James v Commonwealth [1935] HCA 38; (1935) 52 CLR 570 (11 June 1935)

Rich J. delivered separate judgments in the summons and in the demurrer as follows:—

The Summons.—This is an application to stay an action as an abuse of the process of the Court and as disclosing no reasonable cause of action. The action is brought to impugn the validity of the Dried Fruits Act 1928-1935. The present plaintiff brought the action which was decided under the title James v. The Commonwealth[1]. He there attacked the validity of the legislation on the same ground, namely, inconsistency with sec. 92. His action succeeded on another ground. Although the Court ruled that he was wrong upon his first ground he is not estopped, because the decision passed in his favour. He could not appeal from the Court's ruling. It was so to speak a ruling in the air so far as he was concerned. It is now said, however, that he should not be allowed to re-litigate the question. According to his counsel litigation commenced with the intention of carrying the question of the validity of the Dried Fruits Act to the Privy Council. Its validity depends upon this Court's ruling that sec. 92 does not bind the Commonwealth. So far from thinking that he should not be allowed to litigate the question I think that he should be encouraged in his intention to obtain the decision of the Privy Council upon it. There is no reason whatever to be found in the course of his previous litigation to make it improper on his part to do so. It is an extremely difficult and doubtful question, and even in this Court there is something to be said against the view, which I personally take, that we ought to consider it closed. It is perfectly open to the Privy Council, where indeed it was expressly reserved (James v. Cowan[2]). In my opinion it is not the plaintiff's action but the defendant's summons which lacks any reasonable foundation

The Demurrer.—This is a demurrer to a statement of claim. The statement of claim seeks relief against the operation of the Dried Fruits Act 1928-1935 and of the regulations thereunder. Unless the Commonwealth Parliament is unaffected by sec. 92 of the Constitution this legislation would be invalidated by its provisions. So much appears to result from James v. Cowan[3]. The fate of the demurrer depends upon the question therefore whether, when sec. 92 declares that inter-State trade shall be free, it means free of State governmental interference or free of State and Commonwealth governmental interferences. Although up to 1920 the members of this Court had expressed from time to time the view that sec. 92 operated to restrict Commonwealth and State legislative power alike, upon a review of the interpretation of the section which in that year the Court undertook in McArthur's Case[4], the majority of the members of the Court adopted the view that Commonwealth legislative power was not affected by the provisions of the section. Since that decision there has been no enthusiasm displayed by the members of the Court for the conclusion that sec. 92 does not bind the Commonwealth. Until the present case, however, the question has not been presented to the Court for definitive judicial decision. In James v. The Commonwealth[5], the Court pronounced upon the question and followed the opinion expressed in McArthur's Case[6]. But it cannot be said that the decision of the question was necessary to the determination of the case. Two occasions have arisen since in which the question might have been, but was not, raised. The reason why the Court has not been called upon to deal definitively with the question is, no doubt, that the Commonwealth Parliament has not availed itself of the freedom from sec. 92 allowed to it by McArthur's Case[7], except in the legislation now under attack and possibly incidentally, and one may say accidentally, in the course of some other enactments. Indeed, in Vizzard's Case[8] the Commonwealth intervened with the object of securing an interpretation narrowing the freedom from State interference, and to that end boldly argued that the Commonwealth must be held bound on the terms of the provision notwithstanding McArthur's Case[9]. The small value placed by the Commonwealth upon the judicial emancipation from sec. 92 which it enjoys under the McArthur decision[10] is a consideration which might weigh in a less serious question in deciding whether we should now give effect to the opinion expressed in 1920. But, subject to an appeal to the Privy Council, it is our responsibility to interpret this section of the Constitution. When the Court has adopted an interpretation and declared, it is highly undesirable that the Court should depart from it. The tendency of the Court to do so which McArthur's Case[11] so well illustrates has produced results which confirm the truth of this remark. In my opinion we should hold, quite independently of our individual opinions, that the Commonwealth is not bound by sec. 92. An appeal lies to the Privy Council without any certificate under sec. 74. The reasons given in the Privy Council in James v. Cowan[12], and perhaps more at length in the judgments of myself and Dixon J. in Ex parte Nelson [No. 2][13], for the conclusion that sec. 92 raises no question inter se apply equally well to the case of the Commonwealth as to that of the State. The plaintiff in the present case can therefore carry the matter to the Privy Council. If their Lordships are willing to undertake the interpretation of sec. 92 in relation to any of the transport cases it will be satisfactory for them to pronounce upon this question also. In this Court it has even been found possible to disregard the question whether the Commonwealth is bound in deciding over what area of subject matter the freedom from State interference guaranteed by sec. 92 operates.

The plaintiff in this action seeks a declaration against the Commonwealth that the Dried Fruits Act 1928-1935 and regulations made thereunder contravene the provisions of sec. 92 of the Constitution, and are therefore invalid. The action is competent, according to the decisions of this Court, under sec. 75 (III.) of the Constitution (The Commonwealth v. New South Wales[14]; Attorney-General (Vict.) v. The Commonwealth[15]; cf. Monaco v. Mississippi[16]). The Commonwealth issued a summons, seeking an order that the action be dismissed or the statement of claim struck out, and it also demurred to the statement of claim. The summons was founded upon the provisions of Order XVII., r. 30, and also upon the inherent jurisdiction of the Court.

The decision in James v. The Commonwealth[17] operated, it was suggested, as an estoppel of judgment against the plaintiff (Hoystead v. Commissioner of Taxation[18]; Broken Hill Proprietary Co. v. Broken Hill Municipal Council[19]). But upon examination it will be found that these proceedings do not so operate; the Commonwealth there demurred to the statement of claim, but the demurrer was overruled, and by a consent order the Commonwealth was dismissed from the action.

A more formidable objection is that the statement of claim discloses no reasonable cause of action, having regard to the opinions and decisions of this Court in W. & A. McArthur Ltd. v. Queensland[20] and James v. The Commonwealth[21]. In McArthur's Case[22] it was said that "the true office of sec. 92 is to protect inter-State trade against State interference, and not to affect the legislative power of the Commonwealth" (Knox C.J., Isaacs and Starke JJ.[23], Higgins J.[24], Rich J.[25]). If this proposition is accepted, the basis of the plaintiff's claim falls to the ground, and the statement of claim shows no reasonable cause of action. But in James v. Cowan[26] the Judicial Committee said that the question "will remain for them an open question." And in R. v. Vizzard; Ex parte Hill[27], Gavan Duffy C.J., Evatt and McTiernan JJ. denied the proposition, despite the fact that Evatt J. had, in Huddart Parker Ltd. v. The Commonwealth[28], stated that the proposition was an accepted thesis. Again, in O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways (N.S.W.)[29], Dixon J. stated that he was not satisfied that the proposition was correct, though prepared to act upon it. Long before these cases, various Justices had expressed opinions that sec. 92 bound the Commonwealth and the States alike, but the point was not, I think, the subject of argument until the year 1916, when, in Duncan v. Queensland[30], the Commonwealth submitted that the section was a limitation upon the powers of the States to restrict inter-State trade. The point was expressly reserved, though the Chief Justice and other Justices, as then advised, could see no sound reason for so limiting the construction of sec. 92. The arguments in that case are worth attention. The question was again argued in 1920 in McArthur's Case[31]; and its reaction upon the proper interpretation of sec. 92 led in that case to "a closer examination of this question than any previous occasion upon which the Court" had "considered it," with the result that five Justices concurred in the proposition already stated. The summary power of dismissing the action and striking out the statement of claim in the present case should not, in these unusual circumstances, be exercised. The plaintiff should be allowed to pursue his action to a final decision, in this Court or elsewhere.

The demurrer remains for consideration. It was hardly denied that, having regard to the decision of the Judicial Committee in James v. Cowan[32], the provisions of the Dried Fruits Act 1928-1935 passed by the Commonwealth Parliament, and the regulations thereunder, contravened sec. 92 of the Constitution if the provisions of that section applied to the Commonwealth as well as to the States. It was suggested that the Court should reconsider McArthur's Case[33], and the proper interpretation of sec. 92 of the Constitution. It is, of course, open to this Court to reconsider its decisions (Australian Agricultural Co. v. Federated Engine-Drivers and Firemen's Association of Australasia[34]; The Tramways Case [No. 1][35]; Amalgamated Society of Engineers v. Adelaide Steamship Co.[36]; McArthur's Case[37]; Sexton v. Horton[38]); and it has done so in exceptional cases, e.g., where decisions of the Court were in opposition to the principles laid down by the Judicial Committee, or to the decisions of the Court of Appeal, or to its own decisions. We heard a full argument, however, upon the proper construction of sec. 92 in R. v. Vizzard; Ex parte Hill[39], but the Court did not depart from the proposition established in McArthur's Case[40] despite the opinion to the contrary of the Chief Justice and Evatt and McTiernan JJ. No other result could or should be expected in the present case.

But there is another good reason for refusing to reopen McArthur's Case[41]. Both the Commonwealth and the States, acting upon that case, have enacted legislation which, but for the decision, might be open to question. Some of this legislation is referred to in McArthur's Case[42]. A more recent illustration is the Dried Fruits Act here under discussion. And there is other similar legislation. Further, collective marketing of goods and competition between railway and motor services have assumed national importance in Australia, and important decisions have been given in this Court upon legislation affecting such matters and the relation of sec. 92 to that legislation; McArthur's Case[43] is at the base of these decisions. Reconsideration of it could not be limited to the mere question whether sec. 92 extends to the Commonwealth, for the determination of that question must, as Higgins J. said in McArthur's Case[44], have a reaction upon the true meaning of sec. 92 and its limitation of legislative and other powers in Australia. The case has been acted upon for so long that this Court should now treat the law as settled. Its review should be undertaken, if undertaken at all, by the Judicial Committee.

Dixon J. delivered separate judgments in the summons and in the demurrer as follows:—

The Summons.—This is a summons under Order XLIV., r. 2, to stay the plaintiff's action. The summons was referred to the Full Court in view of the fact that the defendant, the Commonwealth, had demurred to the statement of claim. The action is brought by a fruit merchant who desires to resist the operation of the legislation embodied in the Dried Fruits Act 1928-1935 of the Commonwealth and in the regulations thereunder. The substance of his case is that the legislation is inconsistent with sec. 92 of the Constitution and therefore void.

In 1928, the same plaintiff brought an action against the Commonwealth in which he complained, first, that the Dried Fruits Act 1928 and the regulations thereunder were inconsistent with sec. 92 of the Constitution and therefore invalid, and second, that the regulations were inconsistent with sec. 99 of the Constitution and therefore invalid. The Commonwealth demurred to the plaintiff's statement of claim in that action. The demurrer was overruled upon the ground that the regulations were contrary to sec. 99 and altogether void. The Court expressed the opinion however, and in that sense decided, that sec. 92 did not bind the Commonwealth and that for this reason the first ground of the plaintiff's attack upon the legislation failed. After the demurrer the action, so far as it affected the Commonwealth, was disposed of by an agreement between the parties, part of which was given effect to by a consent order dismissing the Commonwealth from the action. The order did not affect the plaintiff's rights which he now seeks to litigate. The proceedings upon the demurrer are reported[45].

The present action is instituted, as we are informed, with the view of carrying to the Privy Council the question whether sec. 92 binds the Commonwealth. The ruling of this Court that it does not bind the Commonwealth is open to very serious question, and it may be surmised that if the plaintiff had not won his case upon the second ground in 1928 he would or might have carried his first ground to the Privy Council in that litigation. It is said on the part of the Commonwealth in support of the application to stay this action that the plaintiff is seeking to re-litigate a question decided against him and therefore that his proceeding is an abuse of process and oppressive and should be stopped in limine. In one sense it is true that the question was decided against him. He submitted the contention to the Court which announced an opinion that he was wrong; but that opinion was not translated into a decree or order and could not be, because upon an independent contention he succeeded. There was no judgment from which he could seek special leave to appeal, none which estopped him. We were informed that his counsel were not permitted to argue the question because it was considered to be covered by the opinion of the majority of the Court expressed in McArthur's Case[46]. I am quite unable to understand why in these circumstances the plaintiff should not be permitted to prosecute the action. It appears to me a perfectly proper proceeding instituted for the object of obtaining a final decision upon the validity of legislation by the operation of which the plaintiff is aggrieved.

The Demurrer.—This is a demurrer to the plaintiff's statement of claim. The substantial question is whether the Dried Fruits Act 1928-1935 and the regulations thereunder infringe upon sec. 92 of the Constitution. It was not denied before us, although perhaps it was not conceded, that having regard to the decision of the Privy Council in James v. Cowan[47], the legislation would be inconsistent with sec. 92 if that provision bound the Commonwealth. For many years it was considered in this Court that sec. 92 did bind the Commonwealth (see Fox v. Robbins (1909)[48], per Isaacs J.; R. v. Smithers; Ex parte Benson (1912)[49], per Isaacs J.; New South Wales v. The Commonwealth (1915)[50], per Griffith C.J.[51], per Barton J.[52], per Isaacs J.[53], per Gavan Duffy J.[54]; Foggitt, Jones & Co. v. New South Wales (1916)[55], per Isaacs J.; Duncan v. Queensland (1916)[56], per Griffith C.J.[57], per Barton J.[58], per Isaacs J.[59]). But, in McArthur's Case (1920)[60], per Knox C.J., Isaacs and Starke JJ.[61], and, per Higgins J.[62], the contrary view was expressed. The case related to legislation of a State, but the opinion was stated as part of the reasoning by which the Court arrived at an interpretation of sec. 92. In James v. The Commonwealth (1928)[63], the Court again expressed the opinion that the Commonwealth was not bound by sec. 92. As the Court decided the proceeding then before it on another ground, it may not have been necessary in strictness to pronounce upon the question; but, however that may be, the Court did in fact do so. In Huddart Parker Ltd. v. The Commonwealth (1931)[64], the validity of regulations under Commonwealth legislation was upheld, although if sec. 92 bound the Commonwealth they were open to attack under that provision; an attack which would have required very serious consideration. No such attack was made, and the case was decided upon the basis that sec. 92 ought not in this Court to be considered as binding the Commonwealth. The question was referred to by Evatt J.[65].

In Victorian Stevedoring and General Contracting Co. Pty. Ltd. and Meakes v. Dignan (1931)[66] similar regulations were upheld in the same way. In R. v. Vizzard; Ex parte Hill (1933)[67], Gavan Duffy C.J., Evatt and McTiernan JJ. expressed their disapproval of the view that sec. 92 did not affect the Commonwealth. In O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways (N.S.W.)[68], I considered it desirable to express my own views upon the vexed question of the manner in which sec. 92 operates in reference to the States. Having done so, I ended my judgment with the following statement:—"It is because of these facts that I have thought it desirable to consider the present case independently of authority. In doing so, I have assumed that the Commonwealth is bound by sec. 92. While I recognize the strength of the considerations which led to the decision to the contrary, I have never felt satisfied that they sufficed to raise a necessary implication limiting the application of the provision to the States. Although quite prepared to follow the decision of the Court in James v. The Commonwealth1(1928) [1928] HCA 45; 41 C.L.R. 442., that the Commonwealth is not bound, I have not in this or previous cases based any affirmative reasoning upon it"[70].

In deciding this demurrer, we are called upon to choose between the two views taken in these divergent authorities. It appears to me that the Court, as a Court, has twice declared the law to be that sec. 92 does not bind the Commonwealth, and has done so on occasions when its declaration, although not absolutely necessary for the decision of the case, was highly relevant to the matter in hand. Thereafter it twice acted as a Court upon the assumption, although almost sub silentio, that this declaration bound the Court to such a construction of sec. 92. Notwithstanding my individual opinion, which I stated in Gilpin's Case[71], I think the Court should treat the question as governed by the rulings to the contrary and hold that sec. 92 does not bind the Commonwealth.

Evatt and McTiernan JJ. delivered separate judgments in the summons and in the demurrer as follows:—

The Summons.—This is an application to stay the action brought by the plaintiff in order to prevent the enforcement against him of certain Commonwealth legislation and regulations and determinations made pursuant thereof. The claim of the plaintiff is based upon the contention that the Dried Fruits Acts and regulations are inconsistent with sec. 92 of the Constitution. To the plaintiff's statement of claim the defendant Commonwealth has demurred, but it also contends that, by reason of the previous action between the same parties in the year 1928, the present action should be stayed altogether.

In the previous action, however, the plaintiff actually succeeded in having overruled the Commonwealth's demurrer to his then statement of claim, and the Court held that the regulations passed under the Dried Fruits Act then in force gave such a preference to one State over another State of the Commonwealth as was inconsistent with sec. 99 of the Constitution. And although the Court expressed the view that the Commonwealth Legislature was unaffected by the provisions of sec. 92, it appears from the judgment of Higgins J.[72], that, in the absence of a Full Bench of Justices, it was deemed undesirable to permit any reconsideration of the pronouncement in McArthur's Case[73] that the Commonwealth was not bound by sec. 92.

The previous decision of the Court, therefore, in James v. The Commonwealth[74] does not estop the plaintiff from litigating the question whether sec. 92 invalidates the present legislation and regulations as to dried fruits, by means of which the Commonwealth is from time to time renewing and perfecting its control over the marketing of dried fruits, not only without, but also within, the Commonwealth.

As will appear from our judgment upon the demurrer to the statement of claim, a clear majority of the present Justices of the Court have expressed their individual opinions that the Commonwealth is bound by sec. 92, and the plaintiff is now desirous of obtaining a final decision upon that question from the Privy Council, which took occasion to announce in James v. Cowan[75] that, for it, the question whether the Commonwealth was bound by sec. 92, would remain an open question.

There is no reason whatever for staying the action and the summons instituted for that purpose should be dismissed with costs.

The Demurrer.—This is a demurrer to the statement of claim of a South Australian trader who alleges that the Commonwealth, acting under the Dried Fruits Acts and regulations, but contrary to sec. 92 of the Constitution, is preventing the marketing of the plaintiff's fruit in the other States of the Commonwealth. The plaintiff lends point to his general claim for relief by referring to the seizures set out in pars. 6 and 8 of the statement of claim, and also to his being prevented from disposing of his fruit in the other States, as alleged in par. 14.

At the time of the two seizures—October 5th and 10th, 1932—the Commonwealth legislation in force consisted of the Dried Fruits Act, No. 11 of 1928, and the regulations made in pursuance thereof (Statutory Rules, No. 91 of 1928, No. 135 of 1928, No. 151 of 1930, and No. 28 of 1931). This legal position was altered by the Act No. 5 of 1935, sec. 3 of which provided that any regulations made under the 1928 Act and any licences issued or action taken under such earlier regulations should be deemed as effectual as if the 1935 Act itself had been in force when the prior regulation was made. Doubts appear to have arisen as to whether an owner carrying his own fruit inter-State infringes the Act (1928 Act, sec. 3 (1) (a) and 3 (1) (b)). It was also possible that questions might arise as to whether two licences had to be applied for under the 1928 Act (see sec. 3 (1)), and whether, in the case of an owner's licence, the Governor-General was empowered to fix the terms and conditions thereof.

At any rate, it is clear that, in October, 1932, by reason of the 1928 Act and regulations, construed by reference to sec. 3 of the 1935 Act, the owner of dried fruit was prevented from marketing any dried fruit inter-State, except upon the terms and conditions prescribed, such conditions including conditions as to the export of dried fruit from Australia by the applicant for a licence (secs. 3 (4), 3 (5), and 5 (a)). The fixing of the quota of fruits to be marketed outside Australia was an essential part of the Commonwealth system of control. Reg. 4 (b) of the main body of regulations (No. 91 of 1928), compelled the owner licensee to market outside the Commonwealth such percentage of the yearly output of dried fruits as the Minister determined from time to time. (See Form B of the Schedule to the regulations, and the later form prescribed by Statutory Rule No. 28 of 1931). The form of a Minister's determination appears in par. 11 of the statement of claim.

Therefore, at the time of the seizures mentioned in pars. 6 and 8 of the statement of claim, the plaintiff as an owner of dried fruits was unable to market such fruit in the other States of the Commonwealth without procuring a licence, and, if he did procure a licence, he was required to submit to a governmental determination as to the quantity of his fruit which was to be marketed overseas. In such a case, as was pointed out by Lord Atkin in James v. Cowan[76], the owner is prevented from selling inter-State more than a limited quantity of his goods. In the South Australian legislation discussed in James v. Cowan[77], the States' scheme of control was carried out in order to secure the "prevention of the sale" inter-State of "the balance of the output"[78], and so as to "prevent persons in South Australia from selling more than the fixed quota in any of the Australian States"[79].

It is clear that the object and effect of the Commonwealth's present system of control of dried fruit is substantially the same as that of the State of South Australia, which was held to be contrary to sec. 92. It may be noted that the introduction of carriers' licences by the Dried Fruits Act and regulations is no part of a scheme for facilitating and regulating transport. In the transport or carriage as such the Commonwealth is in no way interested, and they are dealt with merely as incidental to the main purpose—that of prohibiting and limiting the marketing of the fruit inter-State. This position existed at the time of the seizures mentioned in pars. 6 and 8 of the statement of claim, and also at the time referred to in par. 14 of the statement of claim, when the plaintiff's marketing inter-State was prevented. At the latter time, the regulations contained in Statutory Rules No. 40 and No. 164 of 1934 were in force. Reg. 6 (b) (ii.), as amended by reg. 4 of Statutory Rule No. 164 of 1934, and Form B of the schedule to the rules, show that the system of control is being rigidly maintained.

It is clear that the Commonwealth's legislative and executive authority is being used to enforce a definite policy of limiting and prohibiting the marketing of dried fruits in the various States of the Commonwealth. That policy constitutes an infringement of the rule of absolute free trade among the States which is stated in sec. 92 of the Constitution, and the plaintiff would therefore be entitled to relief unless the Commonwealth be immune from the operation of sec. 92. In our opinion there is no real ground for attributing to it any such immunity.

In the history of the Australian Constitution and of this Court, the first occasion when it was even suggested that the Commonwealth was not bound by sec. 92 was in September 1916, during the argument of the case of Duncan v. Queensland[80]. There counsel contended that the Commonwealth was not bound "because any other interpretation would place the taxation of inter-State transactions in trade beyond the powers not only of the States but also of the Commonwealth, which would be unreasonable"[81].

At that time the argument met with scant success, Isaacs J., who had never underestimated the extent of Commonwealth authority in relation to that of the States, expressly declaring that under sec. 92 Australians were entitled freely to market their goods inter-State "unhindered by any interference of Commonwealth or State"[82]. He also stated that sec. 92 was "one of the fundamental pacts of the Constitution under which we live"[83], and he remained quite unimpressed by the theory that if the Commonwealth were bound by sec. 92, it would become unable to legislate "with respect to" trade and commerce under sec. 51 (1). On the contrary, he considered that the Commonwealth, though bound by sec. 92, would still possess under sec. 51 (1) "a very large field for legislation with respect to inter-State trade and commerce"[84].

The argument advanced in Duncan's Case[85] involved a petitio principii because it assumed a very wide—indeed an absurdly wide—interpretation of sec. 92, and the precise interpretation of sec. 92 was the only question in dispute.

Prior to Duncan's Case[86] not a single Justice expressed a doubt as to the application of sec. 92 to the Commonwealth. In 1909 Isaacs J. declared that sec. 92 was "not capable of being modified or weakened in any degree by any Parliament, whether Commonwealth or State," and added that in this respect the Commonwealth Constitution differs from that of the United States (Fox v. Robbins[87]). Three years later, in 1912, the same Justice stated that the guarantee of inter-State freedom under sec. 92 was "an absolute prohibition on the Commonwealth and Stated alike" (R. v. Smithers; Ex parte Benson[88]).

During the war of 1914-1918, the continual exercise of its defence powers brought the legal authority of the Commonwealth into greater prominence. Yet in the New South Wales v. The Commonwealth (Wheat Case)[89], which was decided in March, 1915, no member of the Court considered that sec. 92 did not apply as a general rule of the Constitution. In that case, Griffith C.J. said that the provision was "equally binding upon the Commonwealth and the States"[90]. Barton J. thought that the tenor of the command of sec. 92 prevented those entitled to its benefit from being interfered with "on the part of Commonwealth, or State, or any other authority or person"[91]. Isaacs J. said: "That section, as I have stated in Fox v. Robbins2(1909) 8 C.L.R. 115. and R. v. Smithers3(1912) [1912] HCA 92; 16 C.L.R. 99. is an absolute limitation on the powers which either Commonwealth or States alike would otherwise have"[94]. A similar view was expressed by Gavan Duffy J.[95].

Thus, until the war period, the application of sec. 92 to the Commonwealth as well as to the States had always been considered foundational to our Federal system.

The history of the Federal movement goes back much further than is generally supposed, a Committee of the Privy Council stating in its report in the year 1849 on a proposal to federate the then colonies:—

In the year 1920, however, this Court, although dealing with a case between a corporation and the State of Queensland, in which the Commonwealth did not even intervene, expressed the opinion, Gavan Duffy J. dissenting, that the Commonwealth was not bound by sec. 92. The Justices did not attempt to explain the earlier expressions of opinion in the contrary sense. The essence of the reasoning of the majority of the leading judgment (Knox C.J., Isaacs and Starke JJ. is as follows:

But it is clear that this reasoning rests upon the prior assumption that, upon its proper construction, sec. 92 will nullify all laws which regulate or control in any degree the manner in which either all trade and commerce or trade and commerce among the States is to be conducted or permitted. Yet, as Gavan Duffy J. pointed out,

In our opinion, it is not right to assume that such Acts of Parliament as were mentioned by Knox C.J., Isaacs and Starke JJ., although they operate with respect to trade and commerce among the States, would be "rendered impossible" if sec. 92 applied to the Commonwealth. The Secret Commissions Act, for instance, merely punishes corrupt conduct in relation to the procuring of inter-State contracts. It certainly regulates the conduct of persons in relation to contracts providing for the inter-State marketing of goods. But, in our opinion, such an Act does nothing to deny that absolute freedom of trade which is postulated by sec. 92.

The Australian Industries Preservation Act aims at repressing all attempts to monopolize inter-State trade where the public will be injured. How does such an Act necessarily interfere with the provisions of sec. 92?

The Sea-Carriage of Goods Act certainly regulates the relationship between consignor and carrier in the inter-State trade, but whether such an Act should be held to offend against sec. 92 would seem to depend upon the degree of relationship between mere transport and carriage on the one hand, and the inter-State marketing on the other, for, as Lord Farrer pointed out, though carriage, like agency and brokerage, is necessary for the operation of trade, it is a subsidiary element of it (The State in its Relation to Trade, Farrer and Griffen, (1902) p. 29), much the same view being expressed recently by Sir H. C. Gutteridge, when he emphasized that buying and selling were the essential elements of international commerce, and carriage, like insurance and finance, was only ancillary to the main purpose of the interchange of goods (British Year Book of International Law (1933) p. 77).

The same comment applies to the monopolizing by the Commonwealth of the postal and telegraph services. They set up regulations which affect trade, including inter-State trade. We fail to see how they could be thought to infringe sec. 92.

We are not concerned to debate the actual decision of the Court in McArthur's Case[98], which may in some respects understate the full operation of sec. 92 (Vacuum Oil Co. Pty. Ltd. v. Queensland[99]; The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia[100]). We would suggest, however, that the setting up of a free-trade system between organized communities is in accordance with a well-known economic doctrine and that neither the words used in sec. 92, nor the underlying doctrine they embody, warrant such an interpretation as, first, resolves "trade, commerce and intercourse" into that infinite number of acts, transactions and operations which occur in the course of it, secondly, subtracts therefrom that number, also infinite, of acts, transactions and operations occurring in the course of "purely domestic" trade, and thirdly declares that the resulting remainder of the acts, transactions and operations cannot be controlled or regulated in any way. This reasoning led to the pronouncement that sec. 92 does not bind the Commonwealth, with the consequence that the latter could lawfully prohibitall inter-State marketing of goods and all inter-State travelling whatsoever! In our view, sec. 92 is not accorded its true significance if the words are analysed separately, considered in abstraction from the rest of the declaration, and the results of the analysis are subsequently synthesized.

Some of the difficulties of the reasoning of McArthur's Case[101] are illustrated by the subsequent decisions of this Court. These subsequent decisions were analysed by us in the case of R. v. Vizzard; Ex parte Hill[102]. The precise situation of the Commonwealth however, did not fall to be considered in such cases, and in James v. The Commonwealth[103], decided in 1928, the Court did not consider it desirable to summon the Full Bench for the purpose of reconsidering whether the Commonwealth is bound (see per Higgins J.[104]).

It was under these circumstances that Evatt J. pointed out in Huddart Parker Ltd. v. The Commonwealth[105] that it was an "accepted thesis" that the Commonwealth Parliament was not bound by sec. 92. The Court was not requested to reconsider the question in Huddart Parker's Case[106], and all we need do is to point out that, if sec. 92 binds the Commonwealth, the Transport Regulations, held valid in Huddart Parker's Case[107], would not necessarily infringe sec. 92, any more than the Commonwealth Acts referred to in the passage from McArthur's Case[108]. The illustrations of legislation given by Evatt J. in R. v. Vizzard; Ex parte Hill[109] show that it is not every regulation of the instruments and instrumentalities of inter-State trade which sec. 92 prohibits.

During the course of Vizzard's Case[110], the Commonwealth authorities appreciated that it was desirable that the relationship between it and sec. 92 should again be considered, particularly as the Privy Council had intimated in James v. Cowan[111] that the question whether the Commonwealth was bound by sec. 92 remained for them an open question. Upon the application of the Attorney-General for the Commonwealth, under sec. 40 of the Judiciary Act, this Court ordered the removal of the cause from the Supreme Court of New South Wales, and the State of Victoria also intervened. In the course of the hearing before us, the Commonwealth contended, through no less an authority than Sir Robert Garran, first, that the Commonwealth, like the States, was bound by sec. 92, and, second, that the State and Commonwealth Legislatures have concurrent authority to regulate inter-State trade and commerce, subject to Commonwealth supremacy under sec. 109 in the case of conflicting laws, and, third, that the regulation and co-ordination of transport facilities by a State did not constitute an infringement of sec. 92, where the State regulated all its transport facilities without discrimination against inter-State transport. Gavan Duffy C.J., Evatt and McTiernan JJ. thought that the first two propositions advanced on behalf of the Commonwealth were established as correct, and Evatt J. fully discussed the matter of the Commonwealth's supposed immunity from sec. 92[112]. It was thought undesirable, however, that a formal ruling should be given upon the casting vote of the Chief Justice[113]. Since Vizzard's Case[114] was decided, Dixon J. has in Gilpin's Case[115] expressed himself as having "never felt satisfied" that the application of sec. 92 should be limited to the States.

We are definitely of opinion that sec. 92 lays down a general rule of economic freedom, and necessarily binds all parties and authorities within the Commonwealth, including the Commonwealth itself, because, as was pointed out by the Privy Council itself, it establishes a "system based on the absolute freedom of trade among the States" (Colonial Sugar Refining Co. v. Irving[116]). Further, a clear majority of the present members of the Bench is of opinion that the Commonwealth is bound by sec. 92. But it has been made quite clear to the Court during the argument that, whatever decision is given, the unsuccessful party will appeal for a final determination of the question before the Privy Council. The Court has also been informed that in the pending appeal of Gilpin it is intended to canvass the rulings of this Court in Vizzard's Case[117] and Willard v. Rawson[118], which two decisions were followed in Gilpin's Case[119]. Until the Commonwealth Parliament intervenes by legislation under sec. 74 of the Constitution, the Privy Council will retain jurisdiction to deal with these constitutional issues. If the Privy Council determines to exercise this jurisdiction in Gilpin's Case[120], the question will arise there and in the present case whether sec. 92 forbids all regulation and control of the manner of conducting inter-State trade, and whether the Commonwealth alone is to be exempted from the general system of absolute free trade which was always supposed to be a foundational provision of the Constitution, and the obtaining of which was one of the leading motives which led to the Federal union of the Australian colonies.

If the question were free of authority, we would disallow the demurrer on the ground that the Commonwealth has no legal authority to maintain its prohibitions and restrictions of the inter-State marketing of dried fruits. But we think that the two cases in which the majority of this Court stated that the Commonwealth may prohibit and restrict inter-State trade should be followed, particularly as Lord Atkin said that, for the Privy Council, the question remains an open one (James v. Cowan[121]).

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

[1] [1928] HCA 45; (1928) 41 C.L.R. 442.

[2] (1932) A.C., at p. 560; 47 C.L.R., at p. 398.

[3] (1932) A.C. 542; 47 C.L.R. 386.

[4] [1920] HCA 77; (1920) 28 C.L.R. 530.

[5] [1928] HCA 45; (1928) 41 C.L.R. 442.

[6] [1920] HCA 77; (1920) 28 C.L.R. 530.

[7] [1920] HCA 77; (1920) 28 C.L.R. 530.

[8] [1933] HCA 62; (1933) 50 C.L.R. 30.

[9] [1920] HCA 77; (1920) 28 C.L.R. 530.

[10] [1920] HCA 77; (1920) 28 C.L.R. 530.

[11] [1920] HCA 77; (1920) 28 C.L.R. 530.

[12] (1932) A.C. 542; 47 C.L.R. 386.

[13] [1929] HCA 14; (1929) 42 C.L.R. 258.

[14] [1923] HCA 23; (1923) 32 C.L.R. 200.

[15] Ante, p. 533.

[16] [1934] USSC 117; (1934) 292 U.S. 313; 78 Law, Ed. 1282.

[17] [1928] HCA 45; (1928) 41 C.L.R. 442.

[18] (1926) A.C. 155.

[19] (1926) A.C. 94.

[20] [1920] HCA 77; (1920) 28 C.L.R. 530.

[21] [1928] HCA 45; (1928) 41 C.L.R. 442.

[22] [1920] HCA 77; (1920) 28 C.L.R. 530.

[23] (1920) 28 C.L.R., at pp. 556-558.

[24] (1920) 28 C.L.R., at p. 562.

[25] (1920) 28 C.L.R., at p. 569.

[26] (1932) A.C. 542, at p. 560; 47 C.L.R., at p. 398.

[27] [1933] HCA 62; (1933) 50 C.L.R. 30.

[28] [1931] HCA 1; (1931) 44 C.L.R. 492, at p. 522.

[29] Ante, p. 189.

[30] [1916] HCA 67; (1916) 22 C.L.R. 556.

[31] [1920] HCA 77; (1920) 28 C.L.R. 530.

[32] (1932) A.C. 542; 47 C.L.R. 386.

[33] [1920] HCA 77; (1920) 28 C.L.R. 530.

[34] [1913] HCA 41; (1913) 17 C.L.R. 261, at pp. 274 et seq.

[35] [1914] HCA 15; (1914) 18 C.L.R. 54.

[36] [1920] HCA 54; (1920) 28 C.L.R. 129.

[37] [1920] HCA 77; (1920) 28 C.L.R. 530.

[38] [1926] HCA 25; (1926) 38 C.L.R. 240.

[39] [1933] HCA 62; (1933) 50 C.L.R. 30.

[40] [1920] HCA 77; (1920) 28 C.L.R. 530.

[41] [1920] HCA 77; (1920) 28 C.L.R. 530.

[42] [1920] HCA 77; (1920) 28 C.L.R. 530.

[43] [1920] HCA 77; (1920) 28 C.L.R. 530.

[44] [1920] HCA 77; (1920) 28 C.L.R. 530.

[45] [1928] HCA 45; (1928) 41 C.L.R. 442.

[46] (1920) 28 C.L.R. at pp. 556-558.

[47] (1932) A.C. 542; 47 C.L.R. 386.

[48] (1909) 8 C.L.R., at p. 128.

[49] (1912) 16 C.L.R., at p. 117.

[50] [1915] HCA 17; (1915) 20 C.L.R. 54.

[51] (1915) 20 C.L.R., at p. 66.

[52] (1915) 20 C.L.R., at p. 79.

[53] (1915) 20 C.L.R., at pp. 95, 100.

[54] (1915) 20 C.L.R., at p. 105.

[55] [1916] HCA 28; (1916) 21 C.L.R. 357, at p. 365.

[56] [1916] HCA 67; (1916) 22 C.L.R. 556.

[57] (1916) 22 C.L.R., at pp. 572, 573.

[58] (1916) 22 C.L.R., at pp. 593, 594.

[59] (1916) 22 C.L.R., at pp. 616 and 620.

[60] [1920] HCA 77; (1920) 28 C.L.R. 530.

[61] (1920) 28 C.L.R., at pp. 556-558.

[62] (1920) 28 C.L.R., at p. 563.

[63] [1928] HCA 45; (1928) 41 C.L.R. 442.

[64] [1931] HCA 1; (1931) 44 C.L.R. 492.

[65] (1931) 44 C.L.R., at p. 522.

[66] [1931] HCA 34; (1931) 46 C.L.R. 73.

[67] [1933] HCA 62; (1933) 50 C.L.R. 30, at pp. 47, 88 and 98.

[68] Ante, p. 189.

[69] [1928] HCA 45; (1928) 41 C.L.R. 442.

[70] Ante, p. 212.

[71] Ante, p. 189.

[72] (1928) 41 C.L.R., at p. 458.

[73] [1920] HCA 77; (1920) 28 C.L.R. 530.

[74] [1928] HCA 45; (1928) 41 C.L.R. 442.

[75] (1932) A.C. 542; 47 C.L.R. 386.

[76] (1932) A.C. 542; 47 C.L.R. 386.

[77] (1932) A.C. 542; 47 C.L.R. 386.

[78] (1932) A.C., at p. 559; 47 C.L.R., at p. 397.

[79] (1932) A.C., at p. 555; 47 C.L.R., at pp. 393, 394.

[80] [1916] HCA 67; (1916) 22 C.L.R. 556.

[81] (1916) 22 C.L.R., at p. 563.

[82] (1916) 22 C.L.R., at p. 620.

[83] (1916) 22 C.L.R., at p. 605.

[84] (1916) 22 C.L.R., at p. 618.

[85] [1916] HCA 67; (1916) 22 C.L.R. 556.

[86] [1916] HCA 67; (1916) 22 C.L.R. 556.

[87] (1909) 8 C.L.R., at p. 128.

[88] (1912) 16 C.L.R., at p. 117.

[89] [1915] HCA 17; (1915) 20 C.L.R. 54.

[90] (1915) 20 C.L.R., at p. 66.

[91] (1915) 20 C.L.R., at p. 79.

[92] [1908] HCA 98; (1909) 8 C.L.R. 115.

[93] (1912) 16 C.L.R. 99.

[94] (1915) 20 C.L.R., at p. 95.

[95] (1915) 20 C.L.R., at p. 105.

[96] (1920) 28 C.L.R., at p. 558.

[97] (1920) 28 C.L.R., at p. 568.

[98] [1920] HCA 77; (1920) 28 C.L.R. 530.

[99] [1934] HCA 5; (1934) 51 C.L.R. 108.

[100] [1926] HCA 47; (1926) 38 C.L.R. 408.

[101] [1920] HCA 77; (1920) 28 C.L.R. 530.

[102] (1933) 50 C.L.R., at pp. 78-80, 88-94, 100-101.

[103] [1928] HCA 45; (1928) 41 C.L.R. 442.

[104] (1928) 41 C.L.R., at p. 458.

[105] (1931) 44 C.L.R., at p. 522.

[106] [1931] HCA 1; (1931) 44 C.L.R. 492.

[107] [1931] HCA 1; (1931) 44 C.L.R. 492.

[108] [1920] HCA 77; (1920) 28 C.L.R. 530.

[109] (1933) 50 C.L.R., at pp. 81, 82.

[110] [1933] HCA 62; (1933) 50 C.L.R. 30.

[111] (1932) A.C. 542; 47 C.L.R. 386.

[112] (1933) 50 C.L.R., at pp. 82-84.

[113] (1933) 50 C.L.R., at pp. 46-47.

[114] [1933] HCA 62; (1933) 50 C.L.R. 30.

[115] Ante, p. 189.

[116] (1906) A.C. 360, at p. 367.

[117] [1933] HCA 62; (1933) 50 C.L.R. 30.

[118] [1933] HCA 12; (1933) 48 C.L.R. 316.

[119] Ante, p. 189.

[120] Ante, p. 189.

[121] (1932) A.C., at p. 560; 47 C.L.R., at p. 398.

High Court of Australia

James v Commonwealth [1935] HCA 38; (1935) 52 CLR 570 (11 June 1935)

HIGH COURT OF AUSTRALIA