Hughes and Vale Pty Ltd v New South Wales [1953] HCA 14

Hughes and Vale Pty Ltd v New South Wales [1953] HCA 14 | Case summary | Zoe

the view of Gavan Duffy C.J. in R. v. Vizzard; Ex parte Hill (2). McTiernan J. agreed, but expressed a separate view (3). Williams J. expresses a view based on the balancing of competing facilities (4). In the present case the State Transport (Co-ordination) Act 1931-1952 (N.S.W.) gives an unqualified power to interfere with the liberties of the inter-State transporter to move inter-State. As such, the Act contravenes s. 92. See Commonwealth v. Bank of New South Wales (5). The impact of the Act is direct and not consequential on the person who seeks to trade inter-State. It is not a case of a rule being prescribed for persons who may travel on the road, e.g., a rule that no vehicle may cross certain bridges when carrying a weight greater than eight tons. In the light of the passages cited above from Commonwealth v. Bank of New South Wales (6) the view taken by Latham C.J., McTiernan and Williams JJ. in McCarter v. Brodie (7) that the Act in that case was a regulatory Act cannot be supported. The Transport Regu- lation Act 1933-1947 (Vict.) which was considered in McCarter v. Brodie (7) did provide by s. 34 as amended by the Transport Regulation (Licences and Fees) Act 1947 (Vict.), s. 7, an upward limit of five shillings per ewt. based on loading capacity, whereas the Act here by s. 18 (5) provides no upward limit on the payment. The only persons who may obtain a licence under the Act are persons whose vehicles are registered in New South Wales. That appears from s. 16 (1). The Transport Regulation Act 1933 (Vict.), s. 33, as amended by the Transport Regulation (Licences and Fees) Act 1947, s. 5 (2), excludes from its operation vehicles registered in other States so that the legislation considered in McCarter v. Brodie (7) contained significant differences from that now in question. In that case Webb J. proceeded on the basis that R. v. Vizeard; Ex parte Hill (8) had been approved by the Privy Council in James vy. Commonwealth (9). That is not so. Only one passage in one of the judgments was approved. Lord Wright was there examining the decisions before and after W. & A. McArthur Ltd. v. State of Queensland (10) not from the point of view of s. 92, but for the purpose of ascertaining whether those decisions were consistent or inconsistent with the view put forward in McArthur's

source of the powers exercised by the road transport authority of the State is the State Transport (Co-ordination) Act 1931-1952. Its provisions cover the carriage of passengers and of goods but in this case we are concerned with the provisions only as they affect the transportation of goods. It is made an offence to carry or offer to carry goods for hire or for any consideration or in the course of business by a motor vehicle unless thé vehicle is licensed under the Act: s. 12 (1) and s. 3 (1) defining " operate"? and "public motor vehicle". The offence is extended to the case of a man carrying his own goods (except goods not intended for sale) or goods which he has sold: s. 12 (2). It is also an offence for a person to send his goods by an unlicensed vehicle: s. 13. These provisions cover not only mechanically propelled vehicles on the surface but also aircraft. A licence is annual: s. 16 (2). It may authorise the vehicle to operate on specified routes or roads or in specified districts and may contain terms and conditions. By means of such conditions the fares and freights may be fixed and the use of the vehicle restricted. To break a condition is an offence and to go outside the authority of the licence is to break a condition: s. 15 (3), s. 17 (1) and (2) and (5). A condition may be imposed in a licence that the licensee shall pay sums ascer- tainable in a manner to be determined. The determination may be according to mileage travelled or otherwise, but so that the amounts payable shall not exceed an amount calculated at three pence a ton per mile of the mileage travelled upon a weight consisting of the aggregate weight of the vehicle unladen and of the loading the vehicle is capable of carrying : s. 18 (5). Clause 3 in the licence fixes a rate consisting of the maximum allowed by this provision. In dealing with an application for a licence the licensing authority is required to consider all such matters as it may think necessary or desirable and in particular it is to have regard to a number of specified matters. They include the suitability of the route, the extent to which the needs of the locality are served and to which the proposed service is necessary or desirable in the public interest, the elimination of unnecessary services and the co-ordination of all forms of transport including rail and tram, the conditions of the roads and their capacity without unreasonable damage to carry the proposed public vehicular traffic, the fitness of the applicant and the construction, suitability and fitness of his vehicle: s. 17 (3). In the beginning a board of four commissioners was set up, which, subject to the control of the Minister, was to carry into effect the objects and purposes of the Act and discharge the duties powers

and were taken into account by the learned judges, who gave different degrees of emphasis to them. I am fully alive to the very great legal and practical importance of the conclusion in favour of the validity of the transport legislation which the Court has upheld. But that is the very subject matter of McCarter v. Brodie (1) and I am not prepared to regard the importance of the subject matter as sufficient to overcome the weight of the circumstances I have enumerated as otherwise making it right to decline to reconsider the decision. If the Transport Cases have no future application except where the conditions or considerations exist that arise from the State providing facilities for the carriage of goods both in the form of railways and in the form of roads, the danger is removed of the decision operating generally over the whole area covered by s. 92 and on that footing I think that we ought not to reconsider it. I have been much encouraged to adopt such a view of the transport cases by the following passage in the reasons of Williams J. in McCarter v. Brodie (2). Referring to the Transport Cases his Honour says : - '* In my opinion they ought not to be re-opened in this Court without the greatest hesita- tion. The Acts do regulate competition between land transport by rail and road, both of passengers and goods, but only so far as such competition arises out of competing facilities provided by the States themselves. In this respect the Acts differ fundamentally from the legislation held to be invalid in the Australian National Airways Case (3) and the Bank Case (4), for there the effect of the legislation was simply to prohibit competition with the govern- ment airlines in the one case and the government banks in the other. The Transport Regulation Acts do not prevent individuals carrying on the business of land transport among the States without a licence. But they do prevent individuals plying their vehicles on the public roads of the States without a licence. They proceed on the broad principle that the interests of the State require the regulation of the whole service of land transport wherever it is conducted upon the public roads. JI am of opinion that a State must have a wide power to regulate the use of the facilities which it provides for trade and commerce, so that the public funds invested in such facilities, in this case the railways, shall not be jeopardised by undue competition brought about solely by the provision of another facility by the State. It is a question of fact whether

or regulating inter-State trade when it prescribes the facilities it will offer for carrying on trade generally, though if, on examina- tion, it appears that the object of the Legislature is really to prejudice inter-State trade, its enactment may be invalid" (1). Rich J. s " Tt (the case) arises upon a new aspect of the legislation relating to the use of roads, vehicles and railways - an aspect which could scarcely have struck the minds of those who resorted to the emphatic but uncertain terms of sec . Then in the course of describing the legislation his Honour said, " It is directed to secure an ordered system of public transportation in which the integers (not the least important of which are State railways) do not engage in mutual slaughter by irrational competition. As part of the means to this end it sets up a licensing system for motor vehicles which act as common carriers or which otherwise engage in the carriage of goods" (3). Finally the learned judge propounds the question he regarded as critical as follows : - " The question which I have to ask myself is whether, in a scheme which allows complete freedom to go or to send from one place to another but in the process of co-ordinating the means and of rationalizing the facilities, denies a completely unregulated choice of means, a direct restraint upon or interference with trade, commerce, and intercourse is imposed " (4). In the course of the judgment of Evatt J. the following passage oceurs : - '' On the contrary, I think that a State does not infringe sec. 92 if, having no concern, interest or object in restricting or prohibiting trade between States, it chooses to organize, regulate and co-ordinate those facilities and services which are provided and conducted within the State as instruments essential to all trade, commerce and intercourse, including inter-State trade, commerce and intercourse" (5). Then, after dealing with the financial and other responsibilities of States in relation to the provision and the maintenance of Government Railways Avatt J. said: " Where the States have also expended large sums of money for the purpose of constructing and maintaining roads, the problem of ' co-ordination ' of the railway and road services becomes one of direct national concern" (6).

the decisions of the Judicial Committee in the James Cases, and with the decision and reasons of the Judicial Committee in the Bank Case (1), to decide that either the transport regulation legis- lation of Victoria or the State Transport (Co-ordination) Act of New South Wales, is in harmony with s. 92. The argument is founded upon the wide discretion conferred by each Act to grant or refuse licences. Notwithstanding this feature of the latter Act, the Judicial Committee said of the decision in Vizzard's Case (2) that it may be reconciled with the decision in James v. Cowan (3). That observation should be noticed in connection with the conten- tion, made for the plaintiff, that the effect of the State Transport (Co-ordination) Act is to authorise the prohibition of inter-State commerce at the mere will of the Executive and to put direct and immediate restrictions upon such commerce. The contention, in my opinion, is based upon a misunderstanding of the Act. I venture to say that the Judicial Committee could not have thought either in James v. Commonwealth (4), the Bank Case (1), or at the hearing of the petition in McCarter v. Brodie (5), that the contention does justice to the legislative scheme of this transport legislation. The discretion conferred to grant or refuse licences is wide but not unlimited. Authority is not granted to refuse a licence merely because the applicant wants to use the vehicle, for which a licence is sought, in inter-State transportation across New South Wales, nor is any authority given to refuse a licence to any applicant out of bias, prejudice or for a reason irrelevant to the purposes of the Act. It is plain from the reasons of the Judicial Committee in the Bank Case (1) that s. 92 does not strike at every regulatory law under which inter-State commerce is not kept open to all comers. It was argued for the plaintiff that in a licensing scheme truly regulatory of motor transport and consistent with s. 92 the question of the facilities provided by the railways can play no part. This argument was advanced upon the hearing of the petition in McCarter v. Brodie (5) for special leave. The reason why that question is out of place, so the argument runs, is that in order to maintain harmony with s. 92 it is necessary to specify the conditions with which an inter-State carrier must comply. It was said that conditions directed to the safety of the public would be permissible, but subject to the proviso that the conditions impose no undue burden upon the commerce.

trade and commerce is invalid. Such a law does not regulate such trade, it merely prevents it. But a law prescribing rules as to the manner in which trade (including transport) is to be conducted is not a mere prohibition and may be valid in its application to inter-State trade, notwithstanding s. 92" (1). Their Lordships added " With this statement, which both repeats the general proposition and precisely states that simple prohibition is not regu- lation, their Lordships agree " (1). A glance at the Milk Case (2) will make it clear that the rules to which Latham C.J. was referring were certainly not confined to rules which left it open to everyone to compete in the industry, because the Act there in question provided for the expropriation of all the owners and the vesting of their milk in a board, the justification being that the expropriation was directed towards fixing the price for the sale of the milk in the metropolitan district of Sydney and its hygienic treatment and distribution so as to safeguard the health of the inhabitants of that district. The Privy Council has twice, at least, referred to the meaning of " regulation". In Attorney-General for Ontario v. Attorney-General for the Dominion (3), their Lordships said that they saw no reason to modify the opinion which was recently expressed on their behalf by Lord Davey in Municipal Corporation of City of Toronto v. Virgo (4) in these terms: " Their Lordships think there is marked distinction to be drawn between the prohibition or prevention of a trade and the regulation or governance of it, and indeed a power to regulate and govern seems to imply the continued existence of that which is to be regulated or governed". There is no suggestion in this definition that the regulation of some form of trade and commerce cannot in appro- priate circumstances restrict the number of persons authorised to engage in it. The thing which is to continue to exist is the trade itself and not the right of every individual to engage in it.

ger transport, including transport by rail". The same problem exists in the United States of America and is discussed in many cases, examples of which are Buck v. Kuykendall (1); Bush & Sons Co. v. Maloy (2) and Lloyd A. Fry Roofiing Co. v. Wood (3). The power of Congress to make laws under the Constitution of the United States to regulate commerce among the States is, unlike the power to make laws with respect to that subject matter under s. 51 (i.) of the Australian Constitution, an exclusive power and it has therefore been held in the United States that laws similar to the Transport Acts are beyond the legislative powers of the States. But it is clear from the judgments in these cases that the power of Congress to regulate commerce is wide enough to authorise laws regulating competition between rail and road. The purpose of the New South Wales Act is to improve and co-ordinate the means of and facilities for locomotion and transport, the official charged with its administration now being a corporation sole, the Director of Road Transport. The principal section is s. 17.. The discretion conferred upon him by this section is extremely wide but it is not unlimited. It must be exercised bona fide and so as to carry into effect the purposes of the Act. Otherwise the duty to exercise the discretion according to law could be enforced by mandamus. It is wrong to say that the Act is in no way concerned with roads or the use of roads as such. Section 17 provides that one of the considerations the director must have regard to is the condition of the roads to be traversed with regard to their capacity to carry the proposed vehicular traffic without unreasonable damage to such roads. Apart from the competitive angle, a State must have, I should think, wide powers of regulating the use of its roads in the interests of public safety and their maintenance. It must have the power within reason to decide for what kinds of vehicles the roads are suitable. It must have power to limit their length, width, height and weight. It must have power to prevent over- crowding though this would have the effect of limiting the number of vehicles.

It has often been observed that inter-State free trade is probably a fundamental necessity of any federal system. In the case of Australia it was a primary object of Federation. When the Constitution was framed, the most prominent consideration which led to the adoption of s. 92 lay doubtless in the existence of customs duties, which were, before Federation, imposed by the States (then called Colonies) upon a great variety of goods not only when imported from overseas but also when imported from another State. But I do not think the idea has ever been seriously entertained that s. 92 was concerned only with these inter-State customs duties as such. One of several answers to any such view is found in the fact that s. 90 has already provided that the power to impose duties of customs and excise, and (subject to the exception prescribed by s. 91) the power to grant bounties on the production or export of goods, shall be exclusive powers of the Commonwealth. At the same time, as was observed in James v. Commonwealth (2), it cannot be doubted that the fundamental conception behind s. 92 was that of a "free border": every person was to be at liberty to take or send goods from State to State (trade and commerce) and to pass from State to State upon his lawful occasions (inter- course) without let or hindrance. There is a passage in the judgment of Higgins J. in W. & A. McArthur Ltd. v. State of Queensland (3), which is worthy of remembrance in this connection. As to the most important point which it decided, McArthur's Case (4) has been overruled by James v. Commonwealth (2), and as to other points its authority is perhaps dubious today: even the examples taken by Higgins J. himself of invalid State legislation must be regarded as open to question. But I know of nothing which better captures the spirit of s. 92 than the short passage which I have in mind. His Honour says: "Sec. 91 is really an exception to the provision of sec. 90 as to bounties, and, when sec. 91 is seen in this aspect, sec. 92 appears in its true character, as extending the application of the principle contained in sec. 90 - no more inter-State imposts (sec. 90); no more State restrictions of any kind, present or future, on inter-State trade or intercourse (sec. 92)" (5). It is now settled, of course, that the Commonwealth is bound by s. 92 equally with the States, so that for the words " State restrictions'? we should, for general purposes, substitute

Now, an import or export duty does not necessarily operate to restrict seriously or at all the trade of an importer or exporter. We are accustomed in this country to heavy protective dutie designed to an extent to d and restrict. But a small duty, imposed for revenue purposes and readily " passed on", may not really restrict the importation or exportation of goods by any individual importer or exporter to any appreciable extent. Never- theless, one would suppose it quite beyond argument that the imposition of any duty on inter-State imports or exports would infringe s. 92. If it were imposed by a State, the matter would be covered by s. 90: if it were imposed by the Commonwealth, it would be covered by s. 92. There would be a burden imposed, real though light. But there are other familiar methods of controlling the passage of goods across frontiers, which are in their nature necessarily restrictive. At least two of these, be it noted, are quite commonly found in customs legislation : they are to be found in the existing Customs Act 1901-1952 (Cth.) and regulations made under ss. 56 and 112: see Reg. v. McLennan; Hx parte Carr (1). These methods include total prohibitions, prohibitions subject to discretionary licences or exemptions, and the imposition of quotas. Each of these methods is obviously and necessarily restrictive of the trade of every person affected by it. In the first case the restriction affects every person who is capable and desirous of engaging in the trade. In the second case, the restriction affects every such person who cannot obtain a licence. In the third case the restriction affects every such person when once the quota is exhausted. Every such person so affected is simply prohibited from engaging in the trade. No valid distinction for the purposes of s. 92 can be drawn among the three methods. A famous example of a quota system - held to infringe s. 92 because it prohibited inter-State (as well as intra-State) sales in excess of the quota - is James v. South Australia (2). The correctness of the decision of this Court in that case was strongly challenged in James v. Cowan (3) and the emphatic approval of the decision (4) is not the least important feature of that vitally important case. It was in relation to this " quota system " that Lord Atkin used the words : « Tf this leaves interstate trade ' absolutely free ', the constitutional

Cases was shifted. The idea that the carrying of goods wasa % means whereby commerce was carried on, but was not itself commerce, was abandoned. The "' volume of trade" theory of s. 92, and the theory that s. 92 did not protect individual persons, punagar J. were abandoned, or perhaps it would be more correct to say that they concealed themselves in a silent background. At the same time, no generally accepted basis on which the legislation could be held valid was arrived at. Practically speaking, two new grounds for so deciding emerged. These were in substance (1) that the legislation in question was merely "regulatory "', and (2) that the States, because they provided facil for transport, must have power to control the use of facilities for transport in any manner thought fit. The second ground had been foreshadowed in the judgment of Williams J. in the Airways Case (2). With regard to the first ground, I simply refer to what I said in McCarter v. Brodie (3), adding a reference to the important case of Melbourne Corporation v. Barry (4). I gave a number of examples of "regulation". Section 92 protects individuals (like Mr. James), and any individual who finds himself prohibited from crossing a State border is entitled to invoke its protection. With regard to the second ground, I speak with all respect, but it is, to my mind, not really a ground at all. In the last resort I can find no real foundation for it except expediency. The question of expediency is itself one of a highly controversial character, and I am not able to regard the reference to political and economic problems in the judgment of their Lordships in the Banking Case (5) as an invitation to treat questions of expediency as decisive or even important in such a case as the present. I would not, of course, deny that a constitution must be interpreted against a political, social and economic, background, but this cannot mean that it is proper to give to a particular provision one meaning where bankers and air-line operators are concerned and another meaning where carriers by land are concerned. The two questions

because of their inherent authority or because of any approval of them by the Privy Council; on the contrary, he treated the case before the Court as depending upon a consideration of the question, apart from the authority of the Transport Cases, whether the challenged Victorian provisions were regulatory or prohibitive. The answer given, like the question, related to the Acts in their entirety ; and the conclusion reached was that the Acts were truly described as regulation Acts. His Honour recognized that the provisions chiefly complained of required a person to hold a licence before he could operate a commercial goods vehicle upon the highways of the State; that they applied to such a person even though he was engaged in inter-State trade and commerce ; that no person had a right to obtain a licence ; and that a licence could be granted or refused at discretion, though the discretion was not unlimited or arbitrary. But his Honour considered that a licensing system, even one possessing these characteristics, must be regarded as a system of regulation. '" Perhaps the most common method of regulating trade", his Honour said (1) "is by a licensing system, e.g. in the case of intoxicating liquor, drugs, slaughtering of stock, dealing in marine stores, &c. In each case some authority has the duty of determining whether an application for a licence shall be granted or refused. Such licences are generally subject to conditions relating to the manner of carrying on the trade and these conditions frequently involve the payment of a fee. It is such a system which the Z'ransport Regulation Act applies. The Act has all the characteristics of a system of regulation". I understand his Honour's judgment to mean that a prohibition applying to inter-State trade and commerce (or at least to the inter-State transportation of goods), if it is subject to a discretionary power to grant exemption as part of a licensing system, is to be regarded as no more than regulation and as therefore leaving inter-State trade commerce and intercourse absolutely free; and that it is nothing to the point that the discretion to grant or refuse licences is absolute within the ambit provided by the general scope and object of the Act. McTiernan J. concurred, but Williams and Webb JJ. gave no support to this far-reaching doctrine.

justifiable as regulation of such trade, is a violation of s. 92. Tt is not to the point that any such interference or restriction may leave unimpaired the total volume of trade from State to State or, that it is not the purpose of the legislation to create interference with or impose restrictions upon inter-State trade as such, or that the legislation is not "directed against" or not "aimed at" inter-State trade. As the Judicial Committee pointed out " in whatever sense the word ' object' or 'intention' may be used in reference to a Minister exercising a statutory power, in relation to an Act of Parliament, it can be ascertained in one way only, which can best be stated in the words of Lord Watson in Saloman y. Saloman & Co. (1) 'in a Court of Law or equity what the legis- lature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to indicate, either in express words or by reasonable and necessary implication'. The same idea is felicitously expressed in an opinion of the English law officers, Sir Roundell Palmer and Sir Robert Collier, cited by Isaacs J. in James v. Cowan (2): 'It must be presumed that a legislative body intends that which is the necessary effect of its enactments: the object, the purpose, and the intention of the enactment, is the same'. The same learned judge adds "by the necessary effect', it need scarcely be said, these learned jurists meant the necessary legal effect, not the ulterior effect, economically or socially, It was because Section 20 of the Dried Fruits Act of South Australia operated according to the natural meaning of its words to authorise a direct restriction upon the manner in which James could dispose of his product by an inter-State transaction that it offended Section 92, not because some other extraneous purpose, object or intention was ascribable to the South Australian legislature". These views of the Judicial Committee Jed, immed- iately, to the conclusion that s. 46 (1) of the Banking Act 1947, which provided that a private bank should not after the commence- ment of the Act carry on banking business in Australia, except as thereinafter required by the section, was invalid. Nor can I see that the decision would have been otherwise if the section had in substance provided that a private bank should not carry on banking business in Australia unless it was the holder of a licence which might be granted or withheld at the absolute discretion of a licensing authority. For if the legislature itself may not, without infringing s. 92, assert a right, at its absolute discretion, to permit or prohibit banking, it is, to me, inconceivable that it may, without infringing s. 92, confer such a right upon a subordinate body. This, of course, 2; 47 C.L.R. 386.

At a glance

Court

Decision date

Before

Source

Judgment (361 paragraphs)

, at pp. 498, (2) (1933) 50 C.L.R., at p. 56.

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