McCarter v Brodie - [1950] HCA 18 - HCA 1950 case summary — Zoe

CTHHCA

McCarter v Brodie

[1950] HCA 18

High Court of Australia|1950-07-01|Before: Fullagar JJ

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Court

High Court of Australia

Decision date

1950-07-01

Before

Fullagar JJ

Source

Original judgment source is linked above.

Judgment (123 paragraphs)

[1]

The application of the principle for which the appellant contends would, now that it has been finally determined that s. 92 applies to the Commonwealth as well as to the States, remove inter-State trade and commerce from legal control under any law (Federal or State) that imposed what could be described as a burden or restriction upon it. It has already been shown that many laws, Federal and State, are applicable to inter-State trade and commerce. Trade and commerce are unintelligible as conceptions and impossible as facts if there are no laws applying to trading and commercial transactions: see Milk Board Case [4] . Any other view would reduce s. 51 (i.) of the Constitution, which gives power to make laws with respect to inter-State trade and commerce, to a nullity, except in the case of facultative laws such as laws granting bonuses or bounties. Another example may be given. The Commonwealth Parliament has power to make laws with respect to quarantine: Constitution, s. 51 (ix.). The proposition for which the appellant contends would make it impossible to pass any valid legislation under this power which attempted to prevent the movement of things or persons inter-State, because the essence of quarantine law is that the actual movement of persons or transportation of things, e.g. animals and plants, is restricted or altogether prohibited. Such a law would be made in respect of the movement or transportation itself and any such law would be invalid according to the test laid down in McArthur's Case, unless indeed the suggestion were adopted which appears in McArthur's Case [1] , that laws on other subjects than inter-State trade or commerce might restrict or prohibit inter-State trade and commerce, notwithstanding s. 92. But the essential character of s. 92 is that, whatever it means, it imposes a limitation upon all law-making power: Gratwick v. Johnson [2] . No law is to prevent inter-State trade and commerce from being absolutely free. It is not material to ask whether the law can be described as a law upon crime or bankruptcy or health or sanitation or the exercise of a particular occupation. If the law does in fact interfere with the freedom protected by s. 92 it must be invalid, whether or not it can be described as a law which is not itself a law upon trade and commerce.

[4]

There is no authority for the proposition that the courts are authorized to inquire whether such restrictions are "reasonable" or not in order to determine whether they become "burdens" so as to infringe s. 92. It is not for a court to determine, to take some examples, whether a Sale of Goods Act, a Bills of Exchange Act, an Act relating to the control of wharves and warehouses, an Act requiring fruit to be prepared in a particular way before it is sold or animals to be killed in licensed abattoirs before the meat can be sold, are reasonable or not. The Transport Regulation Act deals directly with transportation in trade, which is itself trade and commerce: Australian National Airways v. The Commonwealth [1] . The Act imposes restrictions upon persons engaged in such transportation and prevents those persons doing as they please. Without control of transport on the roads, chaos would result. There would be the same result if inter-State transport were free from control and intra-State transport were subject to control. There is in my opinion no authority for the proposition that such restrictions will be valid if, in the opinion of a court, they are "reasonable" but not otherwise. There are many laws relating to highways. It is contended primarily that there can be no control of the persons who use the highways in inter-State transport by permitting only licensed persons to use them, but there is a reluctant admission that if the licence fee is "reasonable" it may be permissible to impose it. The roads of the State of Victoria have cost many millions of pounds; the railways of the State have cost many millions of pounds. It would be a most difficult task to determine what is a reasonable charge for the use of all or some of the roads by a particular motor truck or private motor car or some other vehicle. If a court is at liberty to inquire into such matters I do not see why the railway fares and freights between Victoria and all other States should not be held to be invalid unless it can be shown that they are "reasonable." Similarly the toll on the Sydney bridge, which is part of a highway used by inter-State traffic, might be held to be inconsistent with s. 92 unless a court was of opinion that it was reasonable. It is obvious that the determination of such matters as the amounts of licence fees, freights and fares, of conditions of road traffic and rail traffic, must depend upon considerations of policy which cannot be determined by a court. If the question is asked what would be a reasonable fee for a licence for a large truck or a small truck or a private motor car, or if it is asked how far it would be "reasonable" to limit motor traffic by reason of the financial obligations of the State in relation to the railways, or how much should motor traffic be required to contribute to general revenue to help to pay for roads &c., it would be quite impossible for a court to answer the questions. Any answer would depend upon the policy to be applied, e.g. whether the town should be favoured as against the country or the railways as against the roads or the producers as against the distributors. In my opinion there is no authority for the proposition that it is left to a court to determine whether particular laws with respect to inter-State trade are "reasonable" or not.

[8]

In James v. Cowan the precise question was whether a Minister had used a statutory power in accordance with the provisions of the statute. Section 28 of the South Australian Dried Fruits Act 1924 provided that "Subject to sec. 92 of the Commonwealth of Australia Constitution Act and for the purposes of this Act or of any contract made by the Board, the Minister may on behalf of His Majesty purchase by agreement or acquire compulsorily any dried fruits in South Australia. " It was found as a fact that the Minister had used this power for the purpose of forcing surplus dried fruit off the Australian market. Their Lordships said [3] that " "To force the surplus fruit off the Australian market" appears necessarily to involve two decisions: first, the fixing of a limited amount for Australian consumption (a necessary element in the conception of a "surplus"); secondly, the prevention of the sale of the balance of the output in Australia." It was found as a fact that the Minister exercised his powers for the express purpose of preventing the sale of the plaintiff's fruit inter-State. There was no difficulty therefore in holding that the section (expressed to be subject to s. 92) did not authorize such an exercise of the power. The conclusion which was drawn in this Court from the decision in James v. Cowan was that if legislation was "directed against" inter-State trade and commerce it was invalid, but that inter-State trade and commerce might be regulated and controlled by some laws. This conclusion was based upon the further statement in James v. Cowan which was in the following terms: - "If the real object of arming the Minister with the power of acquisition is to enable him to place restrictions on inter-State commerce, as opposed to a real object of taking preventive measures against famine or disease and the like, the legislation is as invalid as if the legislature itself had imposed the commercial restrictions" [1] . If a power of acquisition were used for these latter objects (as to famine, disease, &c.) it would as effectively interfere with inter-State trade and commerce as in the prohibited case (prevention of inter-State trade). The individual owner of the fruit would be deprived of his fruit in every case. There would be no possibility that he could sell it inter-State. Thus James v. Cowan did not decide that all laws which restricted the power of an individual to deal with his goods in inter-State trade were invalid.

[10]

James v. The Commonwealth [2] decided that the Commonwealth as well as the States was bound by s. 92. In that case a further exposition of s. 92 was given by the Privy Council. That case overruled McArthur's Case on both points which were there decided. The effect of McArthur's Case was summarized by Gavan Duffy C.J. in the following terms in R. v. Vizzard; Ex parte Hill [3] : - This Court in McArthur's Case "laid down the following propositions with respect to sec. 92 of the Constitution of the Commonwealth of Australia: - (1) The section in no way limits or restricts the legislative power of the Commonwealth. (2) The section precludes the Parliaments of the States from in any way regulating or controlling trade, commerce, and intercourse among the States." In James v. The Commonwealth both of these propositions were rejected. There is no dispute that proposition No. (1) was rejected. As to proposition No. (2), that also was rejected. If it had not been rejected the position would have been that no Parliament in Australia could "in any way regulate or control trade, commerce and intercourse among the States." In James v. The Commonwealth [4] this result is expressly stated as one of the reasons for rejecting "the theory expounded in McArthur's Case." In McArthur's Case the view of the Court was that s. 92, as construed by the Court, must be held not to bind the Commonwealth because otherwise inter-State trade and commerce would be free from all law, with the result that s. 51 (i.) would be a nullity. The Privy Council rejected the doctrine that s. 92 meant that inter-State trade and commerce was free from law - either Federal or State. As it was put in James v. The Commonwealth [1] , if the theory enunciated in McArthur's Case failed, the only substantial argument for the respondent's contention (as to s. 92 not binding the Commonwealth) failed. Accordingly in James v. The Commonwealth it was held that inter-State trade and commerce could be controlled and regulated by law and that such control and regulation was not necessarily inconsistent with s. 92, provided, to use the words of James v. Cowan, that "it was not directed against" such trade and commerce.

[19]

Finally, reference was made to certain cases decided in the United States of America and it was contended that these authorities supported the view that the legislation challenged in this case is invalid. With respect to American authorities on this subject the following comments may be made. The Constitution of the United States does not contain any such provision as s. 92. The problems which arise from the presence of s. 92 in the Commonwealth Constitution do not arise in the United States in anything like the same way. The power of Congress is a power to make laws to regulate commerce with foreign nations and among the several States and with the Indian tribes. There has been much variation of opinion in the Supreme Court of the United States with respect to the character and limits of this power. Originally it was held to be a concurrent power. Later it was held to be an exclusive power - see Willis, Constitutional Law, (1938) pp. 307 et seq. It was the prevailing view that Gibbons v. Ogden [2] decided that "The States may not in any manner directly interfere with or attempt the regulation of commerce between the States by whatever agency that commerce may be carried on": see Willoughby on the Constitution of the United States, (1929) 2nd ed., vol. 2, at p. 763, so stating the effect of Gibbons v. Ogden [2] . This proposition is rejected, with respect to the Commonwealth Constitution, in James v. The Commonwealth and in the Banking Case. Later, however, it was held that the States were at liberty to regulate local matters, and that the power of Congress was exclusive only in relation to matters which were considered (by the Supreme Court) to require treatment upon a national scale. No such doctrine has ever been suggested or applied in Australia. There was much conflict of opinion in the United States as to the position where Congress had been silent in relation to a particular matter: Willis, p. 308. On the one hand it could be contended that the silence of Congress upon a matter meant that Congress intended that the States were to be free to legislate with respect to that matter. On the other hand, it was sometimes argued that the silence of Congress meant that it was the intention of Congress that that subject matter should be free from any regulation. No such principles have ever been adopted in Australia. In the United States there is a doctrine of the police power of the States which permits some degree of local regulation of inter-State trade and commerce. This doctrine finds many difficulties in its application and has never been part of the law of Australia. In the United States it has been decided that the States may impose "reasonable" fees for licences in the case of road traffic. No such doctrine has hitherto been applied in Australia for the purpose of limiting legislative power in relation to trade and commerce. Reference has already been made to the difficulties of applying such a criterion of validity.

[26]

In the Airlines Case [2] , however, it became necessary to form a conclusion as to the ratio decidendi of the Transport Cases. For it was claimed that the business of providing inter-State carriage of men and things was not itself part of trade commerce and intercourse between the States, although subject to the commerce power as something incidental thereto. The conclusion I formed I stated in this passage: - "After a full study of the Transport Cases I have come to the conclusion that they do not decide this proposition. In the pragmatical solution which those cases gave to a problem which they approach as a complex the essential features of the legislation were examined for the purpose of determining its practical operation upon inter-State commerce and intercourse regarded as a sum of activities; to see whether it obstructed, restricted, retarded or impaired, not some operations of commerce considered separately or in isolation, but the commerce between New South Wales and Victoria considered as a whole. The legislation was, in effect, treated as part of an attempt to make the internal transport of the State a planned structure, a framework within which the freedom guaranteed by s. 92 subsisted and even by which that freedom was secured. The reasons given for the solution necessarily comprised much that was really directed to denying that in the character and operation of the legislation factors or features could be found to which s. 92 was inimical. It is, I think, in the course of this demonstration that, among other things, any adverse effect upon the flow of trade is excluded and the relation in fact which transport has to trade in goods is emphasised. It is to be noticed that it is not the business of inter-State carrying but motor trucks themselves which Rich J. describes as aids or implements to commerce and intercourse but not the thing itself. The decision was, I think, based upon a combination of all the considerations mentioned in the passage, negative and positive, particularly the fact that it was the undifferentiated road transport of the State that was regulated on a non-discriminatory basis" [1] . The passage was preceded by an attempt to bring together the points which Rich J. had made in his judgment in Vizzard's Case which Evatt J. and McTiernan J. had said truly described the legislation under consideration in Gilpin's Case.

[35]

It remains to consider whether those decisions can be supported on independent grounds. Now upon this subject it is enough to say that I have had the advantage of reading the judgment of Fullagar J. and entirely agree with it. But perhaps there are two or three observations that it may be better for me to add. The first is to say that my own judgment in R. v. Vizzard; Ex parte Hill [1] , expresses reasons for dissenting which I have not seen any cause to regret and by which I abide. The second is to remark that what I wrote in the case of O. Gilpin Ltd. [2] may be nothing but an illustration of the observation made by their Lordships concerning "the way in which the human mind tries and vainly tries, to give to a particular subject matter a higher degree of definition than it will admit." I took the hazardous course of attempting to state a general theory of s. 92 derived from purely logical considerations because it then seemed I was dealing only with a chapter that had ended. On re-reading the judgment I notice that it is not particularly addressed, as perhaps it ought to have been, to the Transport Cases, but I see not much in it greatly inconsistent with their Lordships' judgment and some things which I respectfully think that judgment confirms. The third matter to which I wish to refer is the question whether the Victorian Transport Regulation Acts can possibly be treated as no more than a regulation of the carriage of goods by motor vehicle by road. I state the question in that way because when the judgment of the Privy Council speaks of an enactment being no more than regulatory I understand that to mean regulatory of some description of transactions of trade and commerce. The distinction between regulating a subject and restricting or prohibiting the subject is of course a familiar one. It appears to me quite impossible to describe a statute like the Victorian Transport Regulation Acts as no more than regulation of the commercial carriage of goods by road involving no impairment of the freedom of trade commerce and intercourse among the States. It is perhaps enough to quote the following statement by Isaacs J. in a by-law case (Country Roads Board v. Neale Ads Pty. Ltd. [3] ): - "The power of regulation may, and almost necessarily does, involve some restriction or prohibition. The body entrusted with the power to regulate must in some sufficient way mark out whatever limits of prohibition are to exist. That is to say, legal rights otherwise existing are not to be cut down at the discretion of some individual or individuals, but must be dealt with by the law. And they are not properly dealt with in that case by first exercising the power of prohibition which is not conferred. But where the by-law itself prohibits, and in the absence of a written consent prohibits completely, the consent if refused simply leaves the by-law to operate without it, and if given satisfies the provision of the by-law by a factum which excludes the given case from its operation." See further Swan Hill Corporation v. Bradbury [1] .

[40]

The crucial question emerging from the argument on the grounds depending on s. 92 of the Constitution is whether Vizzard's Case [2] should be overruled. It is the crucial question because no material distinction can be made between the Act there upheld and the present Act which would justify a decision opposite to the decision in Vizzard's Case, if that decision is not overruled. Counsel for the appellants argued that the decision in Vizzard's Case fails to secure to inter-State transportation the freedom guaranteed to inter-State trade, commerce and intercourse. The argument is founded upon the reasons of the Judicial Committee for deciding that s. 46 of the Banking Act 1947 offended against s. 92. Counsel for the States of Victoria, New South Wales, Queensland and the Commonwealth relied upon those reasons to defend the decision in Vizzard's Case and the Act attacked in the present case. In the course of their reasons the Judicial Committee said that the decisions in James v. Cowan [3] and in Vizzard's Case [4] may be reconciled. This statement is a strong obstacle to the attack on the latter decision but a great help to its defence. The former case is of unimpeachable authority. The value of the statement of the Judicial Committee to the defence of Vizzard's Case depends upon this fact. In view of the possibility of this reconciliation, Vizzard's Case cannot be manifestly wrong, supposing it is not right. The statement of the Judicial Committee is not an express approval of the decision. It may be a tacit approval of the conclusion but not of all the reasons. The conclusion could not have been reached on grounds as broad as the propositions enunciated by the Judicial Committee because McArthur's Case left a very attenuated and uncertain residue of legislative power to the States. The Act upheld in Vizzard's Case was a State Act. The statement that the case may be reconciled with James v. Cowan is a strong prop to the decision in Vizzard's Case, whatever may be said of the reasons upon which the Act was upheld.

[42]

The Transport Acts of all the States depend for protection against an attack based upon s. 92 upon the conclusion in Vizzard's Case that the Act there in question is not inconsistent with s. 92. The statement of the Judicial Committee conveys no suggestion that these Acts are in jeopardy. It is more than a neutral proposition in a controversy about the consistency of such Acts with s. 92. If the decision in Vizzard's Case deprived inter-State transportation of its constitutional freedom, it could not possibly be reconciled with James v. Cowan. The authoritative statement that the two decisions may be reconciled tells strongly in favour of the decision in Vizzard's Case. This statement is not a mere theoretical speculation. If the statement be taken in conjunction with the proposition which the Judicial Committee enunciated about the ambit of s. 92 and what class of Acts it allows and forbids, the statement provides solid ground for the view that the Act upheld in Vizzard's Case is in general an Act of the class which could not be condemned. I presume that the Judicial Committee contemplated that the reconciliation would be attempted by applying the propositions they were laying down for determining whether a legislative or executive Act offends against s. 92. James v. Cowan is right because it went the way required by those propositions. The admission of the possibility of reconciling the two decisions makes it reasonable to infer that the Judicial Committee entertained the view that the propositions they enunciated would not spell death to the decision in Vizzard's Case and the State Transport Acts known to depend upon it. The reconciliation which is contemplated is one which could only be reached by observing and applying "the distinction between restrictions which are regulatory and do not offend against s. 92 and those which are something more than regulatory and do so offend." The statement that Vizzard's Case may be reconciled with James v. Cowan impliedly assigns the restrictions imposed by the Act in Vizzard's Case to the former category: at least that statement precludes the view that those restrictions might have been regarded as belonging to the latter category.

[45]

The explanation of the ambit of s. 92 given by the Judicial Committee and the propositions which they have laid down for determining whether an Act offends against s. 92 do not demonstrate that the decision in Vizzard's Case is wrong in its result. It is necessary to apply the more authoritative explanation and propositions of the Judicial Committee rather than any part of the reasoning in Vizzard's Case of which the Judicial Committee has not expressly approved to determine whether the present Act offends against s. 92. The Act regulates motor transport on the public highways in Victoria by restricting to the holders of licences granted in accordance with the provisions of the Act the right to operate for hire motor vehicles used or intended for the carriage of passengers or goods in the course of trade. The vesting of an executive agency established by statute with authority to grant or refuse licences to operate such motor vehicles is a form of regulation of motor transport. Under this system of regulating this economic activity the restrictions which are imposed are that nobody may operate a motor vehicle on the highways unless he has a licence and any person who is refused a licence or has not been granted a licence is prohibited from doing so. The terms "trade, commerce, and intercourse" comprise motor transport which is thus restricted. If these restrictions are "regulatory" they do not offend against s. 92. If on the other hand they are "something more than regulatory" they do offend against s. 92. The Judicial Committee gave their authority to two "general propostions". These are: - "(1) that regulation of trade, commerce and intercourse among the States is compatible with its absolute freedom, and (2) that s. 92 is violated only when a legislative or executive act operates to restrict such trade, commerce and intercourse directly and immediately as distinct from creating some indirect or consequential impediment which may fairly be regarded as remote." Their Lordships added the following observation: - "In the application of these general propositions, in determining whether an enactment is regulatory or something more, or whether a restriction is direct or only remote or incidental, 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, yet it must be solved by a court of law." Applying the propositions and rules which are formulated by the Judicial Committee for determining whether s. 92 is violated by a legislative Act to the present Act, I think that the correct conclusion is that the Act does not violate the section.

[48]

These Acts, except the Transport Regulation (Licences and Fees) Act 1947, are the very Acts which were considered by this Court and held to be valid in Riverina Transport Pty. Ltd. v. Victoria [1] . This case was the culmination of a line of cases commencing with R. v. Vizzard; Ex parte Hill [2] ; and followed by O. Gilpin Ltd. v. Commissioner of Road Transport & Tramways [3] ; Bessell v. Dayman [4] ; and Duncan & Green Star Trading Co. Pty. Ltd. v. Vizzard [5] . These cases were discussed and accepted by this Court as correct but distinguished in Australian National Airways Pty. Ltd. v. The Commonwealth [No. 1]. [6] . They are now attacked on the ground that the reasons in the judgment of the Privy Council in Commonwealth v. Bank of New South Wales [7] show that they were decided upon a misapprehension of the true meaning of s. 92. Of these cases R. v. Vizzard; Ex parte Hill [2] must be considered the most important because this case, and in particular the reasoning of Evatt J., was picked out for special mention by the Privy Council in James v. The Commonwealth [8] . It was also mentioned in the latest judgment of the Privy Council. The reasoning of Evatt J. in Vizzard's Case is based to a considerable extent on the ground that s. 92 does not protect the freedom of individuals to engage in inter-State trade and commerce among the States but only protects the free passage of the goods themselves across State borders and s. 92 is not infringed provided the volume of trade which flows from State to State is not affected. In the Bank Case in this Court, this view is explained in the joint judgment of Rich J. and myself in the following passage: "The defendants contended that s. 92 is not concerned with the right of an owner of goods to sell them out of the State, and therefore is not concerned with the ownership of such goods prior to, at the time of, or subsequent to, the passage of the goods across State boundaries. Accordingly the Commonwealth and State Parliaments legislating within their constitutional powers can select the individuals who are to engage in inter-State trade. But they must not place any hindrance, burden or restriction on the free passage of the goods of such individuals across State boundaries" [1] . The opinion of Isaacs J. in James v. Cowan [2] that the freedom guaranteed by s. 92 is a personal right attaching to the individual and not attaching to the goods, in spite of the fact that Lord Atkin in this case on appeal [3] had said, in delivering the judgment of the Privy Council, that their Lordships were in accord with the convincing judgment of Isaacs J., was rejected. It has always seemed to me, as I have already stated in the Australian National Airways Case [No. 1] [4] , and Clement & Marshall Pty. Ltd. v. Field Peas Marketing Board [5] , that the opinion of Isaacs J. was right in the sense, as stated by the Privy Council in the Bank Case [6] that though s. 92 did "not create any new juristic rights, it does give the citizen of State or Commonwealth, as the case may be, the right to ignore, and, if necessary, to call upon the judicial power to help him to resist legislative or executive action which offends against the section," and that the line of cases under discussion could not be supported on this ground. The law is stated to the same effect in the joint judgment of Rich J. and myself in this Court in the Bank Case [7] . This ground was relied upon to support the legislation held to be invalid in the Australian National Airways Case [No. 1] because that legislation was careful to provide for the monopoly in favour of the Australian National Air Lines Commission only becoming and remaining absolute when and so long as the airlines operated by this Commission were able to carry the whole of the inter-State traffic in persons and goods. Accordingly it appeared to me to be necessary to reconcile this line of cases with the opinion of Isaacs J. before the Australian National Airways could succeed in the action. It was not a matter of avoiding these cases by some dexterity. It was a matter of attempting to reconcile the approval of the judgment of Isaacs J. by the Privy Council in James v. Cowan with the passage from the judgment of Evatt J. in Vizzard's Case cited by the Privy Council in James v. The Commonwealth. This led to the reasoning which appears in the Australian National Airways Case [No. 1] [1] , which seems to me to be the only way in which to effect a reconciliation.

[50]

The judgment of the Privy Council in the Bank Case has thrown new light on the solution of the problems presented by s. 92. In particular it has corrected the misapprehensions which have arisen with respect to its own two previous judgments. The Privy Council has to my mind made it plain that the freedom of trade and commerce and intercourse protected by s. 92 is the freedom of the individual to engage in trade and commerce and pass freely among the States. But freedom of trade, commerce and intercourse in a community regulated by law presupposes some degree of restriction upon the individual and their Lordships said: "(1) that regulation of trade and commerce and intercourse among the States is compatible with its absolute freedom and (2) that s. 92 is violated only when a legislative or executive act operates to restrict such trade, commerce and intercourse directly and immediately as distinct from creating some indirect or consequential impediment which may fairly be regarded as remote." Of Vizzard's Case they said that it does not appear to them that the whole of Evatt J's. reasoning received the considered approval of the Board; "the decisions in James v. Cowan and in Vizzard's Case may be reconciled: it would not be easy to reconcile all that was said by Evatt J. in the one case with all that was said by Isaacs J. in the other." I assume that regulation of trade, commerce and intercourse among the States is compatible with its absolute freedom, although any regulation necessarily involves some interference with the freedom of the individual, because it is necessary to read the Constitution as a whole and such legislation falls within the power of the Commonwealth Parliament to legislate with respect to trade and commerce among the States under s. 51, par. (i.) of the Constitution and within the power of the States to legislate with respect to both intra- and inter-State trade and commerce reserved to them by s. 107 of the Constitution (subject of course to s. 109 of the Constitution in the case of inter-State trade and commerce).

[52]

It was contended for the appellant that the form of regulation intended by the Privy Council was regulation which prescribed certain conditions relevant to the orderly carrying on of the trade with which all who desired to engage in that trade were bound to comply but which preserved an equal right in every individual to engage in the trade subject to such compliance. In other words it was contended that regulation did not include prohibition. The regulation of a trade necessarily implies its continuance and no law which absolutely prohibits the carrying on of a trade could be a form of regulation. But the power to regulate has often been held to include partial prohibition where such prohibition is reasonably necessary for effective regulation. Their Lordships said that they did not intend to lay it down that in no circumstances could the exclusion of competition so as to create a monopoly either in a State or Commonwealth agency or in some other body be justified. Each case must be judged on its own facts and in its own setting of time and circumstance. Their Lordships also said that they must "add, what, but for this argument so strenuously urged, they would have thought it unnecessary to add, that the regulation of trade may clearly take the form of denying certain activities to persons by age or circumstances unfit to perform them, or of excluding from passage across the frontier of a State creatures or things calculated to injure its citizens." It appears to me that the Privy Council must have contemplated that an enactment could be regulatory and nothing more although it placed restrictions upon the right of individuals to engage in inter-State trade where such restrictions were reasonably necessary for its effective regulation. Their Lordships reiterate the view already expressed in James v. The Commonwealth that the question is one of fact and add that in determining whether an enactment is regulatory or something more or whether a restriction is direct or only remote or incidental, the problem to be solved will often be not so much legal as political, social and economic.

[54]

I have given careful consideration to the submissions of counsel for the appellants, but I am not satisfied, after carefully examining the reasoning of the Privy Council in the Bank Case, that the cases under discussion were wrongly decided, and I am not prepared to overrule them. They have been acted on in the States and have no doubt exerted a strong influence upon their policies in relation to their railways and roads. In my opinion they ought not to be re-opened in this Court without the greatest hesitation. 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 and the Bank Case, for there the effect of the legislation was simply to prohibit competition with the government airlines in the one case and the government banks on 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. I 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 such Acts are, as they profess to be, regulatory or something more, and the solution of this question raises social and economic problems. The competition could be destroyed, as Evatt J. pointed out in Vizzard's Case [1] , by the State adopting the simple if drastic expedient of destroying the roads so as to compel all traders and travellers to use the railways. The same result could be achieved by allowing the roads to fall into a sufficient state of disrepair. Another way would be for a State to stop the roads short of the boundary and sell a strip of land along its frontiers with other States to private individuals. It has not yet been suggested that the freedom guaranteed by s. 92 is violated if a private individual refuses to allow an inter-State trader or traveller to pass over his land. By building and maintaining State highways States provide means of competition with their own railways, and I can find nothing in the judgment of the Privy Council which leads me to alter the opinion expressed in the Australian National Airways Case [No. 1] [1] that "it is simply an exercise of the sovereign rights of the States to co-ordinate traffic by rail or road, and to confine the use of roads to particular persons and vehicles. If the choice of these persons and vehicles has no relation to their passage across the border, but the legislation operates without discrimination with respect to all persons and vehicles desirous of using the roads, such legislation is not aimed or directed at inter-State commerce but at regulating, maintaining and co-ordinating a number of utilities for trade, commerce, and intercourse, State and inter-State, provided by the State."

[59]

Whether the co-ordination or rationalisation of motor transport in inter-State trade, commerce and intercourse infringes s. 92 depends firstly upon whether its effect is direct, or only remote. Since the decision of this Court in Australian National Airways Pty. Ltd. v. The Commonwealth [No. 1] [1] it must be assumed that transport for reward is itself trade and commerce, and not merely something incidental thereto which can be dealt with by legislation or executive action without directly affecting such trade or commerce. The coordination and rationalisation of such transport has, I think, a direct effect, i.e. an effect on trade and commerce as trade and commerce. But if it is still essentially regulatory, and not prohibitive or restrictive, it is not an infringement of s. 92. It was submitted for the appellants that it cannot be found to be essentially regulatory, because of the reasoning of the Judicial Committee of the Privy Council in the Banking Case; and particularly because of their Lordships' observations on Vizzard's Case. In the James Case [2] Lord Wright in delivering the judgment of the Judicial Committee observed that the reasoning of Evatt J. in Vizzard's Case seemed to be correct. But it did not appear to their Lordships in the Banking Case that the whole of the reasoning of Evatt J. received the considered approval of the Judicial Committee in the James Case. Their Lordships said that even if it did receive that approval, still it did not follow that the judgment of this Court in the Banking Case could not be maintained; and further that the facts, both in relation to subject matter and to manner of restriction or interference, were so widely different in the two cases that it was difficult to apply to one case all that was said in the other. It may be that this latter observation could be taken to apply to the difference between Vizzard's Case and the Banking Case. Their Lordships, after noting that in James v. Cowan [3] Lord Atkin said the Judicial Committee found themselves in accord with the convincing judgment of Isaacs J., proceeded to say: - "The decisions in James v. Cowan and in Vizzard's Case may be reconciled: it would not be easy to reconcile all that was said by Evatt J. in the one case with all that was said by Isaacs J. in the other."

[78]

Section 24 provides that the Transport Regulation Board may, on the application of the owner of a commercial goods vehicle, grant in respect of such vehicle a commercial goods vehicle licence. Section 25 provides for applications for licences (which must state, inter alia, the route or area of proposed operation and the class or classes of goods proposed to be carried) and for the hearing of any person who may object to the granting of a licence to an applicant. Section 26 provides that before granting or refusing a licence the Board shall have regard primarily to the interests of the public generally, including those who require as well as those who provide facilities for the transport of goods. In particular the Board is to take into consideration (a) the advantages of the proposed service to the public; (b) any already existing service, its adequacy and the probable effect upon it of the proposed service; (c) the benefit to the residents of any particular district of the proposed service; (d) the condition of the roads in the proposed route or area; and (e) the character, qualifications and financial stability of the applicant. Section 27 provides that the Board may grant the application with or without variation or may refuse to grant the application. Subject to s. 37 (which will be referred to in a moment) the decision of the Board is to be final and without appeal. Section 28 provides that every licence shall be subject to the condition that the vehicle shall be maintained in a fit and serviceable condition and that certain laws as to weight of load and speed and wages and hours of work shall be observed. It also provides that the Board may impose certain other conditions on any licence granted, including such conditions appropriate to the service as the Board thinks proper to impose in the public interest. Section 30 provides that a licence shall be granted for a period of not less than two years and not more than three years, and s. 31 provides for the renewal of licences. Section 34 provides for payment of a licence fee not exceeding £5 annually.

[81]

The facts of the present case were not in dispute. The appellant McCarter was the owner of a motor truck which on 2nd August 1949 was being driven by his servant, the appellant Gough, along the Sturt Highway near South Merbein, in the extreme north-west of Victoria. The vehicle was in the course of an inter-State journey, being bound from Adelaide in the State of South Australia to Cootamundra in the State of New South Wales, with a load of 640 dozen bottles of beer. The whole of the beer, which was the product of the Springfield Brewery in Adelaide, was loaded in Adelaide for delivery in Cootamundra. It constituted the whole of the load: no other cargo was being carried. The distance from Adelaide to Cootamundra by road is about 650 miles. The road on which the journey was being made crosses the north-west corner of the State of Victoria and lies for a distance of about seventy-three miles in the State of Victoria. It is not altogether clear on the evidence whether McCarter was carrying the beer under a contract of carriage with the Springfield Brewery or whether he had bought it from the brewery for re-sale to customers in Cootamundra. The managing director of the brewery company said that his company looked to McCarter for payment of the price of the beer, but McCarter was directed as to the customers to whom the beer was to be delivered in Cootamundra. It is perhaps regrettable that more care was not taken to elucidate the exact legal relation subsisting between the brewery, McCarter and the Cootamundra customers, although in the view which I take nothing in this case turns on that relation. It seems clear that the vehicle in question was carrying goods either for hire or reward or in the course of McCarter's trade, so that at the material time it was a commercial goods vehicle operating on a public highway within the meaning of the Transport Regulation Acts, and it was not licensed as a commercial goods vehicle. It seems clear also that the vehicle was at the material time engaged in the commercial carriage of goods from a place in South Australia to a place in New South Wales, and that it was engaged in nothing else in the sense that the sole reason for its presence on the Victorian highway lay in the fact that it was carrying those goods between those places on a normal and convenient route.

[83]

The success or failure of the appellants' argument is far from depending entirely on its merits, because there is authority against it, and decided cases are never to be overruled lightly. But it is convenient to consider it on its merits for a moment before proceeding. I am bound to say that, in my opinion, there is clearly no valid answer to it. It may have been suggested at one time, but the view has never, I think, been seriously entertained, that s. 92 does no more than prevent the imposition of customs duties at State borders. It is clearly established that it goes much further than that. On any view it could hardly be held that a mere prohibition of the exportation or importation of goods generally or of any particular goods from one State to another was outside the scope of s. 92: cf. Tasmania v. Victoria [1] , in which Dixon J. said: "The Constitution says that trade between Victoria and Tasmania shall be free, and Victoria says that a commodity produced in Tasmania shall not come in. If the words of s. 92 have any meaning, they affirm a proposition which the Victorian proclamation specifically denies." It is impossible, to my mind, to distinguish such a case from a mere prohibition of "internal carriage" of goods either generally or by means of a particular kind of vehicle unobjectionable in itself. Nor is the character of such a prohibition changed in any relevant respect by making it subject to the granting of discretionary exemptions or "licences" by the Crown or by some person or body of persons. I would add only two observations at this stage. In the first place, it is well settled - at least since James v. Cowan [1] - that s. 92 protects inter-State trade against violation of its freedom not only by laws which deal merely or specially with inter-State trade but by laws which deal indiscriminately with intra-State and inter-State trade or with trade generally. In the second place, the contention of the appellants does not assert and, of course, need not assert, that s. 92 affords to him who is engaged in inter-State trade, commerce or intercourse complete immunity from all laws. It will be necessary to return to these matters later.

[89]

The first conception was, I think, that the function of transporting goods from State to State is not a thing which is itself comprehended within the expression "trade and commerce" in s. 92. It is merely an incident of trade and commerce, a means by which trade and commerce are carried on. Two extremely important consequences seem to follow if this view is accepted. It would seem, in the first place, to follow that the man whose livelihood consists in carrying goods from seller to buyer or otherwise for reward is not engaged in trade or in commerce within the meaning of the Constitution, and so is not protected in respect of his inter-State operations by s. 92. As Dixon J. said in the Riverina Case [2] , "One important step in the reasoning is the adoption of the view that the use of motor vehicles for the carriage of goods from one State to another, though an incident of trade, commerce and intercourse among the States, is not in itself within the protection of s. 92." The second important consequence is this. There was a good deal of authority for the view that s. 92 protects against "direct" interference with inter-State trade or commerce as such, but not against "indirect" or "remote" or "incidental" or "consequential" restraints or interferences. Now, if the transportation of goods is merely an "incident" or an "instrument" or a "means" of trade and commerce, then, in so far as an interference with the transportation of goods may be said to impinge upon the trade of a trader whose goods are being carried, the interference may properly be regarded as merely indirect or remote and as permitted by s. 92. (Cf. Gilpin's Case [3] , where a trader was transporting his own goods in the course of his own trade.) So, in R. v. Vizzard [1] , Gavan Duffy C.J. draws the distinction between "direct" and "indirect" effects upon trade and commerce [2] , and the distinction between "interfering with trade, commerce and intercourse and interfering with the methods by which they are carried on." So Rich J. [3] refers to action which operates to restrict trade and commerce "immediately and directly as distinct from giving rise to some consequential impediment," and clearly takes, as one foundation for his conclusion that the Act in question affected trade and commerce only indirectly, his view that "the acts or transactions with which the statute is concerned, and upon which it operates, are not actual commercial dealings, the actual transfer of goods from one place to another." In some of the American cases cited by McTiernan J. the distinction is drawn (though, I think, for a different purpose) between commerce and the "instruments" or "vehicles" of commerce, although McTiernan J. himself took the view that transportation of goods for reward was trade and commerce [4] .

[95]

Secondly, while the opinion of Lord Wright in James v. Commonwealth [2] has been discussed in this Court on a number of occasions, notably in the Riverina Case [3] , and it has been thought by some that R. v. Vizzard there received the approval of their Lordships, it should not be overlooked that one aspect of the actual decision in James v. Commonwealth cannot be reconciled with R. v. Vizzard. James v. Commonwealth decided two things. The first thing it decided was that s. 92 bound the Commonwealth equally with the States. This was so much the more conspicuous, and so much the more strenuously argued, of the two things decided, that it is perhaps understandable that one should be inclined to overlook the other. But there was another point no less clearly the subject of actual decision, and that was that a particular section of a Commonwealth Act of Parliament was invalid because it was inconsistent with s. 92. The section in question was s. 3 of the Dried Fruits Act 1928-1935. That section provided: - "Except as provided by the Regulations - (a) the owner or person having possession or custody of dried fruits shall not deliver any dried fruits to any person for carriage into or through another State to a place in Australia beyond the State in which the delivery is made: and (b) the owner or any other person shall not carry any dried fruits from a place in one State into or through another State to a place in Australia beyond the State in which the carriage begins - unless he is the holder of a licence then in force, issued under this Act, authorising him so to deliver or carry such dried fruits as the case may be, and the delivery or carriage is in accordance with the terms and conditions of that licence." Penalties were provided. It was further provided that "prescribed authorities may issue licences for such periods and upon such terms as are prescribed." Regulations were made under the Act, which, if s. 92 bound the Commonwealth, were in conflict with James v. South Australia [1] . But James did not merely challenge the regulations. He challenged the Act. And the Act was distinctly and expressly held by their Lordships to be invalid. Lord Wright [2] said: - "The Act and the Regulations either prohibit entirely, if there is no licence, or, if a licence is granted, partially prohibit, inter-State trade." The italicised words (the italics are mine) obviously refer to the effect of the Act, and the words which follow to the combined effect of the Act and the regulations. The validity or invalidity of regulations made under the Act could not possibly, of course, affect the validity of the Act itself. And the Act was held invalid. The substance of the Act was exactly and precisely the same as the substance of the Victorian Transport Regulation Act 1933. I cannot myself see any valid distinction between the two cases. It is true, of course, that the Commonwealth Act applied to inter-State carrying only, whereas the Victorian Act applies both to inter-State carrying and to intra-State carrying. But, as I have already said, it was settled by James v. Cowan, if not before, that an Act which would be wholly invalidated by s. 92 if it applied only to inter-State trade will not be saved, so far as inter-State trade is concerned, by the fact that it applies both to inter-State trade and to intra-State trade. Lord Porter in the Banking Case [3] said: - " it is an irrelevant factor that the prohibition prohibits inter-State and intra-State activities at the same time."

[119]

It was argued before us that the regulation of public transport vehicles in respect of such matters as safe maintenance and so on could not be efficiently undertaken without a system of inspection and licensing. The same difficulty was felt by municipalities in connection with their building by-laws by reason of such decisions as Swan Hill Corporation v. Bradbury [1] , but very little ingenuity was required to overcome the difficulty. The modern Victorian building by-law requires the issue of a permit or licence to commence building, but it also provides that, if plans and specifications comply with the specific requirements of the by-law, the intending builder is entitled, as of right, to the issue of the licence or permit. The legal right, so given, is, of course, enforceable by mandamus to issue the licence or permit. Such a law differs vitally from a prohibition subject to obtaining a licence which may be granted or withheld at discretion. The only reason why such a system would not be regarded as satisfactory in such legislation as that now under consideration is that such legislation is not really concerned - or at any rate is by no means solely concerned - with the safety of public transport. It is concerned very largely with restricting the development, in competition with existing railways, of modern and convenient methods of transport, and one of its supposed advantages is that the discretion to withhold licences can be used to protect the trade of one State at the expense of another. It is, for example, obviously within the sphere of practical politics that it should be thought in Melbourne that Cootamundra ought to drink Victorian beer and not South Australian beer. The protection of the industries of one State against those of another State was, of course, one of the primary things which s. 92 was designed to prevent, but, if the legislation now in question is valid, effect can easily be given to such an opinion without anybody knowing anything about it. I mention these matters only by the way and as serving to emphasise the essential vice of the legislation.

[120]

It only remains, I think, to refer briefly to Willard v. Rawson [2] . I have already expressed my opinion that that case, unlike R. v. Vizzard, can, in my opinion, be supported consistently with what is said by their Lordships in the Banking Case. In Willard v. Rawson the relevant legislation was contained in s. 4 of the VictorianMotor Car Act 1928 as amended by the Motor Car Act 1930. That section required every motor car to be registered under an indentifying number. On registration a fee was to be paid. The amount of the fee payable depended on the weight and horse-power of the vehicle. A person who drove on a public highway in Victoria a motor car which was not registered under the Act was guilty of an offence. Sub-section (7) (a) provided: - "This section shall not apply to a motor car (other than a motor car which is used in Victoria for carrying passengers for hire or goods for hire or in the course of trade) - (i) which is owned by a person resident in another State; (ii) which is temporarily in Victoria; (iii) which is registered in such other State; and (iv) on which the number allotted to the motor car in such other State is exhibited." The effect of this provision was that, if four conditions were fulfilled, a motor car registered in another State was not required to be registered in Victoria before travelling on a Victorian highway, unless it was a vehicle used for carrying passengers or goods for hire or in the course of trade, in which case registration was required. It was held that the requirement of registration, which involved, of course, payment of the prescribed fee, did not contradict s. 92. I think, with respect, that the essential reasons underlying the decision are correctly stated by Dixon J. in R. v. Vizzard; Ex parte Hill [1] . To put it very shortly, the fee was not a tax but rather in the nature of a reasonable charge for facilities provided by the State and used by persons who drove motor cars in Victoria, it did not deal with trade and commerce as such, and, if it could be said to have any burdensome effect on inter-State trade and commerce, that effect was merely indirect and consequential. So understood, I think that there is no great difficulty in regarding Willard v. Rawson as an example of "regulatory" legislation. It would not, of course, affect my opinion in the present case if I thought otherwise of Willard v. Rawson, but I have thought it proper to express my view of that case.