O'Sullivan v Miracle Foods

[38]

Section 24 (a) provides that no person shall sell or have in his possession for sale any margarine in a package unless there is written or printed on the package in bold-faced sans serif black capital letters of not less than 30 points face measurement the word "margarine"; whilst s. 23 provides that no person shall manufacture, sell or have in his possession for sale any margarine unless one-tenth of one per centum by weight of such margarine consists of dry starch or arrowroot intimately mixed with the other constituents of the margarine. It was argued that if these provisions apply to goods in possession for sale or to the sale of goods in the course of inter-State trade they are invalid. But s. 3 (2) of the Act provides that the Act shall be construed subject to the Commonwealth of Australia Constitution Act and so as not to exceed the legislative power of the State, to the intent that, if any provision thereof would, apart from this section, be construed as being in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that power. Consequently, s. 24 (a) and s. 23 must be read down so as to apply only to goods in possession for sale or to the sale of goods in South Australia where the prohibited acts occur outside the sphere of inter-State trade. However, an amending Act in 1941 introduced a new section - s.25a - into the Act which declared that every provision of the Act relating to, inter alia, the sale and having in possession for sale of any table margarine or other substance, the ingredients of table margarine and the authority to make regulations under the Act, shall apply in relation to all table margarine and every such other substance in the State irrespective of whether the table margarine or other substance was or was not manufactured in the State. This, to say the least of it, is a curious provision, but whatever meaning is given to it, it cannot operate to extend the provisions of s. 24 (a) and s. 23 to sales made in the course of inter-State trade.

[41]

There is, we think, a great deal to be said for the defendant's contention in relation to the provisions of s. 23. It is common ground that if a minute quantity of dry starch or arrowroot is to be mixed intimately with the other constituents of margarine it must be done at the point of manufacture; it cannot be done at any later stage. The effect of the section is, therefore, to prohibit absolutely the sale of margarine in South Australia, including margarine imported from another State, which does not conform to the statutory requirement. Upon the evidence s. 23 cannot be justified as a provision concerned with the safeguarding of public health; it is merely a provision intended to enable a simple test to be made in order to establish that the product contains dry starch or arrowroot and, presumably, that it is not butter. But the direct effect of the section is to put an end to trade in margarine between South Australia and other States where the margarine is imported into South Australia for the purpose of resale if the margarine does not conform to the requirements of s. 23. So far as the defendant is concerned it was, it was said, free to import the margarine in question here into South Australia from New South Wales but since, admittedly, it was not possible for it to correct the lack of conformity with s. 23, the effect of the section in the circumstances was, for all practical purposes, to destroy the inter-State trade in the commodity. To our minds it is merely a matter of words to say that the defendant was free to import the margarine into South Australia from New South Wales for the moment it had it in its possession for sale in the former State, or the moment it sold it in that State, it would commit an offence. To our minds it is about as clear as it can be that, in these circumstances, s. 23 operated directly to terminate its inter-State trade in margarine. This being so, to give s. 23 its full effect in relation to intra-State sales would be to give it an operation which infringes s. 92. Accordingly, the complaint alleged under that section should be dismissed.

[43]

As already appears the third complaint was laid under reg. 6a (6) of the Margarine Regulations. This regulation, which was formulated shortly after the introduction into the Act of s. 25a, was characterized by counsel for the complainant as "a piece of slovenly drafting". But this is, to say the least, an understatement for a more confusing and unintelligible piece of legislation it is scarcely possible to imagine. Its opening words are: "The following provisions shall apply to the manufacture or sale of table margarine in South Australia". Then follow eight sub-regulations. The first of these merely provides that the expression "table margarine" shall have the meaning assigned to it by the Act. The second and subsequent sub-regulations make it quite clear that, at least, some of its provisions apply to all margarine whether manufactured in South Australia or elsewhere. Examination of sub-reg. (2) reveals that it contains two sets of provisions contravention of either of which constitutes an offence under the Act. The first set requires that all ingredients, used in the manufacture of table margarine, shall be submitted for inspection by an inspector before such ingredients are used in the manufacture of table margarine, and the second, that no table margarine (whether manufactured in South Australia or elsewhere) shall be sold or offered for sale or placed on the market in South Australia, unless, prior to manufacture, the ingredients thereof have been submitted for inspection and approved by an inspector, in accordance with the Regulations. Prima facie we should have thought that the positive obligation under this sub-regulation to submit all ingredients for inspection extended only to manufacturers in South Australia and that the second set of provisions was intended to apply to the sale or offering for sale of margarine wherever manufactured and this, we think, is its true meaning. Sub-regulations (3) and (4) go on to provide that, in the case of a manufacturer who holds a licence under the Margarine Act, 1939-1941, that is to say, one who manufactures margarine in South Australia, the ingredients of table margarine shall be submitted for inspection on the premises specified in the licence held by him (sub-reg. (3)) and that where table margarine, which is manufactured outside South Australia, is sold or offered for sale or marketed in South Australia, or is intended so to be, the ingredients shall be submitted for inspection and inspected, at an inspection depot in South Australia provided by and at the expense of the manufacturer and approved by the Minister. The offence created by the latter part of sub-reg. (2) is constituted by the sale or offering for sale in South Australia of margarine wherever manufactured unless, prior to manufacture, the ingredients thereof have been submitted for inspection and approved by an inspector. But sub-reg. (4) is couched in language which is apt to impose upon a manufacturer in another State a positive obligation to submit the ingredients of his margarine for inspection if the margarine is sold or offered for sale in South Australia, or, is intended so to be. As we understand the effect of these sub-regulations the offence under sub-reg. (2) is the sale or offering for sale in South Australia of margarine unless, prior to manufacture, its ingredients have been submitted for inspection, whilst under sub-reg. (4) an offence is committed when the manufacturer manufactures margarine which is intended to be sold or offered for sale in South Australia and fails to submit the ingredients for inspection. Further, it seems that the manufacturer in another State retrospectively commits an offence if margarine of his manufacture, though not manufactured for the purposes of sale in South Australia, is sold or offered for sale in that State by any person and the manufacturer has not submitted the ingredients thereof for inspection.

[45]

The regulation as a whole provides, in language that clearly refers to any sale in South Australia, whether in the course of inter-State trade or not, that no margarine shall be sold in South Australia unless the ingredients thereof have been submitted for inspection at a place established and maintained at the expense of the manufacturer and approved by the Minister. Following the earlier provisions of the regulation sub-reg. (6) constitutes it an offence for any person to sell, offer for sale, or place on the market in South Australia any table margarine unless, in respect of the manufacture thereof, the specified records have been kept. But one may ask by whom are such records to be kept? Clearly enough, we should think, by the manufacturer. Yet under sub-reg. (7) any person who sells, offers for sale or places on the market in South Australia, any table margarine, may be required to produce the records mentioned in sub-reg. (6). This obligation, it will be seen, is placed not only on the manufacturer but on any person who sells margarine in South Australia and one may well inquire how a person of the latter class can ever be in a position to produce the records to which sub-reg. (6) refers, or cause them to be produced. Finally, sub-reg. (8) provides that every manufacturer who sells, offers for sale, or places on the market in South Australia any table margarine (whether manufactured in South Australia or elsewhere) shall furnish a return to the Minister once in every calendar month setting out the particulars required to be kept pursuant to these regulations. It seems to us that the regulation, as a whole, does, at many points, impair, and intends to impair, the freedom of inter-State trade. The requirement that no margarine, whether manufactured in South Australia or elsewhere, shall be sold or offered for sale in South Australia, unless, prior to manufacture, the ingredients have been submitted for inspection and unless the specified records have been kept by the manufacturer, is obnoxious to s. 92, and it seems that these provisions apply and were intended to apply to sales in South Australia whether in the course of inter-State trade or not. There are, in our view, other provisions in sub-reg. (6) which also impair the freedom of inter-State trade and it appears to us that they were framed on the view that s. 25a, which had recently been introduced into the Act, had a full operation according to its tenor and that it authorized the making of regulations applicable to all table margarine irrespective of whether that table margarine or other substance was or was not manufactured in South Australia. In our view, it is quite impossible to read down sub-reg. (6) so as to confine it within permissible legislative limits and, accordingly, it must be held to be invalid. It follows that the complaint in respect of this alleged offence must be dismissed.

[48]

Section 23 of the Act, which requires margarine sold, or offered for sale, in South Australia to have been adulterated with dry starch or arrowroot, is, so far as I can see, a law which serves no sensible purpose, notwithstanding that a simple chemical test can be applied to determine the presence of starch or arrowroot in a sample of a substance. If there be some other law which forbids a like adulteration of butter sold, or offered for sale, in South Australia and if it be assumed that there will be strict compliance with each law, then no doubt the presence, without more, of the additive in a sample of a substance which may be butter or margarine would indicate that the substance is margarine, whilst the absence of the additive would indicate that the substance is butter. It seems to me, however, that the reason for some simple chemical way of distinguishing between margarine and butter is the apprehension that laws will not be strictly obeyed. In the circumstances, I have found it necessary to be on my guard lest I should too readily treat what is an officious requirement as an unlawful exercise of power. It seems to me that a law requiring all margarine manufactured in South Australia to contain starch or arrowroot would not interfere with inter-State trade, notwithstanding that there are customers in other States who want to buy margarine, containing no starch or arrowroot, from South Australian manufacturers. This, I think, follows from the decisions of this Court in Grannall v. Marrickville Margarine Pty. Limited [1] and Beal v. Marrickville Margarine Pty. Limited [2] . By like reasoning, I have reached the conclusion that the South Australian law which, no doubt, makes it practically necessary for manufacturers of margarine in other States to add starch or arrowroot to margarine which they are manufacturing for export to South Australia is not a law which interferes with inter-State trade. It operates after inter-State trade (Wragg v. State of New South Wales [3] ) to influence conduct before inter-State trade (Beal v. Marrickville Margarine Pty. Limited [2] ; Williams v. Metropolitan and Export Abattoirs Board [4] ). In the latter case, Kitto J. said: - "If a law operates directly upon sales of goods, and it is found that goods of the kind to which the law refers cross State boundaries at some stage of their journey to the hands of a purchaser, the question whether the law operates directly or only consequentially upon inter-State trade depends upon the further question whether sales affected by the law are so inseverably bound up with the inter-State movement of the goods sold that together they constitute an example of inter-State trade. If it is only as a repercussion depending upon practical business or economic considerations that an effect upon the inter-State movement will follow when the law makes its impact upon the sales, the law cannot be said to burden inter-State trade by its direct operation, and it therefore cannot be in collision with s. 92" [5] . I think, therefore, that s. 23 validly applies to the sale in South Australia of margarine manufactured in New South Wales. Different considerations might apply to a general law forbidding the sale in a State of a commodity unless it contain something which would render it unsaleable for its ordinary trade purpose.

[53]

A general purpose and policy behind the Margarine Act is, no doubt, to aid and protect the dairy industry in the contest between butter and margarine. But, as the Chief Justice recently said, "It is not enough that there are perceptible reasons for the enactment of the law valid enough in the eyes of a legislature pursuing some policy conceived by it to be for the public good or the general welfare": Harper v. State of Victoria [1] . The Constitution declares freedom of trade, commerce and intercourse among the States to be an overriding good, to be overwhelmingly for the general welfare. But just as purposes and intentions conceived by a legislature to be good cannot destroy the operation of s. 92, so its operation is not to be enlarged to destroy all statutory regulation of trade that traders may find irksome or obedience to which is costly for them. The intentions of the legislature, whether considered good or bad by dairyman or margarine makers, cannot determine whether the enactment is constitutionally good or bad. It is what the Act does, not why it was passed, that counts. Now s. 24 (a) ensures that packages of margarine sold or kept for sale must be plainly and boldly marked with the name of their contents. To insist on this is not to impose an impediment on honest trade and commerce. What s. 92 protects is trade and commerce that is honestly conducted. No honest trader can object to a requirement that his wares be marked by their proper name and sold under that description. Section 24 (a) prescribes what the legislature considers necessary to ensure plain and legible marking. It cannot I think be said that it is not a reasonable prescription for that end. In the present case the requirement was not complied with. The word "margarine" plainly appears on the package in large and legible print which only a busybody would say was not black. However, the letters fall short of the prescribed height by one twelfth of an inch. An offence was thus committed although it seems a harmless one. The defendant must be convicted.

[55]

The next question is whether the same considerations apply to s. 23. It provides that no person shall manufacture, sell or have in his possession for sale any margarine unless one-tenth of one per centum by weight of such margarine consists of dry starch or arrowroot intimately mixed with the other constituents of the margarine. It too must be read with the limitations imposed by ss. 3 (2) and 25a in mind. So read, it applies to the selling of margarine in South Australia for delivery there or to the having margarine in possession there for such sale. That is to say it does not extend to selling margarine or having margarine for sale in the course of inter-State trade. But it does apply to any margarine, wherever made, sold or kept for sale in South Australia. And, as the requirement that the starch or arrowroot be intimately mixed with the other constituents can only be complied with during the process of manufacture, it means that margarine wherever made must, if it is to go upon the market in South Australia, be adulterated by the maker with the stipulated modicum of starch or arrowroot. A person in South Australia who buys margarine from another State for sale in South Australia may possibly have to pay more in order to obtain margarine that he can be assured would satisfy the requirements of South Australian law than he would for other margarine. I shall assume this may be so. But it does not determine the question. I do not think that it can be said in the abstract that a State law prescribing qualities and standards for particular kinds of goods to be sold within a State or things to be used there necessarily offends s. 92. The question cannot be usefully considered apart from the facts of a particular case. In the present case the requirement that starch or arrowroot be in margarine sold in South Australia is unrelated to any quality of margarine as a foodstuff. Its presence is not detectable by the housewife. But it is detectable by a simple process of analysis. That explains the law. If complied with, it enables margarine to be distinguished from butter. A substance that contains starch or arrowroot is presumptively not butter, because butter factories do not ordinarily add starch or arrowroot to their product. Section 23 thus makes passing off of margarine as butter or of butter as margarine easier to detect. That seems to be its purpose. I have had some doubts whether some indirect consequences might make it offensive to s. 92. But on the whole I think it is merely regulatory of the trade in margarine not restrictive of it. I would convict the defendant on this charge.

O'Sullivan v Miracle Foods - [1966] HCA 64 - HCA 1966 case summary — Zoe

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