High Court of Australia|1920-11-29|Before: Starke JJ

For the reasons stated, the plaintiff fails as to the first three methods and succeeds as to the fourth.

The defence in this case admits in effect all the allegations of the statement of claim, and says that the claim - for declaration and injunction - is "bad in law." This pleading would cover an argument that the statement of claim discloses no cause of action; but such an argument has not been attempted by the defendants. If the Queensland Act and proclamation apply to the travellers of the plaintiff, it is the desire of all parties, as I understand, to have it declared whether the Act is valid or invalid. I confess, however, that I find it hard to see the cause of action. The case of Dyson v. Attorney-General[25] goes a long way, especially in its later phases, but not nearly so far as this case. I know of no cause of action arising out of the mere fact of prosecution, actual or threatened, unless it is alleged to be malicious; and then the person prosecuted must be the plaintiff. On the proceedings for a penalty against a traveller for the plaintiff, the point as to the constitutionality of the Act would be open to the traveller, and every other point that has been here raised. There is no analogy to proceedings in equity to restrain proceedings at law, where the ground used to be that the Court of law was not competent to entertain equitable doctrines. I think that I ought to express this doubt, as the matter will probably have to be some day further considered.

On the construction of the Act and the proclamation, I concur in the opinion that, if they are valid, the travellers of the plaintiff in Queensland are liable to a pecuniary penalty or imprisonment, under sec. 12.

What, then, is the effect of the Constitution on the Queensland Act? The meaning of our Constitution must be found in its own words: the Constitution of the United States does not contain our sec. 92. or our sec. 107. Under sec. 107 "every power of the Parliament of a Colony which ... becomes a State, shall, unless it is by this Constitution exclusively vested in the Parliament of the Commonwealth or withdrawn from the Parliament of the State, continue as at the establishment of the Commonwealth." The power to regulate inter-State trade, to make "laws" with respect to it, is vested in the Commonwealth Parliament by sec. 51 (I.); but it is not expressed to be "exclusively" vested: contrast sec. 52. Yet the power of the State Parliament to make a law restricting inter-State trade is, in my opinion, clearly "withdrawn" from the Parliament of the State by sec. 92, as from the time that uniform duties of customs were imposed. The words are "On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free." Whatever the doubt as to these words applying to restrict the powers of the Federal Parliament under sec. 51 (I.), there can be no doubt that they operate as a restraint on the State Parliament. "Free," in the context, means "exempt from restrictions in regard to trade" (Oxford Dictionary, sub "Free"). Already, under sec. 90. the States were deprived of power to impose duties of customs or of excise, or to grant certain bounties, and all the State laws imposing such duties or offering such bounties, ceased to have effect; but there still remained other restrictions made by the States as against States, and a power to make such restrictions, and it was to meet such restrictions that sec. 92 was inserted. For instance, South Australia absolutely prohibited the introduction of grapes from Victoria. This prohibition was originally owing to the danger of phylloxera, but the Act continued after the danger had ceased. Tasmania had an Act prohibiting the importation of fruit plants or other products packed in grass, straw, &c., if calculated to introduce into Tasmania the Queensland cattle tick (Contagious Diseases (Cattle) Act 1896). Queensland, in its turn, had an Act prohibiting the introduction of any plant, &c., likely to introduce any insect fungus or disease (Diseases in Plants Act of 1896, sec. 4). These and other such restrictions were terminated by sec. 92, and future restrictions of a similar character on trade, commerce or intercourse were forbidden. Sec. 91 is really an exception to the provision of sec. 90 as to bounties, and, when sec. 91 is seen in this aspect, sec. 92 appears in its true character, as extending the application of the principle contained in sec. 90 - no more inter-State imposts (sec. 90); no more State restrictions of any kind, present or future, on inter-State trade or intercourse (sec. 92). There is not, to my mind, any ground whatever for confining sec. 92 to State imposts; for State imposts had been already dealt with in sec. 90.

The words of sec. 92 have, of course, to be read with sec. 112, which recognizes the validity of State inspection laws; and with sec. 113, which makes an exception as to intoxicating liquors passing into a State or remaining there for use, &c.; but these sections do not affect the position in this case. Nor does sec. 92 prevent the application of the State laws as to health, morals, &c., after the goods which have passed into the State have ceased to be the subject of inter-State commerce.

It is not strictly necessary, according to my view, to determine whether sec. 92 prohibits the Commonwealth Parliament as well as the State Parliament from restricting inter-State trade. But the point has been argued at much length, and, as our opinion on the subject must have a reaction on the main decision, I think it well to state my view. On the first reading of sec. 92, the generality of the words - "trade, commerce, and intercourse among the States ... shall be absolutely free" - might seem to indicate that inter-State trade was to be free from all restrictions, whether State or Federal. Such a conclusion would leave an awkward gap in the Constitution; for it would mean that no authority in Australia, whether State or Commonwealth, could regulate any abuses of inter-State trade: but the fact that such a conclusion would be awkward is not by itself conclusive that there is not such a gap. It is to be noticed, however, that sec. 92 follows two sections which impose or deal with prohibitions laid on States - as to customs, excise, bounties; and that the words "absolutely free" can reasonably be referred to a desire to prohibit State restrictions of all other kinds - especially such as I have instanced in the South Australian, Tasmanian and Queensland Acts. "Absolutely" does not mean "universally"; nor, when taken with "free," does it necessarily mean free from both Federal and State law-making powers; it may well mean "completely" as to the State power of restriction, the State power having been already partially taken away (as to border duties) by sec. 90. But, finally, it is our duty to give such construction to sec. 92 as will reconcile it with the other parts of the Constitution; and, if we are not to treat part of sec. 51 (I.) as nugatory, we are forced to treat sec. 92 as not denying to the Federal Parliament the power to make laws "with respect to trade and commerce ... among the States." Of course, that power is "subject to this Constitution"; but the question is, does sec. 92 forbid the Federal Parliament to make such laws. We must not assume it. The restraints on the Federal Parliament in the exercise of this power are found, not in sec. 92, but elsewhere in the Constitution; for that Parliament must not discriminate between States in its taxation (sec. 51 (II.)), its bounties must be uniform (sec. 51 (III.)), its trade, commerce and revenue laws must not give preference (sec. 99); and as to intercourse see sec. 117.

I am of opinion that this Act of Queensland is invalid so far as it imposes a penalty on travellers in Queensland of a New South Wales firm, for selling, agreeing to sell or offering for sale goods to be sent from the firm's warehouse in Sydney. The same conclusion has been reached under the United States Constitution in the series of cases known as the Drummer Cases (Robbins v. Shelby County[26]). It is also clear that in the United States such a State law is invalid even though by its terms it applied equally to commerce within the State; discrimination in favour of State residents or State commerce is not necessary to be shown (State Freight Tax Case[27]; Robbins v. Shelby County). This conclusion against the Queensland Act does not strike me as being in the least inconsistent with the Wheat Case[28] or with Duncan v. Queensland[29]. As one who was not a party to the decision in the former case, I may be allowed to say that, even if I were not bound by the decision, I should regard it as perfectly sound, so far as regards that part of it which establishes the validity of the New South Wales Act impugned in the case. The decision in Duncan's Case is equally binding on us, and is, in my opinion, equally sound, although I cannot personally adopt all the reasons given. Counsel for the plaintiff here urged that it is distinguishable, and it clearly is. The State can make laws with respect to property and its ownership; the Commonwealth can make laws with respect to inter-State commerce; and a State law with respect to property and its ownership is valid except so far as it is inconsistent with - repugnant to - some valid Federal law (sec. 109). But in the present case the State Act is directly aimed at commerce, including inter-State commerce, forbidding sales except at certain maximum rates (sec. 12); whereas in the former cases the Act transferred ownership in goods, contingently or with qualifications, from A to B - from the stockowner to the Imperial Government. In the former cases the Acts were not with respect to commerce at all, although indirectly they may have affected inter-State commerce, as all changes in property may. In the present case, the Queensland Parliament, as to property which is vendible and persons who are competent to sell, forbids any sale except at certain maximum prices; in the former cases, the wheat or the stock was merely ear-marked and appropriated to the British Government, or as it should desire. The prohibition against sale contained in sec. 7 of the Meat Supply for Imperial Uses Act of 1914, discussed in Duncan's Case, was in aid of the ear-marking of the existing stock for the British Government; as if the words were "B is to have a first call on A's stock; therefore A must not sell to anyone else than B. But B can sell as he chooses." In short, sec. 7 (1) merely prohibited A from selling property which had passed (or would pass in certain contingencies) to B. It enforced a right of property; it did not prohibit sale on the part of the true owner. The line is fine, as in all these cases; but it is clear. The British Government was to have unrestricted power of sale, and its sub-purchasers would have unrestricted power to sell, inter-State or intra-State. In making this statement I do not rely merely on the principle that the words "all persons" in sec. 7 did not affect the King unless expressly named; but on the fact that by the express words of the Act the King was to have full power to dispose of any of the stock at will - for every contract was to be void "which may have the effect of prejudicing His Majesty in the full and unrestricted use, control, and disposal of any stock or meat (whether the same is or is not actually appropriated to His Majesty by an order made under this Act)" (sec. 7 (2)).

Much of the difficulty of these cases would, I think, be avoided if we keep steadily in view the fact that we have to determine in each case what is the subject of the legislation - what subject is the Act "with respect to" what it effects - not what things or operations it may indirectly affect. As stated lately by the Chief Justice of the United States, it is an elementary proposition that "the States are without power to directly burden inter-State commerce, and that commodities moving in such commerce only become subject to the control of the States or to the power on their part to directly burden after the termination of the inter-State movement" (Rosenberger v. Pacific Express Co.[30]).

Sec. 51 (I.) of the Constitution enables the Federal Parliament, subject to the Constitution, to make laws with respect to trade and commerce among the States. In my opinion the expression "trade and commerce among the States" means the exchange of commodities by way of sale or barter between the citizens of different States, and embraces every act necessary to accomplish that purpose, including the transport of commodities from one State to another.

Sec. 90 runs as follows: - "On the imposition of uniform duties of customs the power of the Parliament to impose duties of customs and of excise, and to grant bounties on the production or export of goods, shall become exclusive. On the imposition of uniform duties of customs all laws of the several States imposing duties of customs or of excise, or offering bounties on the production or export of goods, shall cease to have effect; but any grant of or agreement for any such bounty lawfully made by or under the authority of the Government of any State shall be taken to be good if made before the thirtieth day of June, one thousand eight hundred and ninety-eight, and not otherwise."

If sec. 92 did not exist, the result of sec. 90 would be that on the imposition of uniform duties of customs existing State tariffs would disappear, but thereafter the Federal Parliament might impose any restriction on inter-State trade and commerce which was permissible under sec. 51, and a State Parliament under the powers reserved to it by sec. 107 might impose any restriction which it could theretofore have imposed other than a duty of customs or excise provided that such restriction was not inconsistent with a law of the Commonwealth within the meaning of sec. 109. What is the effect of sec. 92 on this state of things? It runs as follows: - "On the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free. But notwithstanding anything in this Constitution, goods imported before the imposition of uniform duties of customs into any State, or into any Colony which, whilst the goods remain therein, becomes a State, shall, on thence passing into another State within two years after the imposition of such duties, be liable to any duty chargeable on the importation of such goods into the Commonwealth, less any duty paid in respect of the goods on their importation." The language of the section though in form affirmative is said in fact to prohibit any interference with the freedom which it prescribes, and we are asked to determine two questions: - (1) To what Legislature or Legislatures does the prohibition extend? (2) What is the exact nature of the freedom which it vindicates? In answer to the first question I would say that the language of the section clearly controls both the powers conferred on the Federal Parliament and those reserved to State Parliaments. In the circumstances which I have stated, I can imagine no language more appropriate for the purpose of limiting the legislative powers of both classes of Legislature, or less appropriate for the purpose of limiting those of one class only. The freedom which the section confers, it establishes in a sphere beyond all Commonwealth or State powers by making it part of the Constitution. It is said that we should hold that the powers of the Federal Parliament are not affected by sec. 92 because, if they were so affected, the power expressly given to that Parliament to legislate with respect to trade and commerce among the States would be gone, and no authority in Australia, Federal or State, could regulate any abuse of inter-State trade. This alarming conclusion is arrived at thus. Sec. 92 forbids any interference with inter-State trade and commerce, and ex hypothesi applies to State Parliaments. If it also applies to the Federal Parliament, that Parliament cannot exercise any of the legislative powers granted by sec. 51 (II.). and the result is that there is no legislative authority. Federal or State, which can control inter-State trade and commerce. It would be deplorable that the suggested consequences should follow from an interpretation which gives their natural meaning to the words of sec. 92, but that would not justify us in forgetting that we are Judges and imagining that we are legislators. If the words of sec. 92 in their natural meaning were found to be inconsistent with sec. 51 we might be forced to seek for some means of avoiding the apparent antinomy. But no such dilemma can arise here, whatever be the meaning of sec. 92, if its provisions are part of the Constitution, because the power to legislate under sec. 51 is subject to the Constitution. The vice in the suggested argument lies in assuming that sec. 92 forbids every interference with inter-State trade and commerce; and this brings me to a consideration of the second question, namely, what is the exact nature of the freedom which the section vindicates? There are few epithets in the English language which extend over a larger area of meaning than the word "free" or vary more with the object qualified. The word "free" is often used to qualify the word "trade," and sometimes, though not so often, to qualify the word "commerce." When used with respect to trade and commerce among Sovereign States it ordinarily means no more than unrestricted by tariff or customs duties; it more rarely means free from all artificial restrictions or restraints conditioned on the international character of the trade or commerce; but freedom of trade and commerce never means freedom from regulation or control, or complete immunity from municipal law with respect to the acts which constitute such trade or commerce. No civilized nation has ever tolerated a trade or commerce, whether foreign or domestic, which was not subject to regulation and control both with respect to the method of carrying it on, and the general conduct of those who carried it on. It could not be contended that a treaty guaranteeing freedom of trade and commerce between two nations would enable the subjects of each, while carrying on such trade and commerce within the territory of the other, to ignore either the municipal laws regulating the general conduct of individuals within the State, or those prescribing the general conditions applicable to trade or commerce within the State. All that could be demanded under such a treaty would be equality of trading rights for the subjects of each nation in the territory of the other. I see no reason for attributing to the word "free" in sec. 92 any larger meaning than that which it naturally bears in the collocation in which it is there used. Indeed, to do so would immediately create an inconsistency between sec. 92 and sec. 51 (I.), for it would leave no room for the operation of the latter. Sec. 92 does not divide, it consolidates; it does not create two streams flowing through the State side by side, yet distinct and separate like the waters of two newly met rivers; it preserves the even flow of Australian trade throughout the Commonwealth by preventing discrimination against inter-State as compared with intra-State operations just as sec. 117 preserves the solidarity of Australian citizenship by preventing injurious discrimination between the residents of different States. Under sec. 51 (I.) Parliament has complete dominion over a free inter-State trade and commerce subject to this, that it must not by any law or regulation of trade or commerce give preference to one State or any part thereof over another State or any part thereof (sec. 99), nor abridge the right of a State or of the residents therein to the reasonable use of the waters or rivers for conservation or irrigation (sec. 100); but because the trade and commerce are to remain free, Parliament must not fetter the acts which constitute such trade or commerce by any restriction or restraint conditioned on the fact that such trade or commerce is carried on between States. Whether a restriction or restraint is so conditioned is in every case a question of fact. A prohibition of or an impost on the import or export of a commodity would clearly be such a restraint, so also would be any injurious discrimination against foreign as compared with domestic products. In the Wheat Case[31] the New South Wales Legislature had prohibited the export of wheat and by the same statute had expropriated the wheat, and we held that those who no longer owned the wheat could not complain that any restriction was put upon its export. In Duncan's Case[32] the Queensland Legislature had prohibited the export of stock or meat, and we held that it was justified in doing so because the object of the statute was to expropriate such stock and meat as might be thought necessary and suitable for the needs of the King's army, and meantime to keep the whole mass in statu quo and subject to his accruing needs. In the present case the Parliament of the State of Queensland has not endeavoured to obstruct or burden the passage of any commodity into or out of its territory, nor, in my opinion, has it discriminated against inter-State trade or commerce. The enactment complained of is therefore not forbidden by sec. 92, and as it is not inconsistent with any law of the Commonwealth within the meaning of sec. 109, no question arises under that section.

It follows from what I have said that the State of Queensland is entitled to our judgment.

I have had the advantage of perusing the judgment of my learned brothers the Chief Justice and Isaacs and Starke, and, agreeing with that judgment on all points, I should, but for one circumstance, have contented myself with simply stating my concurrence; but the circumstance that I am departing from my judgment in Duncan's Case[33] makes it proper for me to say why I do so. In Duncan's Case the judgment in which I took part was founded substantially, so far as I am concerned, on what I considered the "real object" of the Act. But for that, my judgment would have been the other way, in accordance with the view I had already expressed in Foggitt, Jones & Co. v. New South Wales[34]. In McCawley v. The King[35] I had to reconsider what was meant by the "object" of an Act. At p. 65 I stated, in conjunction with my brother Isaacs, the conclusion I then came to on that subject by the light of the opinions of Sir Roundell Palmer and Sir Robert Collier, and of judicial opinions referred to on the page mentioned. That conclusion was that "the object" of an Act is to be gathered from its necessary effect, and not from some purpose or motive which the Legislature may be supposed to have had. That conclusion was at the root of my judgment in McCawley's Case, and is opposed to the view which had been acted on by me previously in Duncan's Case. My later view has met with the approval of the Privy Council in McCawley's Case[36]. It necessarily follows that, since I agree with the judgment of the Chief Justice and Isaacs and Starke JJ. in every other respect, my judgment in Duncan's Case presents no obstacle, and I join with them in their judgment.

Demurrer overruled as to matters mentioned in par. 11 of the statement of claim and allowed as to the matters mentioned in pars. 8, 9 and 10. Defendants to pay the costs.

Solicitor for the defendants, W. F Webb, Crown Solicitor for Queensland.

[1] [1916] HCA 67; 22 C.L.R., 556.

[5] [1875] USSC 187; 91 U.S., 275, at p. 280.

[6] [1919] USSC 80; 249 U.S., 236, at p. 245.

[9] [1910] USSC 25; 216 U.S., 56, at p. 65.

[10] (1891) A.C., 455, at p. 458.

[11] [1916] USSC 129; 241 U.S., 48.

[12] [1920] HCA 54; 28 C.L.R., 129.

[13] [1916] HCA 67; 22 C.L.R., 556.

[15] [1916] HCA 67; 22 C.L.R., 556.

[16] [1916] HCA 67; 22 C.L.R., 556.

[17] [1916] HCA 28; 21 C.L.R., 357.

[18] [1916] HCA 67; 22 C.L.R., 556.

[19] [1916] HCA 28; 21 C.L.R., 357.

[22] (1914) A.C., at p. 254; 17 C.L.R., at p. 653.

[23] (1915) A.C., 330, at p. 338.

[25] (1911) 1 K.B., 410; (1912) 1 Ch., 158.

[26] [1887] USSC 85; 120 U.S., 489.

[28] [1915] HCA 17; 20 C.L.R., 54.

[29] [1916] HCA 67; 22 C.L.R., 556.

[31] [1915] HCA 17; 20 C.L.R., 54.

[32] [1916] HCA 67; 22 C.L.R., 556.

[33] [1916] HCA 67; 22 C.L.R., 556.

[34] [1916] HCA 28; 21 C.L.R., 357.

[35] [1918] HCA 55; 26 C.L.R., 9.

[36] [1920] UKPCHCA 1; (1920) A.C., 691; 28 C.L.R., 106.

Diseases (Cattle) Act 1896

W & A McArthur Ltd v Queensland [1920] HCA 77; (1920) 28 CLR 530 (29 November 1920)

W & A McArthur Ltd v Queensland [1920] HCA 77;

At a glance

Court

Decision date

Before

Source

Judgment (40 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (2)

W & A McArthur Ltd v Queensland [1920] HCA 77; (1920) 28 CLR 530 (29 November 1920)