Morgan v Commonwealth [1947] HCA 6

Morgan v Commonwealth [1947] HCA 6 - HCA 1947 case summary — Zoe

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excluded from the operation of the law which operates in other States and parts of States. That amounts to a preference given to the excluded parts. Prices and rationing should be uniform through- out the Commonwealth. The Rationing Orders go beyond the power given by reg. 25 of the National Security (Rationing) Regulations. The geographical operation of rationing and other Orders relating to the control or supply of goods is reserved to the Minister and upon the Minister defining what are geographical areas upon which the Commission may operate its powers, the Commission must then exercise its powers uniformly on the areas so declared. It is no part of the Commission's function to limit geographically the operation of any Order made by it. The Commission has no power to make a declaration having partial operation. The Rationing Orders con- travene s. 92 of the Constitution because they prevent a transfer of meat across the border into New South Wales without the consent in writing of the Commission or the controller of meat supplies. The Orders provide that a different rule shall apply in each State or part of a State. Section 99 of the Constitution restricts all powers and is not merely applicable to the commerce power. The Orders are related to trade and commerce because they regulate the sale of commodities. The words "trade" and "commerce" in s. 99 do not refer only to s. 51 (i) but apply to any law of the Commonwealth which affects trade or commerce in such a way that it may properly be described as a law or regulation of trade or commerce, e.g. laws made under s. 51 placita (i), (iii), (v), (vi), (xii), (xvii), (xviii) and (xx), and s. 52 of the Constitution. This wider interpretation is supported by s. 100, A law under or by which a preference is given in the way of trade or commerce is a law in relation to trade and commerce. The law itself must be one which is a law or reg- ulation of trade or commerce. It may be a law upon an entirely different subject which in some indirect way may affect trade or commerce. If it had been intended that s. 99 was to be a mere limitation of s. 51 (i) one would have supposed that as in placita (ii) and (iii) there would have been a proviso to placitum (i) to show that the prohibition in s. 99 was directed to s. 51 (i) and to that section only. It is not without significance that the provisions contained in s. 99 were not inserted in that Part of the Constitution relating to the powers of the Parliament but were inserted in that Part of the Constitution which contains what has been referred to as the "constitutional guarantees." Section 99 is an overriding guarantee. A law does not cease to be a law or regulation of trade or commerce because it was made under a power other than s. 51 (i).

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do grant preferences, it is submitted that they do not grant prefer- ences. That, however, does not arise unless they are held to be laws in respect of trade, commerce, or revenue. They are not preferences because (a) s. 99 in referring to laws or regulations of trade, commerce and revenue means laws or regulations of inter- State trade or commerce ; and (6) even if that were not so, these laws are not, upon their true analysis, laws of trade or commerce, either because (i) their real nature, or pith or substance, is that they are laws of defence, or (ii) if in their real nature they are not laws of defence, though they were made under that power, but are laws dealing with something else then the convenient category is property and civil rights and not trade or commerce. The real nature, or pith and substance, for this purpose can be ascertained only upon an examination of the provisions of the Prices Regulations or the Rationing Regulations. These regulations are laws of defence, or, alternatively, they are laws but are not laws of trade or commerce. The true interpretation of s. 99 is that that section is directed to limiting the power of the Commonwealth with respect to inter-State and foreign trade. Section 99, occurring where it does in the Constitution, is part of the Constitution concerned with inter-State trade and commerce power. It is not possible to find laws made by the Parliament under the other legislative heads which are, at one and the same time, a valid exercise of the legislative powers. under the other heads and laws of trade and commerce. A law made, for example, under placitum (v) of s. 51 is really a postal law and not a law of trade or commerce. In R. v. Barger (1) it was held, by majority, that the statute there under consideration was not a proper exercise of the taxation power and that if otherwise valid, it was invalid on the ground that it authorized discrimination and therefore discrimination between States or parts of States within the meaning of s. 51 (ii). Laws regulating trade and commerce are laws which deal with trade and commerce as such, as complete concepts, not laws which affect some trade or commercial aspect (Citizens Insurance Co. of Canada v. Parsons (2) ). Whether it is a regulation of trade and commerce is to be ascertained by looking at the pith and substance of the legislation (Attorney-General for Canada v. Attorney-General for Alberta (3); Attorney-General for Ontario v. Reciprocal Insurers (4); In re Board of Commerce Act, 1919, and Combines and Fair Prices Act, 1919 (5); Toronto Electric Com- missioners v. Snider (6) ). Section 99 presupposes a law made under

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which the coupons will produce. That constitutes a preference to one State. Section 99 does not specify any section of inhabitants. The words are "to one State or any part thereof." Those words do not mean any geographical unit, nor do they mean the State of government, they must therefore mean the residents of a State or some part of the residents of a State ; some portion of the community in a State. By the Rationing Orders an impediment or burden is imposed upon traders in some States which is not imposed on traders in other States (Cameron v. Deputy Federal Commissioner of Taxation (Tas.) (1) ; Crowe v. The Commonwealth (2) ). The nature of a pro- vision which may amount to a preference is indicated in James v. The Commonwealth (3). The fixing of varying prices for different States or parts of States constitutes a preference. If the prices fixed for a State be different from the prices fixed for another State and amount to a preference then, whatever the economic consequences may be, there is a preference (Cameron v. Deputy Federal Commis- sioner of Taxation (Tas.) (4); James v. The Commonwealth (5) ; Elliott v. The Commonwealth (6) ). The Court is concerned not with the purpose of an enactment but with whether or not it does in fact constitute a preference between one State and another in its effect (Deputy Federal Commissioner of Taxation (N.S.W.) v. W. R. Moran Pty. Ltd. (7) ). Though each Order taken by itself may not contain any reference to inter-State, or kindred matters, the mere fact that it makes a difference renders it invalid. If it is not uniform it is preferential : this is recognized by s. 96 of the Constitution (Deputy Federal Commissioner of Taxation (N.S.W.) v. W. R. Moran Pty. Ltd. (8) ). The general rule in respect of s. 99 is shown in Colonial Sugar Refining Co. Ltd. v. Irving (9) in which it was held that the legislation there under consideration was a uniform law and that the law was applied differently in different States because the amount varied and it was not, therefore, a violation of the Constitution. The laws now under consideration are not uniform and there is no requirement that they should be uniform. The restriction imposed by the Rationing Orders upon some traders in some localities is an impediment upon them which gives traders in other localities a preference over them. It is a direct tangible trading advantage equally as direct and tangible as in James v. The Commonwealth (10).

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benefits and detriments arising from their operation are not within the class of " preferences " hit at by s. 99. Alternatively, (C) If the "enefits and detriments " are capable of constituting preferences within s. 99, then in these cases preferences within the section are not so constituted either in fact or as a matter of mixed fact and law, The " law or regulation " in s. 99 is a law made by the Commonwealth and must therefore be limited to a law with respect to inter-State or overseas trade and commerce. The laws in question in these cases are laws in respect of defence. The law, that is to say either the Rationing Regulations or the Prices Regulations, in each case is in its nature, or because of its pith and substance, not a law of commerce or of trade. The law of rationing, for example, is a law concerning the consuming or use of goods or services. There is a presumption in favour of constitutionality which applies to raise an inference that there is a dissimilarity of the attendant cireum- stances appropriate to the dissimilar provisions of the law in the States so that laws do not give preferences, but on the contrary prevent them from arising. The plaintiff must rebut this inference by allegation and proof. If there be no such presumption, then upon dissimilar legislative treatment being shown it is not for the plaintiff to eliminate appropriate dissimilar facts, it must be open to the defendants to show that the circumstances were themselves such as to make the dissimilar legislative treatment appropriate and justifiable. If once these facts are proper to he considered then evidence should be admitted as to these facts. Laws coming within s. 99 may either introduce a completely new factual situation between the States or may provide a legal regulation of a factual situation which would have existed apart from the law in Elliott v. The Com- monwealth (1). The fixing of prices for meat did not create a situation which had not existed before. What may be adequate to determine a preference, or what may reveal the nature of a preference in one of these cases may be a misleading test in the other. There must be two aspects of this matter, a distortion of the pattern and a distortion which confers, simultaneously, benefits and detriments co-relatively ; the policy must give a preference to one State as against another State. If that be the true view of preference it is clear that it is impossible to ascertain whether there is a preference without recourse to the attendant circumstances. Where the

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entirely appropriate to them, is a law giving preference. In this context " preference " clearly means something which promotes the trade and commerce of one State at the expense of the trade and commerce of another State (Crowe v. The Commonwealth (1): see also Oxford English Dictionary, vol. 8, " preference." ) The Prices Orders were not designed to give, and do not give, a preference. They do not promote or favour the trade of one area and demote or prejudice, correspondingly, the trade of another area. It cannot be determined whether the choice is to promote or to prejudice unless the facts are known, that is to say the whole situation in which the choice of action, the decision to act, is made. Preference of one State over another is only tenable as a conception in the realm of inter-State trade. The word " give" in s. 99 means " produce the effect of " or "create" or "make." These observations as to the nature of a preference involve the rejection of the idea that every discrimination or dissimilarity is a preference. There is something super-added to a discrimination before it becomes a preference. The rights and duties arising from the laws do not confer preferences because if there is an advantage to one State against another State there is concurrently and co-relatively a detriment to the same State against another State and therefore there is no preference such as is referred to in s. 99 (see Elliott v. The Commonwealth (2) ). Laws which affect separate intra-State transactions unrelated to each other and which do not affect inter-State transactions as such cannot confer the simultaneous benefits and detriments prohibited by s. 99. The Rationing Orders affect a transaction in one State only ; each Order affects a transaction in a State or a smaller area. Unless the trade and commerce of one State be promoted at the expense of the trade and commerce of another State it is not a preference. Whatever the criteria, whether it be the place where the property passes or the place where the contract was made, the operation of the respective Prices Orders under consideration is exclusively in one State. If the laws in question are capable of giving invalid preferences their dissimilarity of legislative treatment does not constitute an invalid preference if there is not a similarity of attendant circumstances in which the laws will operate. The minority view in R. v. Barger (3) was adopted by the majority of this Court in Elliott v. The Commonwealth (4). The very idea of a preference, on the true interpretation of s. 99, involves a consider- ation of the attendant circumstances in which the legislation operates

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HIGH COURT [1947. and that a preference cannot be ascertained merely by looking at the legislation unrelated to the circumstances. Mere dissimilarity of legislative treatment, preferential in its appearance, is not obnoxious tos. 99. If in one State the conditions may be such as to require regulation there, and in the other States regulation may be wholly unnecessary, then a law which provides for regulation in that one State but not in the other States is not a preference (Hlliott v. The Commonwealth (1) ). Tf the legislation appears to arise out of the necessity of maintaining order and regularity, where those conditions are imperilled, and does not contain any legislative provision where those conditions are not imperilled, such legislation does not give a preference. It may be that the Rationing Orders constitute a discrimination or a dissimilarity of legislative treatment but they do not constitute a preference or benefit for the trade of one State over the trade of other States. When the discrimination is one which operates irrespective of State boundaries altogether across a line which has nothing to do with State boundaries, the mere incidental result that some of the discrimination may cross State boundaries does not make it obnoxious to s. 99. What matters are relevant for the purposes of ascertaining a preference, namely differences of local situation, are shown in Elliott v. The Commonwealth (2). There can be no logical reason for stopping at facts which are capable of being judicially noticed if once the stage be reached of observing the conditions upon which the legislation operates. The Prices Orders are executive orders (Arnold v. Hunt (3) ; The Common- wealth v. Grunseit (4); Victorian Chamber of Manufactures v. The Commonwealth (Women's Employment Regulations) (5); King Gee Clothing Co. Pty. Ltd. v. The Commonwealth (6); Arthur Yates & Co. Pty. Ltd. v. Vegetable Seeds Committee (7)). Elliott v. The Commonwealth (2) clearly contemplates that the tribunal will direct its mind to some factual situation. The Court should not confine its scrutiny of the facts to those which are the subject of judicial notice (Borden's Farm Products Co. Inc. v. Baldwin (8)). As to whether the Court may examine the operation or the background of legislation in determining its validity see Deputy Federal Com- missioner of Taxation (N.S.W.) v. W. R. Moran Pty. Ltd. (9); Stenhouse v. Coleman (10) ; Arthur Yates & Co. Pty. Ltd. v. Vegetable

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H.C. or A. Jaws with respect to "Trade and commerce with other countries, q 1947. and among the States." It was contended for the plaintiff that the Pte operation of s. 99 is not limited to laws which are authorized by the v. power conferred in s. 51 (i), but that s. 99 applies to other laws or nae a) regulations which are laws or regulations of trade or commerce, weatra. Whatever the constitutional power may be in pursuance of which Jathamc.s, of under which they have been enacted by the Commonwealth wixonJ-; Parliament. It was contended that preferences to States and parts Williams J." of States appear on the face of the challenged Orders, that they are laws or regulations of trade or commerce and therefore must be held to be void. The defendants on the other hand contended that the words of s. 99 and the context in which it appears show that s. 99 is intended to be limited to laws or regulations of trade and commerce which can be enacted by the Federal Parliament under what is called the trade and commerce power, that is, under s. 51 (i), and that s. 99 does not apply to laws or regulations which can be supported only under other powers, even though they have (as some of them in fact have) an effect upon or in relation to trade and commerce. The regulations and Orders under consideration in this case were made under the defence power and though they, or some of them, affect trade and commerce, they are, it was contended, exclusively defence legis- lation and could not be justified under s. 51 (i) as trade and commerce legislation. The argument for the defendants was that s. 99 has no application to laws made under the defence power or, indeed, under any power other than that contained in s. 51 (i). Alternatively, it was contended for the defendants that the Rationing Regulations are not really laws or regulations of trade or commerce, even if those words are given their widest interpretation as including, not only laws made under s. 51 (i), but any other laws which deal with trade and commerce, under whatever power they are made, The argument was that the regulations are directed towards a fair distribution of commodities during a time of war emergency, and that, although they introduce a limitation upon commercial dealings, their real nature is that of an arrangement for the distribution of necessary or important commodities such as, in the present case, food. An arrangement for the fair distribution of food by a coupon system, though it affects trading in food, is not, it was contended, a law regulating trade and commerce. It was also argued, though not with as much force, that the Prices Reg- ulations were directed to the prevention of inflation, and that the object was to prevent money losing its value rather than to fix prices to be observed as maximum prices in commercial dealings.

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