James v Commonwealth [1928] HCA 45; (1928) 41 CLR 442 (12 December 1928)

The plaintiff claims a declaration that the Dried Fruits Act 1928 (No. 11 of 1928), and particularly sec. 3 of that Act, is invalid as being in contravention of the provisions of sec. 92 and/or sec. 99 of the Constitution. He claims also that the Regulations made under that Act are invalid for the same reason. The defendants the Commonwealth and H. C. Brown demur on the ground that the Act and Regulations are valid laws of the Commonwealth, and the only question is whether these laws are or are not valid. Sec. 3 of the Act is in the words following:—"(1) Except as provided by the Regulations—(a) the owner or person having possession or custody of dried fruits shall not deliver any dried fruits to any person for carriage into or through another State to a place in Australia beyond the State in which the delivery is made; and (b) a person shall not carry any dried fruits from a place in one State into or through another State to a place in Australia beyond the State in which the carriage begins—unless in either case, a licence has been issued under this Act permitting that carriage of those dried fruits and except in accordance with the licence so issued. Penalty: One hundred pounds or imprisonment for six months. (2) Prescribed authorities may issue licences, for such period and upon such terms and conditions as are prescribed, permitting the carriage of dried fruits from a place in one State to a place in Australia beyond that State. (3) Any dried fruits which have been, or are in process of being, carried in contravention of this Act, shall be forfeited to the King. (4) A prescribed authority may require any person to give security, in such form and to such amounts as are approved by the Minister, for compliance by the person with the terms and conditions of any licence issued to him under this Act. (5) Where the Minister on report by a prescribed authority is satisfied that any person to whom a licence has been issued under this section has contravened or failed to comply with any term or condition of the licence, the Minister may cancel the licence, and the licence shall thereupon cease to be of any force or effect." Sec. 4 provides for the production of any licence issued under the Act and for the furnishing of returns and production of documents. Sec. 5 empowers the Governor-General to make Regulations.

In James v South Australia[1] this Court held, following the decision in W. & A. McArthur Ltd v Queensland[2] that the declaration contained in sec. 92 of the Constitution was 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. And in McArthur's Case the majority of the Court expressly held that the true office of sec. 92 was to protect inter-State trade against State interference and not to affect the legislative power of the Commonwealth. It is clear from these decisions that sec. 92 affords no ground for an attack on the validity of the Act in question—a Federal Act—or of the Regulations made thereunder. But the plaintiff relies also on sec. 99 of the Constitution, which provides that the Commonwealth shall not, by any law or regulation of trade, commerce or revenue, give preference to any one State or any part thereof over any other State or any part thereof. In Barger's Case[3] our brother Isaacs pointed out that the prohibition contained in this section is the same in purport and effect as that contained in sec. 51 (II.) of the Constitution "but so as not to discriminate between States," and that discrimination between localities means that because one man or his property is in one locality, then, regardless of any other circumstance, he or it is to be treated differently from the man or similar property in another locality. (See also Cameron's Case[4].) Accepting this interpretation of the meaning and effect of sec. 99 of the Constitution, we can find nothing in the Act now under discussion which gives preference to one State over another State. The provisions of the Act are general and apply equally to the transport of dried fruits from any one State to any other State, without discrimination of any kind. There is no provision in the Act which distinguishes between dried fruits in Queensland and similar fruits in South Australia, or exempts the owner of dried fruits in whatever State they may be from the restriction imposed on their transport to any other State. The attack on the validity of the Act therefore fails. But the Act provides that dried fruits shall not be delivered for carriage or carried from one State into another State unless a licence has been issued under the Act permitting such carriage, and "prescribed authorities" are the only persons authorized by the Act to issue such licences. "Prescribed" means "prescribed by the Act, or by Regulations made under the Act." (Acts Interpretation Act 1904, sec. 9) The Act contains no prescription of any authorities, but clause 2 of the Regulations provides as follows: "Prescribed authority means the Dried Fruits Board of the State of Victoria, New South Wales, South Australia, or Western Australia, as the case may be, constituted by the Dried Fruits Acts of the respective States." No authority is prescribed for the State of Queensland or the State of Tasmania. By clause 4 of the Regulations licences can only be obtained from the prescribed authority of the State in which the dried fruits are delivered for carriage into another State. It follows that the owner of dried fruits held in Queensland or Tasmania is precluded by the Regulations from obtaining a licence to deliver such fruit for carriage to another State, because and only because the property which he wishes to deliver is in Queensland or Tasmania, and the Act forbids delivery without a licence of dried fruits held in Queensland or Tasmania equally with those held in any other State. The Regulations, therefore, while affording to the owner of dried fruits held in any of the four other States—Victoria, New South Wales, South Australia or Western Australia—means of obtaining a licence and thus lawfully delivering his goods for carriage to a State other than that in which they are held, deny to the holder of dried fruits in Queensland or Tasmania the opportunity of obtaining a similar licence on any conditions. The mere fact that the dried fruits are held in the State of Queensland or the State of Tasmania prevents the owner from obtaining a licence which he might have obtained had his fruit been held in one of the other four States. In our opinion this affords a clear instance of discrimination between States or of a preference to one State over another State.

For these reasons we are of opinion that the Regulations in their existing form are obnoxious to the provisions of sec. 99 of the Constitution and that the demurrer should be overruled.

In this case there is a demurrer by the Commonwealth and Brown (secretary of the Commonwealth Department of Markets) to the statement of claim. The plaintiff is a fruit grower and dealer, and seeks a declaration that the Commonwealth Dried Fruits Act 1928 contravenes sec. 92 and/or sec. 99 of the Constitution, and a similar declaration as to certain regulations made under the Act. No objection has been taken as to the form of the action or as to the right of the plaintiff to sue. These defendants (there are other defendants) demur to the whole of the statement of claim on the ground that the facts alleged do not show any cause of action; but the argument of these defendants has been confined to the specific ground stated thus: "A ground in law for the said demurrer is that the Dried Fruits Act 1928 and the Dried Fruits (Inter-State Trade) Regulations 1928 made by Statutory Rules 1928, No. 91, are valid laws of the Commonwealth of Australia and that the acts which the said defendants are alleged to have done are authorized by the said Act and Regulations." The parties in their argument treat the Regulations as well as the Act as if fully before the Court; and the question is, does the Act, or do the Regulations, contravene sec. 92 or sec. 99 of the Constitution? Sec. 117 has also been referred to, but we have intimated our opinion that that section relates to discrimination on the basis of residence; and there is no such discrimination here.

Counsel for the plaintiff relies, in the first place, on sec. 92 of the Constitution, which enacts that "on the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free" But it has been decided by the majority of this Court in McArthur's Case[5]—though, I thought, unnecessarily—that sec. 92 is an inhibition on the States and not on the Commonwealth, in view particularly of the power of the Commonwealth Parliament under sec. 51 (I.) to make laws, "subject to this Constitution" with respect to trade and commerce with other countries and among the States. Mr. Cleland desired to challenge this decision, but, as the Chief Justice pointed out, we are not sitting as a Full Bench of seven Judges. Under the circumstances, we have to treat this Act of the Commonwealth as not obnoxious to sec. 92.

Another point taken by the plaintiff is that the Commonwealth Parliament has no power to delegate its functions under sec. 51 (I.) to any Board or person, and in particular to a State Board. By sec. 3 of the Act it is enacted: "Except as provided by the Regulations (a) the owner or person having possession or custody of dried fruits shall not deliver any dried fruits to any person for carriage into or through another State to a place in Australia beyond the State in which the delivery is made; ... unless ... a licence has been issued under this Act permitting that carriage of those dried fruits and except in accordance with the licence so issued." Then it is enacted that "prescribed authorities" may issue licences for such period and upon such terms and conditions as are prescribed permitting such carriage. There are also provisions for forfeiture, for security, for cancellation of licence, for production of licence, for returns, &c. By sec. 5 the Governor-General is empowered to make regulations prescribing matters for carrying out or giving effect to the Act, and in particular for "(a) prescribing the conditions (which may include conditions as to the export from Australia of dried fruits by or on behalf of the person applying for a licence) upon which licences may be issued," &c.

On 29th August 1928 the Governor-General made regulations under the Act to come into operation on 10th September 1928. The writ in this action was issued on 12th November 1928. By reg. 4, the prescribed authority of the State in which the dried fruits are delivered to any person for carriage into or through another State to a place in Australia beyond the State in which delivery is made, may grant an owner's licence in a certain form, "subject to the following conditions" (which need not be set out for the purposes of this statement), and by reg. 2 "prescribed authority" means the Dried Fruits Board of the State of Victoria, of New South Wales, of South Australia, or of Western Australia. These Boards are constituted by Acts of the said States; but it will be noticed, in passing, that there is no such Board mentioned as a prescribed authority for Queensland or for Tasmania. I understand that there are no such Boards created by the Legislatures of Queensland or of Tasmania. The result is that any Queensland or Tasmanian dried fruits are subject to the rigid prohibition of sec. 3 of the Act—that except as provided by the Regulations, an owner of dried fruits is forbidden to deliver dried fruits for carriage into another State, unless a licence has been issued permitting that carriage of those dried fruits. The result is that Queensland or Tasmanian dried fruits cannot be delivered for such carriage at all; for, under reg. 4, the prescribed authority that can grant a licence must be a prescribed authority of the State in which the dried fruits are delivered for such carriage. Queensland dried fruits cannot be the subject of a licence granted by the New South Wales Board, or by the Victorian, the South Australian or the Western Australian Board.

Now, I do not feel any difficulty as to the power of the Commonwealth Parliament, in making a law as to trade and commerce between the States, to delegate powers of granting the licences to specified persons or specified State officers or specified State Boards. It has been long settled by the decisions of the Privy Council in a series of cases, decisions which might almost be regarded as a confirmation of the charters of liberty for the Dominions, that the Legislatures created by the Imperial Parliament are not mere delegates, but, within the bounds of the subjects committed to them, have powers as plenary and as ample as the Imperial Parliament possesses; and that whatever the delegate of the Legislature prescribes is, if rightly considered, a prescription of the Legislature (R. v Burah[6]; Hodge v The Queen[7]; Powell v Apollo Candle Co[8]). If, therefore, the result of this case depended on the point of power to delegate as stated, I should have no doubt that it would be our duty to allow the demurrer. There are many State functionaries who are selected by the Commonwealth to carry out Commonwealth functions—including State magistrates, State policemen, State taxation officers; and I know of no principle that forbids such delegation.

But the whole of the Act and the whole of the Regulations have now to be considered to see whether they offend against sec. 99 of the Constitution: "The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference to one State or any part thereof over another State or any part thereof." Even if the word "regulation" has a broader meaning than a regulation under the powers conferred by an Act, it includes it: the section includes any rule intended by the Commonwealth to impose duties on persons with regard to trade, commerce or revenue. Here we find in reg. 4 that Queensland dried fruit may not be exported to another State at all, whereas New South Wales dried fruit may be exported to Queensland or any of the other four States, if the owner obtains a licence. Is not this a preference to New South Wales as between New South Wales and Queensland?

Probably at this point I ought to refer to my remarks made on the subject of discrimination in The King v Barger[9]. Counsel for the Commission has relied on them, and justifiably; for, although I was one of the minority in that case, and the majority of the Court found that there was, in the Excise Tariff Act, a discrimination in taxation such as offended against sec. 51 (II.) of the Constitution, there was not any condemnation of the principles which I stated. The section we have here to deal with (sec. 99) uses the word "preference," not "discrimination," but as one cannot conceive of any preference without discrimination, my remarks are quite relevant to this case. After twenty years, I adhere to what I there said. I said that to offend against sec. 51 (II.) it is Parliament, an Act of Parliament, that must discriminate. I said that "Parliament does not discriminate between States when it applies the same rule to all the States ... Parliament may not discriminate between States; but the facts may, and often must: Colonial Sugar Refining Co v Irving1(1906) A.C. 360.." We were dealing with an Excise Tariff Act which imposed (alleged) excise duties but prescribed a remission of the duties to any manufacturer whose wages conditions (a) were declared fair and reasonable by Parliament, or (b) were in accordance with an industrial award, or (c) were in accordance with an industrial agreement filed, or (d) were declared to be fair and reasonable by the President of the Arbitration Court. I went on to say, however, that under that Act "these alternative means for getting exemption are open to all manufacturers everywhere." But in the present case that cannot be said, for the only means of getting exemption—by applying for a licence to one of the four State Boards—is not open to those interested in Queensland or Tasmanian dried fruit. My remarks, therefore, in The King v Barger[11], do not help the defendant: they support the view that there is discrimination in this case. I find also a passage at p. 132 which favours the view hereinafter expressed, that the Act may be valid although the exercise of his powers by the Governor-General, this power to make regulations, may be invalid:—"When a power is created which, by its terms, allows a thing to be done either in a lawful or an unlawful way the power is not unlawful; but the exercise of the power will be valid or invalid according as it follows the lawful or the unlawful courses: Griffith v Pownall3(1843) [1843] EngR 440; 13 Sim. 393.; Slark v Dakyns4(1874) L.R. 10 Ch. 35.." I regret to have to refer to my own language at such length; but it is due to counsel citing it that I should explain the relation between that language and the present discussion.

It is not an answer to say, even if it is the fact, that Queensland or Tasmania does not produce dried fruits, and that this regulation makes no real difference to these States. We cannot take judicial notice of such a fact; nor can we assume a limit to the possibilities of a State's trade or commerce under the changing conditions of science and invention. My point is, if there should be any dried fruit produced in Queensland or Tasmania it cannot be delivered for carriage to other States at all, whereas dried fruits produced in other States can be delivered under a licence obtained from the Board of the delivering State. But it must be recognized that the preference, if it is a preference, is created not by the Act but by the Regulations. The Act is, in this respect, perfectly valid; for it may be obeyed without violating sec. 99 as to preference between States. But I do not see how reg. 4, with the definition of in sec. 2, can be obeyed without preference. The flaw, if it is a flaw, in the Regulations, could easily be avoided; for it has been explained in Colonial Sugar Refining Co v Irving[14] that where the rule laid down is general, applicable to all the States alike, but it is found to operate unequally in the several States, not from anything done by the Commonwealth Parliament, but from the inequality in the conditions existing in (in that case in the laws imposed by) the States themselves—the rule is invalid—the Commonwealth Parliament has not been guilty of discrimination or preference between States.

In my opinion reg. 4, with the definition of "prescribed authority" in reg. 2, creates a preference. But the Act being in itself valid, and prohibiting delivery from one State to another without a licence, while the regulation is invalid because the provision for a licence gives preference to one State over another, what is the result? Is the prohibition in the Act operative against the plaintiff in its absolute, unconditional form, as the plaintiff has no licence? This question raises, in another form, the difficult subject discussed in Owners of s.s. Kalibia v Wilson[15]. In that case, it happens that I did not agree with the majority as to the test of separability of valid and invalid provisions in an Act; but our views on the subject were merely obiter, not binding as law[16]; and I do not think that our views would differ in the result in application to the present case. It is our duty to give effect to the intention of Parliament up to the point at which Parliament infringes the Constitution; but if it is clear that Parliament did not intend to impose an absolute, unconditional prohibition without a provision for relaxation thereof, we must give effect to that intention. Now, Parliament certainly meant by sec. 3 of the Act, that there should be some exception to the prohibition—"Except as provided by the Regulations" The object of the Act (whether wise or unwise is not our business) was obviously to sustain the price of dried fruits in Australia by insisting that a certain proportion of the dried fruit shall be exported to foreign countries; the prohibition of delivery from one State to another would not have been enacted by Parliament simpliciter; and we have no right to treat the prohibition as applying to a case in which, by reason of the unlawful regulation, no valid licence can be obtained. This means that the plaintiff is not subject to the absolute, unconditional prohibition, and that the defendants' demurrer must pro tanto be overruled.

In my opinion, therefore, reg. 4 (with the definition of prescribed authority in reg. 2), must be treated as invalid. We should so declare, and to that extent overrule the demurrer.

This demurrer raises questions as to the validity of the Dried Fruits Act 1928 (No. 11 of 1928), enacted by the Parliament of the Commonwealth, and the Regulations of 1928 (No. 91) made thereunder.

First, it was argued that the Act and Regulations contravene the provisions of sec. 92 of the Constitution, declaring that trade, commerce and intercourse among the States shall be absolutely free. This argument is disposed of in this Court by the opinions expressed by a majority of the members of the Court in McArthur's Case[17] and by the decision in James' Case[18].

Next, it was argued that the Commonwealth could not invest State organs, namely Dried Fruit Boards, constituted under the laws of the States, with functions that involved an interference with inter-State trade. The Parliament of the Commonwealth has, however, an authority as plenary and as ample, within its legislative sphere, as the Imperial Parliament in the plenitude of its power possessed or could bestow (Hodge v The Queen[19]; Powell v Apollo Candle Co[20]). In my opinion, the Commonwealth may select its own agents or licensing authorities—whether persons resident in a State, or bodies incorporated by a State, or administrative bodies constituted under a State law. It is unnecessary to consider how far the Commonwealth could compel such administrative bodies as those last mentioned to administer the Commonwealth laws, for in this case the Dried Fruit Boards are functioning under the Commonwealth law without objection.

Finally, it was contended that the Dried Fruits Act and the Regulations contravene secs. 99 and 117 of the Constitution. The provision of sec. 117 was only faintly pressed, and is inapplicable in this case, for no disability or discrimination is based upon residence in any State. The provision of sec. 99 requires consideration. That section prescribes that the Commonwealth shall not by any law or regulation of trade, commerce or revenue give preference to one State or any part thereof over another State or any part thereof. Parliament cannot discriminate between States, or prefer one State over another. And, as I said in Cameron's Case[21], if a law is not applicable to all States alike, then it operates unequally between the States, and discriminates as a law between them. It is clear that the Dried Fruits Act 1928 itself does not discriminate between States, or prefer one over another: as a law, it treats all alike. Thus sec. 3 enacts that except as provided by the Regulations, owners or persons having possession or custody of dried fruits in any State shall not deliver such fruits to any person for carriage inter-State, and that persons shall not carry such fruit inter-State without a licence issued under the Act, and then only in accordance with such licence. The Regulations framed under the Act, however, enable the issue of licences in the States of Victoria, New South Wales, South Australia and Western Australia, but not in the States of Queensland and Tasmania. The Regulations do not prohibit the issue of licences in the latter States, but simply omit to make provision for their issue. The Governor-General might make such provision at any time. But the fact remains that he has not done so, and, unless and until he does so, the Regulations discriminate as a law in the issue of licences between the States of Victoria, New South Wales, South Australia and Western Australia on the one hand, and the States of Queensland and Tasmania on the other hand, and do not as a law treat all the States alike.

Solicitors for the plaintiff, Edmunds, Jessop & Ward, Adelaide, by Dawson, Waldron, Edwards & Nicholls.

Solicitor for the defendants, W. H. Sharwood, Crown Solicitor for the Commonwealth.

[1] (1927) 40 C.L.R. 1.

[2] [1920] HCA 77; (1920) 28 C.L.R. 530.

[3] [1908] HCA 43; (1908) 6 C.L.R. 41.

[4] [1923] HCA 4; (1923) 32 C.L.R. 68.

[5] [1920] HCA 77; (1920) 28 C.L.R. 530.

[6] (1878) 3 App. Cas. 889.

[7] (1883) 9 App. Cas. 117.

[8] (1885) 10 App. Cas. 282.

[9] (1908) 6 C.L.R., at pp. 130-133.

[10] (1906) A.C. 360.

[11] (1908) 6 C.L.R., at pp. 130-133.

[12] [1843] EngR 440; (1843) 13 Sim. 393.

[13] (1874) L.R. 10 Ch. 35.

[14] (1906) A.C., at p. 367.

[15] [1910] HCA 77; (1910) 11 C.L.R. 689.

[16] (1910) 11 C.L.R., see pp. 696, 700, 717-718.

[17] [1920] HCA 77; (1920) 28 C.L.R. 530.

[18] (1927) 40 C.L.R. 1.

[19] (1883) 9 App. Cas. 117.

[20] (1885) 10 App. Cas. 282.

[21] (1923) 32 C.L.R., at p. 80.

High Court of Australia

James v Commonwealth [1928] HCA 45; (1928) 41 CLR 442 (12 December 1928)

HIGH COURT OF AUSTRALIA