Wilcox Mofflin Ltd v NSW [1952] HCA 17

Wilcox Mofflin Ltd v NSW [1952] HCA 17 | Case summary | Zoe

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certain quantity in Australia by determining how much is for export and how much is to be retained locally. How much is sent inter- State and how much is not sent inter-State is determined by a quota, and in order to achieve it the whole is acquired. The export price being higher than the internal price this is the reverse of James v. The Commonwealth (1). The fact that matters is that the persons who would deal inter-State are precluded from dealing. The right protected by s. 92 is the right of the person concerned to determine for himself whether he will sell his goods inter-State, and he must be left with that right until he himself puts it beyond his own reach (he Commonwealth v. Bank of New South Wales (2) ). The Act does not give the person concerned any liberty to decide where he will sell his goods. The law as laid down by James v. South Australia (3) and James v. Cowan (4) is that an unqualified power to interfere with his liberty to dispose of his produce at his will by an inter-State or an intra-State transaction, was bad (Banks' Case (5) ). The mere existence of the power is a burden on the trade. A law which directly operates to restrict trade, is bad. An acquisition may directly operate to restrict trade, and it clearly does so if it is found in marketing legislation (New South Wales v. The Commonwealth (6); Peanut Board v. Rockhampton Harbour Board (7); James v. South Australia (3); James v. Cowan (4) ; Banks' Case (8)). In an Act which vests property in a trading board, the result of the acquisition is direct (Peanut Board v. Rockhampton Harbour Board (9); Australian National Airways Pty. Ltd. v. The Commonwealth (10) ). The test of the Privy Council in the Banks' Case (8) is satisfied by an acquisition in legislation like this Act, and the only question which remains is whether the proviso is adequate. The Act offends s. 92 because, firstly, it does permit really a quota system, inasmuch as it enables those quotas to be fixed arbitrarily ; secondly, in so far as it requires the submis- sion to appraisement, it is a burden on the inter-State trade; there is not any proviso to s. 7 such as there is to s. 9, and there is not any reading down provision ; and, thirdly, that as an acquisition

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ment really is a mere postponement of the right to sell inter-State ; a necessary and reasonable regulation to implement the overall objectives and in no way directed to prohibiting, or restraining, or interfering with inter-State trade as such. It is a mere temporary interference of a regulatory nature which is not only desirable but also requisite for the achievement of the general objectives, all of which are well within power. In practice the appraisements take place at convenient centres; centres where they were appraised or catologued prior to 1939. The power, procedure and practice so far as appraisement is concerned is not so much an interference as was the direction to pack fruit considered in Hartley v. Walsh (1). The seven Acts, that is the Federal Act and the Acts of the various States, should be regarded as interposing appraisement into the ordinary course of trading in skins and putting it into the place where selection and inspection used to take place before the auction, the consequence being that property passes to the board before the auction. The proceeds then belong to the board and there is control over the person who buys or to whom an allocation has been made to buy for export. People who have received quotas from the board receive their allocation at the so-called first auction up to or even in excess of their quota according to availability. The procedure followed gives the equalization element to the scheme with compulsory return of the difference between the appraised price and the second auction price to the producer, and the sub- mission is that at the time when vesting takes place there is full power to acquire the property; that the appraisal is merely regulatory, and, as to vesting, s. 9 (2) safeguards the position from the s. 92 viewpoint. Section 6 is a restraint in a sense, but it falls within the wording of the Banks' Case (2) in that it is not directed towards prohibiting. Under s. 6 the restraint on the sale before appraisal prevents any passing of the property before appraise- ment ; and under s. 9 when the skins are submitted for appraisement the property passes. In sub-s. (2) there is intended to be an excep- tion from the vesting of all types of commodities which have been included in any part of inter-State transactions, whether by agree- ment for sale or otherwise ; so that, under sub-s. (2), once there is a mere agreement, which possibly is not struck at by s. 6, which refers to a sale, that also would be excepted by sub-s. (2). That is one way of reconciling, as a matter of construction, ss. 6 and 9. The words "the subject of trade commerce or intercourse " in s. 9 (2) refer to actual goods in transit or actual movement, but the

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NeW. included in the provisions of s. 7, he having bought from the

- producer would then have to go to appraisement. The language is as wide in its terms as the wording in the Marketing of Primary Products Act 1925 (Vict.) considered in Matthews v. Chicory Market- ing Board (Vict.) (1). The provisions of ss. 6 and 7 are not invalid. They merely enable the board to know what hides and what quantity of hides are available for the purpose of carrying out the objects of the Act. Ownership is not changed by the mere acts of appraisal. There is a critical difference between the scheme of this Act and the Dried Fruits Act considered in James v. South Australia (2) and James v. Cowan (3). The latter Act had the effect of driving surplus fruit off the Australian market, but the effect of the Hide and Leather Industries Act 1948-1949, is not to put an end to any inter-State trade or business, or to force the commodity in question off the Australian market, but merely to regulate intra- State trade having regard to the ordinary flow of inter-State trade. Section 9, and particularly sub-s. (2), only regulates the residue of trade remaining after the inter-State element has been sub- tracted from it. It also supplements inter-State trade out of such residue of intra-State so far as it is necessary to bring about as fair a distribution of the commodity as circumstances from time to time, and in different areas, require. Section 9 (2) results in the safeguard that the export provision or control is not at the expense of inter-State trade. That sub-section is a full recognition of s. 92, and therefore of s. 9 (1) (Matthews v. Chicory Marketing Board (Vict.) (4) ). Sub-section (2) of s. 6 has a very wide, practical effect, and permits, but does not prevent, the producer or the owner or the person referred to, to sell to both an intra- and an inter-State licensed dealer. It does not really affect the matter if the words "the subject of trade commerce or intercourse" have no direct practical or working effect. They comply with the requirements of s. 92. Even if that be wrong, the word "required " of itself, as a pure matter of grammar, is sufficient to give the immunity required by s. 92. That word has a very wide meaning, and,

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A, R. Taylor K.C. (with him R. Else-Mitchell), for the Australian Hide and Leather Industries Board. It is impossible in these pro- ceedings to determine whether any particular parcel of hides or skins is affected by the legislation. The subject legislation is the result of the facts that, firstly, there was a disparity between world price and domestic price of hides and goods manufactured from leather, a feature which was seen not only in relation to this com- modity but also with respect to many others; and, secondly, there was a necessity for securing supplies for the domestic require- ments of the Commonwealth because the price was controlled, and producers no doubt would have sold all of their hides to overseas merchants who were in a position to pay a much higher price. Therefore it was necessary to ensure a local supply in order to obviate the necessity of paying famine prices induced by shortages overseas for hides in Australia where there was a surplus of hides. However, at all times there has been an exportable surplus. In order to determine out of one year's production what surplus there was available for export it was necessary not only to know the number of hides which had been produced during the season, but, also, their various classifications and the quantity in each classifi- fication, because unless that was done it would be quite impossible for any person to determine what hides or what portions of the season's production were available for export. The mechanics of the production of hides; their delivery to a centre, and their final disposal, have not been altered ; the mechanical process remains precisely the same. The course of business has remained completely unaltered, and there is not any question of delay. The material matter in s. 9 of the Act is whether the acquisition does infringe s. 92. That acquisition is very different from the acquisition con- sidered in James' Case (1). It is not an acquisition of all goods, but is, to use the language of s. 9, an acquisition of goods which are not the subject of inter-State trade, and which are neither acquired nor intended for the purposes of inter-State trade. The exclusion in s. 9 (2) is sufficiently wide to obviate a collision with the terms of s. 92 (Matthews v. Chicory Marketing Board (Vict.) (2) ). The lan- guage of the exception is co-extensive with the provisions of s. 92. Whether goods are the subject of inter-State trade, or acquired, or intended for that purpose, must, in every case, be a simple

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because one cannot deal with the inter-State aspect without in- fringing s. 92 (Banks' Case (1) ). Section 92 does not afford protec- tion to a person who is in possession of goods concerning which he has not made up his mind (Carter v. Potato Marketing Board (2) ). It matters nothing that the person having the custody is the agent, because the ultimate disposal depends not on his determin- ation but on the determination of his principal. There was not any suggestion in the passage in the Banks' Case (3) that s. 92 gives to any person a right at his will to engage in inter-State or intra-State trade. It suggests, in effect, that apart from any interference, that is a right which a person normally enjoys and one does not concern himself, so far as s. 92 is concerned, with actual cases of interference but if an unqualified power is given by Parliament to a Minister to interfere with a right or liberty which a person would otherwise have, then the purpose of the creation of that power is invalid. Section 6 has not only a transitory oper- ation, but has also a permanent operation and its object is to prevent the sales of unappraised hides and to prevent people from selling unappraised hides or offering them for sale. It is quite competent for any person, notwithstanding the terms of s. 6, at any time before the hides are submitted for appraisement, to make an offer to sell hides or to enter into a contract to sell hides subject to appraisement. Under that section any person may buy hides. Upon submission for appraisement the hides become the property of the board unless it can be said with truth that the hides are the subject of inter-State trade, or are required or intended for it. The reference in s. 6 to hides which have not been appraised is intended to be a description of hides which may not be sold or offered for sale in that condition. There is plenty of room for transactions which would bring the hides concerned well within the description of goods the subject of inter-State trade where the arrangements made were inter-State arrangements. There is quite a considerable body of other transactions which may be effected notwithstanding the terms of s. 6. Hides and_ skins produced at a meat-works are entirely outside s. 6 because such hides and skins never have to be submitted for appraisement. Those hides and skins may be bought and sold freely by any person and if they are going to inter-State trade or to be purchased for the inter-State trade they are excepted from acquisition. They

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not the subject or intended subject of inter-State trade, and the further immediate effect of excluding from s. 9 hides which are either the subject or intended subject of inter-State trade. In framing s. 9 (2) in the way it is framed, each State legislature has disclosed an obvious intention to endeavour to avoid its Act coming into conflict with s. 92. Legislation framed in the terms of s. 9 (2) does prevent a provision of that nature from coming into collision with s. 92 (Matthews v. Chicory Marketing Board (Vict.) (1) ). In so far as this legislation is legislation of an expropriatory nature, it is not legislation which conflicts with s. 92. Sections 6 and 7 in so far as they are applicable to hides which are the subject or intended subject of inter-State trade or commerce, do not go beyond the legitimate realm of regulation for the purpose of putting the scheme into operation. The extent of the legislative interference is to be judged by the factor that it was a process which in fact had existed for a long time to a very substantial degree, and con- sequently any measure of interference, which is required by s. 7 is not such a burden or a fetter or an interference as would make the section inconsistent with the freedom which is given by s. 92. The matter of grading and sorting hides is a pure regulation and does not constitute an interference. Section 7 leaves the ultimate disposition of the hides perfectly free to go into inter-State trade. The evidence does not justify a finding that in fact the facts on which this legislation is being applied has shown a restriction which would impose a burden which would go beyond the limits of regulation. 'The onus is upon the plaintiffs to prove that the immunity given by s. 92 has been infringed. That onus has not been discharged. The plaintiffs have not shown that the system of appraisement which is in use extends beyond legitimate regulation for the purposes sought to be achieved by this legislation. All that they have shown is that in their trading with hides which they require for inter-State purposes, the hides go through the same mechanical process, namely grading, sorting and cataloguing, that they went through before the legislation was enacted. What was previously done voluntarily is, by the Act, required to be done compulsorily. That does not constitute interference beyond legitimate needs. If there be a case where the regulation may be administered in an extreme way, or in a way that involves but little interference, the burden of proof that he has been prejudiced lies upon the individual who claims that the particular transaction which he desires to carry out has been stopped in violation of his

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the law was a law accommodating free individuals in a society to each other (Duncan v. Queensland (2) ). Trade and com- merce must be regarded in the commodity, not in the abstract. The exception or proviso to s. 9 (2) is inadequate. The scheme of the Act, taken as an Act, is one integral scheme. Sections 6-9, 11 or 16 are all necessary parts of that scheme which has acquisition as its pivotal point. The purpose of the acquisition as provided in the Act itself is to enable the board to enforce a quota. Instead of doing that by direction to the people who own commodities, the scheme that the whole commodity, subject to the proviso, is to be in the hands of the board so that the board may do those things. Assuming that "export " in s. 3 means to and beyond the bounds of Australia, the scheme is to enable the board to quota the hides over export, inter-State and intra-State operations. The power is an absolute and unqualified power to fix those quotas and determine who shall buy, whether he be inter-State on the one hand or intra-State on the other hand. It is not possible to say the State takes the residue after all inter-State trade has been satisfied. Whether or not a person sells his goods inter-State is a matter for his sole decision. Until actually sold an owner of goods may not know, due to outstanding offers, whether his goods will be required for inter-State trade. There need not have been a single inter- State transaction in the commodity for s. 92 to strike out an Act. In James v. South Australia (3) there was not any evidence of any specific inter-State transaction, or of any goods committed to inter- State trade. A power which tells a producer where he must sell his goods necessarily includes the power to tell him to whom he is to sell those goods, or where, in relation to inter-State trade, and therefore the existence of such a power offends s. 92. The deter- minations that were made in James v. The Commonwealth (4) were no more than indications of the width of the power. Section 20 of the Dried Fruits Acts 1924 and 1925 (S.A.) there under con- sideration would have been just as bad if there had never been any determination. A direction cannot be given before an owner has made his decision (James v. South Australia (3)). Acquisition in a marketing or rationalizing Act fetters trade. [He referred to James v. Cowan (5); New South Wales v. The Commonwealth (The Wheat Case) (6); Peanut Board v. Rockhampton Harbour Board (7) :

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Clements and Marshall Pty. Ltd. v. Field Peas Marketing Board (Tas.) (1).| If the acquisition is itself a means then its result is direct and not consequential. What is regulatory necessarily must take its character to some extent from the state of the community whose freedom in the trade is being preserved. The whole acquisi- tion in James vy. Cowan (2) was bad although it was intra-State fruit, not inter-State. Section 8 authorizes the granting of licences to buy and sell hides on an owner's own behalf or on behalf of the board. Prima facie that means that his licence would be limited to New South Wales operations. If that be right, sub-s. (3) does not add anything because the licence under the Federal Act is expressly limited by s. 15 of that Act to buying in a Territory. Dealers themselves cannot have inter-State transactions. Section 6 is a prohibition on sale. The object of s. 6 was to make certain that there would not be any dealing in hides and skins prior to appraisement, and s. 9 (2), because of the remarks in Matthews v. Chicory Marketing Board (Vict.) (3), was inserted in the hope that they would escape the consequences. Sections 6 and 7 are not good or bad merely according to the way they are administered. It is no answer to say that these were regulations because they did not involve very much interference, and are not more than the owners previously did. As to whether a provision was a regulation was considered in McCarter y. Brodie (4). The decision in Hartley v. Walsh (5) does not support the respondents or the intervenants. That case was decided on the ground that the provision in question was a regulation in the nature of a policeman controlling traffic. Section 9 (1) catches in its net property which in fact does come into inter-State trade simply by the device of drawing a temporal line. The Court should declare invalid substantially the whole Act, but in particular ss. 6-9 and 16. They are all so integrated in the scheme that one cannot exist without the others.

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are invalid because they contravene s. 92 of the Constitution. In passing the Hide and Leather Industries Act the Parliament of New South Wales was acting in co-operation with the Commonwealth Parliament and the Parliaments of the five other States. The seven governments agreed upon concerted measures for the control of the hide and leather industries to succeed the control which had been established at the commencement of the war by means of the National Security (Hide and Leather Industries) Regulations. The plan the seven governments adopted closely resembled that embodied in the regulations and was designed to deal with an analo- gous situation by like means. At the beginning of the war the overseas demand for hides and leather rose and, with the demand, price. Price fixing had of course been established and to fix the price of leather with a view to keeping down the price of footwear and other leather goods meant that the price which tanners could afford to give for hides was restricted. It was seen that if no measures were taken the consequence would be that great quantities of hides would be exported and tanners would be unable to obtain supplies of hides at any price they could afford to give. To meet this position the regulations were promulgated. They set up a Hide and Leather Industries Board. The members were persons engaged in the production of hides, in the hide trade, in the tanning industry or in the manufacture of footwear. The plan of control which this body was to administer is substantially reproduced in the Federal and State statutes of 1948 the provisions of which it will be necessary to describe. To give an account of the provisions of the regulations would therefore mean in the end some repetition. It will suffice at this point to state what it was they sought to effect. The board took the property in all hides in the first instance. An appraisement system was established. The appraisement prices were fixed for the various types or classifications of hide and doubtless these would at once provide the basis of distribution of the returns among suppliers of hides and the basis of the price to the tanners. The hides acquired by the board were then disposed of at two different prices. Sales at home consumption prices were made to the tanners. Later each tanner received a quota, which it may be supposed represented the proportion his quantitative requirements bore to those of other tanners, and allocations were made to fill the quotas. Sales of the exportable surplus of hides were made at export parity prices to merchants and exporters. Leather could be exported only under licence and when leather was sold for export the board seems to have obtained some part of the excess of the export price over the home consumption price

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hides arose from the war the same conditions existed. So long as it was considered necessary to keep the price of leather for domestic consumption much below export parity, it logically followed that a statutory control of hides must be maintained to insure that sufficient supplies of hides remained in Australia available to tanners and at prices the fixing of which might be incompatible with competitive bidding for the domestic supply, so that a means of equitable apportionment among tanners would be necessary. Of course, with differential prices, a means of equalizing the return to the suppliers of hides was a consequential necessity. As in the case of most war-time controls of trade and industries the then existing organization of the hide trade and the common course of business in the trade are accepted as the basis of the plan of control. Unfortunately the parties did not enter into formal or full proof of these and other matters which would have enabled us, at all events, to obtain an understanding which we felt more adequate of the real significance, effect and operation of the statutes, infor- mation of a kind that we have come to think almost indispensable to a satisfactory solution of many of the constitutional problems brought to this Court for decision; though we are bound to say that it is not an opinion commanding much respect among the parties to issues of constitutional validity, not even those interested to support legislation, who, strange as it seems to us, usually prefer to submit such an issue in the abstract without providing any background of information in aid of the presumption of validity and to confine their cases to dialectical arguments and consider- ations appearing on the face of the legislation. But from what appears in evidence, from the inferences to be drawn from the regulations and statutes themselves, from the statements made at the bar and from general knowledge and experience of 'Australian affairs, some picture of the industry can be constructed.

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realized at auction sales of that type: (s. 3). A home consumption sale is a sale of hides by the board either at an auction at which only buyers may bid who have satisfied the board that they will use the hides in Australia or at prices which the board decides to be equivalent to prices realized at that type of auction sale: (s. 3). It is evident that, if the price of leather is fixed on the basis of costs which take in hides at the prices in the table of limits, the margin within which competitive buyers might safely bid against one another at a home consumption auction sale would not be wide. At all events no such auction sales are held in practice and the board's hides are sold for home consumption at appraisement prices. The power to license exports of hides, if they have been purchased at any export sale is given to the board subject to the directions of the Minister (s. 21), together with a parallel power to license, subject to conditions, the export of leather (s. 22 (1) ). In the latter case the board is to ensure that the quantity of leather for which it grants a licence for export is not disproportionate. The quantity is to bear to the total quantity manufactured by the licensee the same proportion as his purchases of hides for export bear to his total purchases of hides (s. 22 (2)). The State and Federal legislation contain identical provisions enabling the board to license dealers. The Federal Act is expressed to authorize the board to license dealers for the Territories (s. 15 (1) ), and the State Acts give a similar authority without any express territorial restriction. But all the State Acts make a licence of the board under the Federal Act sufficient for the State Acts. A person licensed under a State Act is deemed to be licensed under the Federal Act. So that means in effect that the board's licence runs throughout Australia. There is in the Commonwealth Act a number of pro- visions relating only to hides in the Territories which are the counterparts, for Territories, of provisions made in the State Acts for hides in the States. These evidently represent the provisions the validity of which it was considered Federal legislative power did not or might not suffice to sustain if they were enacted by the Com- monwealth Parliament as laws operating throughout Australia. Finally the Federal Act contains a section the purpose of which is to prevent any of its provisions operating under s. 109 of the Constitu- tion to the prejudice of the validity of the State Act: (s. 32 (1) ). Further it is provided that the board shall be subject (without express mention) to any law of a State fixing, or providing for the fixing, of prices for the sale of hides, except in relation to sales of hides for export, and to any other law of a State which is expressly applicable to the board: (s. 32 (2) ).

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el eate that there is no legal obligation upon a person who buys hides ee at export sales to export the hides. It is a question only of the Wucox Price paid; and the increased price at an export sale results from Bugncain the fact that anybody may purchase. But at a home consumption *. Sale no one may buy unless he satisfies the board that he will use Srare the hides in Australia (s. 13 (2) ). To impose this limitation upon NEW. the use that the purchasers may make of the hides and at the same time to fix the price of leather, would be enough, without more, ketjernan J. to keep down the price paid for hides at home consumption sales, "if home consumption sales were made by auction. But in practice home consumption sales by auction are not carried on by the board. The sales appear to be made by a system of quotas and allocations at prices based upon appraisement. In each State an allocation committee is set up. In Tasmania it is combined with the appraise- ment committee. The constitution of the allocation committee is left to the Minister: (s. 5 (1)). The committee must exercise its powers and functions subject to any direction of the board : (s. 5 (9) ). What the powers and functions of the committee are in practice is not clear, for the statute describes them in a provision which in terms only applies to sales of hides by auction: (s. 5 (8) ). It provides that the allocation committee shall distribute on an equitable basis the hides which may be sold to tanners at auction and, for that purpose, it may assess a quota of hides which may be bought at each sale by tanners. It has not been made plain how, in fact, the quantity of hides obtainable by a tanner is fixed. There is some indication that a quota is assessed for each tanner by the board and allocations are made by the State committees, presumably from the appraisements, to the tanner to fill his quota. It is of course apparent that in such a system of control the board and the allocation committee must be completely informed con- cerning the hides available. Apart from hides in meatworks the compulsory appraisement of hides contributes to this purpose. But there is a statutory provision for returns. Section 14 (1) requires returns from meatworks and from owners of hides sub- mitting them for appraisement, but in a form following a form of return to be prescribed under the Federal Act and no such form has yet been prescribed. Section 14 (2) however enables the board to notify persons that returns of hides or leather must be made

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hides. It is expressed in terms taken apparently from the exception to the vesting provision in the statute considered in Matthews v. Chicory Marketing Board (Vict.) (1). Of the exception similarly expressed in that statute Latham ©.J., with whose reasons McTiernan J. agreed, said (2) "It is difficult to suggest any provision which could more clearly show the intention of the Act not to interfere with inter-State trade in any commodities which become subject to the Act". And Rich J. said (3) "So far from attempting to interfere with inter-State trade the statute on its face exhibits an earnest desire . . . to walk warily along paths which never lead to inter-State trade". Starke J. spoke even more decidedly of the effect of the provision (4) " The object of the section is to avoid any contravention of s. 92 of the Constitution. And it should be construed so as to give effect to that intention. Consequently, the provision is coextensive with the requirement of the Constitution and enacts in effect that trade, commerce and intercourse among the States in respect of the proclaimed commodity shall be abso- Iutely free. It thus leaves the producers and the commodity free to pass the frontiers of the States and to engage and be engaged in inter-State trade without any hindrance or restriction so far as the Act is concerned". Now the expressions "the subject of trade commerce &c." and " required or intended by the owners . . . for the purpose of trade commerce &c." are not terms of art, They are wide and flexible in their application, and it is obvious that they were meant to cover every case in which to deprive the owners of the goods would involve a conflict with s. 92, a derogation of the freedom that provision guarantees. Unless it is found that s. 92 protects some transaction or some situation which none of these expressions is capable of covering and the transaction or situation may arise in connection with hides, we think the provision should be treated as excluding every hide the acquisition of which would be inconsistent with s. 92. Even if some such transaction or situation is discoverable we are by no means sure that an in- ference does not arise from sub-s. (2) that sub-s. (1) ought to be treated as divisible or distributable in its operation in so far as it is found to be incapable by reason of s. 92 of operating upon all transactions included in its words, so that it is not totally void.

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leather in order to secure the public safety and the defence of the Commonwealth and the efficient prosecution of the war, and to maintain supplies and services essential to the life of the com- munity. This regulation was omitted when the regulations were continued in force by the Defence (Transitional Provisions) Act 1946. The regulations provided for the compulsory acquisition by the Commonwealth of all hides produced in Australia and for the distribution of these hides between Australian users and for export. The regulations in their original form or as amended pro- vided for the constitution and incorporation of a board to be called the Australian Hide and Leather Industries Board to administer the regulations and for the constitution of appraisement committees and allocation committees for each State. Regulation 12 (9) provided that an appraisement committee should have such powers and functions as the regulations conferred or as the board thought fit but should exercise all its powers and functions subject to any directions of the board. Regulation 12B provided that (8) an allocation committee should distribute, in respect of the State for which it was appointed, all auction hides to tanners on an equitable basis and, for that purpose, it might assess a quota of hides to all tanners; (9) an allocation committee should exercise its powers and functions subject to any direction of the board. Hides were divided by the regulations into two classes (1) hides salted and treated otherwise than in a meatworks and (2) hides salted and treated in a meatworks (defined to mean any establish- ment at which stock were slaughtered and treated principally for export). Regulation 14 provided that no person should sell or offer for sale any hides which had not been appraised to the satis- faction of a committee ; provided that the prohibition contained in this regulation should not apply to any sale of hides by a person other than a licensed dealer to a licensed dealer. Regulation 15 provided that all hides, other than hides salted and treated in a meatworks, should be submitted for appraisement to a person or place appointed or approved by the board or by a committee - (a) in the case of hides which did not come into the possession of a licensed dealer within twenty-eight days of being salted and treated - within twenty-eight days of being so salted and treated ; or (b) in the case of hides in the possession of a licensed dealer - within twenty-eight days of coming into the possession of that licensed dealer. Regulation 16 provided that for the purpose of appraising hides according to description the board should cause to

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to regs. 14 and 15 and to ss. 12 and 13 of the Commonwealth Act. They are in the following terms. " 6 (1) Subject to subsection two of this section, a person shall not sell or offer for sale any hides which have not been appraised in accordance with section seven of this Act. (2) The prohibition contained in subsection one of this section shall not apply to any sale of hides by a person other than a licensed dealer to a licensed dealer. 7. All hides, other than hides salted and treated in a meatworks, shall be submitted to a person or place appointed or approved by the Board or by the Committee for appraisement - (a) in the case of hides which do not come into the possession of a licensed dealer within twenty-eight days after being salted and treated - within twenty-eight days after being so salted and treated ; and (b) in the case of hides in the possession of a licensed dealer - within twenty-eight days after coming into the possession of that licensed dealer.'' Section 9 (1) corresponds with reg. 18 and with s. 16 of the Commonwealth Act. It provides that all hides which are salted and treated in a meat works or are submitted for appraisement in accordance with s. 7 of this Act shall thereupon, by force of this section, be acquired by and become the absolute property of the board freed from all mortgages &c., and payment in respect of those hides shall be made in accordance with s. 11 of this Act. Section 9 (2) provides that " Nothing in subsection one of this section shall apply to any hides the subject of trade commerce or intercourse between States or required or intended by the owners of the hides for the purpose of trade com- merce or intercourse between States." Section 11 (1) provides that the person who would have been entitled to receive the price of the hides if the hides had been lawfully sold to the board at the time of their acquisition by the board shall be entitled to be paid in respect thereof such amount as is fixed in accordance with the provisions of the Commonwealth Act. Section 16 provides that a member of the police force &c. may upon production of a warrant issued by a justice of the peace (a) at all reasonable times enter upon any premises and inspect any stocks of hides &c. and (b) take possession of and remove any hides which are the property of the board or which, in contravention of s. 7 of this Act, have not been submitted for appraisement.

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by the board between home consumption and the export trade, and to allocate those hides reserved for home consumption between Australian users. The attack upon the New South Wales Act in these proceedings is solely that the Act or alternatively certain sections of the Act, particularly ss. 6, 7, 9 and 16, contravene s. 92 of the Constitution. The evidence in the actions establishes that prior to the institution of these controls there was an active inter- State trade in hides due mainly to the fact that in some States hides were produced in excess of local requirements whereas in other States there was a deficiency and that, after satisfying Austral- ian requirements, there was an overall surplus of hides for export. There can be no doubt that the Commonwealth can acquire all hides that are produced in the Territories because there s. 92 does not run. There can also be no doubt that a State can acquire all property in the State save such property as is immunized by s. 92. Section 92 provides, so far as material, that trade, commerce and intercourse among the States shall be absolutely free. Section 9 (2) was no doubt introduced into the New South Wales Act so that s. 92 would not be infringed. It was submitted that, despite that sub-section, the New South Wales Act nevertheless infringes s. 92 and, as I understood Mr. Barwick's argument, on three grounds, (1) that the acquisition is part of a scheme to force tanners both in New South Wales and in the other States to accept the quotas out of the hides reserved for home consumption that are allocated to them by allocation committees and that such a scheme combines all the vices of ss. 20 and 28 of the South Australian Dried Fruits Acts brought to the surface, in James v. South Australia (1) (in this Court) and James v. Cowan (2) (in the Privy Council) where James v. South Australia (1) was approved. It was pointed out that s. 9 (2) only applies to owners of hides but that they are not the only persons in the community who are engaged or may be desirous of engaging in inter-State trade in hides. For instance there are residents of other States who may desire to buy New South Wales hides, and persons in New South Wales who may desire to buy hides for resale in other States, and it was submitted that these purchasers also have an immunity under s. 92, but their immunity is not protected by s. 9 (2); (2) that s. 6 (1) of the Act which requires that hides, before they can be sold or offered for sale inter-State, shall be submitted for appraisement, operates directly and not merely incidentally to burden and hinder owners of hides engaging in trade and commerce among the States; and

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necessarily to involve two decisions: first, the fixing of a limited amount for Australian consumption (a necessary element in the conception of a ' surplus'); secondly, the prevention of the sale of the balance of the output in Australia. In the result, therefore, one returns to the precise situation created by sec. 20 with its determination of where and in what quantities the fruit is to be marketed." (1). In The Commonwealth v. Bank of New South Wales (2) Lord Porter, delivering the judgment of the Privy Council, said "Section 20 of the South Australian Act was invalid. It was general in its terms: it did not discriminate between inter-State and intra-State trade in dried fruits. But because it authorized a determination at the will of the Board the effect of which would be to interfere with the freedom of the grower to dispose of his products to a buyer in another State, it was invalid'. These deci- sions do not appear to me to throw any light upon the question whether sub-s. (2) of s. 9 of the New South Wales Act confers a sufficient immunity to satisfy s. 92. They are simply decisions that the Commonwealth and States cannot by legislation or by executive act limit the quantities of goods which a trader may sell in inter- State trade. Mr. Barwick relied upon a later passage in the judgment of Lord Porter in the Banks' Case (3) "it would be a strange anomaly if a grower of fruit could successfully challenge an unqualified power to interfere with his liberty to dispose of his produce at his will by an inter-State or intra-State transaction, but a banker could be prohibited altogether from carrying on his business both inter- State and intra-State and against the prohibition would invoke s. 92 in vain." The unqualified power in question was the power of the Dried Fruits Board under s. 20 of the Dried Fruits Act to interfere with James' liberty to dispose of his produce at his will by an inter-State or intra-State transaction. Mr. Barwick contended that this passage could only mean that s. 92 gave a trader a right, until he actually made a disposition of his goods, to decide whether to sell them intra-State or inter-State. The passage does not appear to me to have this meaning. A Court is not fettered by the form of words in a judgment as if it were a phrase in an Act of Parliament which must be accepted and construed as it stands, Mills v. Mills (4), and I venture to think that all the passage intends is that James could not be ordered to dispose of any produce by an intra-State

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this must mean that no hides can be sold or offered for sale until they have been appraised. It is evident that that was its meaning in the regulations and is still its meaning in the Commonwealth Act. The only hides that could lawfully be sold or offered for sale under the regulations or the Commonwealth Act would be hides which had been appraised and had been acquired by the Com- monwealth or the board and subsequently sold by the Common- wealth or the board. This construction of s. 6 (1) does not appear to me, however, to be crucial to the second ground. The interference with inter-State trade is greater if the owner cannot sell or offer his hides for sale prior to appraisement than it is if he can sell them subject to appraisement. But assume that s. 6 (1) means that hides can be sold or offered for sale inter-State subject to appraisement. What then ? Surely the fact that the hides excepted from acquisition by s. 9 (2) must, nevertheless, be submitted for appraisement to a person or place appointed or approved by the board burdens the inter-State trade. Evidence was given that since the imposition of controls the trade has functioned much in the same way as it did before they were imposed. There are many types of hides which require to be sorted, graded, and catalogued to prepare them for sale. Hides submitted for appraisement under the regulations and subsequent legislation have been consigned by the owners to a convenient broker and sorted, graded, and catalogued in the same way as before controls. It was contended that in these circumstances it could not be said that the necessity of submitting hides for appraisement placed any real burden on inter-State trade. But it is not the way in which an Act is in fact administered that matters. In the Banks' Case (1) Lord Porter cited a passage from the speech of Lord Watson in Salomon v. A. Salomon & Co. Ltd. (2), "In a Court of Law or Equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words or by reasonable and necessary implication." Section 7 states that the board or committee can direct the owner of hides to send them to a person or place approved or appointed by the board and this confers on the board or committee a complete discretion to appoint or approve of a person or place anywhere in New South Wales. No limitation is placed upon the locality of the person or place. No period of time is fixed within which the appraisement must be made. An owner of hides could be subjected

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If the Act did not contain any such provision as is found in s. 9 (2), I should be prepared to agree with the plaintiffs that the divesting provisions I have mentioned would be in collision with s. 92 of the Constitution, for reasons similar to those which must now be taken to have justified the decision in Peanut Board v. Rockhampton Harbour Board (1). I say the reasons which must now be taken to have justified it, having in mind particularly that Dixon J. took several tests which earlier decisions had suggested and showed that the Queensland provisions in question infringed s. 92 whichever of those tests should be applied. Amongst them was the test of directness of operation. It is established now that that is the test, the Privy Council having decided in the Banks' Case (2) that a legislative provision which is not in its true character regula- tory infringes s. 92 if, and only if, it operates, not remotely or incidentally, but directly, to interfere with the passage of the border between States in trade commerce or intercourse. This test, of course, does not diminish in any degree the force of the word " absolutely " in s. 92; its purpose is simply to answer the question which has been the riddle of s. 92, namely, absolutely free from what ? The application of the test to acquisition provisions was not discussed in the judgment in the Banks' Case (2), but James v. The Commonwealth (3) approved the Peanut Board v. Rockhampton Harbour Board (4) as an application of the principle laid down in James v. Cowan (5) on the basis of the view that the Act in question embodied a marketing scheme entirely restrictive of any freedom of action on the part of the producers and involving a compulsory regulation and control of all trade, domestic, inter- State and foreign. The proposition which I think is warranted by the authorities as they now stand is this, that a provision for the compulsory acquisition of goods does not infringe s. 92, unless a scrutiny of its legislative setting reveals that it is enacted as a means of precluding or hindering individuals from engaging in or carrying out operations of trade, commerce or intercourse across State lines. The fact, if it is a fact, that the provision is also a

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of their businesses necessitates their having on hand at some periods large stocks of hides, while being unable to say with respect to any specific hides in stock that they will turn out to be needed for sale in inter-State trade or have become the subject of a decision, intended to be final, that they shall be sold in inter-State trade and not otherwise. But the plaintiffs, in my opinion, place too narrow a construction on s. 9 (2). It is not a necessary condition of the application of that sub-section to particular skins that a positive necessity to sell those skins in inter-State trade, commerce, or intercourse, or a definite and unconditional intention to sell them therein shall be provable at the relevant time. All that is necessary is that they shall then be required or intended by the owners for the purpose of inter-State trade, commerce, or inter- course. If, for example, the owners have an inter-State trade in hides, and for the purpose of that trade they require to keep particular skins in stock, s. 9 (1) seems to me to have no applica- tion to that stock ; and the same is true if the owners intend skins which they have in stock for the purpose of their inter-State trade, even though it is possible that events may so turn out that the intention has to be abandoned. Of course the width of the terms in which s. 9 (2) is couched gives much scope for uncertainty in practice as to whether or not particular skins are thereby saved from s. 9 (1); but that is not a consideration which goes to validity. It is evident that s. 9 (2) covers a very wide field indeed, and, evincing as clearly as it does a legislative intention so to restrict the applica- tion of s. 9 (1) as to avoid conflict with s. 92, it should be given a construction as favourable to the effectuation of that intention as its terms will allow. It is not possible to say categorically that there can never be a case in which, despite s. 9 (2), an acquisition may take place under s. 9 (1) with the result that a desired trans- action of inter-State trade may be made impossible; but the evidence given in the present cases does not appear to me to establish affirmatively that the draftsman has failed to exclude all acquisitions which would in practice diminish inter-State trade. The importance of this is twofold. In the first place, if it is the fact that s. 9 (2), properly construed, suffices to save the inter- State trade in hides from interference by the application of s. 9 (1), the attack on the latter sub-section of course fails. But of much greater consequence is this, that even if s. 9 (2), notwithstanding the straining it exhibits for words sufficient for its purpose, leaves uncovered some residual cases in which acquisition under s. 9 (1)

At a glance

Court

Decision date

Before

Source

Judgment (238 paragraphs)

1951-1952.

Cited By (1)