hospital accommodation &c. £5 5s. 0d. a week a person; for surgical and medical treatment £21 in any year; for funeral burial or cremation services £30 or in the case of a child £10. There are other provisions which the rules must contain, but enough has been said to show the general character of the requirements.

[16]

What the company says brings the business within the protection of s. 92 consists in part in the repeated occurrence of these accidental features in the course of its business and in part in the manner in which it conducts what may, I think, be not incorrectly called its internal affairs, that is to say, the communications between its offices in different States, the transmission of funds and the movements of its directors servants and agents. Now it would not be difficult to conceive of these inter-State elements growing to such dimensions as to form an essential part of the conduct of the business although it consisted in making and performing the intra-State contracts described. In that case they might thus give a particular enterprise, or a number of such enterprises, a character which would bring them under a possible exercise of the legislative power of the Commonwealth conferred by s. 51 (i.) (commerce) independently of the power conferred by s. 51 (xiv.) of the Constitution (insurance). It is in this way that the business of insurance has at length fallen under the Commerce power of Congress in the United States: United States v. South-Eastern Underwriters Association [1] ; Polish National Alliance of the United States of North America v. National Labour Relations Board [1] . But it is because insurance business is based in the United States upon the use of communications and the financial organization and other facilities forming part of inter-State commerce that it falls under the power and not because of the nature of insurance. This is well brought out in the opinion of Stone C.J. [2] whose dissent turned not so much upon the application of the commerce power as upon the inapplicability, as he thought, of the Sherman Act. The Chief Justice did not dissent in the Polish National Alliance Case [1] from the opinion of the Court, which was delivered by Frankfurter J. The opinion includes the following passages which illustrate the distinctions which I think must be made in considering whether the operation of the Victorian Act on the business with which it deals interferes with the freedom of inter-State commerce.

[23]

If a law takes a fact or an event or a thing itself forming part of trade commerce or intercourse, or forming 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, and the law proceeds, by reference thereto or in consequence thereof, to impose a restriction, a burden or a liability, then that appears to me to be direct or immediate in its operation or application to inter-State trade commerce and intercourse, and, if it creates a real prejudice or impediment to inter-State transactions, it will accordingly be a law impairing the freedom which s. 92 says shall exist. But if the fact or event or thing with reference to which or in consequence of which the law imposes its restriction or burden or liability is in itself no part of inter-State trade and commerce and supplies no element or attribute essential to the conception, then the fact that some secondary effect or consequence upon trade or commerce is produced is not enough for the purposes of s. 92. R. v. Smithers; Ex parte Benson [1] supplies a simple illustration. A State cannot say that a man shall not cross the border and enter if he has been convicted of serious crime in another State, or, for that matter, cross the border and leave if he has been convicted of serious crime in his home State. But either State can imprison him as a punishment for an offence for any term the law may prescribe, and yet that is an effectual way of preventing inter-State movement. The first is direct in the sense I have described, the second is not. The illustration is simple, but it is true that it is not close to the present case. Here, however, all the inter-State movement or communication upon the interruption of which the statement of claim insists is not stopped because the statute applies to it or operates upon it or upon anything without which it cannot take place. It is not a necessary part of the business to which the law refers. It is not a thing contemplated by the Act. If it be stopped, it is stopped because the plaintiff company can no longer carry on business consistently with the law of Victoria and must be wound up. The reason why the plaintiff company cannot carry on business and must be wound up is simply because the Victorian statute has undertaken to control the business of contracting to provide the four kinds of social benefits with which the Act deals when it is done for contributions of money.

[29]

The Benefit Associations Act 1951 Vict. and the regulations made under this Act provide for the control within Victoria of the provision of sickness, hospital, medical and funeral benefits. These are benefits which friendly societies and trade unions have for many years provided for members and their dependants. Friendly societies legislation commenced in the United Kingdom at the end of the eighteenth century. The objects of such legislation are the better management of such associations and the better security of their funds. Such societies are associations within the meaning of the Benefit Associations Act, but if registered under the Friendly Societies Acts of Victoria are relieved by the Act from the obligation to register under it. "Friendly Societies are voluntary associations formed for the purpose of raising, by subscriptions of the members, funds out of which advances may be made for the mutual relief and the maintenance of the members, their wives, or children, in sickness, infancy, old age, or infirmity": Halsbury's Laws of England, 2nd ed., vol. 15, p. 294. It is a traditional function of a trade union to provide similar benefits. Trade unions which are registered under the Trade Unions Act of Victoria are also relieved by the Benefit Associations Act from registration under its provisions. The object of the Benefit Associations Act is to bring benefit associations which are not registered friendly societies or registered trade unions under control similar to that imposed upon registered friendly societies. The means for imposing the control is registration. The Act authorises the Government to dispense with the obligation to register any association not engaged in the funeral benefit business. By reason of constitutional necessity, relief from the obligation to register under the Act is granted to workers' organizations registered under the Conciliation and Arbitration Act 1904-1950 and life insurance companies registered under the Life Insurance Act 1945-1950 Cth.. With all these exceptions, the Benefit Associations Act prevents any person or body of persons, unless registered under its provisions, from undertaking or carrying on in Victoria sickness hospital medical or funeral benefit business. Such business is built upon contracts which stipulate for benefit in the form of monetary payments in the event of sickness, the need for hospital treatment, the expenditure of money for medical attention or pharmaceutical goods, or the need for funeral services. In the last case only the Act contemplates that the benefit may take the form of the supply of goods and services, but there is no evidence of any inter-State business constituted by the supply of such goods and services.

[45]

The Chief Justice in the case of the South-Eastern Underwriters Association [6] said that an Act of inter-State commerce may be incidental to the business of writing and performing contracts of insurance but the formation of the contracts is not inter-State commerce. The Chief Justice referred to inter-State contracts of insurance. He said: "If an insurance company in New York executes and delivers, either in that state or another, a policy insuring the owner of a building in New Jersey against loss by fire, no act of interstate commerce has occurred. True, if the owner comes to New York to procure the insurance or after delivery in New York carries the policy to New Jersey, or the company sends it there by mail or messenger, such would be acts of interstate commerce. Similarly if the owner pays the premiums by mail to the company in New York, or the company's New Jersey agent sends the premiums to New York, or the company in New York sends money to New Jersey on the occurrence of the loss insured against, acts of interstate commerce would occur. But the power of the Congress to regulate them is derived, not from its authority to regulate the business of insurance, but from its power to regulate interstate communication and transportation. And such incidental use of the facilities of interstate commerce does not render the insurance business itself interstate commerce. Nor is the nature of a single insurance transaction or a few such transactions not involving interstate commerce altered in that regard merely because their number is multiplied. The power of Congress to regulate interstate communication and transportation incidental to the insurance business is not any more or any less because the number of insurance transactions is great or small. The Congressional power to regulate does not extend to the formation and performance of insurance contracts save only as the latter may affect communication and transportation which are interstate commerce or may otherwise be found by Congress to affect transactions of interstate commerce" [1] .

[56]

These are two demurrers which have been heard together to statements of claim filed by two companies incorporated in Victoria. In each statement of claim there is also joined an individual plaintiff who is alleged to be a shareholder and director of the company, but no reliance was, or I should think could be, placed by the plaintiffs on these additional joinders. The question at issue on the demurrers is whether the Benefit Associations Act 1951 Vict., which came into force on 7th November, 1951, is invalid because it offends against s. 92 of the Constitution. Each of the plaintiff companies is engaged in carrying on business in the forms of insurance to which the Act relates, that is the business of insuring persons for what the Act calls sickness, hospital, medical and funeral benefits. The plaintiffs allege in their statement of claim, and these allegations must be taken to be true for the purposes of the demurrers, that they are carrying on these businesses across State lines, not only in Victoria but also in other States as well, and that they are therefore engaged in trade, commerce and intercourse among the States within the meaning of s. 92. The allegations in the statements of claim, and particularly the allegations that for the purposes of carrying out the contracts of insurance it is necessary to transmit funds, carry on correspondence and transmit documents, and send officers of the company across State borders, are, in my opinion, sufficient to prove that these businesses are inter-State in character. It is established by the Banking Case [2] , that in a modern community traffic in intangibles is just as much trade and commerce as traffic in tangibles. Where that traffic is carried on across State lines it becomes trade and commerce among the States within the meaning of s. 92. In United States v. South-Eastern Underwriters Association [1] , the Supreme Court of the United States held that insurers carrying on the business of insurance in more States than one were carrying on inter-State commerce. That case and the subsequent cases in the United States to the same effect cited by the present Chief Justice in the Banking Case [3] were applied by this Court in the latter case by analogy in deciding that the business of banking was trade and commerce and that where such business was carried on by a bank in more States than one the bank was engaged in trade and commerce among the States. Accordingly, the Act under discussion deals with a subject of trade and commerce, including in the case of individuals and corporations carrying on such business across State lines, inter-State trade and commerce.

[58]

By s. 2, the Act defines "Association" to mean any person or body of persons (corporate or unincorporate) undertaking or carrying on sickness, hospital, medical or funeral benefit business in Victoria. Section 3 (1) provides that such businesses shall not be undertaken or carried on except by an association registered under the Act. The Act recognises that there could be individuals or corporations carrying on such businesses when it came into force, and the same sub-section provides that any association which, at the commencement of the Act, is carrying on any of such businesses may, subject to the Act, continue to undertake and carry on that business for a period of not more than six months after the commencement of the Act without the association being so registered. The Act provides that an association may be registered under the Act to undertake and carry on all or some of such businesses and provides for the exemption from the provisions of the Act of certain societies and associations registered under other Acts and any association, other than an association carrying on funeral benefit business which is declared by an order of the Governor-in-Council to be exempt from the provisions of the Act. The Act provides penalties for carrying on any of these businesses without being registered under the Act. Section 26 (2) (a) provides that where an association is at the commencement of the Act carrying on any of such businesses, and that association is not registered under the Act within a period of six months after its commencement, the Minister shall order such association to be wound up and thereupon all the property &c. of the association shall be vested in the Registrar and the Registrar shall realise upon the property and, after discharging the debts and obligations of the association (other than debts and obligations to contributors) and making provision for the costs and expenses of the winding up of the association, distribute the moneys remaining in his hands among contributors, according to the amounts of their respective contributions. The Act contains elaborate provisions concerning the contents of an application for registration, the provisions which must be contained in the rules of every association registered under the Act, the establishment and the maintenance of separate benefit trust funds for each business and the report of an approved actuary which must accompany an application for registration.

[61]

The Act, in my opinion, operates upon inter-State trade and commerce in the forms of insurance to which it relates. It directly, and not remotely or incidentally, restricts this inter-State trade for it provides that it shall not be undertaken or carried on in Victoria, except by associations which are registered under the Act. Its operation is not limited to associations carrying on purely intra-State business. It applies to individuals and corporations residing or incorporated in Victoria carrying on business which extends into other States and to individuals and corporations residing or incorporated in other States carrying on business which extends into Victoria. Accordingly, the Act, consistently with the principles laid down by the Privy Council in the Banking Case [1] , can only be an Act which does not offend against s. 92 if it is an Act which in its true character is regulatory of the forms of insurance business to which it applies. Their Lordships said that in determining whether an enactment is regulatory or something more there cannot fail to be differences of opinion. "The problem to be solved will often be not so much legal as political, social or economic". They also said that in certain circumstances regulation which prohibits some persons from engaging in certain forms of trade and commerce, that is partial prohibition, or even regulation which confers a monopoly on one person does not necessarily mean that the legislation has passed beyond the realm of regulation and become directly restrictive of trade and commerce. I gathered from these remarks that the extent to which different forms of trade and commerce can be regulated depends upon the circumstances of each particular case, and came to the conclusion in McCarter v. Brodie [1] , that the judgment of the Privy Council was not inconsistent with the view expressed in the transport cases that economic conditions justified State legislation regulating competition between land transport by rail and road, both of passengers and goods, so far as such competition arose out of competing facilities provided by the States themselves. These cases appear to me to fall into a particular category and to have no application to forms of trade and commerce which only require regulation of the manner in which they should be carried on and do not require that the number of individuals who wish to participate should be restricted. In the case of an insurance business there seems to be no reason why everyone wishing to participate should not be entitled to do so provided he can comply with regulations, the purpose of which is to safeguard the interests of the insured. Regulations of this kind would have to be adequately supervised and it would be incidental to their effective operation to require that all such persons should be registered. But a system of registration could not be used so as to confer on some and deny to others able to conform to such regulations the right to carry on business. Such a system would go beyond the realm of regulation and become restrictive of the right of individuals to engage in trade, commerce and intercourse among the States guaranteed by s. 92. The Benefit Associations Act undoubtedly contains a number of provisions which may fairly be described as regulatory. Provisions such as those requiring the establishment and maintenance of benefit funds and the payment of a sufficient proportion of the contributions to those funds to ensure that claims upon the funds shall be met, are all provisions appropriate to regulate the proper administration and carrying on of such businesses. The requirement that individuals and corporations carrying on such businesses shall be registered would also be regulatory, provided all the individuals and corporations who desire to engage in such businesses and are prepared to conform to such provisions have a legal right to be registered.

[63]

Section 10 gives the applicant a right to be registered if, in the opinion of the Registrar - (1) the application for registration as an association; (2) the rules or proposed rules of the association; and (3) the report of an approved actuary comply with the requirements of the Act and the regulations. Section 10 (2) gives an applicant, whose registration is refused, the right "within the prescribed time and in the prescribed manner" to appeal to the Minister whose decision is final and conclusive. There is nothing in this section which appears to me to deprive an applicant of his common law right to apply to the Court for a mandamus if the Registrar refuses to register a proper application. The right to registration is not left to the discretion of the Registrar. The section requires that, if its provisions are satisfied, the Registrar shall register the association. The section refers to the opinion of the Registrar, but the opinion which the Registrar forms must be a proper opinion in law and if the applicant for registration has made a proper application and the Registrar has refused registration, the Court could in the exercise of its discretion grant a mandamus compelling him to register the applicant: Reg. v. Tidd Pratt [1] ; Reg. v. Brabrook [2] . The circumstance that the Act provides for an appeal to the Minister, which is simply an appeal from one administrative officer to a higher administrative officer, would not supply a reason why the Court should not do so. The right to apply for a mandamus is not taken away by the Act, and it is only where there is an alternative remedy at law which is not less convenient, beneficial, and effective that the Court will, as a general rule, in the exercise of its discretion, refuse the writ. Halsbury, Laws of England, 2nd ed., vol. 9, p. 773. In Reg. v. Leicester Guardians, Phillimore J. said "where there is a remedium juris, the Court will not in its discretion grant a writ of mandamus; but where there is no remedium juris, no other way in which the Courts can act, then it is the duty of the Court to grant a mandamus" [3] .

[68]

It is impossible, in my opinion, to read down the provisions of the Benefit Associations Act so as to safeguard the rights of existing associations unless s. 3 (1) can be given a distributive operation and confined to new associations. But the sub-section is not capable of being construed in this way and to attempt to do so would be to give the Act as a whole a completely different operation to that intended by the Legislature. It is evident that the Legislature did not intend that the specified businesses should be carried on partly by registered associations bound by its provisions and partly by unregistered associations subject to no regulation at all. Even if s. 26 (2) (a) could be severed from the rest of the Act existing associations would not be safeguarded because s. 3 (1) makes it unlawful for them to carry on business without being registered after the lapse of six months and the Act provides no means by which registration could be obtained after this time. Nor can the Act be read down so as to operate only with respect to associations engaged in intra-State business. The definition of association applies to any person or body of persons undertaking or carrying on one of the specified businesses in Victoria. It also provides that these businesses shall not be undertaken or carried on in Victoria except by an association registered under the Act. It is impossible to confine these provisions to intra-State trade without altering the whole operation of the Act. In its application to every association carrying on business in Victoria and its requirements that all such associations should be registered and have rules which comply with the Act, the Act embodies an inseverable scheme for the regulation of the carrying on of such businesses in Victoria, whether the associations are engaged in purely intra-State business or in purely inter-State business or in a combination of such businesses. The whole efficacy of the Act would be destroyed if its control of all such businesses was not complete.

[81]

In the view which I hold it is not necessary to examine the provisions of the Act in detail. The central provision is contained in s. 3 (1), which is in the following terms: - "Sickness hospital medical or funeral benefit business shall not be undertaken or carried on except by an association registered under this Act: Provided that any association which at the commencement of this Act is carrying on sickness hospital medical or funeral benefit business may subject to this Act continue to undertake and carry on that business for a period of not more than six months after the commencement of this Act without being so registered." Certain classes of associations are exempted, but neither of the plaintiff companies is within any of the exempted classes. The Act then provides that the Registrar of Friendly Societies under the Friendly Societies Acts is to be the Registrar for the purposes of the Act, and provides for the making of applications to him for registration. It prescribes the information which must accompany the application and requires that the rules of the applicant association must provide for certain specified matters. The application must be accompanied by a report of an approved actuary. Then comes s. 10, which is in the following terms: - "(1) If in the opinion of the Registrar the application for registration as an association the rules or proposed rules of the association and the report by an approved actuary comply with the requirements of this Act and the regulations the Registrar shall register such association; but if in the opinion of the Registrar such requirements are not complied with the Registrar shall refuse registration. (2) If the Registrar refuses registration the applicant for registration may within the prescribed time and in the prescribed manner appeal to the Minister against such refusal and the decision of the Minister in the matter shall be final and conclusive." The remaining provisions of the Act are concerned for the most part with requirements which are to be observed by associations carrying on business. Section 26 (2) provides that, where any association is carrying on a benefit business at the commencement of the Act and is not registered within six months after the commencement of the Act, the Minister shall order it to be wound up. The consequences of a winding up are then prescribed. It should be noted that the Act bears marks of haste in its drafting, and the Solicitor-General was disposed to concede that - theoretically at any rate - s. 26 could have a very drastic confiscatory effect which is not likely to have been intended. It may also be noted that the validity of some of the Regulations is very doubtful apart altogether from any constitutional question.

[91]

It is not, I think, universally true to say that, where the effect of legislation upon inter-State commerce or intercourse is indirect, the legislation does not contravene s. 92; see e.g., Vacuum Oil Co. Pty. Ltd. v. Queensland [1] , and cf. Fox v. Robbins [2] . "However circuitous or disguised it may be", per Dixon J. in O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways (N.S.W.) [3] the effect of legislation in imposing restraints or burdens on acts of inter-State commerce or intercourse may reveal that legislation as an attempt to contravene s. 92. But one thing, I think, is well established. Legislation, which imposes restraints upon conduct without reference or regard to acts of inter-State commerce or intercourse, will not be held to be struck by s. 92 merely because it involves the accidental consequence that acts of inter-State commerce or intercourse, which have previously taken place, will or may cease. An Act which requires an importer of petrol from New South Wales into Queensland to mix it with power alcohol produced in Queensland before he sells it is struck by s. 92, although the effect of the legislation on the protected act of inter-State commerce - the importation of the petrol - could hardly be described as "direct". But (to take a familiar example) the validity of an Act under which a person convicted of a crime is sentenced to imprisonment for five years is not affected, nor is its application restricted, by reason of the fact that that person has been in the habit of making frequent inter-State journeys and will be prevented from making such journeys for five years. An example of a slightly different nature and possibly more apposite to the present case is one taken by Latham C.J. in Australian Communist Party v. Commonwealth [1] : a Victorian law requiring medical practitioners to possess certain qualifications and to be registered does not contravene s. 92 because it may operate to prevent a New South Wales surgeon from crossing the border to perform an operation in Victoria. The Communist Party Case [2] itself provides another good example. The plaintiffs relied on s. 92. The majority of the Court did not find it necessary to consider the argument based on that section, but it could never have been held that the Communist Party Dissolution Act 1950 Cth. was invalid merely because the termination of the existence of the organisation would remove the occasion for inter-State journeyings and communications which had been habitually made by its officials. The cessation of such journeyings and communications would have been the merest accidental consequence of legislation which had no concern with, and no bearing upon, inter-State commerce or intercourse. This was the view taken by Latham C.J., who was the only justice who had occasion to consider the question.

[96]

The business carried on by the two plaintiff companies appears to me to possess none of the characteristics which in the Banking Case [3] attracted the protection of s. 92. Rich and Williams JJ. said: "In our opinion a banker who carries on business in more than one State is engaged in trade, commerce and intercourse among the States" [4] But this must be taken as referring specially to a banker and as being said in the light of the evidence as to the nature of a banker's business in Australia. For it is very clear that a person may carry on business in every State of the Commonwealth and yet never engage in an act of inter-State commerce. Each of the plaintiff companies appears to carry on business in more than one State, but that, of itself, means nothing that is relevant for the purposes of s. 92. The fact that directors of one company reside in different States and meet sometimes in the one and sometimes in the other can in no way affect the nature of the business carried on by that company. The facts that the company in one State makes contracts with persons in other States and receives "contributions" from persons in other States, that it makes payments from its office in one State to persons in other States, that its servants and agents travel from one State to another on the company's affairs, that documents and communications are transmitted from one State to another - these things, severally or in combination, do not mean that the business in which the company is engaged or any part of that business possesses the character of inter-State commerce. The business in which the company is engaged is the making of contracts to pay money on the occurrence of certain contingencies. No part of such a business can be said to possess any essential characteristic which brings it within the category of inter-State commerce, even though, in the course of it, journeyings and communications between the States take place. Such journeyings and communications may themselves, as I have said, command the protection of s. 92, but they are mere incidents or accidents of a business which has not itself the character of inter-State commerce and cannot be brought within the principle of the Banking Case [1] .

[104]

I do not think it necessary, for present purposes, to discuss at length the judgments or the interesting questions which they raise. Such matters as the question of the effect of the decision upon State powers as previously held to subsist (an effect which Jackson J. appears to have considered much more drastic than Black J.) are questions which do not directly arise under our Constitution. It is sufficient, I think, to say two things. The first is that the analysis by Stone C.J. of insurance transactions which involve the doing of acts in more than one State or the passage across State borders of persons or things is an analysis which I would not regard as necessarily inconsistent with anything in the opinion of the Court as expressed by Black J. The second relates to the general effect of the decision. The majority view undoubtedly rejects the broad generalisation that "insurance is not commerce". That generalisation could not, I think, as I have said, be accepted consistently with the decisions of this Court and of the Privy Council in the Banking Case [1] . For the rest, and so far as any question arising in the present case is concerned, I am clearly of opinion that the case is no authority for the proposition that the business carried on by the plaintiff companies or any part of it possesses the character of inter-State commerce in the sense in which part of the business of banking in Australia has been held to possess that character. It does involve the doing of acts which, considered in themselves, do possess that character. The steps necessary in the organisation of a "conspiracy" covering activities in more than one State were also acts of that character. And, when once it was held that the business, in relation to which those steps were taken, was "commerce", it followed that the taking of those steps was a subject matter with which Congress could deal under the commerce power. So far as it is relevant to the present cases, I do not think that the South-Eastern Underwriters Case [2] should be taken as deciding more than that. So regarded, it is perfectly consistent with the view which I take of this case.

[112]

Examination of what may loosely be called the inter-State activities of the plaintiffs shows that they fall into two main categories. The first consists of those activities described in general terms in sub-paragraphs 5 (b) and (c) of each statement of claim. These paragraphs allege that for the purpose of carrying on their respective businesses the plaintiffs maintained offices and staffs in Victoria, South Australia and New South Wales and provided equipment and motor cars in each of the said States for the purpose of the conduct of the said business, including business conducted across State boundaries, and maintained funds in the States of Victoria, South Australia and New South Wales for the purpose of meeting claims by contributors and meeting the liabilities and commitments of the plaintiffs respectively. They further allege that for the purpose of carrying on their respective businesses and as an essential part of their activities the directors, servants and agents of each of the plaintiff associations travelled frequently from the States of Victoria and New South Wales to other States and from those other States into Victoria and New South Wales and that there was, as a necessary part of the plaintiffs' respective businesses, the transmission and conveyance among the said States by internal carriage or ocean navigation of a large number of documents of various kinds. These activities are said to have been necessary for what might be called the internal management of the plaintiffs' businesses and for the co-ordination of their affairs. No doubt many of these particular activities are themselves entitled to the protection of s. 92 but to say that because such activities took place in the course of and for the purpose of carrying on the plaintiffs' businesses those businesses themselves form part of inter-State trade and commerce, is, in my view, completely erroneous. No doubt a company carrying on intra-State business in each of several States would find it necessary to engage in such activities but it would by no means follow from this that the company's business, as distinct from some of its particular activities, would form part of inter-State trade, commerce and intercourse. In such a case a law prohibiting its inter-State activities would, no doubt, infringe s. 92, but a State law prohibiting the carrying on in that State of the intra-State business of the company would not infringe s. 92, though doubtless it would result in a cessation of the business activities between that State and other States in which it might be carrying on business. In my opinion, there is nothing in sub-pars. 5 (b) and (c) of the statements of claim to found a contention by the plaintiffs that their respective businesses as distinct from the activities therein referred to, are entitled to any protection under s. 92.

[113]

If the plaintiffs are entitled to any such protection for their respective businesses the foundation for it must, I think, be found in the allegations contained in pars. 5 (a) (i), (ii), (iii) and (iv). It is apparently true that in some cases contributors resident outside Victoria undertook to pay their contributions to the associations at their respective offices in that State and that others, resident outside New South Wales, undertook to pay their contributions to the associations at their respective offices in New South Wales. Further, it seems, the associations undertook to pay benefits to contributors either from the Victorian or New South Wales office and in all cases to make such payments to the contributor at any address anywhere in Australia or for accommodation and maintenance at a hospital anywhere in Australia. The place of payment in any particular case would, of course, ultimately be determined by the presence or residence of the contributor in some particular place at the time of the occurrence of the relevant contingency. Perhaps the case of the plaintiff associations would be no weaker in principle if there were no allegations of fact other than those contained in paragraph 5 (a) (i), for even in the cases therein referred to, i.e. "contracts made in Victoria with contributors resident in Victoria in respect whereof all payments by the contributors were and are payable to the plaintiff company at its office in Victoria, and sums payable by the plaintiff company were and are payable from the office of the plaintiff company in Victoria to the contributor at any address anywhere in Australia or for accommodation and maintenance at a hospital anywhere in Australia", the associations may very well be required, in some circumstances, to make payments in other States. Evidence that this was so in a substantial number of cases might, no doubt, disclose that the company engaged in a substantial number of transactions across State borders, each of which would, by virtue of s. 92, be immune from direct interference, but, nevertheless, this circumstance would not invest the business of the associations with the character of trade, commerce and intercourse among the States. Possibly, it may be more correct to say that such activities are not, as in the case of the transmission of money or credit in the case of banking, an integral part of sickness, hospital, medical and funeral benefit business. On such evidence, I would have no doubt that a State law prohibiting or restricting in any State the carrying on of such sickness, hospital, medical or funeral benefit business could not be said directly to interfere with any form of inter-State trade, commerce or intercourse. It may be true that any such prohibition or restriction would result in making such inter-State activities unnecessary or diminishing the need for them. But such a result can, on my view, be regarded only as an indirect result of the legislation. I am further of the opinion that the allegations contained in par. 5 (a) (ii), (iii) and (iv) add nothing to the plaintiffs' case. They may disclose that the plaintiffs did engage in what I have referred to as inter-State activities, but, in my view, the prohibition contained in s. 3 of the Act does not operate directly to impede or prohibit these activities.

[114]

The views which I have expressed are not, I think, inconsistent with the decision of the Supreme Court of the United States in United States v. South-Eastern Underwriters Association [1] to which we were referred during the course of argument. In that case Black J. in delivering the opinion of the Court referred to a number of activities judicially recognised as constituting part of inter-State commerce and said: "These activities having already been held to constitute interstate commerce, and persons engaged in them therefore having been held subject to federal regulation, it would indeed be difficult now to hold that no activities of any insurance company can ever constitute interstate commerce so as to make it subject to such regulation; - activities which, as part of the conduct of a legitimate and useful commercial enterprise, may embrace integrated operations in many states and involve the transmission of great quantities of money, documents, and communications across dozens of state lines" [2] . But though this proposition may be thought to have justified an exercise of legislative power by Congress it does not follow that every activity of every insurance company, or, indeed, that the respective businesses of the plaintiffs, in their entirety, form part of inter-State trade and commerce or that in the Commonwealth every activity of such a business is within the protection of s. 92. For it is one thing to say that a company engages in activities which form part of inter-State trade, commerce and intercourse, and another to say that in every case the entire business of such a company forms part of such trade, commerce and intercourse. It is true that whilst conceding that "a contract of insurance, considered as a thing apart from negotiation and execution, does not itself constitute interstate commerce" [1] , Black J. was firmly of the opinion that the Court was not "powerless to examine the entire transaction, of which that contract is a part, in order to determine whether there may be a chain of events which becomes inter-State commerce" [2] . "Only," he said, "by treating the Congressional power over commerce among the states as a "technical legal conception" rather than as a "practical one, drawn from the course of business" could such a conclusion be reached. Swift & Co. v. United States [3] . In short, a nationwide business is not deprived of its interstate character merely because it is built upon sales contracts which are local in nature" [2] . The views were, however, expressed upon an examination of facts relating to insurance business generally in the United States and which were vastly different from those disclosed by the pleadings in this case. But, even so, his Honour went on to say: "It is settled that, for Constitutional purposes, certain activities of a business may be intrastate and therefore subject to state control, while other activities of the same business may be interstate and therefore subject to federal regulation. And there is a wide range of business and other activities which, though subject to federal regulation, are so intimately related to local welfare that, in the absence of Congressional action, they may be regulated or taxed by the States" [4] . Further, it is noteworthy that the decision in this case did not prevent the Supreme Court, when deciding Robertson v. California [5] - and independently of the operation of the McCarran Act which, subsequently to the decision in United States v. South-Eastern Underwriters Association [6] declared that the continued regulation and taxation by the several States of the business of insurance is in the public interest and provided that the business of insurance and every person engaged therein should be subject to the laws of the several States which relate to the regulation or taxation of such business - from upholding a State enactment constituting it a misdemeanour for any person, except one appropriately licensed under State legislation to act "as agent for a non-admitted insurer in the transaction of insurance business" within the State.

At a glance

Court

Decision date

Before

Source

Judgment (117 paragraphs)

Parties