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High Court of Australia |
James Plaintiff; against The State of South Australia and Another Defendants.
H C of A
22 August 1927
Isaacs A.C.J., Gavan Duffy, Powers, Rich and Starke JJ.
Sir Edward Mitchell K.C. (with him Ward), for the plaintiff.
Owen Dixon K.C. (with him Robert Menzies), for the defendants.
Ham K.C. and Robert Menzies, for the State of Victoria intervening,
Sir Edward Mitchell K.C., in reply.
The following written judgments were delivered:—
Aug. 22
Isaacs A.C.J. and
Powers J.
Resolved into its ultimate form, the main and dominant question presenting itself in this case may be thus stated: it is whether a "matter" arises under the Commonwealth Constitution or involves its interpretation, so as to enable this Court to adjudicate upon it under the power conferred by the Parliament in sec. 30 of the Judiciary Act 1903-1926, when an Australian citizen complains that contrary to sec. 92 of the Constitution, declaring inter-State trade to be "absolutely free," a State Executive has deliberately and systematically prevented him, and, still insisting on its right to do so, threatens to continue preventing him from carrying on his legitimate inter-State trade. Questions which may be called intermediate and of less comprehensive import arise, including the construction of State legislation and the constitutional effect of the State relying on its legislation to support its executive acts. But State legislation per se and unexecuted would not interfere with trade operations, and a private individual could not invoke the interposition of a Court merely because some impeachable enactment found its way into the Statute Book. It is only action—that is, either State Executive action, or else individual action resting on the de facto authority of the State, legislative or executive—which could offend against sec. 92 of the Constitution. State Executive action, however—that is, action by the State Executive with all the actual force of the political community behind it—if applied, may so offend, whether applied directly or indirectly, and whether based on the assumed authority of legislation under the State Constitution, or on the direct provisions of that Constitution, or of the inherent power, de jure or de facto, of the State Executive by virtue of its existence under that Constitution. As we view the whole position, we should not find it necessary on the merits to examine further than to ascertain whether in reality the State Executive had so acted towards the plaintiff as to obstruct, hamper, or interfere with his inter-State trade, in derogation from the absolute freedom predicated by sec. 92 of the Constitution. It is quite immaterial from our point of view whether, if that be so, the State does or does not set up a State enactment, and, if it does, whether that enactment is itself valid or invalid, for it can never be valid to sustain State action of the nature predicated. But contrary opinions are held which, though commanding respect, we are unable to share, and therefore, though the central question comes in the end to that we have stated, it is desirable to give primary attention to intermediate questions.
This action was instituted in this Court in its original jurisdiction by Frederick Alexander James, a resident of South Australia, against the State of South Australia and the Dried Fruits Board of that State. The statement of claim sets out the circumstances in respect of which the plaintiff seeks redress. Whether the Board is now in existence we do not consider. We direct our attention to the State as defendant. For present purposes what is averred in the statement of claim is to be accepted as true. On that basis the plaintiff contends that the defendant State has in various ways violated sec. 92 of the Commonwealth Constitution and has threatened to do so in future, and he asks this Court to protect him. The defendant State contends that, assuming all the plaintiff alleges is true, it has not infringed sec. 92, and that no case has been made out entitling this Court to determine the present controversy or any part of it. It says that all the plaintiff alleges does not arise under the Constitution or call for its interpretation. It will be convenient, therefore, at once to state without detailed narration the substance of the facts which in this proceeding are taken to be true.
The plaintiff has for several years carried on and, so far as not prevented by the defendant State, is still carrying on in South Australia the business of growing fruits, drying them, buying other dried fruits, and then selling all his dried fruits—with insignificant exceptions—to purchasers in other States, namely, New South Wales, Victoria and Western Australia. In the course of that business, and between 28th December 1926 and 19th February 1927, he entered into various inter-State contracts to sell and deliver dried fruits. The contracts are not set out; but it is stated, and we must accept the statement, that these sales were sales of part of the dried fruits he then acquired and delivery was contractually to be made by him to his purchasers f.o.b. at Port Adelaide, out of the said dried fruits. All that time, and for some little time afterwards, there were in existence three State statutes referring to dried fruits. Two of these, namely, No. 1657 of 1924 and No. 1702 of 1925, are material. The first is the principal statute, the second amends the first; and so the two may be treated as one enactment. Purporting for the most part to act under the authority of this legislation, both before and after its expiration, the State, according to the averments, acted in relation to the plaintiff in various ways, which may be classed as follows: (1) compulsorily "acquired," by the forcible taking from time to time in quick succession of, all the dried fruits which the plaintiff had in his packing shed or in the hands of his vendors or agents for the purpose of his inter-State business; (2) compulsorily "acquired," by the forcible taking of, his dried fruits required for filling his inter-State contracts, and in some cases, expressly specifying those marked "I.S.C." or "Required for Inter-State Contracts"; (3) prosecuted him for making inter-State sales in excess of the limits determined by the Board, the prosecutions being adjourned ultimately at the request of the Board pending the result of this action; (4) compulsorily "acquired" and forcibly removed at the plaintiff's packing shed dried fruits already actually placed on lorries for transit to merchants in Sydney, this "acquisition" being accomplished by the simple act of forcible seizure without any attempt at formal notice; (5) threatened, notwithstanding warnings and full knowledge that the plaintiff's dried fruits are the subject of inter-State trade, to continue taking them as before. The result of these acts is stated to be, and naturally is, that the plaintiff's whole business is brought to a standstill, and he has incurred liabilities and loss generally. The State says that all this raises no interference with the plaintiff's "absolute freedom" of inter-State trade, and no case for the original jurisdiction of this Court.
Viewing the connected series of acts in the light of ordinary human reason and experience, the State's contention appears to us impossible of acceptance. At every point of the plaintiff's inter-State trade—where he purchases, where he acquires and stores, and as fast as he acquires and stores, where he despatches in pursuance of contracts, when he begins to despatch, when he marks his goods for inter-State trade and fulfilment of inter-State contracts, and as fast as he does so—he is followed up, obstructed, deprived of the means of carrying on his trade, and sought to be punished for venturing to carry it on free from the restrictions with which the State authority has endeavoured to surround it. We unhesitatingly agree with the observation of Sir Edward Mitchell that if this series of acts, unexplained, is not an interference with inter-State freedom of trade, it is difficult to imagine what would be. That the defendants are discriminating against inter-State trade is clear. Par. 18 of the statement of claim says:—"Neither of the defendants has made any similar orders or authorized the seizure of any dried fruits of any of the other persons in South Australia who in fact carry on similar kinds of businesses to what the plaintiff does."
The State, among other objections, has raised the formal contention that this case, either in its totality or as to any limited portion, is not a matter within the original jurisdiction of this Court. During the argument a question of considerable general importance was raised and debated, as to whether such a contention could be raised by demurrer. It is, we think, desirable to say a few words on this point. By Order XXIV., r. 1, of the Rules of this Court, it is prescribed that "Any party may demur to any pleading of the opposite party ... on the ground that the facts alleged do not show any cause of action ... to which effect can be given by the Court as against the party demurring." These words, in our opinion, aptly cover a case like the present, where it is to be determined whether, supposing the plaintiff has any cause of action at all, it is one "to which effect can be given by the Court." The rule so interpreted is in harmony with the law as enounced by Willes J. in advising the House of Lords in Mayor &c. of London v. Cox[1], in a passage quoted at length by Lord Herschell L.C. in British South Africa Co. v. Companhia de Mo¸cambique[2], and approved by the House of Lords. In the Divisional Court[3] Wright J. (whose judgment was restored by the House of Lords) also quoted that passage, and added that the objection to the jurisdiction "could have been taken by demurrer to the statement of claim." In the Court of Appeal Lord Esher M.R., whose dissenting judgment was upheld, after speaking of cases where a dilatory plea to the jurisdiction of a Court having general jurisdiction is proper, says[4]: "But there is a larger objection to jurisdiction, which need not be pleaded, but which, if pleaded, is a plea in bar." And in support of that the learned Master of the Rolls quotes the passage from Willes J. already referred to. The simple truth is that as soon as it appears to the Court that it has no jurisdiction the mode in which that appears is of no consequence. In Spooner v. Juddow[5] Lord Campbell for the Judicial Committee first presumed that the defendant under the plea of "not guilty" would not have been able to adduce the facts ousting the Court's jurisdiction, yet, as the plaintiff in his case proved those facts, his Lordship proceeded: "Supposing, upon these facts, the Court had no jurisdiction to try the cause, was the Court to try it, and give judgment for the plaintiff, because the defendants had omitted to plead specially?" The question is no less cogent if the plaintiff sets out his facts in the statement of claim. We therefore cannot doubt that the demurrer in this case is a competent pleading to raise the question of the Court's jurisdiction.
Dealing first with that question, the only head under which our original jurisdiction can attach in this case is under sec. 30 of the Judiciary Act and sec. 76 (I.) of the Constitution, namely, a "matter arising under the Constitution or involving its interpretation." In our opinion this is a "matter" coming under both heads. Story in his Constitution, vol. II., sec. 1647, says: "Cases arising under the Constitution, as contradistinguished from those arising under the laws of the United States, are such as arise from the powers conferred, or privileges granted, or rights claimed, or protection secured, or prohibitions contained in the Constitution itself, independent of any particular statute enactment" (and see sec. 1641). The right to conduct inter-State business "absolutely free" from State interference is at once a right, a protection and a prohibition, referable directly to the Constitution itself, and therefore this matter arises under the Constitution. The common law right to trade generally is not a right free from State interference; on the contrary, it is, apart from the Commonwealth Constitution, entirely subject to State legislative control under the State Constitution. The "absolute freedom" guaranteed by sec. 92 against State molestation with inter-State trade is a purely Federal constitutional right, so far limiting the State constitutional power. Sec. 92 is thus a limitation, not simply of State legislative power, but of State constitutional power generally—that is, of State power, however manifested. That, it will be seen presently, was the opinion expressed in McArthur's Case[6].
That this case, as to a very material portion of it at least, involves the interpretation of the Commonwealth Constitution, seems to us scarcely open to argument, either on principle or authority. The reason is that this case cannot, at all events entirely, be determined without construing and applying the Federal Constitution to the Constitution and law of the State and the facts alleged. The plaintiff's case challenges the conduct of the State in various ways. First, he says the legislation referred to was, at least to the extent necessary for this case, invalid, because in conflict with sec. 92 of the Constitution. Next, he says that, so far as the legislation is valid and is relied on to justify the State's conduct complained of, it fails because that conduct itself is an interference with the absolute freedom of inter-State trade protected by sec. 92 of the Constitution. Thirdly, he says, as to the conduct complained of which took place since the Acts expired, including the threats of continuance, that the State by its executive action apparently asserted, and still asserts, that under or by virtue of the State Constitution it is empowered to subject the plaintiff to the treatment he has suffered. Each position will be dealt with separately. The first position, attacking the validity of the legislation, concentrates on (1) sec. 28 and sec. 29 and (2) sec. 20. The second, which assumes legislative validity, consists of the events ending on 31st March 1927. The third consists of the subsequent events. We shall deal with each position in order.
The second complaint under the first position impeaches the validity of sec. 20 as the foundation of the determinations for breach of which the prosecutions were instituted. Sec. 20 is not verbally excluded from sec. 92 of the Constitution, and it stands on its own basis as a cause of complaint. Sec. 20, as amended, stood thus:—"(1) The Board shall also have power, in its absolute discretion, from time to time to determine where and in what respective quantities the output of dried fruits produced in any particular year is to be marketed, and to take whatever action the Board thinks proper for the purpose of enforcing such determination. (2) Notice of every such determination shall be given (a) by public notice; or (b) by sending by post," &c. Sec. 31, as amended, was as follows: "If any of the following persons, that is to say—(a) any grower; (b) any dealer; or (c) any person being the owner or occupier or person in charge of any packing shed, sells or otherwise disposes of any dried fruits contrary to any determination of the Board applying to such fruits and notified to him in manner prescribed, such person shall be liable to a penalty not exceeding five hundred pounds." In the year 1926 the Board, acting under sec. 20, made three determinations fixing the maximum proportions of currants, sultanas and lexias produced by growers, which might be "marketed in the Commonwealth of Australia," at 15, 20 and 20 per cent; 15, 30 and 30 per cent; and 30, 45 and 60 per cent—respectively. In September 1926 the Board summoned the plaintiff for exceeding the limits so prescribed, and three summonses, as already stated, await the decision of this Court as to the validity of the relevant sections. It was not contested at the Bar—the reason for this we are not concerned with—but it nevertheless has to be considered, whether this matter, so far as it relates to the validity of sec. 20 or the validity of the determination of the Board under that section, is a matter within or outside the original jurisdiction of this Court. That is to say, whether it is or is not within the words of sec. 76 of the Constitution "a matter arising under the Constitution or involving its interpretation." McArthur's Case[7] is clear and definite authority for what we should think inherently plain, namely, that if at any point the interpretation of the Constitution becomes, in some event to be judicially determined, an issue necessary to the success of one side or the other, so that the "matter" in controversy may for one side or the other be incapable of determination without that interpretation, the "matter" falls within the original jurisdiction of this Court. If, to use the expression of Harlan J. in Railroad Co. v. Mississippi[8], the constitutional question "forms an ingredient of the original cause," it is within the judicial power (see also Brooks v. United States[9]). The question is an "ingredient" if in some event as the cause stands it is an issue, and that it is an issue in the circumstances just stated, we shall presently make clear. That this matter falls within the original jurisdiction of this Court, so far as to determine whether sec. 20 of the State Act conflicts with sec. 92 of the Constitution, appears transparent, and we proceed to consider whether such conflict exists.
The method of approach for this purpose of conflict is marked out by the case of McArthur[10], and we accordingly follow it. First, we examine the language of sec. 20 and the determinations, to ascertain its purport apart from any restraining considerations of Constitutions, either State or Federal: next, if necessary, we interpret, which includes its application, the State Constitution (Macleod v. Attorney-General for New South Wales[11]); and lastly, if that be also necessary, and only if necessary, we interpret and apply the Federal Constitution (McArthur's Case). Confining ourselves, in the first instance, to the language of the instruments—section and determination—the central word is "marketing." The determination of the Board is to regulate "marketing," as to (1) "where," or (2) "in what respective quantities" the output of dried fruits may be "marketed." The word "marketed" in the determination must be given the same meaning as it has in the Act (Richards v. Attorney-General of Jamaica[12]). "Marketing" of dried fruits is indeed the central purpose of the Act, as may be seen by reference to its title, to sec. 19 (b), to sec. 20 and to sec. 34, sub-secs. 1 (a) and 1 (c). Other provisions are substantially ancillary to the control of "marketing." The true interpretation of the disputable words when all proper canons of interpretation are applied, is this:—"Marketed" means some commercial act done in South Australia, such as sale, consignment or otherwise, having the effect of supplying the economic demand for dried fruits in some markets. "Where" is universal. It refers to any place in the world where such demand exists. The relation of the two words in sec. 20 is comparable to the relation between firing a bullet from a gun of unlimited range in South Australia at a target situate anywhere. The remaining language of the section is not open to controversy. The construction of the first sub-section, then, is as follows:—The Board has power to determine in what market for dried fruits in the world, and in what respective quantities, dried fruits are to be marketed—that is, so sold, consigned or otherwise commercially dealt with in South Australia as to be thereby supplied to any market for dried fruits anywhere in the world, &c. The determination as an exercise of that power says that so marketing within the Commonwealth, the stated proportional quantities are not to be exceeded. In interpreting the word "marketed" we have not been unconscious of the danger the community runs of having its legislative measures designed for meeting new needs and circumstances of its progress and development frustrated by the comparative want of judicial acquaintance with the current coin of commercial intercourse. The mintage of commercial words and phrases is so rapid, new or specialized values are so frequently given to the verbal coin already in circulation, that Courts may easily fail to perceive the intended meaning of expressions in modern statutes. Parliament is in necessarily closer touch with the ordinary streams of commercial thought and modes of expression than is the Judiciary, and therefore the full connotation of the word "marketed," as used in this connection, has given us much reason for consideration. But one thing is quite clear. The term "market" and, necessarily, its correlatives "marketing" and "marketed" have in recent years considerably expanded with the enlargement and adjustment of international commerce. Even since 1908, when the relevant volume of the Oxford Dictionary appeared, the literature of the subject shows a noticeable alteration in the connotation of the terms "market" and its cognate expressions. Webster's Dictionary (1923 and 1926), when contrasted with the Oxford Dictionary of 1908 and the Webster (say) of 1883, shows the great enlargement in the connotation of the word "market." From denoting the very limited locality itself where the mutual operations of buying and selling took place, it has come to bear also the world-wide conception as the recent Webster in the sixth meaning has it, "the economic extent of the commercial demand for commodities." The seventh meaning is also modern, namely, "opportunity for selling or buying of commodities, or the rate or price offered for them; also, the phase or course of commercial activity by which the exchange of commodities is effected." To a purchaser the terms "market" and "marketing" represent the field of opportunity and the exercise of commercial activity for his requirements. To the seller—which is the aspect with which we are presently concerned—they represent his opportunities and activities. For instance, a wool-sale in Melbourne, attended by American, French, German and Japanese buyers, is a "market" answering both descriptions. To the buyers it represents commercially, as well as locally, the Australian market—the selling market. To the sellers it represents commercially, that is, practically, the markets of the buyers—the buying market. The prices which the buyers are prepared to give are determined eventually by the demand conditions of the consumers on the commercial field occupied by the buyers—conditions of quantity, quality, style, price, &c., as well as circumstances of transport, storage, &c., relevant to that commercial field. Unaffected by any restricted canon of interpretation, the words "marketed" and "where" are universal in respect of locality. But there is one recognized canon of interpretation, namely, that a Legislature is presumed, in the absence of express statement or necessary implication to the contrary, to intend validity, and thereby to intend acting within the limits of its jurisdiction. Legislation of the British Parliament as to bigamy is primarily intended to cover a bigamous marriage by a British subject anywhere in the world (Trial of Earl Russell[13]). The British Parliament, by its grant of a Constitution to South Australia, might have authorized the Parliament of that State to legislate as widely. It is necessary, therefore, to examine and interpret the Constitution in order to ascertain whether it has done so. Interpretation of that Constitution being necessary, it is found that legislative jurisdiction is limited to South Australia. Macleod's Case[14] establishes the canon of construction that, there being no reason of express statement or implication to the contrary, the enactment should be read down to the extent, and only to the extent, necessary to its validity. Applying that canon, it is necessary and proper to read down "marketed" to commercial acts in South Australia only. Express limitation is out of the question. Necessary implication is, however, admissible. "Necessary implication," according to the opinion of Lord Eldon, adopted in Hill v. Crook[15], "means, not natural necessity, but so strong a probability of intention that an intention contrary to that which is imputed ... cannot be supposed." When we come to consider the probability of the legislative intention to apply the word "where" outside South Australia, as well as inside, the strength of that intention is undeniable. Sub-sec. 2 of sec. 2 looks to corresponding legislation in Victoria, the competing State in dried fruits as defined. Renmark and Mildura are representative areas. If sec. 20 is confined to South Australian markets the first difficulty is, why trouble about Victoria? What has one State to do with the purely internal trade arrangements of another State? What does it matter to South Australia whether Victoria does or does not restrict the dried fruit trade between Mildura and Bendigo, so long as Mildura is free to trade outside Victoria? Again, if the "marketing" contemplated by the Act is to places purely intra-State, what is meant by "concerted action in the marketing of dried fruits produced in Australia" (sec. 19 (b))—that is, produced anywhere in Australia? "Concerted action," which is entirely separate and distinct, and therefore necessarily unconnected, is an extraordinary phenomenon, which we are unable mentally to picture. "Simultaneous" action of the kind we could understand, but "concerted" action adds an element that is contradicted by hypothesis of mutual restriction to the one State. One might as well speak of concerted action on the part of the inhabitants of a street in taking their several morning baths or evening dinners. Then there is another peculiarity that finds no raison d'être in the assumption that the Act is confined to intra-State marketing. On that assumption, how can we account for the right of the dispossessed owner of dried fruits under sec. 28 to receive London price less adjustments? If sec. 20 necessarily leaves him entirely free to sell anywhere outside South Australia, why select London as the sole test of value? If, however, Australian trade is intended to be controllable, and London left free, or practically enforced and assisted by brands and labels, a good reason is shown for providing for London value. The presumption would be that compulsory taking was to ensure marketing in the London market, where that was not intended voluntarily. It is also a significant fact that sec. 20 is not preceded by the prefatory words of sec. 28 in respect of sec. 92 of the Federal Constitution. On the whole, the construction of sec. 20 of the statute seems to us overwhelmingly opposed to restricting it to control of intra-State trade. Its natural construction, apart from all constitutional considerations, is unlimited as to space. Macleod's Case[16], while restricting penalization to acts done within the jurisdiction, does not limit the area of the commercial effect of the acts struck at. Before Federation the State Parliaments could validly prohibit the sale of goods for, or their despatch to, any part of the Commonwealth, or India or Patagonia. Therefore, stopping at State law, the determinations which, properly construed, cover for the same reasons precisely the same ground as the section, so far as this case is concerned, are lawful restrictions on inter-State trade. No commercial man—and the determination is intended for commercial men—would for a moment think that it was intended to affect a transaction by him actually entered into outside the limits of South Australia. It refers to the "output produced by each grower." But there is not in the Act or the determination any express limitation of "grower" to South Australia. Nevertheless, everyone would understand "grower" to be limited to South Australia in both instruments; and similarly as to the transactions necessary for "marketing." The words "in the Commonwealth of Australia" would mean to any commercial man, having regard to the context, that the "market" to be supplied was "in the Commonwealth of Australia." He would not unnecessarily attribute absurdity either to Parliament or to Board. The result, then, is that certain acts of trade and commerce in South Australia are so far penalized if they are directed either to forbidden intra-State or inter-State trading. This position reached, it at once, and without dispute, compels the interpretation and application of sec. 92 of the Constitution. The matter is consequently within the original jurisdiction of the Court. Exercising that jurisdiction, the result as to sec. 20 and its attendant determinations is that they are invalidated at least pro tanto in respect of the plaintiff's inter-State trade.
Obviously, also, this class of case is distinguished from the cases provided for in secs. 38A and 40A of the Judiciary Act. Those sections, which ex facie are intended to preserve the principle of sec. 74 of the Constitution, have been expounded on several occasions. It is sufficient to say that they take away from the Supreme Court of a State the jurisdiction it normally has, only when the "question" predicated both in sec. 74 of the Constitution and the quoted sections of the Act in fact arises for actual decision. The language of the legislation and its transparent purpose so indicate. Until that event arrives the State Court's jurisdiction is not taken away. Naturally, it does not follow that, merely because there is State jurisdiction in a given matter, there is not also Federal jurisdiction (see Lorenzo v. Carey[28]). In the present case, the "matter" as a controversy within original Federal jurisdiction already exists on the face of the statement of claim, the necessary circumstances existing to bring it within sec. 30 of the Judiciary Act. How widely the two classes of case differ in this respect may be seen by considering the result of confusing them. If, for instance, it were held that sec. 76 (II.) of the Constitution did not apply except where the constitutional "question" actually and necessarily presented itself for decision, then, as already mentioned, if only the facts were disputed, or if the authority of the State statute relied on were contested on its construction, there would be no "matter" falling within the constitutional category referred to—merely to pick up matters when so much had been decided would not satisfy the contents of sec. 76 (II.). The distinction thus appearing appears to us to make the view above presented with reference to the present case practically conclusive.
It may not be unimportant, though it forms no part of our reasoning, to observe that the formal defence as a whole contests the whole case, in fact and in law. It forms what seems to us an excellent practical illustration of what would be the consequence of holding contrary to the view we have expressed. We mean that the defendant State could ride off on an assumption, which the plaintiff could not remove, that it was unjustified by State law, and so escape Federal judicial investigation, and then proceed in the State Court to demonstrate, so far as possible, the impropriety of the assumption. For ourselves, we do not see how this Court, without at least holding the State to be without legal justification under State law, which is deciding the case, can allow the demurrer objecting to its so deciding, nor how, if it allows the demurrer, it has jurisdiction to determine whether the State is or is not justified under State law. Inconsistency obtrudes itself.
The Wheat Case.—To prevent any possible misconception as to the relation of this case to the Wheat Case[29]:—In that case the expropriation of wheat by the Government was held to be good, because it appeared that it was made without reference to inter-State trade or inter-State contracts as a criterion or as influencing the operation of expropriation, and without discrimination. Otherwise the contrary would have been held. (And see McArthur's Case[30].) Here, as shown, the purpose for which the goods were seized was direct interference with inter-State trade, and inter-State contracts not only influenced the governmental action but formed its criterion. In Municipal Council of Sydney v. Campbell[31] Duff J., speaking for the Judicial Committee, said: "A body such as the Municipal Council of Sydney, authorized to take land compulsorily for specified purposes, will not be permitted to exercise its powers for different purposes, and if it attempts to do so, the Court will interfere. As Lord Loreburn said in Marquess of Clanricarde v. Congested Districts Board4(1914) 79 J.P. 481.: Whether it does so or not is a question of fact. Where the proceedings of the Council are attacked upon this ground, the party impeaching those proceedings must, of course, prove that the Council, though professing to exercise its powers for the statutory purpose, is in fact employing them in furtherance of some ulterior object." Here the Government of South Australia has made it perfectly plain, and without the slightest attempt at concealment, that it was expropriating the plaintiff's property to enforce sec. 20 of the Act, that is, to obstruct and prevent his inter-State trade, and not for any general State purpose independent of the direct object mentioned. This case, therefore, is the antithesis of the Wheat Case[33].
Constitutional Result.—If it be assumed that, the dilemma above stated being disregarded, the demurrer is allowed as to any of the acts complained of, what is necessarily implied? Either (1) that the State is legally responsible to make redress for the acts of the individuals committing them, or (2) that the State is not responsible at all. If the State is legally responsible to make compensation—and by assumption in the State Courts and by State law—that must be because by law the State was injuring the plaintiff by those individuals, and so comes within the principle respondeat superior. But if so, that law must be statutory, because it must ex necessitate be either the statute of the State Constitution or some statute made under it, as, for instance, the Public Service Act. That involves the legal implication that though statutory powers were exceeded, the State was purporting to act, and was generally acting, within them, just as it did while the Marketing Acts were in force. To attempt a constitutional distinction between those categories of statutes would, as it seems to us, be to
... distinguish and divideEither, then, on the assumption that the State is responsible at all in this case, the demurrer should be wholly allowed or wholly overruled.A hair, 'twixt south and south-west side.
The alternative assumption—complete absence of State responsibility for the acts of trespass since 31st March 1927—would be startling. It would mean that sec. 92 of the Constitution could never be enforced, because the State had not in law authorized the act complained of, and the individual acting without State authority was not within the ambit of the section. The most extreme optimism would be hard pressed to find a means to surmount the difficulty. Even the first assumption—State responsibility for actual authorization—that is, responsibility assumed to be under State law alone, presents a serious obstacle. If it be now decided that sec. 92 does not affect the case here, because not in issue in any way, then necessarily it would still be so in the State Court, and equally so in appeal to this Court. So that sec. 92 is shut out on every side. And there would be cut away all liability of a State whatsoever under the Federal Constitution in such a case. At common law the Crown is not liable for an unauthorized taking by an individual, and the view we reject would leave it entirely within the power of a State to deny all recourse to itself or even the individual for redress. The true position of the whole matter, however, seems to us, as we have said much earlier, so plain that only its serious consequences and our respect for the opposite opinion justify this elaborate exposition.
In our opinion, the demurrer should be entirely overruled.
Gavan Duffy, Rich and Starke JJ.
The plaintiff has commenced an action against the defendants in the original jurisdiction of this Court. He filed a statement of claim alleging that he is a grower of and dealer in dried fruits engaged in inter-State trade. He claims that determinations of the Dried Fruits Board of South Australia as to the proportion of the output of currants, sultanas and lexias produced by the growers in the year 1926 which may be marketed in the Commonwealth are invalid and also that acquisitions made by the Government of South Australia on and between 5th March and 9th May of large quantities of dried fruits belonging to the plaintiff are invalid. The defendants demurred to this statement of claim and also raised an objection to the jurisdiction of the Court as to part of the plaintiff's claim. The plaintiff's contention is that the determinations and acquisitions already mentioned were made under and in pursuance of the Dried Fruits Acts 1924 and 1925 and that those Acts are invalid because they contravene the provisions of sec. 92 of the Constitution. The Dried Fruits Acts 1924 and 1925 continued in operation only until 31st March 1927, and, consequently, determinations or acquisitions made or effected after that date cannot be referred to those Acts. The plaintiff in his statement of claim wrongly assumed that the Acts of 1924 and 1925 had been continued in operation by the Dried Fruits (Continuation of Operation) Act of 1926; but the continuation in operation of these Acts has not been proclaimed under the authority of the 1926 Act and therefore they have not been in operation since 31st March 1927. On discovering the true fact the plaintiff amended his statement of claim. The consideration of his position with respect to the acts of the defendants alleged to have taken place after 31st March 1927 may be postponed for the present.
It is necessary, in the first place, to consider the meaning of the South Australian legislation and how far the acts alleged by the plaintiff are warranted by the terms of that legislation. It appears to form part of a scheme, in which the Commonwealth and the States of Victoria and South Australia have joined, to regulate and control the marketing and sale of dried fruits. The Commonwealth regulates the export of dried fruits—the external trade of the Commonwealth (Dried Fruits Export Control Act 1924)—whilst the States by their legislation regulate or attempt to regulate the internal trade (Dried Fruits Acts 1924 and 1925 Vict.; Dried Fruits Acts 1924 and 1925 S.A.). The legislation of the States should be construed so as to uphold it rather than defeat it; to keep it within the legislative power of the Parliament of the States rather than beyond them (Wheat Case[34]). Now, it is clear enough that the legislation does not transcend the territorial jurisdiction of the Parliament of South Australia—it is confined to persons, property or acts within the territorial limits of South Australia; but that does not advance us very far as regards the provisions of sec. 92 of the Constitution, for State legislation may deal with acts within its territorial limits and yet contravene the provisions of sec. 92 of the Constitution that trade, commerce and intercourse among the States shall be absolutely free.
The South Australian statute must now be examined in detail. It provides for the constitution of a Dried Fruits Board consisting of five persons—three representatives of the growers, that is, persons who produce dried fruits for sale or barter, and two official members, one of whom is to be chairman of the Board. It confers extensive powers upon the Board. Thus sec. 19 gives the Board power to make contracts in respect to the sale or purchase of dried fruits produced in Australia, to open shops for the sale of dried fruits, to encourage the consumption of dried fruits and create a greater demand therefor. The validity of these powers, taken singly, was not challenged during the argument, but it was said that sub-secs. (b) and (f), taken either singly or together with various other provisions of the statute, notably secs. 20, 26, 28 and 29, were in contravention of sec. 92 of the Constitution. The sub-sections which were challenged enact as follows: Sec. 19—"The Board shall have power in its absolute discretion from time to time (b) to enter into contracts with Boards appointed under legislation in force in other States with objects similar to those of this Act for concerted action in the marketing of dried fruits produced in Australia and for purposes incidental thereto, and to carry out such contracts... (f) to fix the maximum prices to be charged on the sale of dried fruits, whether wholesale or by retail." The plaintiff has not alleged in his statement of claim that the Board made any such contracts or fixed any such prices. In substance he alleges that he might be prejudiced in his inter-State trade if the powers conferred by the said sub-sections were exercised. So far, no right of the plaintiff is alleged to have been invaded under those sub-sections. The jurisdiction of the Court to declare a statute or parts of a statute in contravention of the Constitution can be invoked only when it is found necessary to secure and protect the rights of a party before it against unwarranted exercise of legislative power to his prejudice (Attorney-General for New South Wales v. Brewery Employees Union of New South Wales[35]).
Next, sec. 20 of the statute must be considered. It enacts that the Board shall have power in its absolute discretion from time to time to determine where and in what respective qualities the output of dried fruits produced in any particular year is to be marketed and to take whatever action it thinks proper for the purposes of enforcing such determination. The statement of claim alleges that the Board has exercised this power and, to take one instance, determined in August 1926 that the proportion of the output of currants, sultanas and lexias produced by each grower which may be marketed in the Commonwealth of Australia should not be more than the following: for currants 20 per cent, for sultanas 30 per cent, for lexias 60 per cent. Such a determination undoubtedly affects and prejudices the right of the plaintiff to conduct his business as he thinks expedient. The first question therefore is whether the section authorizes the determination. On ordinary principles of construction the section must be confined to dried fruits produced within the territorial jurisdiction of South Australia, and it would be within the constitutional competence and authority of the Parliament of South Australia, subject to any overriding provisions of the Constitution, to control the marketing of dried fruits produced within its territory and to prohibit persons subject to its jurisdiction from marketing more than a certain proportion of such produce in the Commonwealth. The provisions of sec. 20 properly construed do, in our opinion, delegate that power to the Dried Fruits Board. The Act contemplates the concerted action of the Commonwealth and the States in the marketing and control of dried fruits to the fullest extent within the competence of the several authorities. If the powers in sec. 20 be confined to persons and dried fruits within the confines of South Australia, still as applied to those persons and to that subject matter the word "where" is without restriction or limitation of any kind and is applicable to places outside as well as to those within South Australia. Such a construction is consistent with the objects of the Act and does not transcend the territorial jurisdiction of South Australia. Consequently, the determination of the Dried Fruits Board is warranted by the provisions of sec. 20 of the Act. The effect, then, of this determination is to prohibit growers in South Australia from marketing their produce or engaging it in inter-State or other trade in Australia beyond the proposition mentioned. Such a prohibition contravenes sec. 92 of the Constitution as expounded in McArthur's Case[36]: "The prohibition by a State Legislature of inter-State sales of commodities either absolutely or subject to conditions imposed by State law is ... a direct contravention of sec. 92 of the Constitution"[37].
The provisions of secs. 28 and 29 next fall for consideration. They give authority to purchase by agreement or to acquire compulsorily on behalf of His Majesty any dried fruits in South Australia grown or dried in Australia which are not held for export under licences granted by the Commonwealth pursuant to the Dried Fruits Export Control Act of the Commonwealth. The Wheat Case[38] is a binding and conclusive authority that such a law does not violate the provisions of sec. 92. It was pointed out, however, that the acquisition authorized by sec. 28 of the South Australian Act was an acquisition for the purposes of the Act or of any contract made by the Dried Fruits Board; and, consequently, it was argued that if any of those purposes were or might be in violation of the provision of sec. 92 the whole section must necessarily be invalid. We need not consider the effect of this limitation on the right of acquisition because sec. 28 conditions the power of acquisition by its opening words, "Subject to section 92 of the Commonwealth of Australia Constitution Act," in effect providing that the power of acquisition shall not be exercised so as to violate sec. 92 of the Constitution. Consequently, whatever the purposes of the Act may be, whether in violation of sec. 92 of the Constitution or not, the acquisition authorized by sec. 28 can never violate sec. 92, for it can operate only in accordance with, and not in violation of, the provisions of that section. An acquisition not within the Constitution is not authorized by sec. 28, but, in our opinion, the acquisitions effected in this case are strictly within the limitation imposed on the operation of sec. 28 and are therefore authorized by that section.
It remains only to consider the objection to the jurisdiction of this Court which was argued with the demurrer. This Court has original jurisdiction in all matters arising under the Constitution or involving its interpretation (Judiciary Act, sec. 30); and on that provision the jurisdiction of this Court is rested. Matters arising under the Constitution or involving its interpretation are those in which the right, title, privilege or immunity is claimed under that instrument, or matters which present necessarily and directly and not incidentally an issue upon its interpretation. It is quite clear that the interference alleged in par. 21 of the statement of claim and the compulsory acquisition of the plaintiff's dried fruits after the expiration of the Dried Fruits Act on 31st March 1927 raise no question on the Constitution or involving its interpretation. The defendants' acts are rightly stated as trespasses, and the causes of action are not founded on the Constitution but upon the plaintiff's possessory rights in his dried fruits. We say that these acts of the defendants are rightly alleged as trespasses because we think the plaintiff must have failed if he had relied on those acts as giving him a right of action for damages for breach by the defendants of the provisions of sec. 92 of the Constitution. In our opinion, no such action would lie. Sec. 92 was defined in McArthur's Case[39] as applying only to the States, and we think that it is no more than an inhibition addressed to the Parliaments of the States preventing them from legislating so as to interfere with the freedom prescribed by that section. It gives no right to the citizens of the Commonwealth except the right to ignore, and, if necessary, to procure the assistance of the judicial power in resisting, any such legislation. The defendant cannot justify those trespasses by invoking the Constitution or any statute of South Australia, which involves the interpretation of sec. 92 or of any other section of the Constitution. So far as pleadings go, it is quite impossible to say that any provisions of the Constitution touch the case, and, to found jurisdiction, the facts alleged in the pleadings must distinctly and clearly raise the issue of constitutionality. Equally clear is it that the allegations in the pleadings relating to the determination fixing the proportion of the output of currants, sultanas and lexias which may be marketed in the Commonwealth, raise an issue directly involving the interpretation and application of sec. 92 of the Constitution, and therefore within the jurisdiction of this Court.
The allegations as to the validity of secs. 28 and 29 and the acquisitions of the plaintiff's dried fruits under those sections also in our opinion raise an issue directly affecting the interpretation of the Constitution; they raise the same question as was raised in the Wheat Case and the application of sec. 92 to a section somewhat differently framed. The result is that the objection as to the jurisdiction should be upheld in so far as it relates to the unlawful taking alleged in par. 21 of the statement of claim and to the compulsory acquisition of dried fruits after the expiration of the Dried Fruits Act on 31st March 1927, and not otherwise; that the demurrer should be overruled in so far as it relates to the cause of action based on the determinations fixing the proportion of the output of currants, sultanas and lexias produced by each grower in 1926 which may be marketed in the Commonwealth, and allowed as to all other causes of action in the pleadings mentioned within the jurisdiction of this Court.
Demurrer overruled so far as it relates to the cause of action based on the determinations fixing the proportion of the output of dried fruits produced by each grower in 1926 which might be marketed in the Commonwealth. Demurrer otherwise allowed.
Solicitors for the plaintiff, Madden, Butler, Elder & Graham.
Solicitor for the defendants, A. J. Hannan, Crown Solicitor for South Australia.
Solicitor for the intervener, Frank G. Menzies, Crown Solicitor for Victoria.
[1] (1867) L.R. 2 H.L. 239, at p. 261.
[2] (1893) A.C. 602, at pp. 621-622.
[3] (1892) 2 Q.B. 358, at pp. 370-371.
[4] (1892) 2 Q.B., at p. 403.
[5] [1850] EngR 300; (1850) 6 Moo. P.C.C. 257, at pp. 278-279.
[6] [1920] HCA 77; (1920) 28 C.L.R. 530.
[7] [1920] HCA 77; (1920) 28 C.L.R. 530, particularly at p. 543.
[8] [1880] USSC 144; (1880) 102 U.S. 135, at p. 141.
[9] [1925] USSC 83; (1925) 267 U.S. 432.
[10] [1920] HCA 77; (1920) 28 C.L.R. 530.
[11] (1891) A.C. 455.
[12] [1848] EngR 705; (1848) 6 Moo. P.C.C. 381, at p. 398.
[13] (1901) A.C. 446.
[14] (1891) A.C. 455.
[15] (1873) L.R. 6 H.L. 265, at p. 277.
[16] (1891) A.C. 455.
[17] [1918] USSC 126; (1918) 247 U.S. 105, at p. 114.
[18] (1925) 268 U.S. 473, at p. 495.
[19] [1908] HCA 8; (1908) 5 C.L.R. 695, at p. 734; [1909] UKPCHCA 2; (1909) 8 C.L.R. 767, at p. 778.
[20] (1912) 1 Ch. 158.
[21] (1927) 43 T.L.R. 457, at p. 459.
[22] [1913] USSC 61; (1912) 227 U.S. 278.
[23] (1912) 227 U.S., at p. 282.
[24] (1912) 227 U.S., at p. 284.
[25] [1916] USSC 93; (1916) 240 U.S. 462.
[26] [1926] USSC 68; (1926) 270 U.S. 426, at p. 434.
[27] [1920] HCA 77; (1920) 28 C.L.R. 530.
[28] [1921] HCA 58; (1921) 29 C.L.R. 243, at p. 252.
[29] [1915] HCA 17; (1915) 20 C.L.R. 54.
[30] (1920) 28 C.L.R., at p. 551.
[31] (1925) A.C. 338, at p. 343.
[32] (1914) 79 J.P. 481.
[33] [1915] HCA 17; (1915) 20 C.L.R. 54.
[34] (1915) 20 C.L.R., at p. 96.
[35] [1908] HCA 94; (1908) 6 C.L.R. 469.
[36] (1920) 28 C.L.R., at p. 550.
[37] (1920) 28 C.L.R., at p. 555.
[38] [1915] HCA 17; (1915) 20 C.L.R. 54.
[39] [1920] HCA 77; (1920) 28 C.L.R. 530.
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