y Own Aj lustralia; eague Inc v sips Co Stes oe fe Sle iroyvih of Brayv Cin... [1945] HCA 41 | Case summary

y Own Aj lustralia; eague Inc v sips Co Stes oe fe Sle iroyvih of Brayv Cin... [1945] HCA 41 | Case summary | Zoe

[14]

Australian National Airways Pty. Ltd., a company incorporated in Victoria, brought an action in the High Court against the Common- wealth, its Treasurer and Minister of State for Air and Civil Aviation and the Director-General of Civil Aviation. In its statement of claim the plaintiff alleged that it was formed for the purpose of and had for many years carried on and was still carrying on the business of carrying passengers, goods and mails for reward by air throughout the Commonwealth; it had for many years carried on, and still carried on, in the course of its said business, regular public transport services each providing for the transport by air for reward of passen- gers and goods, and operating from one place in Australia to other places in Australia ; some of such services had scheduled stopping places in two or more States, and some were wholly intra-State ; such services had been and were carried on in accordance with and on routes specified in airline licences purporting to have been issued to the plaintiff by the Director-General of Civil Aviation under Part VIL. of the Air Navigation Regulations. The statement of claim asserted the invalidity of the Australian National Airlines Act 1945 and of particular provisions thereof and of the Air Navigation Regulations in terms which are sufficiently indicated in the terms of the declarations claimed. In addition to injunctions which are not here material, the plaintiff claimed : - (1) A declaration that Part VII. of the Air Navigation Regulations (Statutory Rules 1937 No. 81 as amended) is not authorized by the Air Navigation Act 1920-1936, and is beyond the powers of the Governor-General in Council, and void. (2) Alternatively, a declaration that such Part of the said Regulations, if upon its true construction it confers upon the defendant the Director-General of Civil Aviation an absolute and uncontrolled discretion to refuse to issue, to refuse to renew, or to cancel, any airline licence or licences, is unauthorized, ultra vires, and void as aforesaid. (3) A declaration that the Australian National Airlines Act 1945 is beyond the powers of the Parliament of the Commonwealth, contrary to the provisions of the Constitution of the Commonwealth, and void. (4) Alternatively, a declaration that ss. 46, 47 and 49 of the said Act are beyond the powers of the said Parliament, contrary to the said Constitution, and void.

[21]

for an inter-State (or a " Territorial "') airline service any existing licence which would compete with it is suspended so long as the Commission's service is "adequate", and no new licence is to be issued to a competitor unless the licensing authority is satisfied that the Commission's service is not meeting the needs of the public. Subject to the last-mentioned condition s. 47 is directed to giving the Commission a monopoly so far as inter-State and Territorial air services are concerned. The effect of the Act, therefore, is to create "a common carrier by air on (among others) inter-State routes and to give the carrier a guarantee against competition so long as it main- tains adequate services. The Act in relation to inter-State airlines is not referable to any legislative power conferred by the Constitution unless to the trade and commerce power ins. 51 (i.). Reference to the preamble to the Act will show that this is so. In this Act there are no ambiguities, no matters of construction, calling for reference to the preamble, but it may be looked to as showing what powers the legislature purported to exercise. For the uses which may be made of a preamble, see Bourne v. Keane (1); South Australia v. The ~ Commonwealth (2): Cf., as to objects clauses in regulations, R. v. University of Sydney; Ex parte Drummond (3) - see also Gratwick v. Johnson (4). Paragraph a of the preamble obviously relates to s. 51 (i.) of the Constitution. As to par. b of the preamble, there is nothing in the Act requiring the Commission to do anything in relation to defence; the Act does not connect the civil air services in any way with defence. As to par.c, the Act cannot be said to be a law for the development of the Territories, in respect of which it does nothing more than provide for air services. As to par. d, the only provision of the Act touching the carriage of mail is s. 22, which does not oblige the Commission to carry mail ; the carriage of passengers and goods, with which the Act is mainly concerned, cannot be regarded as accessory to the carriage of mail. The Act is not a "transport co-ordination Act", but is a straight-out attempt to create a monopoly. [He referred to R. v. Vizzard ; Ex parte Hill (5).] Parts II. (ss. 6 et seq., 19 et seq.) and IV. (ss. 46-49) are inseparable parts of one scheme. As s. 92 of the Con- stitution binds the Commonwealth (James v. The Commonwealth (6) ), it is imported into s. 51 by the words " subject to this Constitu-

[26]

prohibit or restrict. As to the meaning of a power to " regulate," see Attorney-General (Ontario) v. Attorney-General (Canada) (1) ; City of Toronto v. Virgo (2); Attorney-General (Canada) v. Attorney- General (Alberta) (3). The Act is therefore invalid because it does not merely regulate, but is a prohibition of the business of trans- portation by air. At all events Part IV. is invalid on this view. Part II., if severable, would not be affected by this view, but a legis- lative power would have to be found to support it. Again, it could be referable only to s. 51 (i.). If Part IV. were severed, Part II. would be simply a law incorporating the Commission and giving it trading powers as a carrier. Such a law would not be within power, because the Commonwealth has not, under s. 51 (i.) or any other pro- vision of the Constitution, any general trading power or any power to create a corporation except in so far as such a power may be accessory to the legislative powers expressly conferred. As to trading power, see Commonwealth v. Australian Commonwealth Shipping Board (4) ; Attorney-General (Vict.) v. The Commonwealth (5); Heiner v. Scott (6) ; Australian Steamships Ltd. v. Malcolm (7). The last-mentioned case treats the power under s. 51 (i.) as being merely a power to regulate. The idea behind a power to regulate has regard to a regulating authority which stands outside the area regulated. A law creating a trading corporation cannot aptly be described as a law with respect to (or with respect to the regulation of) trade and commerce. The power to incorporate is a special power: See Huddart, Parker & Oo. Pty. Ltd. v. Moorehead (8) ; Jumbunna Coal Mine, No Liability v. Victorian Coal Miners' Association (9). It is not within the power with respect to trade and commerce. On the grounds on which the Act has been challenged, Part VII. of the Air Navigation Regulations is also invalid. Regulation 79 (3), as it now stands, offends against s. 92 of the Constitution. It empowers the Director-General to subject the issue of a licence to " such con- ditions, in addition to compliance with these regulations," as he considers necessary. It is clear that a condition may be imposed which has no relation to considerations of safety and the like as regards air navigation with which the rest of the regulations is

[34]

to which laws may be made: See Australian Steamships Ltd. v. Malcolm (1); New South Wales v. The Commonwealth (2). If transportation is within the concept "trade and commerce" in s. 51 (i.), it is also within the same concept in s. 92, which will present the defendants with a dilemma. Even if transportation is within s. 51 (i.), the power over it is merely a power to regulate, and not a power to engage in the business of transport. A power to trade, limited to trade " with other countries, and among the States," would be a peculiar one, and there is no reason to suppose that s. 51 (i.) was intended to confer such a power. The provisions of the Act relating to Territorial airlines cannot aptly be described as a law "for the government of any Territory" within s. 122 of the Constitution ; they merely extend the monopoly which the Act purports to confer in relation to inter-State airlines. A law with respect to trade and commerce between Territories and States or between Territories is not a law for the government of the Territories within the meaning of s. 122. It is significant that s. 51 (i.) expressly confers power to make laws with respect to trade and commerce among the States, and that there is no similar provision in s. 122 or elsewhere in the Constitution in relation to trade and commerce between States and Territories or between Territories. If such a power was thought to be implicit in s. 122, it is curious that s. 92 was not extended to it. A provision such as s, 49 of the Airlines Act is not authorized by s. 122 of the Constitution so far as it relates to Territorial airlines; it is a law for the States as well as for the Territories, and it is not justified by any power to be found in the Constitution. Accordingly, Part IV. (ss. 46 et seq.) of the Act is wholly invalid, and it is not severable by reason of s. 15a of the Acts Interpretation Act. If Part IV. goes, the Commission is deprived of its monopoly." The rest of the Act, if it stood, would constitute the Commission as a body conducting air transport in competition with others. It is not sufficient to say that this would be a work- able scheme ; it is not the legislative scheme contemplated by the Act. The monopoly is the gist of the legislative scheme here. The Act, without Part IV., would be a substantially different Act with a different policy. For the purposes of the test applied by Dizon J. in Fraser Henleins Pty. Ltd. v. Cody (3), the monopoly provisions and the other provisions of the Act are inter-dependent : See also R. v. Burgess; Ex parte Henry (4); Australian Railways Union v. Victorian Railways Commissioners (5). The position

[38]

Maughan K.C. (with him Weston K.C. and Holmes), for Mac- Robertson-Miller Aviation Co. Ltd. This plaintiff is interested in the provisions of the Act relating to airlines between a State and a Federal Territory. It adopts the arguments of the other plaintiffs as to the invalidity of the Act. Attention is drawn particularly to s. 49 of the Act, which purports to penalize the doing of certain things which might be done within a Territory or outside a Territory. This section purports to make it an offence for someone outside a Territory, e.g., in a State, to make a contract with regard to a Territorial airline service. This cannot be supported by the power with respect to Territories. The only provision in the Constitution to which legislation with respect to Territories generally can be ascribed is s. 122. It stands apart from the other legislative powers. It makes the Commonwealth Parliament sovereign within a Territory, but the jurisdiction is necessarily limited territorially ; the limits are the boundaries of the Territory. The Commonwealth clearly can establish an airline, or a railway, within a Territory, and so far as things within the Territory are concerned, can legislate as it thinks fit. It could, therefore, construct a railway, for instance, within a Territory, and legislate with regard to it, up to the border of the Territory. But, if it wished to extend the railway beyond the border into a State, it would not get any power from s. 122, because the power under that section is to make laws for the govern- ment of the Territory. Likewise as to an air service between Territory and State. The Statute of Westminster, s. 3, gives the Commonwealth Parliament power to make laws having extra- territorial operation, but that does not enlarge the power conferred by s. 122 of the Constitution ; it is not directed to altering domestic law. In its application to Australia it is directed to the Common- wealth of Australia vis-d-vis countries other than Australia and does not alter the powers of the Commonwealth inside Australia as between Territory and State or State and State. No doubt the Commonwealth could give a corporation capacity within a Territory, but it cannot extend that capacity to a State so as to authorize activities within a State unless it has legislative power to do so in relation to the State. On this account, s. 19 (1) (0) of the Act is beyond power. It is true that in form that provision is merely an empowering one, but when it is read with other provisions of the Act, particularly the second sub-section and the third sub-section

[46]

Regulations and the Air Navigation Act, upon which they are based and which is a valid piece of legislation, shows that the Regulations deal with the subject matter of the Act, air navigation. The power to refuse a licence is a necessary and proper incident or step in the system of control and regulation of air navigation (inter-State and otherwise) which is set up by the Regulations and which, as to inter-State services, is not inconsistent with s. 92. Matters that are relevant to the purpose of reg. 79 are not limited to the mere safety of the machines used in the transport. The purpose of the power conferred by reg. 79 (3) is to provide efficient and proper services. The Director-General can properly have regard to con- siderations material to a co-ordinated system of air transport. He can consider the question of competition between services and may conclude that unlimited competition is not in the public interest. Where there is already an adequate service on a particular route it would not be in the interest of efficiency to grant another licence for the same route; therefore the Director-General could properly refuse to issue more than one licence for that route. In R. v. Vizzard ; Ex parte Hill (1) the decision was that the requirement under the New South Wales Act there in question of a licence for a motor vehicle to carry goods by road in New South Wales (including an inter-State journey) was not a hindrance or obstruction of inter- State trade; on the contrary (so it was held), it would make for the facilitation and co-ordination of inter-State transport. The motor truck with which the case was concerned was regarded as being engaged in trade and commerce, as a means of transport, for the purpose of inter-State commerce. The power of the licensing authority under the New South Wales Act to grant or refuse a licence was expressed in general terms; the Act indicated certain matters which should be taken into account, but the authority was not limited to those matters. The Act was expressed in its title to be an Act for the co-ordination of transport: A similar general purpose, though confined to air transport, is indicated in the dir Navigation Regulations. The considerations which in that case were found to be conclusive of the validity of a State Act must have the same force in respect of a Commonwealth Act or regulations thereunder : See Riverina Transport Pty. Lid. v. Victoria (2). R. v. Vizzard ; Ex parte Hill (3), is supported by Bessell v. Dayman (4) ; Duncan and Green Star Trading Co. Pty. Ltd. v. Vizzard (5): See also

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James v. The Commonwealth (1); Hartley v. Walsh (2); Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd. (3); Willard v. Rawson (4). Riverina Transport Pty. Ltd. v. Victoria (5) is perhaps closer than the earlier cases to the present case. There the Court upheld the validity of a Victorian Act which, as part of a scheme for limiting uneconomic competition in transport and obtaining a more efficient service, prohibited the carriage of goods by commercial transport vehicles (including inter-State transport) except under licence and conferred an unrestricted power to grant or refuse alicence. An Act which is designed to increase the volume of trade and commerce across the border and for that purpose prevents the passage across the border of individual goods or of persons or limits the means of passage does not on that account contravene s. 92. In Gratwick v. Johnson (6) it was held that the challenged provision directly interfered with inter-State travel ; it did nothing else but stop people from crossing the border ; it could not have increased travel. For the purposes of s. 92 it is not sufficient to say that some movement is " prohibited," that therefore the provision challenged does not "regulate." An Act directed to promoting inter-State trade and commerce must exercise some control, and it is the essence of control that there will be some degree of prevention : See Metropolitan Meat Industry Board v. Finlayson (7), per Isaacs and Rich JJ. The result of the decisions is that an Act controlling or regulating inter-State transport to provide for co-ordinated services in an orderly trade does not contravene s. 92 even though it may have the effect of preventing or interfering with the passage of individuals across the border. The requirement of a licence is not inconsistent with s, 92, and the power to refuse a licence is a necessary corollary. The Air Navigation Regulations in their relation to inter-State air transport are within this principle. They are designed to regulate and control inter-State trade by air; it cannot reasonably be suggested that they are designed to prohibit it. Similar provisions exist in England, Canada and New Zealand, and in Australia some of the States have applied the Commonwealth Regulations to intra-State air navigation; from this it appears that the control by licensing of aviation is widespread and has been considered reasonable and proper. From the reasons which have been advanced for the contention that the Regulations do not

[51]

contravene s. 92 and are valid it follows that a licence may validly be refused if an adequate service already exists on the route applied for. The same reasons go to show that the Adrlines Act does not offend against s. 92 (it being assumed for the purpose of this particular argument that the Commonwealth has power to establish air services). If without contravening s. 92 the Director-General under reg. 79 (3) can refuse a licence on the ground that an adequate service exists, the Commonwealth Parliament can achieve the same result by statute. In this view it is immaterial whether the existing service is that of the Commonwealth itself or of someone else. So far as s. 92 is concerned a monopoly could be granted, in the interest of efficiency, to one of the existing companies, to a Government, to anyone; therefore the Act is not obnoxious to s. 92 merely because it is designed to give a monopoly to the Commission which it con- stitutes so long as the Commission provides adequate services. The only question is whether to do so may properly and reasonably be regarded as facilitating air transport, and it is submitted that air transport is especially a matter in respect of which such a view may reasonably be taken, a matter in which competition is not likely to produce satisfactory results. Accordingly, so far as ss. 46 and 47 of the Airlines Act in their relation to inter-State airlines are con- cerned, all that they do is what the Director-General might have done under the Regulations: They say, in effect, that when on a particular route an adequate service is provided by the Commission the licensing system shall apply in such a way that no other licence shall be granted in respect of that route. It is not material to say that the Commonwealth is conferring a monopoly on itself: The decision in the Riverina Transport Case (1), for instance, must have been the same, it is submitted, if the Commonwealth (or a State) had been concerned instead of an individual or trading company. As to the impact of s. 92 on the Act, all that has happened is that the Act has recognized the licensing system of the Air Navigation Regulations and has superimposed on it something to meet the particular circumstances with which the Act is concerned. That is so as to Part IV., and this view is borne out by reference to ss. 4, 19, 20, 28 and 29. In this view s. 49 presents no difficulty. It is merely incidental to the scheme of ss. 46 and 47 and is a provision of a kind which might well have been incorporated in the Regulations themselves. Section 19 (1) is merely an enabling section, and like- wise s. 25. The Act does not impose on the Commission any duty to step in and oust existing services which are adequate.

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P. D. Phillips. In relation to s. 51 (i.) the plaintiffs apparently take the view that, if the Acrlines Act can be called a law with respect to governmental trading or governmental monopoly, it is taken out of the category of laws with respect to trade and commerce. Where the subject matter of a grant of legislative power is expressed in terms of purpose, of course the validity of legislation professing to be made under it may be tested by reference to purpose, but, where the grant simply describes a subject matter (e.g., s. 51 (i), "trade and commerce " &c.), the only test is whether the legislation operates on that subject: See Huddart Parker Ltd. v. The Common- wealth (1); Victorian Stevedoring and General Contracting Co. Pty. Ltd. and Meakes v. Dignan (2) ; Stenhouse v. Coleman (3). Here the question is whether the Act operates on the subject of trade and commerce. It is submitted that it does; it is an Act within the category of s. 51 (i), and it is not to the point to say that it creates a government monopoly. The plaintiffs also contend, in effect, that the power to make laws with respect to inter-State commerce presupposes commerce with respect to which laws are to be made and that a law which is designed to create a new commercial actor in inter-State commerce - the Government or its instrument - is not a law " with respect to " inter-State commerce because it is not a law dealing with some concept or entity outside itself but is a law which itself creates the inter-State commerce. The contention seems to proceed on the assumption that a law with respect to a given subject matter must destroy, limit or condition the subject matter and cannot in a positive way create it or create the actor itself : Such an assump- tion is unwarranted. A law creating a capacity to engage in com- merce is of necessity a law with respect to (a law which relates to, and operates on, the subject of) commerce. In the United States the power to constitute a government instrumentality with capacity to engage in commerce is well recognized as being within the trade and commerce power. [He referred to California v. Central Pacific Railroad Co. (4); Luaton v. North River Bridge Co. (5); Selected Essays, vol. 3, pp. 214 et seq., " Federal Incorporation," particu- larly at pp. 222, 225; Rottschafer on Constitutional Law (1939), pp. 251, 252, 271 and 272; Ashwander v. Tennessee Valley Authority (6) ; United States v. Appalachian Electric-Power Oo. (7); Oklahoma

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Territory, s. 49 may present difficulty as to the prosecution of offences if the position is that they are cognizable only within the Territories and by the Courts of the Territories. It may be that the section will not be effective unless in the case of a defendant who is found in a Territory and prosecuted there, but that does not make the section invalid. The plaintiffs have contended that the whole Act must fail if certain of its provisions are found to be invalid. The question of severability presents itself in two main aspects. In the first place it was said that the provisions of Part IV. are inseverable as among themselves; that is to say, if the provisions of Part IV. relating to inter-State airlines are invalid, those as to Territorial airlines cannot stand separately, and vice versa. Then it was contended that Part IV. as a whole is such an essential part of the Act that, if it goes, the whole Act must go. It is submitted that in whichever of these aspects the question arises there is a clear case of severability. The language, framework and arrangement of the Act show clearly that it has been drafted so as to render its various parts severable. This could not be indicated more clearly unless, perhaps, by saying expressly: "The various parts of this Act shall be severable." It has been asserted by the plaintiffs that the Act has one dominant purpose, " monopoly." That this is unfounded is clear from the long title of the Act. Moreover, in the pre- amble there is a clear separation of objects. Ins. 4 "inter-State airline service" and " Territorial airline service" are separately defined and are dealt with in separate paragraphs in the definition of "adequate airline service," and this distinction is carefully preserved in s. 19 (1) by the manner in which the various kinds of services are dealt with in separate paragraphs. Another possible type of service in relation to which the question of severability might arise - overseas services - is dealt with separately in the last sub-section of s. 19. In s. 46 the enactment as to inter-State airlines is in the first sub-section and as to Territorial airlines in the second, and in s. 47 a similar separation is effected by pars. aandb, Section 49, as already mentioned, expressly distinguishes between inter-State and Territorial airlines, and does so at the expense of multiplying words; if mere brevity had been the object, a general or composite phrase could have been used. Accord- ingly, the Act presents the problem of severability in its simplest form - the "blue pencil " form - in which all that need be done is to strike out such words as are beyond power. Putting aside for the moment the Territorial services, the Act discloses two distinct purposes, (1) to set up inter-State services, and (2) to render them exclusive by force of the licensing provisions in ss. 46 (1) and 47 (a).

[121]

The plaintiffs must contend that transportation is trade and commerce in order to obtain protection from s. 92. On the other hand, the defendants claim that legislation with respect to trans- portation is legislation with respect to trade and commerce under s. 51 (i.) so as to justify the Act, but when s. 92 is approached they are willing to draw distinctions between trade and commerce itself and instruments used in trade and commerce, such as aircraft, motor cars or other means of carriage, thus endeavouring to prevent or limit the application to the Act of any considerations arising from s.92. For the defendants much reliance was placed upon Willard v. Rawson (1); R. v. Vizzard; Ex parte Hill (2); and Riverina Transport Pty. Ltd. v. Victoria (3). It was contended that these cases show that a distinction should be drawn between transportation as a subject and trade and commerce as a subject. It is true that in these cases certain statutes were construed as relating to motor cars regarded as integers of traffic and instruments of commerce rather than as relating to the transportation of goods and persons by motor cars. But I think that it is a mistake to regard these cases as establishing the proposition that inter-State transportation is not itself included within the category of inter-State trade and commerce. In Willard v. Rawson (4), Rich J. based his view with respect to the Act there in question (which was a motor car Act requiring registra- tion of motor cars) upon the opinion that the statute was not con- cerned with trade, commerce or intercourse as such, but only with motor vehicles considered as machines, integers of traffic, users of the highway and potential sources of danger and annoyance to the public ; that is, as I understand the distinction, a law with respect to motor cars does not become a law with respect to trade and commerce simply because motor cars can be used in trade and commerce. In R. v. Vizzard (2), Rich J. took the same view of the statute there in question (5). But his Honour, in referring to McArthur's Case (6), pointed out that McArthur's Case " denied that trade between the States was limited" (my italics) " to mere inter- State movement of persons or things " (7), it plainly being conceded that trade between the States included such movement. So also his Honour was at pains to point out that the transactions to which the Act related did not include " the actual transfer of goods from one place to another and the actual movement of individuals " (5). Starke and Dizon JJ., who dissented, each took the view that inter- State transportation was inter-State trade and commerce: See the

[138]

the Commonwealth. Placita (xvii.) bankruptcy and insolvency, (xxi.) marriage, (xxii.) divorce and matrimonial causes, (xxiii.) invalid and old-age pensions, (xxvii.) immigration and emigration, (xxviii.) the influx of criminals, and others, are matters in which the Commonwealth does not take part, but in respect of which the Com- monwealth Parliament may legislate. In the case of other subjects, however, it appears to me to be quite plain that the nature of the subject is such as to entitle the Commonwealth to make laws with respect to the Commonwealth (by itself, or by a Commonwealth agency) taking part in the very subject matter itself. For example, placita (ii.) " taxation " is plainly taxation by the Commonwealth ; (iii.) " bounties " are bounties to be granted by the Commonwealth ; (iv.) "borrowing money" relates to borrowing money by the Commonwealth ; (v.) " postal &c. services" include such services provided by the Commonwealth; (vi.) "the naval and military defence of the Commonwealth " includes defence by the Common- wealth. Under the power to legislate with respect to " (vii.) light- houses, lightships, beacons and buoys" Parliament may authorize the Commonwealth to establish lighthouses &c. So also under (viii.) " astronomical and meteorological observations " the Common- wealth Parliament may legislate, as in fact it has done, for the actual making and control of such observations. Similarly, under (xi.) " census and statistics " the Commonwealth itself can take a census. Under (xiii.) "banking other than State banking" the Common- wealth Parliament can create a bank, as in fact it has done in the case of the Commonwealth Bank. It is unnecessary to extend the illustrations beyond those already given. There can be no reason in law why the power to make laws with respect to trade and commerce with other countries and among the States should not include a power to make laws enabling the Commonwealth itself, or a body established by the Commonwealth, to take part in such trade and commerce.

[233]

appropriated by the Act to meet expenditure necessary for the purposes of the Act (s. 30). The provisions of the Air Navigation Regulations apply so far as applicable to and in relation to the Com- mission in like manner as they apply to and in relation to other persons (s. 29). These Regulations set up a licensing authority in respect of public transport services (Regulations, Part VII., Public Transport Service). And Part IV. of the Airlines Act imposes limitations in respect of airline services the purpose of which is to give the Commission the right to operate the airline services mentioned in s. 19 and to exclude all other corporations or persons therefrom. Where an airline licence is issued to the Commission in respect of an inter-State airline service and the Commission has established that service, any airline licence held by any person other than the Commis- sion or its contractors, in respect of any inter-State airline service, which provides inter-State transport by air between any scheduled stopping places of the service established by the Commission, is inoperative so long as there is an adequate airline service between those stopping places by reason only of the services operated by the Commission and its contractors. A similar provision is enacted in respect of Territorial airline services (s. 46 (2)). The licensing authority is prohibited from issuing to any person other than the Commission or its contractors in respect of an inter-State airline service, an airline licence which would authorize inter-State transport by air between any scheduled stopping places of any airline service operated by the Commission or its contractors and similarly in respect of Territorial airline services unless and except to the extent to which the licensing authority is satisfied that having regard to the airline services operated by the Commission and its contractors the issue of the licence is necessary to meet the needs of the public with respect to inter-State and Territorial airline services (s. 47). And s. 49 imposes sanctions upon persons operating inter-State or Territorial airline services without a licence which is operative.

[235]

its constitutional basis in the trade and commerce power and in the power relating to the Territories, for there is no other that can sup- port it. The Parliament has, subject to the Constitution, power to make laws for the peace, order and good government of the Common- wealth with respect to trade and commerce with other countries and among the States and this power extends to navigation and shipping and to the railways of the State (Constitution, s. 51 (i), s. 98; Australian Steamships Ltd. v. Malcolm (1)). In the Constitution of the United States the power is to regulate commerce with foreign nations and among the several States and with the Indian tribes. In the Constitution of Canada, British North America Act 1867 (30 & 31 Vict. c. 3), it is the regulation of trade and commerce. But there is little if any difference, I think, between the power to make laws with respect to trade and commerce and the power to make laws to regulate, or for the regulation of, trade and commerce. And since the decision, Huddart Parker Ltd. v. The Commonwealth (2), in this Court the view can no longer be maintained that the constitu- tional power in the Australian Constitution to make laws with respect to trade and commerce with other countries and among the States is limited to general rules of conduct to be observed by those engaged in the operation of commerce with respect to those operations (Australian Steamships Ltd. v. Malcolm (3) ), and does not enable the Commonwealth itself or its instrumentalities to engage in or carry on commerce. In Gibbons v. Ogden (4) Marshall C.J. said : "" Commerce, undoubtedly, is traffic, but it is something more ; it is intercourse a and Griffith C.J. in Australian Steamships Lid. v. Malcolm (5) accepted that description. Trade and commerce among the States is not an isolated journey across a State boundary line (See Willis on Consti- tutional Law, p. 288), but the flow of business among the States. Tt includes the movement of goods or persons from one State to another, transportation by land, sea or air, and it also includes something more such as sales of goods tangible or intangible by persons in one State to persons in another. Or as was said in this Court in W. & A. McArthur Ltd. v. Queensland (6): "* Trade and commerce' between different countries - we leave out for the present the word ' intercourse "has never been confined to the mere act of transportation of merchandise over the frontier. That the words include that act: is, of course, a truism. But that they go far

[269]

to inter-State trade and commerce and exceeds the power. In R. v. Smithers; Ex parte Benson (1) Higgins J. draws a contrast, in reference to the movement of persons from one State to another, between, on the one hand, school children returning from holidays and friends visiting friends, and, on the other hand, commercial travellers returning to their warehouses. Notwithstanding the addition, in s. 92, of the word " intercourse " to the words " trade " and "commerce," I am not disposed to think that there is much covered by the word " intercourse " that falls outside the commerce power. Actual movement of persons or goods among the States will, I should imagine, be regarded as enough here as it is in America. See Covington & Cincinnati Bridge Co. v. Kentucky (2) ; Caminetti v. Umited States (3); United States v. Hill (4). Probably, too, it will be taken to extend to acts and transactions involving such movement. But this view is part and parcel of a more general interpretation or understanding of the conception of inter- State commerce under which the place given to the carriage of goods and persons, transportation, is anything but subsidiary. That is to say, as it is inseparable from the movement of things and people, it cannot be regarded as something which falls within the power only because it is ancillary or auxiliary, incidental or conducive to the essential object of the power, as perhaps might be the case if the inter-State buying and selling of commodities were regarded as the exclusive object. From the beginning, the doctrine prevailing in the United States has been that transportation occupied a central place in the conception of commerce as a subject of the power. In the concurring opinion which Johnson J. added to that of Marshall C.J. in Gibbons v. Ogden (5), an opinion relying more than did that of the Chief Justice on the exclusive characteristics of the commerce power, there occurs the following passage : " When speaking of the power of Congress over navigation, I do not regard it as a power incidental to that of regulating commerce; I consider it as the thing itself; inseparable from it as vital motion is from vital existence." In Hannibal & St. Joseph R.R. Co. v. Husen (6) Strong J. for the court said: "Transportation is essential to commerce, or rather it is commerce itself." How far the reasoning in the Transport Cases in this Court (7) accommodates itself with this doctrine is a matter for

[275]

make Jaws in that connection which will have an operation in Australia. It was contended that even although the power given by s. 122 might be regarded as an independent legislative power restricted in its geographical operation to the Territories, at the same time it could be used to justify the establishment of services radiating out, so to speak, from each Territory. The analogy is that of a State which in virtue of its power to make laws in and for the State might establish a shipping service with any place outside its boundaries, whether within or beyond Australia. The law passed by the State would not in such a case operate coercively outside the State but would nevertheless authorize the carrying on of the service and the use of such port facilities and the like as were made available in other jurisdictions. This appears to me to be an artificial and narrow justification of the legislation and, moreover, does not recognize that the Airlines Act is meant to operate on the same basis throughout Australia and its Territories as a law of the Parliament. I should see no difficulty myself in treating s. 122 as aided by s. 51 (xxxix.) and in interpreting the Constitution as a whole as meaning that the Commonwealth Parliament could make laws concerning the Terri- tories including communications and all other matters arising from the connection between the Commonwealth and the Territory or dependency. However, it is said that such cases as Buchanan v. Commonwealth (1), R. v. Bernasconi (2) and Porter v. The King ; Ex parte Chin Man Yee (3) make it necessary to treat s. 122 as an independent power complete in itself and outside the general system of government. I admit that it is difficult to reconcile the Australian cases on the subject, but I think that the decision in Porter's Case (3) tends in the contrary direction and that so does some of the reasoning in Mainka v. Custodian of Expropriated Property (4), and also that of some of the judgments in Ffrost vy. Stevenson (5), where antecedent steps of the reasoning in Mainka's Case (6) were criticized. As to the commerce power, it is not easy to see how such a Territory as the Northern Territory could be described either as another country or a State ; but it is to be noted that, under the analogous American power, Holmes J. appears to have been prepared to adopt the assumption that trade with the Territories could be covered (Hanley v. Kansas City Southern Railway Co. (7) ), giving the power no doubt a wide general interpretation implying some extension beyond its exact text.

[284]

s. 92 does not affect trade, commerce or intercourse with the Terri- tories, yet, on the definition of a Territorial airline service, it is pos- sible that it will include some inter-State carriage of goods or persons. It is with the former, the inter-State airline services, that we are immediately concerned. Sub-s. (1), which deals with them, pro- ceeds upon the assumption that, for any inter-State airline service existing at the time when the Commission establishes a service covering any of the stopping places of the existing service, a valid licence under the Air Navigation Regulations will be needed and will be held. It provides that, when certain conditions are fulfilled, the licence, in so far as it authorizes inter-State air transport, shall become inoperative, which means, of course, that for the licensee to continue the service would contravene the Air Navigation Act and Regulations. The conditions are, in effect, (1) that an airline licence for a particular inter-State service has been issued under the Regula- tions to the Commission specifying the terminal and intermediate stopping places of the service; (2) that the Commission has estab- lished the service ; (3) that the existing service provides inter-State transport by air between some of the scheduled stopping places ; and (4) that the service of the Commission, or its contractors, by itself provides an adequate airline service between those stopping places. In those conditions the existing licence becomes inoperative and remains inoperative as long as the Commission maintains an adequate airline service between such stopping places. Under the Air Navigation Regulations airline licences may not be granted or renewed for a longer period than a year, so that it may be assumed a licence rendered inoperative is unlikely during its currency to revive owing to the Commission's service becoming inadequate. But the next section of the Airlines Act, s. 47, contains a prohibition, subject to a condition by way of exception, against the licensing authority issuing to anybody but the Commission or, at its request, to a contractor with the Commission, an airline licence for an inter- State service authorizing transport by air between any of the Com- mission's scheduled stopping places, or those of such a contractor. The condition by way of exception is expressed in the following words, " unless, and except to the extent to which, the licensing authority is satisfied that, having regard to the airline services operated by the Commission and contractors, the issue of the licence is necessary to meet the needs of the public with respect to inter-State airline services."

[291]

opposite view of the effect of a monopoly in a form of transport. As js well known, that great case turned upon the monopoly which the State of New York had granted to Fulton and Livingston at the end of the eighteenth century upon condition that they constructed a steamboat that would navigate against the current of the Hudson. They fulfilled the condition and, as a result, enjoyed for some years an exclusive franchise for navigating New York waters by steam. The decision in Gibbons v. Ogden (1) was that it was inoperative against Federal law. Johnson J. placed his judgment upon the quasi-exclusiveness of the commerce power, a doctrine which though not part of the ratio decidendi of the Court was expounded by Marshall C.J. in such a way as to establish it. Johnson J. treated the matter as evident and used some of the very words of s. 92, He said: "The grant to Livingston and Fulton interferes with the freedom of intercourse among the States; and on this principle its constitutionality is contested " (2). His Honour, in effect, took the view that the principle did form part of the constitutional law of the United States and for that, among other reasons, the monopoly did notavail. It is, however, better not to pursue the analogy presented in the United States, if for no other reason, because in America it is always invasive action by a State that is in question. Here I think that we should apply s. 92 in the light of the general guidance given by the two decisions of the Privy Council and of the authority of the Transport Cases (3). The Transport Cases formed the founda- tion of the argument in support of Part IV. and to my mind our decision must in a great measure depend upon a proper interpretation of those authorities. There is an extensive passage in the judgment of Rich J. in Vizzard's Case (4), set out in the judgment of Hvatt and McTiernan JJ. in Gilpin's Case (5), a judgment in which Rich J. himself agreed. Having set it out, Hvatt and McTiernan JJ. say that, in their opinion, it truly describes the legislation under con- sideration in that case, and they proceed to say : " Absolute freedom of trade, commerce and intercourse among the States does not mean that a resident of one State possesses the right to transport goods or travel to a place in another State in whatever vehicle or by whatever route or at whatever time or at whatever speed he may choose. 'And a law which imposes a limitation upon his choice is not neces- sarily inconsistent with s. 92 of the Constitution." 22 U.S. 1 [6 Law. Ed. 23]. (3) (1933) 50 C.L.R. 30; (1935) 52 (2) (1824) 22 U.S., at p. 229 [6 Law. CLR. 189, 215 ; (1985) 53 C.L.R. Ed., at p. 78). 493; (1937) 57 C.L.R. 327.

[301]

carriage of men and things does not itself lie within the concept of trade, commerce and intercourse among the States ; that it forms no part of the denotation of commerce because it has not the attributes required by the definition though, because it is conducive to com- merce, it may in some respects be regulated under the commerce power? After a full study of the Transport Cases I have come to the conclusion that they do not decide this proposition. In the pragmatical solution which those cases gave to a problem which they approach as a complex the essential features of the legislation were examined for the purpose determining its practical operation upon inter-State commerce and intercourse regarded as a sum of activities: to see whether it obstructed, restricted, retarded or impaired, not some operations of commerce considered separately or in isolation, but the commerce between New South Wales and Victoria considered as a whole. The legislation was, in effect, treated as part of an attempt to make the internal transport of the State a planned structure, a framework within which the freedom guaranteed by s. 92 subsisted and even by which that freedom was secured. The reasons given for the solution necessarily comprised much that was really directed to denying that in the character and operation of the legislation factors or features could be found to which s. 92 was inimical. It is, I think, in the course of this demonstration that, among other things, any adverse effect upon the flow of trade is excluded and the relation in fact which transport has to trade in goods is emphasized. It is to be noticed that it is not the business of inter-State carrying but motor trucks themselves which Rich J. describes as aids or implements to commerce and intercourse but not the thing itself. The decision was, I think, based upon a combination of all the considerations mentioned in the passage, negative and positive, particularly the fact that it was the undifferentiated road transport of the State that was regulated on a non-discriminatory basis.

[304]

not like the post office, something which undertakes an exclusive function independently of State boundaries. Nor, may it be added, does it resemble the post office in being a traditional function of government, dealt with as such in the Constitution, and nowhere forming a business. It is no answer to the application of Lord Wright's test to say that, because the general exclusion in time and place of the business of air transport in favour of a government under- taking could only be accomplished under the commerce power, the freedom infringed must necessarily be related to State boundaries. Tf, on the other hand, the answer is offered that the transmutation of the business into a government undertaking means that the func- tion is still freely carried on, it is met by the proposition, so often enunciated by Isaacs J., that in s. 92 "'free" means free from governmental restriction or obstruction, whether legislative or executive, a proposition for which the judgment of Lord Atkin in James vy. Cowan (1) is authority. It comes back, in my opinion, to the position of the business of inter-State transportation as part of commerce and intercourse. If it is part of the denotation of that expression in s. 92, as I think it clearly must be, then I see no escape from the conclusion that Part IV. is inconsistent with that constitutional restraint. If, on the other hand, carrying on inter- State transportation were held to be outside the protection of s. 92, it would be hard indeed to bring it directly under s. 51 (i.). In that case the legislative power could affect it only as an incident of the subject matter of the power. There would then arise the difficulty to which I have already referred, that to provide for the carriage of passengers not concerned in commerce might be considered outside the power. My opinion, however, is that inter-State transportation falls directly under s. 51 (i), but is also within the protection of s. 92. For the reasons I have given, I think that s. 92 invalidates so much of Part IV. as is not concerned with the Territories.

[308]

The other and more important question is whether Part IV., as a whole, can be severed from the rest of the Airlines Act. It is said on the part of the plaintifis that it contains provisions indis- pensable to the conception upon which the statute is based. To authorize the establishment of an airline service to operate as a monopoly is one thing, to authorize one to compete in air transport is another. Accordingly, it is said, the invalidity of Part IV. changes the character of the measure. Further, it is pointed out that sub-s. (2) of s. 19, to which reference was made in the earlier part of this judgment, is linked with Part IV. It imposes upon the Commission the duty of exercising its powers of establishing, main- taining and operating airline services as fully and adequately as may be necessary to satisfy the need for such services: compare the definition in s. 4 of " adequate airline service." Reliance is placed upon this provision as itself contemplating an exclusive service and as measuring the Commission's duty on that assumption. These considerations are, no doubt, important and, prior to the enactment of s. 15a of the Acts Interpretation Act 1901-1941, they might have proved decisive. But that provision has, in effect, introduced a rule of construction whereby unless an intention affirmatively appears to the contrary, the provisions of a statute are to be taken as indepen- dent of one another and not interdependent. The application of the provision is seldom easy, but it is illustrated by a number of decisions of this Court, a collection of which will be found in Fraser, Henleins Pty. Ltd. vy. Cody (1), and it is further elucidated by the industry expended in the United States upon the exposition of similar clauses. But I think little help is to be gained from abstract discussions of the effect of severability provisions. As a practical conclusion, it comes back to the manner in which the intention of the legislature is to be ascertained, that is to say, the presumptions to be made. My view, which I repeat, is that such severability clauses " establish a pre- sumption in favour of the independence, one from another, of the various provisions of an enactment, to which effect should be given unless some positive indication of interdependence appears from the text, context, content or subject matter of the provisions " (2).

[371]

The most important sections in the Act are ss. 19, 46 and 47. Section 19 (2), in my opinion, imposes upon the Commission the duty of providing airline services which are completely capable of carrying all the passengers and goods requiring carriage by air for reward between any place in a State and any place in another State ; between any place in any Territory of the Commonwealth and any place in Australia outside that Territory; and between any place in any Territory of the Commonwealth and any other place in that Territory. In other words the Act is intended to create a complete Government monopoly in the transport of passengers and goods by air for reward throughout Australia and its Territories except in respect of intra-State services. An argument was submitted on behalf of the defendants that the words in s. 19 (2) "as may be necessary to satisfy the needs for the services " specified in s. 19 (1) mean adequate to satisfy any insufficiency in these services that may © exist and which is not met by the existing services, or in other words that the duty of the Commission is to supplement existing services so far as it may be necessary to do so in order to give fully adequate services. But the definition of " adequate airline service" in s. 4 indicates that adequate service in the Act means a service adequate in itself to satisfy the public needs, and in s. 19 (2) this meaning is reinforced and placed beyond the possibility of doubt by the addition to " adequately " of the word "fully." Sections 46 and 47 prescribe the manner in which this duty is to be fulfilled. Sub-section (1) of s. 46 refers to inter-State airline services, while sub-s. (2) refers to Territorial airline services. 'The sub-sections provide that when a licence has been issued to the Commission and the Commission has provided an adequate service, licences issued to other persons to operate competing airlines will be inoperative so long as the Com- mission provides an adequate service. Section 47 prohibits the licensing authority from issuing a licence to any person other than the Commission or its contractors unless and except to the extent to which the licensing authority is satisfied the airline services provided by the Commission are inadequate to meet the needs of the public with respect to inter-State airline services and Territorial airline services. So far, therefore, from the duty of the Commission being to satisfy the needs not satisfied by the existing services, it is the duty of the Commission fully to satisfy the public needs, and for that

[384]

ship Co, v. Pennsylvania (1); Hoke v. United States (2); Dahnke- Walker Milling Co. v. Bondurant (3) ; Caskey Baking Co. v. Virginia (4); Edwards v. California (5); Northwest Airlines v. Minnesota (6)). I shall cite a few short passages from these cases. In Chicago and Northwestern Railway Co. v. Fuller (7) it is said: " Commerce is traffic, but it is much more. It embraces also trans- portation by land and water, and all the means and appliances neces- sarily employed in carrying it on." In Philadelphia Mail Steamship Oo. v. Pennsylvania (1) it is said: " This transportation was an act of inter-State and foreign commerce. It was the carrying on of such commerce. It was that, and nothing else." In Hoke v. United States (2) it is said: '"' Commerce among the States, we have said, consists of intercourse and traffic between their citizens, and includes the transportation of persons and property. There may be, there- fore, a movement of persons as well as of property ; that is, a person may move or be moved in inter-State commerce." In James v. Cowan (8) Isaacs J., in a judgment which Lord Atkin referred to in the Privy Council on appeal as "a convincing judgment" (9), pointed out that the right of inter-State trade and commerce protected by s. 92 is a personal right attaching to the individual, and that is a tight of passing from one State to another, of transporting goods from one State to another, and dealing with them in another State. There can be no doubt, in my opinion, that to engage in the business of transporting passengers and goods by air for reward from one State to another is to engage in inter-State commerce. If it is not, then the provisions of the Air Navigation Regulations and of the National Airlines Act relating to air navigation among the States must fall to the ground, because they derive their entire validity from s. 51 (i.) of the Constitution. In order, therefore, that reg. 79 (3) and the National Airlines Act in their relation to commerce among the States should be valid, they must be, in the former case a dele- gated exercise, and in the latter case an exercise, of s. 51 (i.) which does not contravene s. 92. As ss. 51 (i.) and 92 appear in the same Constitution, there must be a field of legislation open to the Parlia- ment of the Commonwealth under s. 51 (i.), just as there must be a field of legislation preserved to the Parliaments of the States by s. 107, which does not coincide with the area fenced off by s. 92.

[388]

It was contended on behalf of the defendants that the reasoning of the majority of this Court in Vizzard's Case (1) (and the analogous cases of O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways (N.S.W.) (2); Duncan & Green Star Trading Co. Pty. Ltd. v. Vizard (3); Riverina Transport Pty. Ltd. v. Victoria (4) ) should be followed, and that, if this is done, reg. 79 (3) and the Act, in their relation to inter-State commerce, must be held to be valid. But Lord Wright has said that the question whether an Act contravenes s. 92 is in every case one of fact, and these decisions must, therefore, in my opinion, all be regarded as decisions upon their particular facts. The question in each case is, does the legislation in fact interfere with the freedom of passage from one State to another. In answering this question, the considerations adverted to as material in the judgments in Vizzard's Case (1) and the analogous cases must be given careful attention, but they all appear to be based funda- mentally on the right of a State to make laws of a general non-dis- criminatory character for regulating the care and upkeep and preserving the financial stability of public utilities, particularly railways and roads, established and maintained at the expense of the State. So in the United States, where the power to regulate com- merce among the States has been held to be an exclusive power, it has also been held that the laws of a State may validly provide for such matters as the licensing of drivers, the registration of motor vehicles, and the exaction of a licence fee as a contribution to the upkeep of the roads; and for a licensing system which limits the number or the weight and size of vehicles using the roads in the interests of the public safety (Bradley v. Public Utilities Commission (5) )} - and see the cases in the Supreme Court of the United States cited in the Constitution of the United States (annotated by the Senate to Ist January 1938, pp. 187-189) and in the judgment of McTiernan J. in Vizzard's Case (6). In Vizeard's Case (6) and the analogous cases this Court has perhaps gone further in upholding State legislation of this nature than the Supreme Court of the United States. But this would appear to be because the railways in Australia are all owned by the States, so that, in establishing and maintaining roads, the States are creating means of competition with their own instrumentalities.

[390]

Wales the Main Roads Board was constituted by the Main Roads Act 1924, and in 1926 the Federal Aids Roads Act was the first of a number of Commonwealth Acts which authorized the expenditure, under agreements between the Commonwealth and the States, of Commonwealth revenue upon the establishment and maintenance of the main roads of the States. This increase in motor traffic caused competition between carriage by road and rail, and this led to the passing in New South Wales of the Transport Co-ordination Act, which was held to be valid in Vizzard's Case (1), restricting the carriage of passengers and goods in New South Wales by road to vehicles licensed under the Act. In Vizzard's Case (2) Evatt J. said that 'the Act proceeds upon the broad principle that the interests of the State call for the regulation of the whole service of land trans- port wherever it is conducted upon the roads of the State of New South Wales." There is no obligation imposed upon the States to facilitate trade and commerce by building roads, so that, if they choose to do so and thereby provide means for competition with their own railways, it is simply an exercise of their own sovereign rights to co-ordinate traffic by rail or road, and to confine the use of the roads to particular persons and vehicles. If the choice of these persons and vehicles has no relation to their passage across the border, but: the legislation operates without discrimination with respect to all persons and vehicles desirous of using the roads, such legislation is not aimed or directed at inter-State commerce but at regulating, main- taining, and co-ordinating a number of utilities for trade, commerce, and intercourse, State and inter-State, provided by the State. Soa State could, I should think, build a number of aerodromes, and provide that only aeroplanes which fulfilled certain conditions could use such aerodromes, or it could confine their use to aeroplanes owned by itself, Provided the conditions of use were non-discriminatory and were unrelated to flying across the border, the legislation would not infringe s. 92. It would be legislation regulating the use of a further facility for all trade and commerce provided by the State. And it would seem to follow that if the Commonwealth built aero- dromes it could also pass non-discriminatory legislation regulating the use of such aerodromes, or confining their use to its own purposes : Cf. reg. 110a of the Air Navigation Regulations. But it would be a different matter if a carrier or carriers of persons or goods by land were able # persuade the owners of private Jand on each side of the border to build a road on which to carry on their business, and one of the border States passed a law preventing such carriers crossing the border by such a road. Such a law would not be made

[393]

References in Vizzard's Case (1) and the analogous cases, to Acts, such as the New South Wales Transport Co-ordination Act, providing a more orderly system of land transport, and to their having the effect of facilitating and increasing the passage of persons and the flow of commodities to and from the States concerned, must be read in the light of the particular facts of those cases, and particularly in the light of the fundamental fact that the flow was facilitated and increased along routes provided by the State itself. But in the case of air routes the only facilities which the Commonwealth can provide are aerodromes and aids to navigation. Vizzard's Case (2) and the analogous cases are, as I have said, authorities that the Common- wealth can exercise very wide powers of control over the use of such facilities provided by itself. But private enterprises can also provide suitable aerodromes and aids to navigation. These cases fall far short of establishing that it is not a contravention of s. 92 for the Commonwealth to attempt to monopolize the business of transporting persons and goods by air, although adequate facilities can be provided for this purpose by private enterprise, and persons engaged in the business do not need to use aerodromes and aids to navigation provided by the Commonwealth. Isaacs J., in the judgment already cited, said the freedom guaranteed by s. 92 is a personal right attach- ing to the individual. To say to an individual that he may not engage in the business of inter-State air carriage is a direct negation of that right. No doubt that right can be regulated so far as may be necessary to make air navigation safe. But reg. 79 (3) and ss. 46 (1) and 47 (a) of the Act go far beyond anything that is required to regulate safety in the air, or to give the Commonwealth reasonable control over those facilities which it can itself provide to increase the flow of inter-State traffic by air. The only limit that can be imposed upon the discretion conferred upon the Director-General of Civil Aviation by reg. 79 (3) to refuse a licence is that the discretion must be

[394]

exercised bona fide in furtherance of the purpose for which it was given (Weinberger v. Inglis (1) ; Liversidge v. Sir John Anderson (2) ; Point of Ayr Collieries Ltd. v. Lloyd-George (3) ; Yoxford and Darsham Farmers' Association Lid. y. Llewellin (4); Swan Hill Corporation v. Bradbury (5) ). It is impossible to limit his discretion to matters related to safety in navigation by air, because the amending regula- tion expressly extends his discretion beyond these matters and provides that he may refuse to issue a licence. No guide can, therefore, be found in the purpose and scope of the regulations which would enable reg. 79 (3) to be read down by construction in accordance with s. 46 (b) of the Acts Interpretation Act 1901-1941 so as to confine the discretion to refuse a licence to matters which would not contravene the right of the individual to engage in the particular phase of inter-State commerce in question. It could be argued, however, that reg. 6 would save the sub-regulation in its application to air navigation within the Territories, and that it has an independent validity under the State Acts in relation to intra- State air navigation. But its operation under the State Acts could affect inter-State commerce, and it is probable that it is as invalid under these Acts as it is invalid as part of the law of the Common- wealth. In Pidoto's Case (6) I expressed my opinion upon the manner in which ss. 15a and 46 (6) of the Acts Interpretation Act operate. It appears to me that reg. 79 (3) was intended to have a complete and inseverable operation under the laws of the Commonwealth, of the Territories, and of the States at the same time, and that to construe it as valid in relation to the Territories, or even to the Territories and States, would cause it to have a partial operation in these respects which would be altogether different to that which it would have had if it had been completely operative. Sub-regulation 79 (3) is, in my opinion, as great a contravention of s. 92 as the legislation held to be invalid in Gatwick v. Johnson (7), and is inseverable and therefore wholly void.

[398]

But I am of opinion that the contention that s. 51 (i.) of the Constitution does not authorize the Commonwealth to incorporate an authority to engage in trade and commerce on its behalf must fail. The power of legislation conferred by the placitum is plenary in its fullest sense, and must be given a wide and liberal interpretation. It is not, like the commerce power in the Constitution of the United States, a power to regulate trade and commerce. It is a power to make laws with respect to trade and commerce. Even under the more limited power, the Supreme Court of the United States has held that Congress can incorporate authorities to carry on businesses ancillary to facilities which it has provided to promote the flow of commerce, such as the business of generating and selling electricity as ancillary. to the construction of reservoirs to control the flow of navigable rivers (Oklahoma Ex Rel. Phillips v. Guy F.. Atkinson Co. (1)). A law incorporating an authority to carry on trade and commerce on behalf of the Commonwealth is, I think, a law with respect to trade and commerce. Under s. 122 the Com- monwealth can incorporate an authority to engage in trade and commerce on its behalf in the Territories. The position is, therefore, that, except so far as prohibited by s. 92, the Parliament of the Commonwealth can under s. 51 (i.) set up an authority to engage in the business of carrying persons and goods by air for reward amongst the States, and can under s. 122 do so in respect of such carriage in, into, and out of the Territories. Section 92 does not prevent the Commonwealth creating a monopoly in such a business except in the case of trade and commerce and inter- course among the States. Sections 46 (1) and 47 (a) of the Act, like reg. 79 (3), contravene s. 92. But s. 46 (2) is carefully limited to rendering inoperative existing Territorial airlines licences in respect of scheduled stopping places other than stopping places in a State, and s. 47 (b) is carefully limited to prohibiting the licensing authority issuing a licence in respect of a Territorial airline service which would authorize the transport by air between any scheduled stopping places, not being stopping places in a State. I can see no reason, therefore, why these sub-sections, to which s. 92 does not apply, should not be valid.

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