Samuels v Readers' Digest Association Pty Ltd

About 26th August 1966, at Glenunga in the said State, in connexion with the sale or advertising of certain goods, namely a set of ten gramophone records, issued or delivered with or about or concerning, relating to, or in connexion with such goods a writing promising, offering or representing, or purporting to promise, offer or represent, that the purchaser or any other person would be entitled to or would receive a gift, reward, valuable consideration, benefit or advantage dependent on the purchase of such goods: contrary to the provisions of s. 5 (1) (b) of the Trading Stamp Act, 1924-1935.

About 26th August 1966, at Glenunga in the said State, in writing promised, offered, represented or advertised, or purported to promise, offer, represented or advertise, that it would give or deliver goods, or give a reward, benefit, valuable consideration or advantage, in exchange for, or in redemption of, a stamp, coupon, ticket, document, means or device which had been, or was, issued or delivered with, about, concerning, relating to or in connexion with certain goods, namely a set of ten gramophone records, which were being, or were intended to be, sold or distributed in South Australia by the defendant: contrary to the provisions of s. 5a (1) of the Trading Stamp Act, 1924-1935.

About 26th August 1966, at Glenunga in the said State invited or encouraged Mr. and Mrs. R. Davis to dispatch from South Australia, in exchange for goods or for a reward, benefit, valuable consideration, or advantage, a stamp, coupon, ticket, document, means or device which had been, or was, issued or delivered with, about, concerning, relating to or in connexion with certain goods, namely a set of ten gramophone records, which were being, or were intended to be, sold or distributed in South Australia by the defendant: contrary to the provisions of s. 5a (2) (b) of the Trading Stamp Act, 1924-1935.

The magistrate, having heard evidence and made certain findings, indicated his preparedness subject to constitutional questions to convict the defendant on each count: but at that stage the cause, by its order made under s. 40 of the Judiciary Act 1930-1965 Cth, was removed into this Court and by the Chief Justice, pursuant to s. 18 of that Act, directed to be heard before a Full Court.

Section 5 (1) (a) of the Trading Stamp Act, 1924-1935 SA (the Act) on which the first count of the charge against the defendant is founded is in the following terms:

(1) No person shall, on the sale of or in connection with the sale, free distribution, or advertising of any goods -

(a) issue or deliver with or about or concerning, relating to, or in connection with such goods or any advertisement of any goods any trading stamp to any person;

"Trading stamp" is defined by s. 4 of the Act to include - any stamp, coupon, ticket, cover, wrapper, package, paper, document, means or device issued or supplied by any trading stamp company or issued by any trader upon or in connection with the sale of or advertising of any goods, or with or in connection with any advertisement of any trader relating to any goods, which, or any part of which -

(b) authorises or entitles the holder thereof or person producing the same or any number or combination of the same to demand and receive, or purports to promise that such person will or may receive, from the said trader any goods free of cost or at a reduced or alleged reduced price:

"Goods", according to the same section - includes goods, wares, and merchandise of all kinds and also includes trading stamps or any tickets, checks, tokens, documents or orders directly or indirectly authorising or entitling any person to travel by any public or private railway, tramway, boat or conveyance, or to obtain meals or refreshments or to play or take part in any indoor or outdoor game or sport, or to be admitted into any theatre, concert hall, racecourse, cricket or football ground, circus, or place of public amusement or entertainment, or to obtain or receive any valuable consideration or benefit or advantage of any kind whatsoever, whether of the same kind as aforesaid or not:

This charge, as each of the other three charges, contains alternatives following the terms of the sections on which they respectively are based as permitted by s. 51 of the Justices Act, 1921 SA. The magistrate had not put the complainant to his election in respect of any of the charges, but having regard to the views I propose to express nothing turns on this circumstance: see generally Iannella v. French [1] .

The facts produced in support of this charge were that a witness, who as well as his wife, was a current subscriber to "The Readers' Digest", a magazine which is published monthly in Australia, received by post an envelope addressed to him and his wife. Clearly the envelope and its contents emanated from the defendant in Sydney. The envelope and portion of the papers it contained informed the addressees that they had already won a prize without any effort on their part or any participation in any contest and that by merely returning to the defendant in Sydney one of the sheets of paper which was contained in the envelope and which was called a certificate, with a small square of cardboard bearing a number suitably placed on the certificate, they would be eligible to win, in addition to the prize they had already won, again without effort or participation in any contest, a prize in what was called "The Readers' Digest $16,999 Lucky Number Contest". The square of cardboard bearing a number to which I have already referred was called "Readers' Digest Lucky Number Token" and was held in a small slot on the left hand end of the certificate. Thus by merely removing the token from one slot, and placing it in another and mailing the certificate to the defendant in Sydney the addressee could win a further prize. The papers in the envelope did not disclose the nature of the prize already won, and contained no information as to how prize winners in the Lucky Number Contest were to be determined but did contain information as to the nature of the principal prizes in the Lucky Number Contest. According to the literature in the envelope this gratuitous prize-giving was entered upon as a means of drawing attention to the "magnificent 10 record album" which was the subject of the offer contained in a further part of the enclosed material. This part contained an offer of a free ten-day trial of the records in the album and an offer to sell the album at what was claimed to be a "low price", some $22.51 less than the price of the records themselves, presumably if purchased separately in a retail store. It did not appear that the album itself could be bought otherwise than from the defendant. To obtain delivery of the album on trial the addressees were required to remove the lucky number token from its slot and place it in another slot upon the certificate marked "Yes Please" and which bore the legend "Yes send me my prize and mail me one set of "120 Greatest Hit Songs from Broadway" for 10 days free play". If the addressees did not want the album of records, the token could be placed in a different slot on the same sheet, marked "No Thank You" and bearing the legend "No, I do not wish to hear these records but please send me the prize I must win". If the Certificate were returned with the token in the slot marked "No", the addressee would be entitled to participate, as I have already mentioned, in the Lucky Number Contest as well as receive the prize already won. It was also said in this part of the literature that if the addressees placed the token in the "Yes" slot and mailed it as directed, and subsequently won a major prize in the Lucky Number Contest, a special $50 bonus prize would be paid. If the addressees obtained the album on trial, they could return it within ten days of its receipt without obligation but if they retained it they would be obliged to pay the stipulated price, which could be discharged by a deposit and instalments as specified in the papers in the envelope.

In a further part of the enclosed papers, it was said that if within ten days of the receipt of the envelope and its contents the addressees mailed the certificate with the token in the slot marked "Yes", an extra record would be sent which would become the property of the addressees, without charge, if they kept the album of records sent in pursuance of the order constituted by the mailed certificate with the token in the slot marked "Yes".

The proper legal analysis of these papers, in my opinion is as follows:

(1) The addressee is informed that a "prize", the nature of which is not disclosed, will be sent to him if he indicates his desire to receive it by mailing the certificate with the token in either the slot marked "Yes" or that marked "No" and that by reason of that same communication he will also become eligible to win a prize in a contest, without payment, effort or competitive participation of any kind.

(2) That by ordering by means of the Certificate with the token in the "Yes" slot mailed to the defendant in Sydney, the addressee will receive from Sydney a record album on trial for ten days. He may purchase it at a price said to be lower than the retail price of the records by merely retaining the album beyond ten days or he may return the album within ten days of its receipt and be under no obligation. If having retained the album, the addressee should win a further "major" prize, a special bonus of $50 would be paid.

(3) That if the addressee should order the album within ten days of receipt of the offer of a free trial, he would receive an additional record which would be free to him if he subsequently retained the album as its purchaser.

The first charge depends upon the envelope and its contents or some part of them being a trading stamp within the meaning of s. 5 (1) of the Act. In my opinion, the Lucky Number Contest and the information about it which was contained in the envelope constituted an advertisement of the record album. It was so claimed by the defendant's literature. I think it can fairly be said that the other material in the envelope was delivered in connexion with the advertising of the goods, though in so far as it constituted an offer to sell, it could not be said, in my opinion, to be related to or connected with the sale of the goods. With that advertisement in any case all that was associated was an offer to supply goods on trial and for purchase by retention after the trial period at a "low" price. Quite clearly, in my opinion, this price was not a "reduced" price which is the expression in s. 4. The defendant, so far as the evidence went, had no price for the album other than that at which it agreed that the addressee might purchase it. The fact that the defendant was prepared to accept as its price less than that which might be thought to be the market value of the goods does not make its price, in my opinion, a "reduced" price within the meaning of the section.

But in any case, in my opinion, an offer to supply goods does not itself authorize or entitle the offeree to demand or receive goods within the meaning of s. 5 (1) of the Act. The lucky number token quite clearly is not itself a trading stamp. It has no function, other than that of facilitating the communication of the addressee's desire in relation to the record album and to the Lucky Number Contest. In particular, it does not authorize or entitle the addressee to anything. But even if, in relation to the prize "already won" the token could be regarded as authorizing or entitling the addressee to the prize, it would not fall within sub-s. (a) which does not apply to money or goods promised or given by the trader.

Before leaving this charge, I should advert to the offer of a free record. The entitlement to this depends upon the purchase of the album consequent upon the request for a free trial given within a stipulated time and the subsequent retention of the album. The fact that the mode of ordering the records involves the use of the token to effect the appropriate communication does not mean that the token itself authorizes or entitles the addressee to demand or receive the free record. Thus, in my opinion, nothing on or in the envelope delivered by post to the witness constituted a trading stamp.

I conclude, therefore, that the first charge fails. The defendant did not issue or deliver a trading stamp within the meaning of the section in connexion with its advertisement of the record album.

Considerations which have led to this conclusion really dispose of the third and fourth charges. These are respectively based upon ss. 5a (1) and 5a (2) which are in the following terms:

(1) No person shall, in South Australia, directly or indirectly -

(b) either in writing or otherwise howsoever promise, offer, represent, or advertise or purport to promise, offer, represent, or advertise that he will give or deliver (whether the actual giving or delivering is to be done or made in South Australia or elsewhere),

any money, goods, reward, benefit, valuable consideration, or advantage whatsoever in exchange for, or in redemption of, any article or thing described in subsection (4) of this section or any number or combination of any of such articles or things.

(2) No person shall, directly or indirectly, either in writing or otherwise howsoever invite or encourage any other person to, or suggest that any other person should -

(a) do any act or thing forbidden by subsection (1) of this section; or

(b) tender, or despatch, or offer to tender, or despatch in or from South Australia any article or thing described in subsection (4) of this section or any number or combination of any of such articles or things in exchange for any money, goods, reward, benefit, valuable consideration, or advantage whatsoever, whether the actual exchange shall be effected, or become effective, in South Australia or elsewhere.

There was no offer or promise or advertisement that any money, goods, reward etc. would be given or delivered in exchange for or in redemption of any of the articles described in s. 5a (4). As I have already mentioned nothing, including the prize already won, is to be delivered in exchange for or in redemption of anything, least of all the lucky contest token. As I have already indicated, the offer of the extra record was made conditionally upon the offeree becoming the purchaser of the album but in no sense in exchange for or redemption of anything.

It follows that there could be no invitation or encouragement within the meaning and operation of s. 5a (2). In my opinion, both these charges fail. It is not necessary for me to consider whether in any case any relevant act or event was done or took place in South Australia.

The second count, however, requires separate consideration. It is founded on s. 5 (1) (b) which provides:

5. (1) No person shall, on the sale of or in connection with the sale, free distribution, or advertising of any goods -

(b) issue or deliver with or about or concerning, relating to, or in connection with such goods or any of them any writing promising, offering, or representing, or purporting to promise, offer, or represent, that the purchaser or any other person will be entitled to or will receive any refund, gift, allowance, reward, valuable consideration, benefit or advantage of any kind whatsoever dependent on the purchase of goods or of any quantity thereof, or entitling or inviting the purchaser or any other person to participate in any competition for any refund, gift, allowance, reward, valuable consideration, benefit or advantage of any kind whatsoever: Provided that this subdivision shall not prevent a trader from paying, or from promising, offering or representing that such trader will pay, to any person who purchases goods from such trader a discount payable in cash and not otherwise calculated on the price paid or payable by such purchaser to such trader for goods so purchased.

As I have said, the defendant, in my opinion, by the envelope or its contents was advertising the record album. The separate paper contained in the envelope which offered the free record in certain events was, in my opinion, a writing within the section. It was delivered with the advertising of the album. The writing did promise that the addressee if he became a purchaser of the album should have the extra record as a gift. It could be said that whilst that gift was dependent on the purchase of the album, it was not exclusively so dependent. The promise was conditioned upon the giving of an order for the album in the stipulated manner and within the stipulated time. Thus the promise of a free record is only made to a purchaser who within a limited time had ordered the goods on trial. None the less it seems to me that it should be held that the defendant did deliver (which I have treated as equivalent to cause to be delivered) a writing by which an offer of a free record was made dependent upon the purchase of the record album. The writing was on a separate paper to that which contained the advertising matter and the offer to supply the goods. I have no need to consider what would be the position if the offer of the gift was associated on the same sheet of paper as the offer of the goods and literally as part of it. But, as at present advised, I see no reason to think that the situation under the Act would be any different in that case.

But was the writing delivered "with or about or concerning, relating to, or in connection with such goods"? It is to be observed that the writing does not qualify under the section simply because it is delivered in connexion with the advertising of the goods. It must be delivered in conformity with one of the requirements which I have quoted.

The relationship of the delivery to the advertising of the goods is stipulated by the opening words of the sub-section. As the writing must make the offer of a gift dependent upon the purchase, the writing's relation to the goods is thus ensured though it is to be noted that the purchase spoken of is not necessarily the purchase of the advertised goods. The words I have quoted are, as I have said, related to the delivery. I can quite understand the delivery of the writing with the advertised goods. I have considerable difficulty in comprehending what is meant by the delivery "about" the advertised goods, and a like difficulty in assigning a precise meaning to the expression deliver "concerning, relating to, or in connection with" the advertised goods. Notwithstanding the presence of the word "with" in the collocation which follows the word "deliver", I think the proper course in order to make sense out of the provision is to treat the words "any writing" as if they were interpolated between the word "deliver" and "with" in the first line of the paragraph so that these requirements specify qualities of the writing rather than the nature of the delivery. So reading the paragraph, the second charge, in my opinion, was made out according to the terms of the sub-section. The defendant in connexion with the advertising of the album of records delivered a writing concerning the advertised goods by which a gift was promised dependent upon the addressee becoming the purchaser of the advertised goods.

It therefore becomes necessary to consider the validity of the statutory provision. In order to do so, it is important to observe that it seeks to render criminally liable a trader who, in association with the advertising of his goods, offers in writing a material inducement other than a cash discount to a person to buy goods which he offers to deliver from one State to another with a view to their sale to that person. Perhaps it may not technically be said that he is made criminally liable for making the offer to sell for delivery inter-State but in truth and in substance he may only make such an offer if he refrains from associating with it, or with any advertisement of the goods he thus wishes to sell any material inducement except a cash discount to promote the purchase of his goods upon the terms otherwise offered. Whilst in point of form the writing, in this case, may be regarded as accompanying or being in association with the advertisement of the goods and as well with their offer for sale, in reality, the inducement is part of the total offer made by the defendant. It is the presence in that totality of the material inducement to purchase that brings the trader within the criminal provisions of the sub-section. As I recount later, the offer of the inducement cannot be isolated from the offer of the purchase because the dependence of the former on the acceptance of the latter is fixed by the legislature.

It is said that such a provision does not constitute a burden upon or hindrance of the defendant's trade between the States or that, if it does, the burden or hindrance is imposed by a law which is no more than regulatory in its nature and thus no impairment of the defendant's freedom to trade out of one State into another. To my mind it is evident that the section does by its operation impose an inadmissible and a most substantial burden on the freedom of trade and commerce which s. 92 guarantees. But, in holding that opinion, I have the great misfortune to find myself in disagreement with my brethren of the bench. I will therefore briefly and without elaboration set out my reasons for what to me is an inescapable conclusion.

I feel it appropriate to observe at the outset that a constitutional provision to prevent at least the members of a federation, which in relation to trade and commerce is what we would now call a common market, from making or so operating laws as to inhibit the freedom of trade and commerce between them is necessary and indeed indispensable. With a common external tariff such as that for which the Australian Constitution provides, it is clearly not enough to prevent customs barriers at the territorial margins of the constituent integers of the federation. This in the Australian Constitution is done by s. 90. The inhibition of the freedom of trade and commerce can take such multifarious and at times seemingly innocent forms and its prevention is so vital to the commercial life of the members of the federation as well as of the federation as a whole that only sweeping and absolute language is appropriate to express the necessary constitutional provision. The ingenuity of the present as well as of the near and distant future must be securely guarded against. Also, the unintended as well as the intended interference with the freedom of inter-State trade and commerce must be covered. This is particularly so where, as in Australia, we are not a federation of separate and distinct peoples. The advantages of the freedom of national trade is for this reason of peculiar advantage to all Australians wherever they may chance to reside.

Perhaps there is no need in the nature of a common market to deny to the central Government or authority any power to inhibit such freedom, though in the market set up by the Treaty of Rome which has a provision to protect the freedom of trade and commerce between the members, the common market authorities themselves have in fact no such power, not because it is expressly denied but because it is not given. But the founders of the Australian Constitution were emphatic that no government in the federation should have the power to inhibit the freedom of trade, commerce or intercourse between the constituent members. Thus the Commonwealth as well as the States is bound by s. 92. This creates the gap in legislative power to which reference has been made.

Yet it is the freedom of trade and commerce which is to be maintained. This of its nature, in my opinion, involves laws regulating the relationships of free men to each other and to their institutions within a society. It is not, in my opinion, that freedom is qualified by such laws. It is not really that there is a freedom "from" something. It is a freedom of - and therefore to - trade. It is the concept of freedom in a civilized society, in contrast with unbridled licence in a lawless state which itself involves the necessity for laws of the kind which accommodate one man's activities to those of another so that each is free to trade within the society organized under and controlled by law.

The limitations upon s. 92, in my opinion, are thus to be found in the concept of freedom and not in qualifications imposed on that concept. The constitutional provision remains the text to be applied to the circumstances of each case as it arises rather than tests or formulae. No gloss upon it and no test for its enforcement can rise above it or qualify it. Of its nature it demands a liberal construction and application and does not warrant any judicial attempt to restrict its connotation or to limit its operation. On the other hand, failure to observe and effectuate the limitation inherent in the concept of freedom of trade and commerce as used in the section can well result in unwarranted restrictions upon the ability of the legislatures to secure the society and its members against practices and activities which are incompatible with the maintenance of freedom of trade and commerce in a civilized society. There is thus a need in each case closely to observe a nicety of balance between freedom of trade and commerce and the permissible restrictive legislation of a free and civilized society which is compatible with that freedom.

But out of the many decisions of the past there have emerged some clear principles which have received general acceptance and, as well, endorsement by the highest authority. The first is that the trade and commerce of which freedom is predicated is to be identified by applying a broad practical concept so as to include at least all the "mutual communings, the negotiations, verbal and by correspondence" and, as I would think, the endeavours which lead up to a transaction of a commercial nature which by its terms express or implied involves in its performance of completion a movement of things tangible or intangible across State lines. Perhaps the width and the practical nature of the concept is sufficiently illustrated for present purposes by the inclusion of banking within it.

The second is that any law no matter what its legislative subject matter may offend the constitutional guarantee. It will do so if by its operation directly and not remotely it inhibits or burdens trade and commerce amongst the States in any respect, whether it strikes before, during or after the inception or completion of an inter-State transaction of trade or commerce unless upon examination what it effects by its operation is compatible with the freedom of that trade and commerce or, put another way, unless that law is in its nature no more than regulatory in the sense that it merely orders the activities of the citizen in matters and in a way which can fairly be regarded as appropriate to accommodate the activities of traders in the maintenance of the freedom of such trade and commerce. It may be said that this is all one question, namely, whether the law or action under challenge is in reality and in substance compatible with freedom of trade and commerce.

I am not concerned here to expand on the difficulties of the concept of a regulatory law or of a law which is compatible with the guaranteed freedom. Suffice it to say at this point that I would respectfully adopt what my brother Kitto wrote in his reasons for judgment in Hughes and Vale Pty. Ltd. v. New South Wales [No. 2] [1] . Little if anything, it seems to me, is added to this statement of his Honour by saying that the guarantee must apply in and to a society regulated by law. That, as I have said, is involved in the concept of freedom of trade and commerce. The problem remains as to what laws may regulate the society compatibly with the guaranteed freedom.

What I am concerned with here is the emphasis that any law may infringe the guarantee. It was the escape from the notion that the legislative subject matter of the law afforded the criterion by which to judge the validity of a law under challenge as obnoxious to s. 92 which was, in my opinion, the principal advance made by the decision of the Privy Council in The Commonwealth v. Bank of New South Wales [2] . It was not only laws about trade and commerce or laws which operated upon some aspect of trade and commerce but any law on any topic which might offend, unintentionally as well as intentionally, as I have already mentioned. The two tests authoritatively offered by their Lordships - authoritatively in the strictest sense since the decision in Hughes and Vale Pty. Ltd. v. New South Wales [1] - in the final paragraphs in their advice in The Commonwealth v. Bank of New South Wales [2] are worth recalling.

1. [1950] A.C. 235; (1949) 79 C.L.R. 497. 2. [1955] A.C. 241; (1954) 93 C.L.R. 1. 3. [1950] A.C. 235; (1949) 79 C.L.R. 497.

After much consideration and a re-reading of the decisions of this Court both before and since the Bank Case [2] , I find myself, with unfeigned respect for those who are and have been of a contrary opinion, unable to accept the view that their Lordships affirmed the proposition that only laws which fastened upon a characteristic which a transaction must have to be itself a transaction of inter-State trade, commerce or intercourse as the criterion upon which the law's operation depends can be obnoxious to s. 92. Nor can I accept the view that such a conclusion logically follows from a consideration of the terms of the constitutional guarantee. Such a view, in my opinion, limits in an unauthorized way what the Privy Council decided in the Bank Case [2] . I feel bound by the authority of that case as well as by the terms of the section itself to decline to adopt or to apply such a proposition. The same would have held true if the proposition were limited to an aspect of trade generally as distinct from inter-State trade. Doubtless a law which did so select such a criterion could offend the section. But that is a different matter. To my mind, the first question always is whether the direct as distinct from the merely consequential and remote effect of the operation of the law whatever its topic constitutes in a practical sense a burden upon trade, commerce or intercourse amongst the States or any part or aspect of it. The second is whether, if so, the law can be said, none the less, not to impair the freedom of that trade and commerce because the burden or hindrance is compatible with it. It will be so if the law is regulatory in character in relation to the impact upon that trade and commerce which results directly and not remotely from its operation.

1. [1950] A.C. 235; (1949) 79 C.L.R. 497. 2. [1950] A.C. 235; (1949) 79 C.L.R. 497.

One other observation I would wish to make. It is with respect to the effect of the operation of an Act which may bring the Act into invalidity. We are here dealing with the practical concepts of trade and commerce. It is sometimes said that the economic consequences of the operation of an Act do not come within the purview of the constitutional guarantee. But the Bank Case [2] did not decide, in my opinion, that the practical or economic effects of the legal operation of an Act could be ignored. On the contrary, their Lordships emphasized the economic nature of the problem involved in cases arising with respect to the constitutional guarantee. Their reasons make it clear, in my opinion, that it was only consequential and remote effects which ought not to be regarded as material for the purposes of applying the constitutional guarantee. In particular, I am unable to accept the view that the operation of the Act to which attention is to be limited is its operation upon some aspect of inter-State trade and commerce which it has made the criterion of that operation. Such a view, in my respectful opinion, is neither warranted by nor consistent with the decisions of the Privy Council: nor is it, in my opinion, compatible with the terms of the Constitution.

Basically, it is my view upon these points which ultimately results, I think, in my inability to accept the view that the sub-section presently under consideration does not infringe the constitutional guarantee.

I approach the present case, therefore, aided by the many decisions and reasons therefor which the members of this Court have heretofore made and given, and for which anyone charged with the duty of interpreting the Constitution must be exceedingly grateful: but bound by the decisions of the Privy Council and by the principles of law upon which those decisions were directly founded.

A law which makes it a criminal offence for a trader to offer to deliver goods from one State to another State could scarce be said to be compatible with freedom of trade and commerce. A law which made it a criminal offence to solicit an offer to accept delivery of goods from one State into another, in my opinion, could scarce be in a less case: offering and soliciting an offer are each to my mind part of what is included in the mutual communings to which earlier reference has been made. The Act, however, does not make all such offers or such solicitations criminal but only those which offer or are accompanied by a material inducement not in cash in order to obtain acceptance of an offer or an offer to purchase as the case may be. I express the result of the section in this form because the offending offer of an inducement must be conditioned upon the purchase of the goods: it thus contemplates that there will be an offer to sell or the solicitation of an offer to buy to which the offending promise or offer will refer. It is to my mind quite beside the point to say that the trader may make his offer shorn of the inducement. That is not the offer he wants to make. To prevent his making it at least prima facie impairs his freedom to trade. Could it be said that a law which forbad the offering of a cash discount in connexion with an offer to deliver inter-State or with the solicitation of an offer to buy for delivery inter-State was compatible with freedom of inter-State trade and commerce? I cannot think that it could rightly be so concluded: and any reasoning in the decided cases which might appear to point towards or seem to justify such a conclusion must to my mind, and with very great respect, be suspect, at least as to its universal validity. If a cash discount may not be forbidden, why is it that an offer or promise of a discount or inducement in kind may be forbidden without impinging on the freedom of trade and commerce.

No doubt the legislature of a State desiring to protect its traders from competition from traders in another State might well think that it would be of advantage to its traders to ban the kind of discount which its traders either did not wish to give or which its traders could not afford to give. But that protection is, to my mind, demonstrably one of the kinds of interference with freedom of trade and commerce which cannot be sustained. As Fullagar J. observed in McCarter v. Brodie [1] :

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. Or it may be that a State, according to the current philosophy of its government, may disapprove some trading practice and according without any idea of protecting the trader ban it. But the economic consequence of a law cannot be disregarded and such a law is in no different case to a law designed to limit competition. 1. (1950) 80 C.L.R. 432, at p. 499.

There is nothing fraudulent or deceptive in the inducement by material and non-monetary advantage either in the manner of its making or in the nature of things offered. Nor is there anything, either in itself or in its circumstances, which could possibly be classed as unfair trading of an order which could be brought by analogy within the scope of fraud or deceit. The section, for example, would make it criminal to make an offer of a baker's dozen for the price of twelve if the delivery of the thirteenth was made contingent on acceptance of the offer to buy twelve. To outlaw fraudulent or deceitful practices is but to secure freedom of trade and commerce as that freedom is understood in organized and civilized societies. To prevent cornering, restriction of competition in a society based on free competition in trade, or monopolization, particularly where disproportionate strength or advantage is the source of the power or ability to corner, restrict or monopolize, again to my mind is compatible with freedom of trade in such a society and laws providing means of such prevention can be regarded as regulatory in nature, and dependent on the length of their reach and the nature of their provisions, may well be regarded as compatible with the guaranteed freedom. But the offer of a material inducement such as in the present case has no similarity whatever to a deceitful, fraudulent, restrictive or monopolistic practice even if the ability to make it springs from great economic strength or a powerful position in a particular field of trade. The manner of trading it represents is common in Australia, exhibiting a great variety of forms with a wide variety of goods or material benefits being offered as inducement to buy goods or order or accept services. We were told that several States have like legislation to that in question here: but that fact, in my opinion, carries no weight whatever in the resolution of the question posed in this case. If all the States adopt the same restrictive measures in relation to some area of trade and commerce, it merely means that overall the harm done to national trade is the greater.

I am unable to accept the proposition that such a law as that under discussion applying as it does to an attempted inter-State transaction does not burden or hinder the freedom of inter-State trade or commerce which s. 92 seeks to protect. In my opinion, and with every respect for those who hold a contrary view, it is quite incompatible with the maintenance of that freedom.

In my opinion, upon this simple and direct ground, s. 5 (1) (b) is invalid.

I should now say something of Home Benefits Pty. Ltd. v. Crafter [1] .

It may have been thought at the time special leave was granted that this Court's decision in Crafter's Case [1] necessarily fell for review in this. But it became apparent during the argument of the matter that this was not really so. Indeed, the complainant's counsel did not really rely upon that case, except as a terminal argument, all else failing and then but faintly. And upon a close examination of that case the manifold differences between its circumstances and those of this became apparent. Here the trader is offering his own goods both as the principal matter of the proposed transaction and as the subject matter of his inducement. There it was a trading stamp company dealing only in stamps and not at all in goods, except in so far as goods were involved in the redemption of the trading stamps. We are here concerned with a substantially different aspect of the South Australian statute, namely, that which seeks to prevent all traders from offering inducements other than cash discounts to promote their trade and does so by throwing a very wide net; for example, the delivery of a packet of a household commodity would appear to be forbidden under criminal penalty if on the packet there is an offer to the purchaser of a free cookery book. It was not considered necessary by the Court in Crafter's Case [1] to consider this operation of the Act. I do not find it necessary therefore to express any concluded view on the propriety of the precise decision in Home Benefits Pty. Ltd. v. Crafter [1] in relation to its own facts and to that part of the statute on which the offence in that case was said to rest. Suffice it to say that I would be unable to accept any of the very divergent reasons then given for that decision. These were propounded at an earlier time before such decisions as the Bank Case [2] and Hughes and Vale Pty. Ltd. v. New South Wales [No. 2] [3] . Certainly I would not feel bound to follow and apply it if its decision were material to the resolution of this case. There is little room for stare decisis in this field: I have expressed elsewhere, however, my opinion as to the occasions on which earlier decisions should be departed from: Spratt v. Hermes [4] .

1. (1939) 61 C.L.R. 701. 2. (1939) 61 C.L.R. 701. 3. (1939) 61 C.L.R. 701. 4. [1950] A.C. 235; (1949) 79 C.L.R. 497. 5. (1955) 93 C.L.R. 127. 6. (1965) 114 C.L.R. 226, at pp. 243, 248.

In my opinion, however, Crafter's Case [1] neither in its precise decision nor in any of its reasoning is of any assistance in determining the validity of s. 5 (1) of the Act.

In my opinion, all charges should be dismissed, charges 1, 3 and 4 because not made out in fact and charge 2 because the statutory provisions which were said to be breached are invalid.

This case consists of four complaints under the Justices Act, 1921-1960 SA for offences against the Trading Stamp Act, 1924-1935, of that State. The complaints, each of which is regularly drawn up in compliance with the Justices Act, were laid under ss. 5 (1) (a), 5 (1) (b), 5a (1) and 5a (2) (b) respectively of the Trading Stamp Act. The plea to each complaint was "not guilty". The defendant is a company incorporated in New South Wales. The case was moved by an order made under the Judiciary Act 1903-1965 Cth, s. 40, into this Court upon the ground that the defence to each complaint involved the interpretation of s. 92 of the Constitution. The present matter is a reference of the cause to the Full Court of the High Court under s. 18 of the Judiciary Act. The constitutional question for decision is whether the provisions of the Trading Stamp Act, 1924-1935 SA under which the defendant company is prosecuted infringe upon s. 92 of the Constitution. The long title of the Act in question is "An Act to prohibit the use of trading stamps and coupons and for other purposes". In brief a "trading stamp" is a stamp, coupon or other device issued by any "trading stamp company" or by any trader in connexion with the sale or advertising of any goods which entitle the holder or promise him that he will or may receive from any trading stamp company or any source other than the trader any money or goods; or, authorizes the holder thereof to demand and receive or promises that he will or may receive from the trader any goods free of cost or at a reduced or alleged reduced price. Broadly, a "trading stamp company" means any person, firm, or company who or which issues or supplies any trading stamp.

The complaint alleges breaches by the defendant of four provisions of the Act. The substance of these relevant provisions is the prohibition in South Australia of the issue or delivery in connexion with the sale or advertising of any goods of a trading stamp (s. 5 (1) (a)) or of any writing promising, offering or representing that the purchaser or any other person will be entitled to any refund, gift, benefit or advantage dependent on the purchase of such goods (s. 5 (1) (b)); the prohibition of the promising, offering, representing or advertising that any money, goods or benefit will be given in exchange for, or in redemption of any of certain specified articles (s. 5a (1)); and, the prohibition of the inviting or encouraging of any person to tender or dispatch in or from South Australia any of certain specified articles in exchange for any money, goods or benefit (s. 5a (2) (a), (b)).

The defendant contends that the effect of these sections of the Act is to prohibit a method of merchandising or sale of its gramophone records, adopted by it as part of its engagement in inter-State trade, commerce and intercourse, and, that, therefore, these provisions of the Act offend s. 92 of the Constitution. The defendant's trade and business involves the selling in South Australia, as well as some other States, of gramophone records produced and also sold in New South Wales. The actions of the defendant which form the subject of the present complaints are claimed to be merely the actions of a trader seeking to promote the sale of his goods by the offer of some advantage. It is contended that sale is one part of inter-State trade and commerce and that sale involves the making of offers and the causing of acceptance of offers and that it is this process that the defendant is being prevented from engaging in by reason of the operation of the provisions of the Act. The defendant's activities in respect of which it is prosecuted are said to be at least initiatory of inter-State trade, commerce and intercourse and are therefore themselves covered by s. 92 as part of the process of inter-State trade, commerce and intercourse, even if the initiatory step taken amounts to no more than a form of advertising.

It is opportune, I think, to repeat the well-known observation on s. 92 which occurs in the reasons of the Judicial Committee in The Commonwealth v. Bank of New South Wales [1] :

It is generally recognized that the expression "free" in s. 92, though emphasized by the accompanying "absolutely", yet must receive some qualification. It was, indeed, common ground in the present case that the conception of freedom of trade commerce and intercourse in a community regulated by law presupposes some degree of restriction on the individual. 1. [1950] A.C., at pp. 309, 310; (1949) 79 C.L.R., at p. 639.

The provisions of the Act which are in question are prohibitory measures. But it is equally clear that regulation of trade may take the form of denying certain activities to traders even though they include inter-State traders. The question, therefore, is whether the activities struck at by the present Act are of such a kind. As regards the individual trader in the present case the Act does not prevent him from trading in records in the ordinary way. It is prevented from trading in such goods or from promoting its trade therein or in advertising them in the particular method prohibited by the Act. I think that the provisions of the Act which are impugned are a regulation of trade applying equally to inter-State and intra-State trade. In the case of Home Benefits Pty. Ltd. and Household Helps Pty. Ltd. v. Crafter, in speaking of the present Act Latham C.J. said this [2] :

The Act does not stop trading in goods but regulates trading by excluding a certain manner or method of trading. Since that case was decided none of the decisions on s. 92 of the Constitution have affected that judgment or the principle upon which it is based as to the operation of the Act. For these reasons I am of opinion that s. 92 does not afford a defence to the complaint now in question. I would remit the cause to the magistrate for adjudication upon the other issues in the case. 1. (1939) 61 C.L.R., at p. 711. Kitto J.

This is a prosecution initiated by a complaint in a South Australian court of summary jurisdiction and removed into this Court under s. 40 of the Judiciary Act 1903-1965 Cth. The complaint alleges an offence against each of four provisions of the Trading Stamps Act, 1924-1935 SA, namely the provisions made by s. 5 (1) (a), s. 5 (1) (b), s. 5a (1) and s. 5a (2) (b). The defendant denies that it contravened any of these provisions, and in addition it claims the protection of s. 92 of the Constitution for that which in fact it did. Since the prosecution cannot succeed without a decision being given not only that the relevant provisions of the Act apply to the proved facts of the case, but also that their application to the facts does not impair the freedom of inter-State trade, the proceeding involves the interpretation of the Constitution. It was on this basis that the order for removal was made.

Before the removal the proceedings had been heard by a magistrate to the extent that the evidence had been taken and certain findings of fact had been made. It had been proved that the defendant, a company carrying on business in New South Wales, posted at Sydney an envelope containing several documents and addressed to a Mr. and Mrs. R. Davis, 2 Brooker St., Glenunga, South Australia. The envelope with its contents was duly delivered by the post office to Mr. and Mrs. Davis at that address. Thus the documents were unquestionably delivered by the defendant to Mr. and Mrs. Davis in South Australia, and the communications which the documents contained were made by the defendant to Mr. and Mrs. Davis in South Australia.

Among the contents of the envelope was a card which was marked as divisible into two parts. One part, which letterpress on it called the stud, had a detachable portion describing itself as "Readers' Digest Lucky Number Token". The other part, referred to in the case as the reservation card, bore on its face the names and address of Mr. and Mrs. Davis, and had two pairs of slots, one pair marked Yes and the other No, in either of which the lucky number token, when detached from the stub, could be inserted. Letterpress indicated that if the reservation card were returned to the defendant with the token inserted in the Yes slots it would be a request to the defendant to send Mr. and Mrs. Davis a "mystery prize" and to mail them one set of gramophone records for ten days' free play; but that if it were returned with the token inserted in the No slots it would indicate that Mr. and Mrs. Davis did not wish to hear the records but were requesting that the mystery prize be sent to them. Another document, headed "You have already won a prize", explained that the records, ten in number, were records of "the 120 greatest hit songs from Broadway", and that the recipients, if they should take the set for the ten days' free trial, might either return them within the ten days and owe nothing, or buy them at a stated price (which was represented as substantially below their normal retail price) and pay for them by instalments over a period of five months. If the recipients should send in the token in either pair of slots they would be eligible for one of a number of "major" prizes, and if they should win such a prize after saying Yes to the offer they would qualify for a special bonus prize of $50. Still another document in the envelope informed the recipients that if they should within ten days mail the card asking for the ten records and should keep the set after the ten days' trial, the defendant would send them another record, called "Broadway Show Stoppers", free of charge.

The first count of the complaint, as explained by particulars that were given, charged that the defendant at Glenunga, in connexion with the advertising of the ten records, delivered to Mr. and Mrs. Davis, with an advertisement (of the records) consisting of the document headed "You have already won a prize", a trading stamp, being either the lucky number token or the reservation card with the token attached, "in so far" (the particulars said) "as it concerns the free record Broadway Show Stoppers". (I omit superfluous alternative allegations which the evidence does not support and the complainant would have been well advised to leave out.) A contention that the Act on its true construction applies only to acts done not only in South Australia but by persons who are in South Australia at the time of doing them may be put aside as obviously untenable; but a second contention, that neither the token nor the reservation card with the token attached was a "trading stamp", requires consideration. The expression "trading stamp" is defined by s. 4. Although the definition is expressed as inclusive it is in truth exclusive since "trading stamp", unexplained, is a meaningless expression. The definition is lengthy, and there is no need, as I regard the matter, to do more than point out that it cannot apply to anything which does not authorize or entitle "the holder thereof or person producing the same" (or any number or combination of the same) to receive, or purport to promise that "such person" will or may receive, money or goods. An essential feature of a "trading stamp" is therefore missing if the only authorization or entitlement or purported promise is given to particular persons as personae designatae and upon their performing other conditions than simply being the holders or the persons producing a coupon or the like. The token and the card in the present case were addressed to Mr. and Mrs. Davis by name, and the promise that was held out to them of receiving a free record was conditional upon their purchasing the set of ten records, and not upon their holding or producing the token or the reservation card with the token attached to it. In my opinion the charge in the first count fails for this reason.

The second count, so far as material and as limited by particulars, may be taken to be that the defendant at Glenunga, in connexion with the advertising of certain goods, namely a set of ten records, delivered in connexion with such goods a writing (consisting of the document about the free record) promising that the purchaser would be entitled to a gift (namely the free record) dependent on the purchase of the goods. Again it is immaterial that the defendant was not in South Australia at the time when, through the post, it delivered the envelope and its contents to Mr. and Mrs. Davis in South Australia. The facts charged are clearly established, and only the defence under s. 92 of the Constitution needs consideration. This I shall leave for the moment.

The third count, so far as material and as limited by particulars, is that the defendant at Glenunga in writing promised that it would deliver or give a reward, benefit, valuable consideration or advantage in exchange for, or in redemption of a stamp, coupon, ticket, document, means or device (i.e., the token, or alternatively the reservation card with the token attached to it) which had been delivered in connexion with goods, namely the set of records, which were intended to be sold or distributed in South Australia by the defendant. The only reward etc., which is relevant, would seem to be the mystery prize. As to that two points are to be observed. First, the defendant's promise was not to give the prize in exchange for or in redemption of the token, but to give it upon receiving a request for or refusal of the ten records, conveyed by the return to the defendant of the reservation card with the token inserted in one or other of the pairs of slots. Secondly, the delivery by the defendant of the envelope and its enclosed documents was in connexion with an unascertained set of records, so that it was not in connexion with any goods of which it could be postulated that they had been, were being or were intended to be, sold or distributed in South Australia. In particular it is not proved that any specific set of the records was intended to be sold or distributed in South Australia rather than elsewhere. For these two reasons I think that the third charge fails.

The fourth and final charge, so far as material and as limited by particulars, is that the defendant at Glenunga invited or encouraged Mr. and Mrs. Davis to dispatch from South Australia, in exchange for goods or for a reward, benefit, valuable consideration or advantage, a stamp, coupon, ticket, document, means or device (to wit the lucky number token or alternatively the reservation card with the lucky number token attached to it) which had been delivered in connexion with certain goods (namely a set of ten records) which were being, or were intended to be, sold or distributed in South Australia by the defendant. This charge fails, in my opinion, for reasons corresponding with those I have stated in relation to the third count.

Since other members of the Court are of opinion that all four charges are made out, I shall turn to the s. 92 questions on that footing.

In Home Benefits Pty. Ltd. v. Crafter [1] a coupon company was charged under s. 5a (2) (b) of the Act with having encouraged a person to dispatch in South Australia to it in New South Wales, in exchange for articles such as butter-knives, to be sent to him by the defendant from New South Wales at prices lower than their value, a specific number of labels, each forming a part of a package in which tea of a particular brand was sold by another company. The coupon company contended that unless s. 92 provided a good defence to the charge the Act impaired the freedom of inter-State trade in respect of its own trade in the articles it offered to exchange for labels, or alternatively in respect of the tea merchant's trade in tea. Lord Atkin's judgment in James v. Cowan [2] and Lord Wright's judgment in James v. The Commonwealth [3] had been delivered, but much had yet to be explained, both by the Privy Council and by this Court, as to the nature of the freedom which s. 92 should be understood as intending to confer. The judgment in James v. The Commonwealth [3] recognized that laws there described as "regulatory" of trade were not inconsistent with the freedom of trade, but what had yet to be made clear was that the reason for this is, not that there is some implied proviso to s. 92 preserving "regulatory" laws notwithstanding an interference with freedom, but that "regulatory", if properly used in this connexion, refers to a kind of law which operates upon inter-State trading or commercial activity and yet cannot fairly be said, as a matter of common sense, to impede, restrict or burden it: see the observations of Fullagar J. in Hughes and Vale Pty. Ltd. v. New South Wales [No. 2] [1] , approved by Dixon C.J. in Greutner v. Everard [2] . But it was not apparent upon the face of either of the Privy Council judgments, and indeed it did not become received doctrine until the Banking Case (The Commonwealth v. Bank of New South Wales [3] ), that s. 92 confers freedom from such restrictions and burdens only as are imposed upon inter-State trade by the direct operation of laws or of executive acts as distinguished from being merely the consequences or indirect results of such laws or acts. Even after the Banking Case the test for distinguishing between direct operation and consequential result had yet to be fully worked out. Dixon J. had suggested a formula by his proposition in O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways (N.S.W.) [4] that

given an act or transaction which falls within the conception of trade, commerce, or intercourse among the States and a restriction or burden operating upon that act or transaction, it appears to me that it must be an infringement upon the absolute freedom guaranteed by s. 92 unless the restriction or burden is imposed in virtue of or in reference to none of the essential qualities which are connoted by the description "trade, commerce, and intercourse among the States". But whether the "unless" clause in this proposition gave full effect to the principles laid down in James v. The Commonwealth [5] had not yet been generally agreed in 1939. 1. (1939) 61 C.L.R. 701. 2. [1932] A.C. 542; (1932) 47 C.L.R. 386. 3. [1936] A.C. 578; (1936) 55 C.L.R. 1. 4. [1936] A.C. 578; (1936) 55 C.L.R. 1. 5. (1955) 93 C.L.R. 127, at pp. 204, 205. 6. (1960) 103 C.L.R. 177, at p. 184. 7. [1950] A.C. 235; (1949) 79 C.L.R. 497. 8. (1935) 52 C.L.R. 189, at p. 206. 9. [1936] A.C. 578; (1936) 55 C.L.R. 1.

The answer which Latham C.J. and Starke, Evatt and McTiernan JJ. gave to the defendant's argument upon s. 92 was, in substance, that the operation of the legislation in the particular case was to prohibit a supposedly objectionable method of trading in tea, as distinguished both from the trade in tea and from the dealings of the coupon company with the purchaser of tea, and that a law merely forbidding a particular method of trading was a "regulation" of trade, in the sense which James v. The Commonwealth [5] had held to be consistent with the freedom conferred by s. 92. Starke J. alone referred expressly to the proposition advanced by Dixon J. in O. Gilpin Ltd. v. The Commissioner for Road Transport and Tramways (N.S.W.) [6] , and he did so in order to say that he thought it could not be adopted in view of the Privy Council decisions and the decisions of the High Court in a group of cases beginning with R. v. Vizzard; Ex parte Hill [1] . The High Court decisions to which Starke J. referred have since been overruled by the Privy Council in Hughes and Vale Pty. Ltd. v. New South Wales [No. 1] [2] , and there was in truth nothing inconsistent with Dixon J.'s proposition in James v. Cowan [3] or in James v. The Commonwealth [4] . Dixon J. himself, while not reiterating his proposition in terms in Home Benefits Pty. Ltd. v. Crafter [5] , dealt with the s. 92 point in that case in a manner which did not depart from it. Like the other members of the Court, he considered that the transaction between the purchaser of tea and the coupon company was not an independent commercial dealing or part of an independent trade or trafficking in goods, and therefore was outside the protection of s. 92; but of course the inter-State sale and distribution of tea were within the protection, and his Honour's reason for holding that the legislation was compatible with that freedom was that its operation was upon "a secondary consequence or incident in the sale or distribution", upon "an accessory transaction to principal transactions which otherwise are left entirely free".

1. [1936] A.C. 578; (1936) 55 C.L.R. 1. 2. (1935) 52 C.L.R., at p. 206. 3. (1933) 50 C.L.R. 30. 4. [1955] A.C. 241; (1954) 93 C.L.R. 1. 5. [1932] A.C. 542; (1932) 47 C.L.R. 386. 6. [1936] A.C. 578; (1936) 55 C.L.R. 1. 7. (1939) 61 C.L.R. 701.

The Banking Case [6] , confirming in this respect what Isaacs J. had insisted upon in James v. Cowan [7] , established the crucial significance of the distinction between a law which imposes a restriction or burden upon inter-State trade, commerce and intercourse by its very operation and a law from the operation of which there flows some "ulterior effect economically or socially" [8] . It is important not to confuse this distinction with the distinction between the legal effect of the law upon the conduct or other subject-matter to which the law applies according to its express terms and a legal effect which is only to be seen by a process of reasoning from the express terms. As Vacuum Oil Co. Pty. Ltd. v. Queensland [9] , shows, a legal effect of the latter description is, no less than one of the former description, a matter of the direct operation of the law and is not, in the relevant sense, merely consequential or remote. The true concept was formulated by Dixon J. in a passage in his judgment in Hospital Provident Fund Pty. Ltd. v. Victoria [10] , which is now familiar. I shall repeat it because in my view it provides the established test for deciding such a case as the present.

1. [1950] A.C. 235; (1949) 79 C.L.R. 497. 2. (1930) 43 C.L.R., at p. 409. 3. [1950] A.C., at p. 307; (1949) 79 C.L.R., at p. 637. 4. (1934) 51 C.L.R. 108. 5. (1953) 87 C.L.R. 1, at pp. 17, 18.

If a law takes a fact or an event or a thing itself forming part of trade commerce or intercourse, or forming an essential attribute of that conception, essential in the sense that without it you cannot bring into being that particular example of trade commerce or intercourse among the States, and the law proceeds, by reference thereto or in consequence thereof, to impose a restriction, a burden or a liability, then that appears to me to be direct or immediate in its operation or application to inter-State trade commerce and intercourse, and, if it creates a real prejudice or impediment to inter-State transactions, it will accordingly be a law impairing the freedom which s. 92 says shall exist. But if the fact or event or thing with reference to which or in consequence of which the law imposes its restriction or burden or liability is in itself no part of inter-State trade and commerce and supplies no element or attribute essential to the conception, then the fact that some secondary effect or consequence upon trade or commerce is produced is not enough for the purposes of s. 92.

The logical force of this formulation, perhaps nowhere better illustrated than by the Vacuum Oil Case [1] , has been accepted and given effect to by the Court in Grannall v. Marrickville Margarine Pty. Ltd. [2] ; Beal v. Marrickville Margarine Pty. Ltd. [3] , and a number of other cases. The Margarine Cases were cases of manufacture, but the principle for which they are authorities is missed if they are thought of as having been decided as they were because of some consideration applying exclusively to manufacture. The ratio decidendi had to do, not with anything peculiar to manufacture, but with the distinction between laws which impose by their own force restrictions or burdens upon the very things which s. 92 protects, namely inter-State trade, commerce and intercourse themselves, and laws which impose restrictions or burdens upon things antecedent or preparatory or collateral to inter-State trade, commerce or intercourse and affect such trade, commerce and intercourse as a matter only of economic or practical consequence. The application of that ratio decidendi to cases other than cases of manufacture is not an extension or development of the law as laid down in the Margarine Cases and the long line of cases from which they extract the essence. It is not open to be condemned as resulting rather from a pursuit of logic than upon the actual provisions of the Constitution. The purpose of the test which Dixon J. propounded is the exact opposite. It is to bring thought on the subject back to the very terms of the Constitution, and to insist that since s. 92 decrees freedom for nothing but trade, commerce and intercourse among the States no considerations of logic or supposed reasonableness should be allowed to extend the freedom beyond that concept to facts, events or things which, though incidental or ancillary or conducive to or necessarily consequential upon some activity of trade, commerce or intercourse [1] neither form part and parcel of it nor give it the quality of inter-Stateness. It seems to me that when such a precisely-worded statement of principle has been worked out by strenuous thought over a long period of years, and has been made the basis of the Court's decisions in a succession of cases on the ground of its exactness in defining a complicated concept which the Constitution expresses with economy of language, the national interest is well served by a continuing acknowledgment that to that extent certainty as to the meaning of the Constitution has been achieved.

1. (1934) 51 C.L.R. 108. 2. (1955) 93 C.L.R. 55. 3. (1966) 114 C.L.R. 283. 4. (1955) 93 C.L.R. 55, at p. 79.

A necessary application of the principle which I thus take to be established is that where the operation of a law is to impose a prohibition or burden upon any form of conduct with respect to goods, the question whether s. 92 prevents that operation in a given instance depends upon whether the conduct in that instance is an integral part or feature of a transaction of inter-State trade or is only preliminary or preparatory to it. If the former, s. 92 prevents the application of the law to that case. If the latter, s. 92 has nothing to say to the case; for though the commercial or economic or practical consequences may inevitably be that an intended or proposed or contemplated transaction of inter-State trade is rendered impossible for want of available goods to be the subject of it, to hold that for that reason the case falls within s. 92 would be to make an unauthorized addition to that which s. 92 selects for a guarantee of freedom.

If the test be applied in relation to the application of the relevant provisions of the Trading Stamps Act to the facts of the present case the result, in my opinion, must be similar to that which was reached in Home Benefits Pty. Ltd. v. Crafter [2] , even though not everything that was said in that case, particularly in the judgment of Starke J., can now be accepted. The defendant had no inter-State trade for which to claim the protection of s. 92 except the trade it desired to engage in with respect to the set of ten records. Everything that it did which is now alleged to have constituted an offence was "accessory" to that proposed inter-State trade, in the sense that on the one hand it formed no part of any other trade protected by s. 92, for there was none, and on the other hand it formed no part of that trade but was merely an activity designed to enhance the likelihood of its being brought into being.

In my opinion the defendant should be convicted on the second count of the information.

In April 1967 a complaint was laid in South Australia charging the defendant with four offences against the provisions of the Trading Stamp Act, 1924-1935 SA. The offences alleged were that the defendant -

(1) About 26th August 1966, at Glenunga in the State of South Australia, in connexion with the sale or advertising of certain goods, namely a set of ten gramophone records, issued or delivered to Mr. and Mrs. R. Davis with an advertisement of such goods a trading stamp;

(2) About the same date and at the same place, in connexion with the sale or advertising of certain goods, namely a set of ten gramophone records, issued or delivered with or about or concerning, relating to, or in connexion with such goods a writing promising, offering or representing, or purporting to promise, offer or represent, that the purchaser or any other person would be entitled to or would receive a gift, reward, valuable consideration, benefit or advantage dependent on the purchase of such goods;

(3) About the same day and at the same place, in writing promised, offered, represented or advertised, or purported to promise, offer, represent or advertise, that it would give or deliver goods, or give a reward, benefit, valuable consideration or advantage, in exchange for, or in redemption of, a stamp, coupon, ticket, document, means or device which had been, or was, issued or delivered with, about, concerning, relating to or in connexion with certain goods, namely a set of ten gramophone records, which were being, or were intended to be, sold or distributed in South Australia by the defendant; and

(4) On the same day and at the same place, invited or encouraged Mr. and Mrs. R. Davis to dispatch from South Australia, in exchange for goods or for a reward, benefit, valuable consideration or advantage, a stamp, coupon, ticket, document, means or device which had been, or was, issued or delivered with, about, concerning, relating to or in connexion with certain goods, namely a set of ten gramophone records, which were being, or were intended to be, sold or distributed in South Australia by the defendant.

To say the least of it the charges framed in this manner are most cumbersome and embarrassing but no objection was taken to them by the defendant and we are told that the form of allegation employed in each instance is permissible under the Justices Act of that State. The first and second charges were laid, respectively, under s. 5 (1) (a) and (b) of the Trading Stamp Act and the third and fourth counts under s. 5a (1) (b) and s. 5a (2) respectively. Each of the offences was alleged in the terms of the statutory provisions and the evidence shows that the charges arose out of the same transaction.

It is alleged that each offence was constituted by the delivery of a communication addressed to Mr. and Mrs. R. Davis which was dispatched by the defendant through the post from Sydney. Upon the hearing it was the defendant's principal contention that s. 5 and s. 5a constituted an infringement of the provisions of s. 92 of the Commonwealth Constitution, or alternatively, that they should be so read as not to apply to communications made in the course of inter-State trade. Thereupon an application was made to remove the matter into this Court pursuant to the provisions of s. 40 of the Judiciary Act 1903-1960 Cth and an order to that effect was made.

Certain facts were found by the magistrate before the order for removal was made and these are not now challenged. But it is not without importance to notice that it is only in respect of the first count that it is necessary to inquire whether the defendant issued a "trading stamp", as defined, to Mr. and Mrs. Davis. By definition a trading stamp includes, inter alia, any stamp coupon or ticket issued or supplied by any trader upon or in connexion with the sale of or advertising of any goods, or with or in relation to any advertisement of any trader relating to any goods which authorizes or entitles the holder thereof or person producing the same to demand and receive, or purports to promise that such person will or may receive, from the said trader any goods free of cost or at a reduced or alleged reduced price.

What happened in this case was that the communication which was delivered was contained in an envelope, addressed to Mr. and Mrs. Davis, which on the outside thereof contained the announcement "You have already won a prize and stand to win another in the new $16,999 Readers' Digest lucky number contest. To claim your prize return this lucky number token within 14 days". On the back of the envelope there was the further announcement "Claim your prize now nothing to write nothing to fill in simply return your lucky number token today". The "lucky number token" consisted of a detachable numbered portion of a card contained, with other documents, in the envelope and the recipient was invited by the card to "Stick this token behind "Yes" or "No" slots (which were provided on the card) and post today". The accompanying matter which was included in the envelope made it clear that if the token should be detached and placed by the recipient in the "Yes" slot and returned to the defendant he would receive "One set of "120 Greatest Hit Songs from Broadway" for 10 days' free play" and that, if the records should be kept after 10 days, an additional record - "Broadway Show Stoppers" - would be provided free. The cost of the 10 records was said to be $29.99, "a saving of $22.51 on the price you would expect to pay if this set were available through normal retail channels".

I have no doubt that the so-called lucky token was a trading stamp as defined for it was supplied by a trader in connexion with the sale of or advertising of the set of ten records and it authorized and entitled the recipient to demand and receive an additional record free of cost upon purchasing the set of ten records.

No such question, however, arises in relation to counts 2, 3 and 4 and it is clear enough that the "writing", the "promise, offer, representation or advertisement" and the "invitation or encouragement" alleged, respectively, in those counts were of the character and quality described in the sub-sections under which those charges were laid.

A further point was taken and I refer to it merely to dispose of it briefly. It was contended that upon its true construction s. 5 applies only when the acts prohibited by it are done, and the person doing those acts are, in South Australia. It is not contended that a delivery by medium of the postal service was not, in the circumstances, a delivery by the defendant (as to which see R. v. Brisac [1] ; R. v. Oliphant [2] and R. v. De Marny [3] ); what is contended is that the section should not be understood to prohibit a "delivery" by a person outside South Australia. But in my view there is no substance in this contention and the attempt to gain support for it by a comparison of the section with s. 5a - a section introduced into the Act in 1935 - has no force or validity.

1. (1803) 4 East 164 [102 E.R. 792]. 2. [1905] 2 K.B. 67. 3. [1907] 1 K.B. 388.

We are left, therefore, with the submission based on s. 92 of the Constitution. The point which this submission raises was, however, substantially decided in relation to s. 5a of the Act by Home Benefits Pty. Ltd. v. Crafter [1] . But it is contended that the matter should be re-examined in the light of the pronouncements of this Court since the Banking Case (Bank of New South Wales v. The Commonwealth) [2] . There is, of course, no question that since that case there have been some marked changes in the approach to s. 92 problems. Nevertheless much of what was said in the earlier case is still fundamentally valid. As Latham C.J. pointed out [3] "s. 92 (of the Constitution) does not exclude inter-State trade from the sphere of legislative action" and "any other view would result in legal incoherence". Later he added that what had been said "in James v. The Commonwealth [4] should not be construed as entitling any parliament to select any trade of which it disapproves and then to prohibit it, inter-State as well as intra-State" [5] . But he emphasized that it was necessary to recognize "the distinction between prohibition of a trade and the prohibition of a practice in trade", and later added that

it is consistent with James v. The Commonwealth to hold that the prohibition of a particular practice in trading in articles which does not prevent trade in those articles if the prohibited practice is not adopted does not constitute an infringement of s. 92. Such a provision may fairly be regarded as a regulation of trade and not a prohibition of it [6] . Dixon J. (as he then was), whose views as to the effect of s. 92 had not at that time received general acceptance, was prepared "to concur in the view that s. 92 ought not to receive an application which would prevent the operation of s. 5a of the State statute upon the transaction described in the circular" [7] . But it is pointed out by the defendant that, in that case, the Court was concerned merely with the activities of "coupon companies" and not, as in the present case, with the merchandizing procedure adopted by a company promoting the sales of its own goods and that, since the legislation operates to prohibit the making of offers to prospective customers in the form in which they were made and, as the making of such offers forms part of inter-State trade, the legislation must be taken to infringe s. 92. But I confess that I am unable to see how it can be said that the impugned legislation bears with any more force upon the defendant's inter-State trade in goods than s. 5a did upon the inter-State trade of the "coupon companies" in the case referred to. In each case the Court was and is concerned with an express prohibition, not upon the selling or the making of offers to sell in the course of inter-State trade, but upon the offering of particular kinds of inducements in order to promote sales generally. 1. (1939) 61 C.L.R. 701. 2. (1948) 76 C.L.R. 1. 3. (1939) 61 C.L.R., at p. 711. 4. [1936] A.C. 578; (1936) 55 C.L.R. 1. 5. (1939) 61 C.L.R., at p. 712. 6. (1939) 61 C.L.R., at p. 713. 7. (1939) 61 C.L.R., at p. 722.

There can be no doubt that a law of general application penalizing or prohibiting some classes of conduct, whether it occurs in the course of inter-State trade or not, will be valid. For instance, such a law may validly penalize or prohibit false or fraudulent or misleading advertising, or, such legislation may operate generally in suppression of monopolies, or, to penalize and prohibit the making of certain classes of contracts whether in the course of inter-State trade or not. Indeed it has never been suggested that s. 4 (1) of the Australian Industries Preservation Act 1906-1950 Cth - which penalizes and renders void contracts, whether in the course of inter-State or intra-State trade, which are in restraint of or with intent to restrain trade or commerce or made with intent to destroy or injure by means of unfair competition any Australian industry, the preservation of which is advantageous to the Commonwealth having due regard to the interests of producers, workers and consumers - is invalid. On the contrary, this Court has held that the section is a valid enactment: Redfern v. Dunlop Rubber Australia Ltd. [1] . (See also James v. The Commonwealth [2] .)

1. (1964) 110 C.L.R. 194. 2. [1936] A.C., at p. 626; (1936) 55 C.L.R., at pp. 54, 55.

In the joint judgment of Dixon C.J. and McTiernan and Webb JJ. in the Hughes and Vale Case [No. 2] [3] , their Honours said:

In most questions concerning the consistency with s. 92 of laws which in some way affect the conduct of any description of transaction or activity occurring in the course of inter-State trade commerce or intercourse there is nothing better calculated to open the way to a true solution than to distinguish between on the one hand the features of the transaction or activity in virtue of which it falls within the category of trade commerce and intercourse among the States and on the other hand those features which are not essential to the conception even if in some form or other they are found invariably to occur in such a transaction or activity. Much the same line of reasoning was applied in Mansell v. Beck [4] , where in the judgment of Dixon C.J. and Webb J. it was said: The fact that the "transaction" beginning with the acceptance of the money and ending with the delivery of the ticket may possess an inter-State character does not take the defendant far enough for a reason arising from the operation of s. 92 as it has now come to be applied. The reason is that it still remains to consider whether the provision impugned, notwithstanding that in this particular case its effect is to penalize the acceptance of money with which the transaction begins, is in truth a law impairing the freedom which is constitutionally assured by s. 92. To give a law that character it is not enough that there are or may be transactions of inter-State trade, commerce or intercourse that are adversely affected by the operation of the law. That may be a consequence of a law which is not concerned with any fact, matter or thing forming part of inter-State trade, commerce or intercourse but takes for its operation events or circumstances or conduct which of their own nature do not fall within that conception and do not constitute or necessarily include any essential element or attribute of trade, commerce and intercourse among the States. A law which imposes restrictions or burdens upon some description of act matter or thing not of its own nature forming part of inter-State trade, commerce or intercourse and does so because of some characteristic which is independent of any element entering into that conception is very unlikely to be found to destroy impair or detract from the freedom secured by s. 92. It may conceivably do so if upon examination of the facts and scrutiny of its intended operation it appears that in spite of the prima facie absence of any but an accidental interference with inter-State trade, commerce and intercourse the law is but a circuitous means of burdening, restricting or impeding operations of a kind which s. 92 protects. But no such vice can be imputed to the enactment under discussion and the qualification which the possibility demands may be ignored in considering the true relation of the prohibition contained in s. 21 of inter-State trade. The basis of the prohibition is the existence of a lottery. If the legislation had taken this basal conception and independently of the place where or whence the lottery was conducted had prohibited the selling of tickets and the acceptance of money for the purchase of tickets there would be little difficulty in regarding the case as one in which a law taking no aspect of trade, commerce or intercourse among the States and no attribute of that conception as the criterion of its operation, produced an incidental effect upon given transactions of inter-State trade, commerce or intercourse. In the same case Fullagar J. quoted the passage from the Hughes and Vale Case [1] and then went on to quote from the judgment of Dixon J. in Gilpin's Case [2] : given an act or transaction which falls within the conception of trade, commerce, or intercourse among the States and a restriction or burden operating upon that act or transaction, it appears to me that it must be an infringement upon the absolute freedom guaranteed by s. 92 unless the restriction or burden is imposed in virtue of or in reference to none of the essential qualities which are connoted by the description "trade, commerce, and intercourse among the States". 1. (1955) 93 C.L.R., at p. 162. 2. (1956) 95 C.L.R. 550, at pp. 564, 565. 3. (1955) 93 C.L.R., at p. 162. 4. (1935) 52 C.L.R., at p. 206.

Illustrations may also be given to show that a general law definitive of the conditions under which inter-State trade or commerce may be carried on, or, prohibitory of certain classes of conduct in the carrying on of such trade or commerce do not necessarily infringe s. 92. I refer to the Sea Carriage of Goods Act 1924 Cth and to the Secret Commissions Act 1905 Cth. (See on this point James v. The Commonwealth [1] .) Finally, I observe that a company engaged in inter-State trade may be wound up, and its inter-State trade, thereby, terminated, if it fails to comply with certain prescribed standards of conduct. Such provisions do not infringe s. 92.

1. [1936] A.C., at p. 626; (1936) 55 C.L.R., at pp. 54, 55.

In the present case the sections impugned deal with conduct in merchandizing which, it seems, is considered by the legislature of South Australia to be unfair or oppressive, or, as Latham C.J. said in Home Benefits Pty. Ltd. v. Crafter [2] , "as parasitical upon legitimate trade" and, therefore, a reprehensible practice in trade. It is not, I think, for us to say whether such conduct is reprehensible or not and, though much water has run under the bridge in the United States of America since the decision in Munn v. Illinois [3] - a case referred to by Latham C.J. in his concluding remarks in the case just cited - it is, in my view, sufficient to say that the object of the legislation fairly appears as the proscription of undesirable and objectionable practices in merchandising, that it is, clearly enough, legislation upon that topic and that it was, therefore, within the province of the South Australian Parliament to enact the impugned provisions applicable to trade generally without affecting the freedom accorded by s. 92 to trade commerce and intercourse among the States. It is, of course, not without significance that, were we to hold otherwise, it would not be competent for any legislative body, whether Commonwealth or State, to prescribe generally practices considered by them to be objectionable or undesirable when such practices are employed in connexion with inter-State trade.

1. (1939) 61 C.L.R., at p. 714. 2. (1876) 94 U.S. 113, at p. 132; 24 Law. Ed. 77, at p. 86.

In my opinion the matter should be remitted to the magistrate, in order that he may proceed according to law.

The legislation of the Parliament of the State of South Australia impugned in these proceedings prohibits a number of what are regarded as undesirable trading practices, having as a common feature, the promise, or the purported promise, of a gift or other collateral advantage, made by a prospective seller to a prospective buyer in the event of the purchase of the goods offered. Here the collateral advantage was the gift of an eleventh gramophone record in the event of the purchase of a set of ten records.

For the defendant it has been argued that legislation of the character stated cannot operate constitutionally when the offer is to sell goods in circumstances which would make the sale part of inter-State trade - s. 92.

Nearly thirty years ago what I regard as essentially the same question arose before this Court in Home Benefits Pty. Ltd. v. Crafter [1] , when it was unanimously decided that the legislation there in question did not contravene s. 92 of the Constitution. It is true that the defendant convicted in that case was not itself a seller of goods; it was what was called "a coupon company", but the trade of that company was just as much inter-State trade as is the trade which the present defendant here invokes s. 92 to protect. The decision in the earlier case, was that it is no contravention of the freedom protected by s. 92 to legislate to suppress the giving of rebates in kind as a supposedly undesirable incident of retail selling cf. Latham C.J. [2] ; Rich J. [3] ; Starke J. [4] ; Dixon J. [5] ; Evatt J. [6] ; McTiernan J. [7] .

1. (1939) 61 C.L.R. 701. 2. (1939) 61 C.L.R., at p. 714. 3. (1939) 61 C.L.R., at p. 715. 4. (1939) 61 C.L.R., at pp. 717, 718. 5. (1939) 61 C.L.R., at p. 723. 6. (1939) 61 C.L.R., at pp. 731, 732. 7. (1939) 61 C.L.R., at p. 734.

There is, of course, no doubt that the decisions of the Privy Council in the Banking Case [8] , and Hughes and Vale Pty. Ltd. v. New South Wales [No. 1] [9] and the working out of these decisions in a number of cases in this Court have wrought a great change in the general understanding of s. 92 which prevailed in 1939; nevertheless, none of the intervening decisions has called into question the decision in Home Benefits Pty. Ltd. v. Crafter [1] , and, that decision is reconcilable with the more far-reaching present day interpretation of s. 92 upon the very footing upon which it was decided viz., that the regulation of selling practices and conditions incidental to trade is compatible with the freedom of trade protected by s. 92: the Banking Case [1] ; Wragg v. New South Wales [2] and Harper v. Victoria [3] .

1. [1950] A.C. 235; (1949) 79 C.L.R. 497. 2. [1955] A.C. 241; (1954) 93 C.L.R. 1. 3. (1939) 61 C.L.R. 701. 4. [1950] A.C., at pp. 309-313; (1949) 79 C.L.R., at pp. 639-642. 5. (1953) 88 C.L.R. 353. 6. (1966) 114 C.L.R. 361.

It is not without significance that Dixon C.J. whose judgments since 1933, some dissenting e.g., Vizzard's Case [4] ; Gilpin's Case [5] ; McCarter v. Brodie [6] , some not e.g., the Airlines Case [7] ; the Banking Case [8] , have played the leading part in bringing about the changed appreciation of s. 92 to which I have already referred, was himself, as Dixon J., a member of the Court which decided Home Benefits Pty. Ltd. v. Crafter [9] in 1939.

1. (1933) 50 C.L.R. 30. 2. (1935) 52 C.L.R. 189. 3. (1950) 80 C.L.R. 432. 4. (1945) 71 C.L.R. 29. 5. (1948) 76 C.L.R. 1. 6. (1939) 61 C.L.R. 701.

It is not necessary here to attempt to set limits to what a legislature may do by way of prescribing or proscribing, in general terms and without any discrimination against inter-State trade, what shall or shall not be done by traders who seek to adopt high pressure selling tactics to push their goods in a fiercely competitive market. The giving of rebates in kind is one practice that has a long history of legislative animadversion and cannot now be said to go beyond permissible legislative discretion to prevent undesirable selling practices. Another sphere in which legislatures throughout Australia have long been active in strictly controlling trading and commercial practices without discrimination between inter-State and other trade and commerce is in the sphere of hire purchase. It is this kind of regulatory legislation which, in my opinion, is compatible with s. 92 on the principles stated by the Privy Council in the Banking Case [10] . The same principle is to be found in Hughes and Vale Pty. Ltd. v. New South Wales [No. 2] [11] ; Armstrong v. Victoria [12] , and Freightlines and Construction Holding Ltd. v. New South Wales [13] establishing the validity of certain road maintenance charges imposed by States upon certain carriers including those carrying goods in the course of inter-State trade. In the last cited case the Privy Council quoted with approval the observation of Dixon C.J., McTiernan and Webb JJ. in Hughes and Vale Pty. Ltd. v. New South Wales [No. 2] [14] :

Just as any commercial pursuit or activity must conform with the laws affecting its incidents, notwithstanding that it may form part of inter-State commerce, so it must discharge the fiscal liabilities which State law attaches to those incidents. Thus it is to be seen that Home Benefits Pty. Ltd. v. Crafter [1] and Freightlines and Construction Holding Ltd v. New South Wales [2] rest upon the same foundation in law. 1. [1950] A.C. 235; (1949) 79 C.L.R. 497. 2. (1955) 93 C.L.R., at pp. 159-161 and 163. 3. (1957) 99 C.L.R. 28. 4. [1968] A.C. 625. 5. (1955) 93 C.L.R., at p. 172. 6. (1939) 61 C.L.R. 701. 7. [1968] A.C. 625.

In my opinion the validity of the legislation under which the defendant is charged having been established the matter should be remitted to a magistrate to proceed according to law.