ope chants Lands, MoollalraMC vy Minister ficharae Buttsworth v Gilley

ope chants Lands, MoollalraMC vy Minister ficharae Buttsworth v Gilley - [1945] HCA 23 - HCA 1945 case summary — Zoe

[23]

A. R. Taylor K.C. (with him Ashburner and Bowen-Thomas), for the plaintiffs. Prices Regulation Order No. 1816 is complicated and confusing in its terms. It is not precise. The method indicated in the Order for ascertaining the fixed price is too uncertain in its application and results, for example, although in par. 6 of the Order is used the expression " the cost of the labour" as recorded in the detailed costs record, a person interested would be led to believe that the draftsman referred to direct labour because that is the cost which is to be recorded in Part III. of the Second Schedule and there is no other provision for the recording of any other form of labour. The Order purports to fix different prices for different traders. The basis of discrimination between them is not permitted by the pro- visions of reg. 23 of the National Security (Prices) Regulations. The Order is a " bookkeeping" order and is one which is intended or calculated to compel traders to keep costing accounts in a particular form. The distinction between the various traders is not based on any distinction or difference in the goods themselves, nor is it based on any distinction in the circumstances in which the traders operate, but it is directed wholly and solely to the question whether they do or do not keep records. Under reg. 49, all traders are bound to keep proper books and accounts and proper costing records. Notwith- standing the provisions of that regulation, the Order provides that books, accounts and records must be kept in the manner therein prescribed. Where in the same regulations a clause is found empower- ing the Commissioner to fix prices on conditions, the legislature did not have in mind that he should be able to fix one price for traders who observed the conditions of reg. 49 and another price for those who didnot. There is nothing in reg. 23 (1) which permits different maximum prices to be prescribed for traders in the circumstances set out in the Order. It was not intended by that regulation, including par. (g) thereof, to give the Commissioner authority to impose any condition whatsoever. If it had been so intended the provision would be void: as being outside the defence power. The

[116]

The first ground of objection to the validity of the Order is that the Prices Regulations do not empower the Commissioner to fix in respect of the same goods one maximum price to be charged by traders who keep certain prescribed records and another maximum price to be charged by those who do not keep such records. The legal foundation of the Order is reg. 23 (1), (14), (2) and (2) of these Regulations. Sub-regulation (1a) (d) authorizes the Commissioner to fix and declare maximum prices on a condition or conditions. Paragraph (f) authorizes the Commissioner to fix and declare maximum prices on landed or other cost, together with a percentage thereon or a specified amount, or both. Paragraph (g) authorizes the Commissioner to fix maximum prices according to or upon any principle or condition specified by the Commissioner. Sub- regulation (24) (2) and (f) contain similar provisions with respect to fixing and declaring maximum rates for services to those contained in sub-reg. (1a) (d) and (7). The effect of reg. 23 (1) and (1a), (2) and (2a), speaking generally, is to empower the Commissioner to fix maximum prices for goods or maximum rates for services by specifying a sum of money or providing a formula for ascertaining a sum of money (Vardon v.. The Commonwealth (1)). The simplest and most certain method of fixing a maximum price or rate is to specify a sum of money. This method has been used in the Order in some instances, of which pars. 14, 15 and 16 are perhaps the most important. But in these paragraphs the specified sums only provide a maximum price or rate where they are less than the prices or rates ascertained by the use of the selected formulae. They do not fix an independent maximum price or rate but only operate conditionally. The whole substratum of the Order is therefore the prescribed formulae. The defendants seek to support these formulae as valid exercises by the Commissioner of the powers conferred upon him, in the case of manufacturers and semi-manufac- turers, by reg. 23 (1) (d) and (9), and, in the case of makers-up, by reg. 23 (2a) (d) and(f). The Order makes the use of the more favour- able of the alternative formulae conditional upon the manufacturer, semi-manufacturer or maker-up keeping the prescribed records. It was contended for the plaintiffs that the condition authori: ed by the regulation is a condition having some relation to the goods or the sale or supply of the goods, and that a provision that a trader

[127]

called the on-cost, the two together making the total cost of produc- tion" (1). In Advanced Accounts (Australasian Edition) by R. N. Carter, F.C.A., 6th ed. (1939), at p. 703, it is stated that on-cost is a term used to denote all the expenses consequent on or incidental to production and distribution, and that factory on-cost includes all expenses directly or indirectly connected with production. At first sight, indirect labour would appear to include the wages of the fore- man and timekeeper, of the mechanics who keep the manufacturing machinery in running order, of the cleaners and watchmen, and the wages ot all other employees whose labour contributes however remotely to the production of the outerwear. But the prescribed records also contain provisions for the allowance of the expenses of manufacturing overhead. While these expenses probably refer to payments other than salaries and wages, such as for rent, motive power, heating and lighting, it is by no means certain that they are not intended to include some salaries and wages. Except in the case of the provisoes, this indefiniteness in the meaning of indirect labour would not make the Order uncertain, because once the cost of direct labour is ascertained, a definite percentage of that cost is allowed for whatever is intended to be included in indirect labour, and a further definite percentage for what is intended to be allowed in manufac- turing overheads. But, in order to keep the three-monthly recon- ciliation statement in the fourth schedule, the manufacturer and maker-up must assess the value of the hours his employees were engaged on indirect labour in respect of the goods to which the detailed costs relate, and for that purpose determine what is indirect labour, and whether any of that labour should be excluded because it should be included in the expenses of manufacturing over- heads. The separation of these items would be difficult enough in a factory exclusively engaged in the manufacture of men's, youths' and boys' outerwear. Where a factory was also engaged in the manufacture of other goods the difficulties would increase, because it would not only be necessary to determine what was indirect labour in relation to the outerwear, but also what proportion of the costs of indirect labour should be attributed thereto. As my brother Dixon has said in his judgment, compliance with the proviso involves a degree of "judgment, estimation and opinion, matters about which there can be no exactness, certainty or common agreement in result." In Fraser Henleins Pty. Ltd. v. Cody (2), referring, I assume, to Vardon v. The Commonwealth (3) and Bendixen vy. Coleman (4) he said: "It may be conceded, and,

[129]

indeed, it appears to have been decided, that a bare power to "fix" a price cannot be validly exercised without naming a money sum, or prescribing a certain standard by the application of which it can be calculated or ascertained definitely " (1). In the present case, the application of the specified standards, or as I have called them formulae, by which the maximum prices and rates are ascer- tained where prescribed records are kept, appear to me, subject to the ground of uncertainty still remaining for consideration, to fix with sufficient definiteness the initial maximum prices or rates. The pur- pose of the provisoes is to reduce these prices or rates for the following three months in the circumstances there stated. The question is whether their invalidity vitiates the whole of the provisions for fixing maximum prices and rates where prescribed records are kept, and if it has this effect, whether it destroys the whole Order. The defendants are entitled to rely on the provisions of s. 46 (b) of the Acts Interpretation Act 1901-1941 and s. 5 (5) of the National Security Act 1939-1943. These sections were recently discussed in Fraser Henleins Pty. Ltd. v. Cody (2). The decisions of this Court upon the proper meaning of s. 46 (b) and the analogous section of the Acts Interpretation Act, s. 15a, are collected by Diaon J. (3). My own view of their effect is contained in Pidoto v. Victoria (4). The answer to the question whether the provisoes are severable from the other ingredients of the formulae within the principles of these decisions is not easy. The prescribed records which are a condition of these formulae being used include the keeping of the reconciliation statement in the fourth schedule. The function of the provisoes is, in the circumstances mentioned, to adjust the maximum prices and rates every three months. But the fourth schedule is severable from the other prescribed records, and the provisoes are also severable from the other ingredients in the formulae. Provided the cost of direct labour is accurately kept in the detailed costs records, the effect of the provisoes on the maximum prices and rates would be small, because it would only be where the cost of indirect labour was less than 5 per cent of the cost of direct labour that they would have any operation. They would then only reduce the prices and rates by 24 per cent. Their purpose appears to be, as Mr. Ferguson said, to act as a check in order to ascertain whether direct labour plus 10 per cent is a reasonable figure to adopt to cover all labour direct and indirect employed in the manufacture of the outerwear. On the whole, it seems to me that the require- ment that those manufacturers and makers-up who elect to use the

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Judgment (136 paragraphs)

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