Dairy Farmers' Co-operative Milk Co Ltd v Commonwealth [1946] HCA 49; (1946) 73 CLR 381 (16 December 1946)

The Dairy Farmers' Co-operative Milk Company Limited and Another Plaintiffs; and The Commonwealth and Others Defendants.

This is a demurrer to a statement of claim whereby the plaintiffs claim a declaration that certain orders fixing the prices of milk are invalid because beyond the powers conferred upon the Commonwealth Prices Commissioner by the National Security (Prices) Regulations or, alternatively, as beyond any Commonwealth legislative powers. The plaintiffs also claim a declaration that the orders in question are invalid in so far as they relate to sales to the State Contracts Control Board, which is an agency of the Government of New South Wales. The Court was informed that the orders have been revoked since the action was instituted. The plaintiffs plead that they have contracts to supply milk to the State Contracts Control Board and it is stated at the Bar that if the Orders fixing the price for sales to that Board are held to be invalid the plaintiffs will claim the higher price provided for in their contracts with the Board.

The Orders in question distinguish between wholesale and retail sales, between sales in the metropolitan milk distributing district and in the Newcastle district, between sales to retailers who operate milk rounds and those who do not and those who use milk in milk bars and, in particular, special prices are prescribed for sales for use in public hospitals and to the State Contracts Control Board. It is contended that there is no relation between considerations of defence and the differentiations contained in the order relating to the specified characteristics of purchasers of milk. The Court has held in Victorian Chamber of Manufacturers v. The Commonwealth[1] that the Prices Regulations under which authority is given to fix prices of goods generally are valid. In particular, the determination of the prices of food in time of war is within the defence power: Stenhouse v. Coleman[2]. If it were sought to use this power by determining prices by reference to considerations which could not possibly have any relation to the organization and control of the community for defence purposes as, for example, according to religious distinctions, such an exercise of the power would be invalid. But the orders in question provide for different prices in relation to considerations of time and place and circumstance and character of purchaser, which are elements which may naturally be taken into account in any scheme of control of prices as an element in economic organization. Accordingly, the principal objection to the Order fails.

In the second place, it is contended that there was no power to fix prices in relation to particular individual purchasers unless, in addition to an exercise of the power of fixing prices in such a manner by the Prices Commissioner, the Minister had, under reg. 22 (3) of the Prices Regulations, made a declaration in respect of that particular purchaser. There is no substance in this objection. In the present case the Minister has declared milk as "declared goods" under reg. 22, and the Commissioner then has power under reg. 23 (1) (a) to declare the maximum price at which milk may be sold generally or in any part of Australia. This power is sufficient to warrant the Orders, but the power is further defined under reg. 23 (1A) (h), under which it is expressly provided that the Commissioner may determine maximum prices in relation to certain circumstances mentioned in par. (h) and, in particular, may fix prices so that "such prices shall vary in accordance with a standard or time or other circumstance ... as are determined by the Commissioner." This power is sufficiently wide to authorize the differentiations which are to be found in the orders in question.

Finally, it is contended that the Prices Regulations and Orders made under the Regulations do not bind the Crown in right of the State of New South Wales and therefore do not bind the State Contracts Control Board. We do not see, however, how any question as to the Board being bound arises in the present proceedings. The Board is referred to in the Orders only as a purchaser and not as a vendor. Even if it were held that the Regulations and Orders did not bind the Crown in right of a State, this conclusion would, we think, leave unaffected the proposition that the plaintiff companies were bound in relation to their sales to all purchasers, including State Government agencies. Thus a decision that the Crown in right of a State was not bound by the Regulations or Orders would afford no ground for making either of the declarations sought by the plaintiffs in this action.

Accordingly, all the objections of the plaintiffs to the validity of the Orders and of the Regulations fail. If, however, we had been of opinion that there was any substance in the objections it would have been necessary to consider whether any relief should be given to the plaintiffs in these proceedings. The parties who are, as far as the Court is informed, really interested in the question whether the Orders are valid or not are the plaintiffs and the State Contracts Control Board as a department of the Government of New South Wales, with which the plaintiffs have contracts.

The Commonwealth and a past and present Prices Commissioner (but not the State of New South Wales) are the defendants in the proceedings. The Orders have been revoked, they will have no application in the future to the business of the plaintiffs, and the defendants have no interest whatever (except as to the costs of these proceedings) in defending their validity. If we had been of opinion that there was any substance in the contentions submitted on behalf of the plaintiffs we would have hesitated before making any of the declarations sought in the absence of the State of New South Wales, which is the other party really interested in the issue raised in this litigation.

Demurrer to a statement of claim claiming declarations that certain Prices Orders, so far as they relate to "Sales by Wholesale and Certain Other Sales," were beyond the powers conferred upon the Prices Commissioner by the National Security (Prices) Regulations, the National Security Act 1939-1943 and the Constitution, or alternatively a declaration that the said Prices Orders, so far as they relate to "Sales to State Contracts Control Boards," were beyond any powers that could be conferred upon the Prices Commissioner.

It was stated at the Bar that these Orders have been revoked since action brought. Therefore there is no "live issue" in this litigation between the parties (cf. Sun Life Assurance Co. of Canada v. Jervis[3]).

The Court has, no doubt, jurisdiction to make binding declarations of right in actions properly brought whether consequential relief is or could be claimed or not. The jurisdiction, however, should be exercised with care. A decision upon this demurrer would be "in the air" so to speak, for no declaration of right should follow in the circumstances of the case. The plaintiffs should attack, if they attack at all, those relying upon the provisions of the Prices Orders as an answer to contractual rights claimed against them and not the Commonwealth or the Prices Commissioner appointed under the Regulations.

Nevertheless the demurrer was argued. But there does not appear to be any substance in the argument. The validity of the Prices Regulations was not challenged. It was said, however, that the Prices Orders did not comply with or were not authorized by the Regulations.

They did not comply with the Regulations because the Minister had not made a declaration in respect of any person or body or association in accordance with reg. 22 (3). But the Minister, it was conceded, had declared certain goods generally, namely milk, pursuant to reg. 22 (1) and (3) to which the Prices Orders related. That declaration is sufficient to support Prices Orders in respect of milk.

They were not authorized by the Regulations because they exceeded any powers conferred upon the Prices Commissioner under reg. 23. But the powers granted to the Commissioner are amply sufficient to warrant the Orders (reg. 23 (1) (a), (1A) (a), (g) and (h)).

It was also contended that the Prices Orders were bad in so far as they regulated the prices at which persons might sell the declared goods to the State Contracts Control Board because reg. 32 prohibited the sale of declared goods to the Board except at the prices fixed by the Commissioner. The argument invokes, in a strange way, the exploded doctrine of the immunity of instrumentalities. Nothing in the Constitution supports the argument or precludes the enactment of reg. 32 and the sanction thereby imposed or the particular provision contained in the Prices Orders, which operate in this case in favour of the Contracts Board. But then it was argued that the State and its instrumentalities are also prohibited from selling declared goods except at the declared prices. The plaintiffs have no interest in this question, which involves a constitutional question, but depends primarily upon the interpretation of the words "any person" in the Prices Orders and "a person" in reg. 32. It will be time enough to consider the question when, if ever, it arises.

The appropriate order in the present case is, I think, that the action be dismissed.

Solicitor for the defendants, H. F. E. Whitlam, Crown Solicitor for the Commonwealth.

[1] [1943] HCA 19; (1943) 67 C.L.R. 335.

[2] [1944] HCA 36; (1944) 69 C.L.R. 457.

[3] (1944) A.C. 111.

High Court of Australia

Dairy Farmers' Co-operative Milk Co Ltd v Commonwealth [1946] HCA 49; (1946) 73 CLR 381 (16 December 1946)

HIGH COURT OF AUSTRALIA