North Eastern Dairy Co Ltd v Dairy Industry Authority [1975] HCA 45 | Case summary

North Eastern Dairy Co Ltd v Dairy Industry Authority [1975] HCA 45 | Case summary | Zoe

Part II of the Act establishes a statutory corporation called the Dairy Industry Authority of New South Wales ("the Authority"). Its role is generally described in s. 17 as "the regulation and control of the quality, supply and distribution of milk for the purposes of ensuring the wholesomeness and purity of milk and dairy products in the interests of public health". Detailed powers given to the Authority include powers of inspecting and sampling milk (s. 18), of directing the actions of dairymen or milk vendors (s. 18), of engaging directly in the trade and manufacture of milk and milk products (s. 19), to carry out research on improving the dairy industry (s. 20), to delegate the exercise of its powers (s. 21) and to acquire land and undertakings (Pt VI). The Authority is given control over milk, which becomes vested absolutely in the Authority upon being supplied (s. 23). No definition is given of the words "supply" and "supplied", as to "milk supplied to the Authority": see discussion in Andaloro v. Wyong Co-operative Dairy Society Ltd. [38] . However, I am of opinion that, in relation to the facts of the present cases, the treated milk and milk products from Victoria were supplied in New South Wales for human consumption there when they entered New South Wales from Victoria in the first plaintiff's vehicles, whether destined for sale in Albury or Junee. At that point of time, assuming validity of the Act, the milk would become vested in the Authority. The Authority may choose to accept delivery of the milk on terms fixed by it (s. 24), and make payments to the dairymen (s. 25), or the Authority may refuse to accept delivery of the milk. Where milk supplied in New South Wales is not accepted by the Authority, it remains vested in the Authority and the supplier of the milk may not sell or dispose of it for human consumption or for use by man. The Authority is given sweeping protection from civil action (see s. 26(5), s. 29, s. 32, s. 81), and may even conclusively certify fictitious facts about any delivery to it (s. 26). Registration of dairymen and milk vendors is made compulsory (s. 33) and the Authority has a wide discretion as to whom it issues certificates or registration (s. 34) and as to the conditions to be attached to such certificates (s. 33(6)). It should be observed that the Authority itself does not retail in milk. Section 35, which came into effect on 1st January 1972, makes it an offence to sell other than to a milk vendor, or to a dairy produce factory within the meaning of the Dairy Industry Act, 1915, milk which has not been pasteurized within the meaning of the Pure Food Act and regulations made thereunder, or treated in the prescribed manner. By reason of s. 14A of the Interpretation Act, 1897-1972, s. 35 relates to the selling of milk in New South Wales. Part IV of the Act provides for the continuation and extension of the existing marketing quota system. Part V establishes a Dairy Industry Price Tribunal to investigate and recommend prices in the industry, which prices are then fixed by order of the Governor. A Dairy Industry Artificial Breeding Advisory Board is established in Pt VII. The remaining provisions of the Act complete the machinery of the scheme. Finally, the Minister is given power in s. 7 to exempt people, premises, milk, or parts of the State from any provisions of the Act (except s. 35), but may not exempt a person except as to milk obtained from a dairy herd certified by the Chief of the Animal Husbandry Division of the Department of Agriculture to be free of tuberculosis and other disease, to which herd no animal has been admitted subsequent to such certification: see s. 35(2). This conspectus of the Act indicates the scope and design of the scheme it establishes controlling all aspects of the dairy industry in New South Wales.

After the many vicissitudes through which the application of s. 92 has passed, we are left with a statement by the Privy Council in Bank of New South Wales v. The Commonwealth [8] that it is what the law does in the circumstances in which it was intended to operate, provided that merely remote consequences are ignored, which will determine whether the law infringes s. 92. Having applied the particular statutory provision according to its proper construction to the relevant situation in fact, the question is whether its operation thus explicated, leaves trade and commerce free. It will do so although it produces an impact upon interstate trade if its provisions do not in their nature go beyond the adjustment of the rights of man and man in a free and legally regulated society. The question is not from what is the interstate trade and commerce to be free: nor is it from what kinds of statutory provisions it is to be free. The statutory provisions must not infringe the freedom of interstate trade and commerce. The concept of freedom and the word "free" carry within themselves their own limitation. Perhaps the analogy of freedom of speech cannot be bettered. A man enjoys freedom of speech though he may not defame his fellows. The relationship of one man to another in a civilized society furnishes the basis for the conclusion that inability to defame without consequence is not an impairment of freedom, properly understood. The freedom of the individual to engage in interstate trade and commerce is included in the freedom of interstate trade and commerce which the Constitution guarantees. Thus laws to ensure public health and honesty and fairness in commercial dealings form examples of laws which the concept of freedom of trade and commerce does not deny. Consequently, laws, e.g., to secure public health, must have no impact which is reasonably unnecessary upon the activities of the individual in interstate trade and commerce. The protection of the individual is not merely incidental or peripheral to the enforcement of the constitutional guarantee. Indeed, whilst not exhausting the operation of s. 92, it is central to it.

Evatt J. thought that "it is impossible to accept the theory that, in applying s. 92, one need not look past the mere operation of the State law upon the inter-State trader, traveller or carrier and that one should disregard the nature and character of the State law which is impugned" [20] (citing his Honour's own judgment in R. v. Vizzard; Ex parte Hill [21] ). If his Honour had meant, which in my opinion clearly he did not, that a law regulatory in character in the appropriate sense of the word "regulatory" may not offend the constitutional provision, his statement, though indecisive in itself, would have been borne out by subsequent decisions. But, using Willard v. Rawson [22] , R. v. Vizzard [23] and O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways (N.S.W.) [24] , as the basis of his remarks, his Honour, in my opinion, was treating the subject matter of the law as the relevant criterion of validity, or, at any rate, of critical significance in that respect. He later added [20] : "The fact that a legislative scheme of a State will have a direct and even disastrous effect upon the interstate marketing business of certain individuals does not invalidate the scheme, providing its main objects and purposes are disparate from trade, commerce and intercourse and the scheme is not being administered for the purpose of restricting interstate marketing". This indicates the adoption of the same criterion as that chosen by Sir John Latham. His Honour takes the object of the legislative scheme, rather than its operation on interstate trade, as the criterion of validity. Further, his Honour found support in Hartley v. Walsh [25] , a case to which I shall need to refer. McTiernan J. adopted the same criterion. He said: "It is clear that the Milk Act does not profess to expropriate in order to hinder or burden the passing of milk from other States" [26] . His Honour presumed that the purpose of the legislation was "an expedient one for reasons only of health, hygiene, efficiency and the economic benefit of farmers in the milk-producing districts" [26] . I have already indicated that it is not enough that the motive of the expropriation is the protection of health. To be valid it would, in my opinion, need to be reasonably necessary as compared with other available expedients to achieve that purpose.

The advance in the decision of Bank of New South Wales v. The Commonwealth [28] was the displacement of these various criteria, something not done with clarity in the decision in James v. The Commonwealth [30] , and the decision that the operation of the Act upon interstate trade and commerce, whatever its subject matter and whatever the legislature's purpose in passing it, would itself be decisive, if by that operation a burden or hindrance was placed upon interstate trade and commerce which was not regulatory in character, regulatory being used in the special sense of which I have spoken elsewhere: see Samuels v. Readers' Digest Association Pty. Ltd. [31] ; also per Kitto J. in Hughes v. Vale Pty. Ltd. v. New South Wales [No. 2] [32] . The extreme statements of Dixon J. in the Peanut Board Case [33] and of Evatt J. in the Milk Case [34] have been displaced. Sir Owen Dixon's statement was: "The words "absolutely free" admit of no qualification, but they are used with reference to governmental control and exclude all such control; trade, commerce and intercourse among the States are made up of acts, transactions and conduct which, considered as trade, commerce and intercourse, are free of all governmental control whatsoever". I have earlier referred to Evatt J.'s first statement [35] . His second statement was: " sec. 92 does not prevent a State from socializing any one of its industries of production, converting the reward to the producer from a chance of selling at a good or a bad price to a proportionate share in the proceeds arising from State control of the industry" [36] . The solution is found in comparing the result produced by the operation of the law with the freedom of interstate trade which, properly understood, leaves room for regulatory provisions of the kind to which reference has been made. This decision in Bank of New South Wales v. The Commonwealth [37] renders the reasoning, and as I think the conclusion, in the Milk Case [38] unacceptable. That case should be treated, in my opinion, as having been overruled.

I should now deal with the case of Hartley v. Walsh [39] , on which reliance was placed in the argument of these cases. A Victorian statute forbad the purchase or sale of dried fruits unless they had been packed in a Victorian packing shed. It has been said that the decision upholding the Victorian law "was based upon the principle that the regulations were directed to procuring standards of quality, condtion and grade and that such regulations had been expressly recognized in James v. The Commonwealth [40] " (Wynes, Legislative, Executive and Judicial Powers in Australia, 4th ed. (1970), p. 257). It was said in Bierton v. Higgins [41] , that "it is unnecessary for us to reconsider the decision in the earlier case", i.e. Hartley v. Walsh [39] , "though it is desirable to point out that it rests substantially on principles which have not been regarded as acceptable in recent years". The regulation under challenge in Hartley v. Walsh [42] was destructive of all interstate trade in dried fruits, unless they had first been brought into Victoria for packing or unless they were first processed in Victoria in a packed condition. They could be purchased outside Victoria in an unpacked condition but could not be sold or purchased in Victoria for delivery from another State: nor could unpacked fruit be sold in Victoria for delivery into another State. The particular contracts in Hartley v. Walsh, as Dixon J. points out [42a] , were made in Victoria and were sales of unpacked dried fruits for delivery into South Australia. " in each case the transaction was one of inter-State commerce". Whilst it was said that the regulation was a health or pure food provision, it was not maintained that the only reasonable method of protecting the Victorian public from unwholesome or contaminated fruit was to require their packing in a Victorian shed. In my opinion, the regulation operated to burden interstate trade both in packed and unpacked dried fruits and was not in the relevant sense itself of a regulatory nature. Wholesome and uncontaminated dried fruit packed in South Australia or in New South Wales could not be sold in Victoria by its importer from South Australia or New South Wales, and unpacked dried fruit could not be sold for delivery into South Australia or New South Wales. In my opinion, the decision in the case is inconsistent with the principles affirmed in the cases before the Privy Council and applied, e.g., in Cam & Sons Pty. Ltd. v. Chief Secretary (N.S.W.) [43] and Fish Board v. Paradiso [44] . The case of Hartley v. Walsh [42] ought not to be followed and should be regarded as overruled.

The final matter with which I should deal is the submission that the effect of the Act and the regulations upon the plaintiffs' trade is merely economic and not within the operation of the Act. I have adverted elsewhere to this recurring theme in some of the decided cases. The operation of an Act is what it does in the situation in which it is to work according to its proper construction. An Act does not operate in a vacuum, so that you study only its words in the abstract. It operates in and upon matters of fact, which, if it is valid, modifies and causes by that modification further changes. All these effects are within its operation until the point of remoteness is reached. In this area we are not involved in the difficulties introduced in other areas by the concept of foreseeability. The expression in the decision of the Privy Council in Bank of New South Wales v. The Commonwealth [55] , "some indirect or consequential impediment which may fairly be regarded as remote", was clearly a reference to remoteness as understood in various areas of the law. It was not intended to exclude the consequences produced by an Act operating upon the facts which, according to its proper interpretation, it intended to affect. The language of their Lordships' decision lends no support whatever, in my opinion, to the proposition that the economic result produced by an Act is not within its direct operation. When one remembers that the purpose of examining the operation of an Act in relation to s. 92 is to determine whether the situation produced by that Act leaves trade and commerce free, it immediately seems impossible to exclude the economic product of the Act as irrelevant - as outside the direct operation of the Act. In the instant cases, the matter to my mind is particularly plain. The legislative provisions directly produce the result that a trader may not lawfully sell within the State a commodity of commerce, except on terms dictated by or on behalf of the State. The fact that these provisions put an end to the trade of the trader cannot be regarded as but an "economic" and thus irrelevant consequence of the legislation. It is fairly and plainly within its operations.

If inter-State trade and commerce can be governed by any law which a parliament chooses to enact, such trade and commerce is no more free than any other potential subject matter of legislation. Thus, there must be some criterion which will make it possible to distinguish between laws which may properly govern such trade and commerce and other laws which, apart from s. 92, could have governed it, but which s. 92 prohibits. James v. The Commonwealth [58] , which it is the duty of this court to follow, tells us that the application of laws of the first class will still leave inter-State trade and commerce free. He continued [59] : One proposition which I regard as established is that simple legislative prohibition (Federal or State), as distinct from regulation, of inter-State trade and commerce is invalid. Further, a law which is "directed against" inter-State 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. He further said [60] : In the present case, however, the question is, I think, squarely raised whether it is possible for a State parliament, operating within its territorial limitations, to introduce what James v. The Commonwealth [58] describes as compulsory regulation and control of all trade, including inter-State trade. and again [1] : The Milk Act is an Act which expropriates property, and that expropriation is made for the purpose of controlling trade, and, upon the construction of the Act which I am assuming to be correct, inter-State trade is included in the trade to be controlled. Latham C.J. continued [2] : In the present case there is nothing to show that the Act is directed against inter-State trade or that the real object of the Act is to interfere with inter-State trade and he said [3] : Thus, in my opinion, James v. The Commonwealth [4] makes it possible to uphold the validity of the Act not only as to the expropriation provisions which it contains, but also as a whole. A court should always take the view, if it is fairly open, that an Act of parliament is valid rather than that it is invalid. 1. (1939) 62 C.L.R., at p. 126. 2. [1936] A.C. 578; (1936) 55 C.L.R. 1. 3. (1939) 62 C.L.R., at p. 127. 4. (1939) 62 C.L.R., at p. 131. 5. [1936] A.C. 578; (1936) 55 C.L.R. 1. 6. (1939) 62 C.L.R., at p. 132. 7. (1939) 62 C.L.R., at p. 133. 8. (1939) 62 C.L.R., at p. 135. 9. [1936] A.C. 578; (1936) 55 C.L.R. 1.

These two cases stated, which have been heard together, raise for decision the questions whether three statutory provisions - reg. 79(10) (c) of the regulations made under the Pure Food Act, 1908 N.S.W., as amended, and ss. 23 and 33 of the Dairy Industry Authority Act, 1970 N.S.W. ("the Act") - are valid and applicable to sales made, or milk supplied and sold, as the case may be, by the plaintiffs, having regard to the effect of s. 92 of the Constitution. The first plaintiff (North Eastern Dairy Co. Ltd.) carries on the business of processing milk and selling and distributing milk and milk products. Its principal processing plant is at Kiewa in Victoria. It engages in three courses of dealing which give rise to the present questions. First, milk and milk products processed and packaged by the first plaintiff at Kiewa are loaded on to the first plaintiff's motor vehicles at Wodonga in Victoria and carried to Albury in New South Wales where the first plaintiff makes door-to-door sales to householders. Secondly, milk and milk products processed and packaged by the first plaintiff at Kiewa are similarly loaded at Wodonga and carried to Albury where they are delivered to the proprietors of a number of shops each of whom has executed an agreement with the first plaintiff. By each of these agreements the first plaintiff appoints the shopkeeper as its agent to sell the milk or milk products which it agrees to deliver to the agent and the agent agrees to store the milk and to endeavour to sell it as agent for the first plaintiff to customers in New South Wales. The agreement states that no property in the milk delivered shall pass to the agent and that neither the agreement nor anything done under it constitutes a sale by the first plaintiff to the agent. The agent is entitled to commission on milk sold and the first plaintiff agrees to retake delivery of possession of milk delivered to the agent and unsold. The milk and milk products are sold by shopkeepers to customers in the ordinary course of business. The second plaintiff (Carroll's Food Mart Pty. Ltd.) is the proprietor of two supermarkets in Albury and has entered into agreements of this kind with the first plaintiff and sells in its supermarkets milk and milk products delivered by the first plaintiff in the manner mentioned. Thirdly, the first plaintiff delivers milk and milk products to shopkeepers in the area of Junee in New South Wales who have entered into agreements of the kind described and who sell the milk and milk products to customers in New South Wales. In this case the milk and milk products, although processed and packaged at Kiewa, are delivered by employees of the first plaintiff to the first plaintiff's depot at Wagga Wagga in New South Wales where they are transhipped to other vehicles of the first plaintiff and delivered by other employees of the first plaintiff to the shops in the Junee area.

I turn then to the submissions as to the effect of s. 92 of the Constitution. Quite recently, in S.O.S. (Mowbray) Pty. Ltd. v. Mead [9] , I expressed my opinion on questions similar to those that arise in the present case; I adhere to what I there said and need not repeat the discussion. I can therefore express quite briefly, and with little further citation of authority, the reasons that lead me to the conclusions that I have reached in the present case. There can be no doubt that in taking milk over the border for the purpose of selling it the first plaintiff was engaging in interstate trade. On the other hand, in my opinion the sales made within New South Wales to customers who made no stipulation that the milk should come from Victoria, and who were indeed quite indifferent as to the origin of the milk, were, considered by themselves, intrastate sales. However, as Walsh J. said in S.O.S. (Mowbray) Pty. Ltd. v. Mead [10] , in a passage to which I referred in Pilkington v. Frank Hammond Pty. Ltd. [11] , in many cases an act may have a double aspect, being in one aspect an act which forms part of intrastate trade, and in another aspect an act which forms part of interstate trade. Viewed from the point of view of the plaintiffs' trade, each sale was at least "an inseparable concomitant or consequence of that transaction" (cf. Fergusson v. Stevenson [12] ). The trade in which the first plaintiff engaged did not consist merely in bringing the milk across the border - it carried the milk from one State to another to sell it in the latter State. Trade is not limited merely to carriage. The essential object of s. 92 would be defeated if a State could, by the enactment of legislative provisions such as those now in question, entirely exclude from sale the products of another State. The present case is clearly distinguishable from S.O.S. (Mowbray) Pty. Ltd. v. Mead [9] . In that case the statutory burden was placed on the first sale made in Tasmania by a shopkeeper to whom goods had been consigned by the manufacturer in Sydney; the statute did not prevent the New South Wales seller and the Tasmanian buyer from completing their interstate transaction and the only effect which the statute had on interstate trade was an economic or commercial one. In the present case the person selling the goods within the State is the very person who has brought the goods across the border for that purpose, and the legislation prevents the plaintiffs' interstate transactions from being carried to their conclusion. The second plaintiff's activities occur entirely within New South Wales, but form an essential and integral step in the transactions of the first plaintiff, and take their colour accordingly - cf. Reg. v. Wilkinson; Ex parte Brazell, Garlick and Co. [13] . It should be added that it was not shown that any element of sham or contrivance attached to the relationship between the first plaintiff and its agents.

The defendant, a statutory authority established by the Act and charged by s. 17 with "the regulation and control of the quality, supply and distribution of milk for the purposes of ensuring the wholesomeness and purity of milk and dairy products in the interests of public health", claims that the sale and supply by the plaintiff in New South Wales of milk pasteurized in Victoria is illegal as it is not authorized by the two certificates of registration held by the plaintiff. These certificates restrict the plaintiff to the supply in the Albury area of milk which has been pasteurized at Albury by Haberfield's Milk Pty. Ltd., a competitor of the plaintiff (which holds a certificate authorizing it to pasteurize milk), and to the supply in the Wagga Wagga area of milk pasteurized at Wagga Wagga by Inland Dairies Pty. Ltd., another competitor of the plaintiff (which also holds a certificate authorizing it to pasteurize milk). In the case of Wagga Wagga the restriction arose as a result of a variation made on 6th July 1973 by which an additional condition was added to the plaintiff's certificate. The defendant also asserts that the sale or supply of pasteurized milk for human consumption that has not been pasteurized by the holder of a certificate of registration authorizing the holder to carry on the activity of pasteurizing milk is an offence against reg. 79(10) (c) of the regulations made under the Pure Food Act. The defendant therefore threatens to cancel the two certificates of registration held by the plaintiff. The plaintiff's answer is to say that its sale and supply of Victorian pasteurized milk in New South Wales forms part of interstate trade and commerce, that as such it is not affected by reg. (79(10) (c) either because the regulation is invalid on the ground that it infringes s. 92 or is otherwise ultra vires or because it should be read so as not to apply to interstate trade. The plaintiff further submits that the relevant provisions of the Dairy Industry Authority Act, in particular s. 23 (which vests in the Authority milk supplied for human consumption or use by man) and s. 33 (which authorizes the issue of certificates of registration subject to conditions) have no application to the plaintiff's interstate trade because they infringe s. 92 or because they should be read down so as to comply with the constitutional prohibition.

With respect to sales by "primary wholesalers" who are importers there may be stronger grounds for invoking s. 92, for some of these sales may actually be made in the course of inter-State trade. But before the plaintiffs can invoke s. 92 they must establish that, at least, some of those sales are of such a character as to be within the protection of s. 92. In my opinion, the facts leave this matter completely open. It is true that, except in the case of the small proportion sold by primary wholesalers otherwise than to secondary wholesalers, the primary wholesaler does not take the imported potatoes into store but sells them ex-wharf and delivery is taken by the purchaser at the wharf, but such sales are not necessarily part of inter-State trade. Possibly, upon examination, some may be found to fall within this category, but this is not sufficient to entitle the plaintiffs to any declaration based on the assumption that all or any of them constitute a part of trade, commerce and intercourse between the States even if, by reason of s. 92 such sales are not subject to the provisions of the legislation - a point which the views above expressed leave completely open. Taylor J. was here dealing with all relevant primary wholesalers because in one or another sense of the term they were all importers of Tasmanian potatoes. He was not dealing only with those whose course of dealing was described in par. 18 of the stated case. The word "importer" is used to describe persons in two different situations. If I order goods from abroad, or from another State, and pursuant to that order goods are shipped and then completion of the sale takes place by delivery and payment on arrival I am commonly described as an importer of the goods. But if by that is meant an importer of my own goods, that is not always or even usually correct. The vendor brings the goods in to my order and completes the sale to me in this State. However, if I send or bring my own goods into the State, I am also described as an importer. At the same time however I am exporter from the place whence the goods are sent. 1. (1953) 88 C.L.R. 353. 2. (1953) 88 C.L.R., at p. 383. 3. (1953) 88 C.L.R., at pp. 360-361. 4. (1953) 88 C.L.R., at p. 399.

Now in Wragg's Case [19] the impugned sales in New South Wales were in no instance established as sales made by a company which had sent or brought its own potatoes into the State for the purposes of selling them. They were all, so far as is now relevant, sales made in New South Wales by a company which had bought from a Tasmanian exporter. I would not like to think that the distinction which I make turns primarily on when the property in the potatoes passed. What is an act or event of trade, commerce, and intercourse among the States must be determined as a matter of commercial reality rather than of mere legal form. However, I would point out that, even in the case of the few sales made direct between the Tasmanian exporter and the New South Wales primary wholesaler, it was not established that the primary wholesaler was bringing into the State of New South Wales potatoes the property in which had already passed to it in the State of Tasmania. The property would not generally pass until payment against delivery of shipping documents: Halsbury's Laws of England, 3rd ed., vol. 34, pp. 165, 173-174: and there was no evidence of when payment and delivery of shipping documents took place. The so-called importer was not bringing in its own potatoes from Tasmania and then selling them in New South Wales. The exporter from Tasmania was either the importer in the strict sense into New South Wales or else in other cases the first sale between the two States was to P.I.C. Pty. Ltd. Therefore, Wragg's Case [23] does not deal with the power of the State to restrict the first sale by an exporter-importer. It does not deal with sales by importers who are also exporters from the other States, as in the case now before the Court. In my view the words of Dixon C.J. in Wragg's Case [24] must be read in the light of those facts. He never acceded to the proposition that a man who brought goods into a State from another State for the purpose of selling them ended his interstate transaction when he brought the goods in but before he sold them. Nor can I read the language of Taylor J. in this important judgment as so holding. He was dealing with importers who were not also exporters from the other State and with sales in New South Wales by those importers. He showed clearly that the interstate transaction was the export-import transaction of sale and delivery and not the subsequent sale in New South Wales by the so-called importer. However, neither the conclusion, nor in my respectful view the reasoning, establish that export-import separated from the sale which is the purpose of the export-import is the only act or event of trade, commerce, and intercourse among the States. I repeat that an act or event of trade, commerce, and intercourse among the States must be looked at in its commercial reality. If a man buys goods in one State and has them sent to him in another State, the interstate act or event extends from the sale to the delivery. When the goods are received the interstate transaction is completed. That is what I understand Wragg's Case to have decided. It does not decide that the interstate transaction is not still current so long as an exporter is selling or attempting to sell his goods from one State in another. I would interpose here that I find it impossible to distinguish between an exporter who sends his goods to another State pursuant to a contract of sale with a purchaser in that State and an exporter who accompanies his goods, in person or by his agent, to another State in the hope of selling them there. In neither case at that stage are the goods committed to the intra-State trade of the importing State. Indeed in the second case the exporter may not find a purchaser and may perforce send or take the goods back whence they came.

Cantarella v. Egg Marketing Board (N.S.W.) [33] requires especial considerations. In so far as it was held that the conditions imposed on the interstate sale of eggs were regulatory it was a decision depending on all the facts and circumstances. However, if it was decided that there was no relevant interstate transaction (and therefore no relevant trade, commerce, and intercourse among the States) on the ground that the interstate transaction consisted only of the carriage of the eggs from Queensland to New South Wales and did not extend to the sale in New South Wales by the Queensland exporter McLean (through his agents Peter and Carmel Cantarella) which was the purpose of the carriage, then with respect I do not think that the decision should be followed. I think, however, that that was not a ratio decidendi of the majority but was that of Walsh J. only. He placed reliance upon the fact that there was no preceding contract of sale while the eggs were in Queensland, therefore no interstate sale of eggs and therefore no transaction of trade, commerce, and intercourse among the States, other than the making of the interstate journey which was at an end before the sale took place in Sydney between the Queensland exporter and the New South Wales purchaser. With great respect I cannot accept the proposition that such trade, commerce, and intercourse between Queensland and New South Wales as the Queensland exporter had was limited to the journey. It extended to the purpose of that journey, namely, sale. That was the only reason why he sent his eggs from Queensland to New South Wales. The journey and the subsequent sale were part of one enterprise of trade, commerce, and intercourse among the States of Queensland and New South Wales. The decision can only be sustained on the basis that the conditions imposed were an essentially reasonable regulation applicable to the sale of all eggs to which they applied and which had no vitiating character in their operation, such as, for instance, conferring a preference or advantage in fact on New South Wales traders over traders from other States.

For reasons which appear from what I have stated earlier I am of the opinion that the plaintiff North Eastern Dairy Co. Ltd. directly and through its agent Carroll's Food Mart Pty. Ltd. engages in a transaction of trade, commerce, and intercourse between the States of Victoria and New South Wales when it transports milk from Victoria to New South Wales for the purpose of selling the milk in New South Wales either directly or through its agent and when it sells the milk to purchasers in New South Wales. The transport, the purpose thereof and the effectuation of the purpose are not severable. Subject to the question whether the burden is permissible even on this transaction because of a regulatory character thereof, that is the end of the matter on the facts presented before the Court. It has been strongly urged that Wragg's Case [34] is applicable but that case has little, if anything, to say on a transaction of the kind presently being considered. In Wragg's Case the sales by all concerned were sales of potatoes in New South Wales after the conclusion of the interstate sales. They were resales, just as sales by purchasers from the plaintiff North Eastern Dairy Co. Ltd. in New South Wales would be resales. It was held that the effect on the interstate transaction was remotely consequential. There was still complete freedom to export potatoes to New South Wales; there was only the economic consequence affecting the price at which such exports could be effected. None of this is true in the present case, even if the relevant sales were or should be regarded as intrastate sales. If either sale or resale within New South Wales of the plaintiff Victorian company's milk falls within the Dairy Industry Authority Act, 1970 N.S.W., then that Act operates directly and in no way indirectly or consequently upon any interstate transaction between the Victorian company and any New South Wales consumers or resellers. There cannot practically be any such transactions. The interstate trade would for all practical purposes be brought to an end. There is nothing remote or consequential about that, especially when the impugned Act by such an operation has the effect of preferring New South Wales milk producers to those such as the plaintiff who produce milk in another State. In no way, therefore, are the principles enunciated in Wragg's Case [34] applicable to the circumstances of the present case. I should add that I say nothing of the case where the legislation provides for compulsory resale within the importing State. That is not the present case. Even if the Victorian milk vests in the Authority by virtue of s. 23 there is no provision whereby the Authority is bound to pay for it. If it does not vest, then there is a simple prohibition on resale. On both views the interstate trade is directly burdened.

North Eastern Dairy Co Ltd v Dairy Industry Authority

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