Sloan v Pollard [1947] HCA 51; (1947) 75 CLR 445 (12 December 1947)

This is a motion by the plaintiffs for an interlocutory injunction which by consent has been ordered to be treated as a motion for a decree and has been referred to the Full Court.

The plaintiffs, John Henry Sloan and others, carry on business under the name of "Regal Cream Products" in the purchase, processing and sale of cream.

The Defence (Transitional Provisions) Act 1946 provides in s. 6 that the regulations the titles of which are specified in the First Schedule, being regulations in force under the National Security Act immediately prior to the commencement of the Defence (Transitional Provisions) Act, shall, subject to the Act, be in force until midnight on 31st December, 1947, with the amendments specified in the schedule.

The regulations which were thus enacted by the statute include the National Security (Food Control) Regulations. Regulation 9 (1) of those regulations provides that the Minister shall have power to control, regulate and direct the distribution, disposal, use and consumption of food ... and in particular shall have power—(a) to require that any food ... shall be distributed or disposed of ... (d) to prohibit, regulate or restrict the distribution, disposal, use or consumption of food.

Regulation 9 (2) provides that the Minister may make such orders as appear to him to be necessary or expedient for the purposes of the regulations.

Under these provisions the Minister made an order on 22nd August 1947, entitled Cream (Disposal and Use) Order. Paragraph 4 of the order provides that a person shall not without the consent of the Controller-General of Food sell, exchange, give away or otherwise dispose of cream except—(a) to a butter or cheese factory, or (b) under the authority of and in accordance with the terms and conditions of a permit.

Paragraph 5 provides that, except with the consent of the Controller-General of Food or under the authority of and in accordance with the terms and conditions of a permit, a person shall not purchase, receive or otherwise acquire any cream unless he is registered or licensed under the law relating to butter factories or cheese factories.

Paragraph 6 provides that a person shall not without the consent of the Controller-General of Food use any cream except—(a) for the manufacture of butter or cheese at registered butter factories or cheese factories or at the farm where the cream is produced; or (b) under the authority of and in accordance with the terms and conditions of a permit.

Paragraph 9 provides that the Controller-General of Food or an authorized officer may, by notice in writing, require a person to furnish returns relating to food.

The evidence shows that an officer acting on behalf of the Controller-General of Food has informed the plaintiffs that they must apply for a permit in order to purchase cream from producers or butter factories and that it would be a condition of the permit that the cream should be resold by the plaintiffs to specified classes of purchasers, viz., manufacturers of ice cream or other approved products, hospitals and retail vendors holding permits in respect of certain medical cases.

A demand has also been made that the plaintiffs should furnish returns in accordance with par. 9 of the order. The plaintiffs have declined to supply such returns and a prosecution of the plaintiffs for breach of the order is pending. If the order applies to the plaintiffs they will be unable to sell cream for table use or for use in the making of cakes and pastry, and will (if they obtain a permit) be able to supply cream only to persons who are approved as purchasers by the Controller-General of Food.

The order made under the regulations is an administrative order, and, it is submitted, can be valid only if the power to make the order is exercised bona fide for the purpose for which the power is conferred (Arthur Yates & Co. Pty. Ltd. v. Vegetable Seeds Committee[1]). That purpose is shown by the preamble to the Defence (Transitional Provisions) Act 1946 to be a purpose connected with defence. The preamble to the Act, which was assented to on 14th December 1946, recites that a state of war still exists between His Majesty and Germany, Japan and other countries and that legislative provision is required in order to bring a gradual and orderly return to conditions of peace and that it is necessary for the peace, order and good government of the Commonwealth—(a) to make certain provisions to operate during a time of transition from war conditions to conditions of peace; (b) to make provision for the carrying on or completion, of certain arrangements &c. entered upon or subsisting in pursuance of regulations made under the National Security Act; (c) to provide for matters incidental to the termination of that Act and of the regulations made thereunder and/or the orders, &c. made under those regulations.

This preamble, it is contended, operates in relation to all the regulations to which it is sought to give continued effect by s. 6.

The plaintiffs contend that there are no circumstances associated with defence which can be relied upon to support the order.

In the affidavit filed on behalf of the plaintiffs the following statement appears, and it is not contradicted or qualified by any of the evidence adduced on behalf of the defendants:—"The cream which the Plaintiffs purchase process or sell in the course of their said business is produced from cows' milk in the State of Victoria. On the said 1st day of September 1947" (the date of the Minister's order) "and at all other material times the quantity of cows' milk produced in the State of Victoria and in other parts of the Commonwealth of Australia was more than sufficient to supply the demand therefor and for cream and any other product derived therefrom by persons desiring to purchase the same for use or consumption in the said Commonwealth and/or for use or consumption by the armed forces of the Commonwealth, and the sole purpose of the said Order is to increase the exportable surplus of products derived or manufactured from milk or cream."

In a further affidavit by A. D. Roker, it is stated that the secretary of the Australian Dairy Produce Board constituted under the provisions of the Dairy Produce Export Control Act 1924-1942 of the Commonwealth informed the plaintiffs that the prohibition of the sale of cream contained in the Minister's order "was not necessary in order to maintain the present butter ration scale in Australia; that the production in Australia of cream and of cream derivatives such as butter and cheese, both immediately before the coming into operation of the Order and at the present time, was more than sufficient for all domestic needs (including the demand for table cream) in Australia and for the supply of the Armed Forces of Australia; that the only purpose of the order was to stimulate exports to Great Britain." The said officer also informed Mr. Roker that the enforcement of the order would mean that 10,000 tons of extra butter per annum would be available for export. This statement is not contradicted or qualified by any of the evidence submitted on behalf of the defendants.

The defendants, while not disputing these allegations made on behalf of the plaintiffs, contend that there are further facts consideration of which shows that the Minister's order can be justified under the defence power.

An order restricting the use of cream was made in May 1943, in order to meet the demands for the armed services and the United Kingdom. That order continued in force until 11th November 1946.

In the year 1944, i.e. during the war, an agreement was made between the Government of the United Kingdom and the Government of the Commonwealth with respect to the disposition of butter and cheese produced in Australia. This agreement is contained in a document entitled "Heads of Agreement for the purchase by the Government of the United Kingdom of supplies of butter and cheese in Australia from the production period 1st July 1944 to 30th June 1948." It bears the date of 1st July 1944. The agreement is prefaced by the following words: "The Government of the United Kingdom and the Government of the Commonwealth of Australia, recognizing the necessity of maintaining and, if possible, increasing the production in Australia of butter and cheese, agree as follows."

Clause 1 of the agreement provides that the Commonwealth of Australia will make available for sale to the Government of the United Kingdom, in the period commencing 1st July 1944 and ending 30th June 1948, all butter and cheese in excess of that required—(a) to satisfy the needs of Australia including those of the Australian forces; (b) to provide the requirements of the forces of the United States of America; (c) to provide supplies to U.N.R.R.A.; (d) for sale to other markets.

In the case of (b), (c) and (d), it is provided in each case that the requirements, supplies or sales shall be made following or subject to consultation with the Government of the United Kingdom.

Clause 3 provides that the Government of the United Kingdom will buy butter and cheese from Australia.

The defendants have also adduced evidence that since November 1943, allocation of world foodstuffs has been made by a Combined Food Board and later by an International Emergency Food Council in Washington. The agreement between the Governments of the United Kingdom and the Commonwealth was taken into account by the Council as part of the general scheme of distribution of world supplies.

In August 1947, i.e. more than two years after the end of the war in Europe, the food position in the United Kingdom was rapidly deteriorating and the Commonwealth Government formed the opinion that the provision of sufficient fats in the 1947-1948 winter would be a matter of vital importance for the maintenance of the life and health of very many inhabitants in the United Kingdom.

It is admitted for the plaintiffs that there is Commonwealth power in time of war to control the disposition of foodstuffs: see Farey v. Burvett[2]; Stenhouse v. Coleman[3]. It is argued for the defendants that the power to make laws with respect to the defence of the Commonwealth and the several States conferred upon the Commonwealth Parliament by s. 51 (vi.) of the Constitution extends also to the enactment of measures for the economic assistance of other parts of the British Commonwealth which have assisted Australia in the recent war and upon whose support Australia would probably depend in any future war. It is suggested that economic assistance to Great Britain (whether or not there is war or imminence of war at the time) is assistance to a country which has been and can be expected to be a powerful ally in time of war and that therefore such assistance is authorized as an exercise of the power to make laws with respect to the defence of the Commonwealth.

Upon the view which I take of the effect of the agreement made between the Governments, it is not necessary to decide upon this contention. As at present advised I am of opinion that the contention goes too far. Even in relation to matters within Australia the defence power does not enable the Commonwealth Parliament to make laws upon the basis that they promote the welfare and strength of Australia and are therefore connected with defence—cf. Victorian Chamber of Manufactures v. The Commonwealth (Industrial Lighting Regulations)[4]. If this be so, the strengthening of the economic position, not of Australia, but of another country, even though it be part of the British Commonwealth, could not be held to come within the subject of the defence of Australia.

The defendants, however, rely also upon a special argument based upon the existence of the agreement with the United Kingdom. The conduct of war involves many arrangements between allies and, within the British Commonwealth, between the various parts of the Commonwealth. These arrangements must necessarily be made at a time when it is not known how long the war will last or what the result of the war will be. In some cases such arrangements can be effective only if they can be relied upon for a period. In 1944 the date of the termination of the war was quite uncertain. As a war measure the provision of fats—butter and cheese—to Great Britain clearly might be a matter of great importance not only to Great Britain but also to Australia. It cannot be said that it was unreasonable to take the view that the war and consequential necessity for such provision might continue to the year 1948. Further, the agreement made must be viewed in relation to the whole war set-up which involves a complexus of reciprocal arrangements as to supply of shipping, munitions, food and other commodities. Butter may be given or sold in exchange for guns. It is a matter of common knowledge that a far-reaching system of mutual assistance between countries engaged on the same side in a war may be necessary during a war in order to secure co-operation and the efficient utilization of national resources in the common interest.

Thus in my opinion the making of the agreement as to the sale of Australian butter and cheese to England during the period 1944-1948 was a step which may reasonably be regarded as incidental to the conduct of the war and therefore the making and the carrying out of the agreement is a justifiable exercise of the defence power.

It is argued for the plaintiffs that the arrangement between the Governments of the United Kingdom and the Commonwealth was not a contract to supply any definable quantity of butter and cheese. In my opinion that is quite true. The agreement was not a contract for the breach of which an action for damages could be brought. It was an arrangement between governments and was essentially the kind of arrangement upon which governments are entitled to rely as between themselves. It is true that the Commonwealth Government does not agree to restrict the consumption of cream in Australia so as to increase the amount of exportable butter and cheese, but the terms of the arrangement show that it was expected that the Commonwealth, though not legally bound to do so, would endeavour to make as much butter and cheese as possible available for export to the United Kingdom.

Accordingly in my opinion the existence of the agreement in the special circumstances of this case gives legislative power to the Commonwealth Parliament to act so as to increase the exportable surplus of butter and cheese to the United Kingdom during the period for which the agreement operates. One obvious method of securing this result is to take steps to secure the conversion of cream into butter and cheese and to limit the use of cream for other purposes.

It is objected, however, that the order of the Minister contains no reference to the arrangement between the two governments and that therefore it ought to be considered apart from any such arrangement. Many orders made under National Security Regulations have contained no reference in terms to the purpose for which the orders were made. It has not hitherto been suggested that such orders were invalid because they did not declare their purpose upon their face. In my opinion there is no reason why the facts in relation to which an administrative order is applicable should not be shown by evidence. If, for example, there is power to give a certain direction to a class of persons such as, e.g., wheat farmers, and a direction is given to someone described as "William Smith" without any mention of his occupation, the person who gives the direction would, if his authority be challenged, be entitled to show that William Smith was in fact a wheat farmer. In the same way, in the case of the present order, the defendants are, in my opinion, entitled to show that the operation of the order is to increase the exportable surplus of butter and cheese and that such increase is in accordance with the true object of the arrangement between the Governments. The Court may properly assume that the arrangement will be carried out by exporting as much butter and cheese as possible to the United Kingdom.

These conclusions make it unnecessary for me to consider arguments for the defendants which were based upon the power of the Commonwealth Parliament to make laws with respect to trade and commerce with other countries.

For the reasons stated, the order made by the Minister is, in my opinion, a valid order and the action of the plaintiffs should be dismissed.

This case presents some difficulties, but in my opinion they are to be solved by an application of the defence power to the precise facts of the case. I have said before "that although the meaning of the defence power is static its application varies with the circumstances to which the legislation in question is directed" (Victorian Chamber of Manufactures v. The Commonwealth[5]). This observation was made in reference to an exercise of the power during the progress of the war. At that time it was necessary to consider the ambit of the defence power in relation to what was incidental or conducive to the prosecution of the war. We have now reached a state of affairs when our attention must be directed rather to what is incidental or ancillary to the liquidation of the national organization for war. The basal principle, however, by which the operation of the power is to be determined is the same although the manner in which the principle works in its application to the facts is necessarily governed by a somewhat different line of reasoning. What is incidental to the process of winding up the organization, arrangements or order called into being for the prosecution of the war necessarily includes the implementing, execution or adjustment of agreements whether with other countries or between the Commonwealth and its subjects made in the course of the prosecution of the war. In the present case the situation which makes the defence power applicable depends in some measure upon the outcome of an agreement made between the Commonwealth and the United Kingdom during the war. That agreement which seems to have been made in 1944 is expressed in a document exchanged in May 1945 between the representatives of the two countries. If the Cream (Disposal and Use) Order made in August 1947 can be regarded as a means of fulfilling the obligations of the Commonwealth to the United Kingdom arising under this agreement I think it is justified by the defence power. I have come to the conclusion that it can be so regarded and for two reasons. In the first place, the natural tendency of the order is to produce a greater surplus for export of butter and cheese. In the second place, though the document does not stipulate for any definite quantity of butter and cheese as the exportable surplus, the plain sense of the agreement is that Australia should supply as much butter and cheese as she reasonably can after supplying her own needs, and the assurance subsequently given by the Commonwealth to the Ministry of Food is sufficient as between two countries to quantify the obligation in an amount making it incumbent on the Commonwealth to take some measures to secure a commensurate exportable surplus. I need hardly say that I am not using the word "obligation" in any technical or juristic sense. I refer only to the need for the fulfilment of expectations raised between two countries by any express understanding arrived at between them. In short, I use the word "obligation" to express the consequence of the Latin phrase pacta sunt servanda.

I am therefore of opinion that the order is a valid exercise of power and that the action should be dismissed.

A declaration is sought in this action that the Cream (Disposal and Use) Order dated 22nd August 1947 is void and that in so far as the National Security (Food Control) Regulations and the Defence (Transitional Provisions) Act 1946 purport to authorize the order the same are beyond the constitutional powers of the Commonwealth and void.

Shortly, the order provides that a person shall not without the consent of the Controller-General of Food sell, exchange, give away or otherwise dispose of cream except to registered butter or cheese factories or under the authority of a permit and also that a person shall not, except with the consent of the Controller-General of Food, purchase, receive or otherwise acquire cream unless his premises are registered or licensed as a butter or cheese factory. Further, the order provides that a person shall not without the consent of the Controller-General of Food use any cream except for the manufacture of butter or cheese at registered or licensed butter or cheese factories, or at a farm where the cream is produced or under a permit. But a person is not prohibited from using cream obtained from milk held by him for his own ordinary consumption. The order also gives very general powers concerning the issue of permits and the terms and conditions thereof and also authority to require persons to furnish returns or supply information relating to food or foodstuffs specified by notice.

This order purports to have been made under and in pursuance of the National Security (Food Control) Regulations which were made effective by the Defence (Transitional Provisions) Act 1946. And although some reliance was placed upon the trade and commerce and the external affairs powers in the Constitution it is plain, I think, that the constitutional basis of the Defence (Transitional Provisions) Act, the National Security (Food Control) Regulations and the order itself depend upon the defence power in the Constitution.

Every legislative Act, regulation or order of the Commonwealth must, as I have said before, find some warrant in the Constitution. Some reasonable and substantial basis must exist for the conclusion that the Act, regulation or order is one with respect to defence. The Court however has already held that the cessation of hostilities does not necessarily exhaust the defence power which includes power to remedy conditions arising out of and by reason of war.

Orders restricting the use of cream were first made under the National Security Act in 1943 and were continued until November 1946.

In August 1947 the present order was made, operating from 1st September 1947, renewing restrictions as already set forth.

At the time of the making of this order hostilities between the belligerents in the recent war had ceased.

Apart from the recitals in the Defence (Transitional Provisions) Act 1946 there is nothing on the face of the order itself that discloses any connection with defence. And it does not require that the owners or manufacturers of butter or cheese should apply the same for defence or any other purpose. So far as the order is concerned the owners and the manufacturers of butter or cheese are free to deal with and market it as they choose.

But, I take it that we may look at the circumstances surrounding the order. It is conceded that the real purpose of the order is to increase the exportable surplus of products derived or manufactured from milk or cream. And it appears that in August the food position in the United Kingdom was rapidly deteriorating and that the provision of sufficient fats in the winter of 1947-1948 was of vital importance for the maintenance of the life and health of the inhabitants of the United Kingdom.

Further, it appears that in 1945 an arrangement was made between the governments of the United Kingdom and Australia whereby Australia was to make available for sale to the government of the United Kingdom in the period commencing on 1st July 1944 and ending 30th June 1948 all butter and cheese in excess of what I may shortly describe as Australian requirements and the United Kingdom agreed to buy the excess. In a covering letter it was intimated that the United Kingdom regarded the purchase as on behalf of the United Nations but expected the supplies under the arrangement to be allocated to the United Kingdom.

And the National Security (Dairy Produce Acquisition) Regulations made effective by the Defence (Transitional Provisions) Act 1946 conferred upon the government of Australia ample powers to implement this arrangement.

It was suggested, however, that the defence power of the Commonwealth must be confined to the needs of Australia—the peace, order and good government of the Commonwealth and that the shortage of foodstuffs and other materials in England in the postwar period in consequence of and by reason of conditions arising from the war were not matters in respect of which the Commonwealth could exercise the defence power. The argument cannot be sustained. The defence power is being exercised in the present order to implement a war arrangement with the British Government involving food supplies in short supply arising in consequence of and by reason of conditions arising out of the war in which both the United Kingdom and Australia together engaged with other allies, and in operation the order results in an increase of the exportable surplus of butter and cheese available for the purposes of that arrangement.

In my opinion, that is a reasonable and substantial basis for concluding that the order is made with respect to defence. It may be that the order can be justified, as was argued, upon a wider basis but it is unnecessary to discuss that contention in this case. It can stand over for another day.

The question in this suit is whether an order called the Cream (Disposal and Use) Order is valid. It is expressed to come into force on 1st September 1947 and was made a week before that date by the Minister for Commerce and Agriculture purporting to act under the National Security (Food Control) Regulations, the operation of which is continued by the Defence (Transitional Provisions) Act 1946.

The chief provisions of the order forbid the sale or disposal of cream, except under permit, to anybody who is not registered or licensed in respect of a butter or cheese factory and forbid the use of cream, except under permit, for any purpose but the manufacture of butter or cheese.

A law imposing such a prohibition upon the disposal and use of an ordinary commodity is prima facie a regulation of domestic industry, internal trade and home consumption which falls within the legislative powers of the States and beyond those of the Commonwealth.

It is upon this broad ground that the validity of the order is attacked. The order, if good, is plainly calculated to increase the production of butter and cheese and its provisions evidence that purpose. To increase production is to increase the exportable surplus of butter and cheese.

The Commonwealth claims that, because of the circumstances that obtain, the purpose of securing a greater export of these foods from Australia is one which, for the time being at all events, falls within the scope of Federal legislative power. The purpose, it is said, draws under Commonwealth power what otherwise would be an excursion into the legislative field of the States. Three powers are invoked. Stout reliance was placed on defence; a Iove incipiendum. Then trade and commerce with other countries was referred to as a second power that might support the provisions of the order. The reference was brief and seemed less like an argument than a caveat against any supposition on the part of the Court that it was impossible, even with a full use of the more recent decisions of the Supreme Court of the United States, to extend the power over inter-state and foreign commerce back to the production of commodities that might be required for such commerce.

In the third place, the power with respect to external affairs was faintly mentioned.

The order itself depends upon the power conferred by the National Security (Food Control) Regulations upon the Minister to control, regulate and direct the production, disposal and use of foodstuffs, and it may seem strange that any power but that of defence could be used to justify an order made under a power deriving from the National Security Act.

The explanation lies in the fact that the Food Control Regulations had by the time the order was made, come to depend upon s. 6 of the Defence (Transitional Provisions) Act 1946. Section 6 of that Act provides that a list of regulations contained in a schedule, including the Food Control Regulations, shall be in force until 31st December 1947. It may be true that, if any of the legislative powers of the Parliament will authorize so much of this provision as relates to any of the scheduled regulations or any divisible part thereof, it is enough for the validity of that regulation or that part.

Little need be said about the Commonwealth's reliance upon the legislative powers with respect to overseas commerce and external affairs.

The order cannot, in my opinion, be justified under either of these powers for the simple reason that neither the order nor the statutory authority under which the order was made is shown to amount to a law with respect to trade and commerce with other countries or with respect to external affairs.

The statutory authority under which the order was made consists in s. 6 (1) of the Defence (Transitional Provisions) Act in its application to so much of the first schedule as refers to the National Security (Food Control) Regulations. On the face of those regulations there is nothing to connect them with trade and commerce with other countries nor with external affairs. In picking up the regulations and providing that they shall be in force until 31st December 1947, s. 6 (1) does not therefore touch ostensibly either of these two subjects of legislative power. That, perhaps, is not conclusive. Circumstances existing when the Defence (Transitional Provisions) Act was passed might put a different complexion on that part of the operation of s. 6 (1). For instance, the preamble to the Act speaks of "arrangements activities actions and proceedings entered upon or subsisting in pursuance of certain of the regulations made under the National Security Act." If it had been made to appear that some "arrangement or activity" so subsisted and was of such a kind as to fall within either of the two legislative powers in hand, conceivably that might have been enough to make the section pro tanto a law with respect to the subject.

But a singular and unfortunate circumstance of this case is that there has not been laid before us a complete account of what must be an interconnected, if complicated, set of arrangements, transactions, events and facts with reference to the war-time and post-war production, allocation and distribution of food, which I should imagine must have a bearing upon the questions for our decision. If it were before us, it might not affect either the result or the steps by which we reach it, but that we cannot know. As it is, I think that it is clear that we must put aside the commerce power and the external affairs power at all events.

I have reached a different conclusion with reference to the defence power. Enough, in my opinion, has been made to appear to establish that, in present circumstances, to increase the exportable surplus of butter and cheese is an object falling within the defence power. And I agree in the contention that the order can be justified because it is addressed to that object and comes within the words of the authority conferred upon the Minister by the regulations.

Of the facts disclosed by the evidence before us, those upon which I rest this opinion can be briefly stated. During the war, in 1944, an agreement was arranged between the United Kingdom and Australia for the supply of the exportable surplus of butter and cheese. The heads of the agreement were settled and exchanged between the Governments in March 1945. The Commonwealth undertook to make available to the United Kingdom for four years, commencing on 1st July 1944, all butter and cheese in excess of that required to satisfy the needs of Australia, including those of the Australian forces, and to supply certain other requirements.

The other requirements were, in effect, the supply of American forces, the supply of U.N.R.R.A. and sale in other markets. It was left for Australia to agree how much of these requirements she would supply, but always following prior consultation with the United Kingdom Government, and in the last case, namely, sale in other markets, subject to the prior agreement of that Government. The heads of agreement recited the recognition by the two Governments of the necessity of maintaining and, if possible, increasing the production in Australia of butter and cheese.

The transaction formed part of the Allied arrangements for the supply of food in the conduct of the war. The Minister of Food for the United Kingdom, in forwarding the heads of agreement to the Australian High Commissioner, wrote:—"While we expect that the supplies we shall buy under the Agreement will be allocated to the United Kingdom, we regard them as purchased on behalf of the United Nations and subject to allocation by the Combined Food Board" (a body established under the Combined Chiefs of Staff) "so long as that body continues to allocate food supplies among the United Nations."

The agreement does not provide for any limitation upon Australia's prior needs, it being sufficiently obvious that such a matter would be left to the good faith of the Commonwealth. But afterwards, that is to say, as I understand it about October 1946, the Commonwealth gave an assurance or promise to the United Kingdom Government of an annual export of 60,000 tons of butter to sustain the ration of butter decided on by the British Ministry of Food. The giving of this promise appears to me to be a thing done in pursuance of, although not required by, the agreement, something incidental to its reasonable execution or fulfilment.

There had been an order restricting the use in Australia of cream, an order like that now in question. But, because of a mistaken expectation that the production of butter would increase, the order was revoked on 11th November 1946. The present order was made nine or ten months afterwards as part of the measures adopted to obtain a production of 160,000 tons of butter in 1947-1948. Of such a production 100,000 tons would be available for Australian consumption and 60,000 tons for export to Great Britain.

If the surplus were 60,000 tons, the Commonwealth would thus be able to make good its promise to the Ministry of Food in the United Kingdom. How much would be contributed to the surplus by the diversion of cream to butter as a result of the order is necessarily a matter of estimate. According to the information obtained by plaintiffs' inquiries, if the order were enforced completely it would mean that annually 10,000 tons more butter would be available for export. The estimate by the Commonwealth officials of the increase to be expected from the operation of the order is not specifically given, but it appears to be considerably lower than this figure. It is plain, however, that the order involves a very substantial contribution to making up the 60,000 tons needed to fulfil the assurance given to Great Britain in 1946 as to the quantitive working out of the agreement made in 1944 and 1945.

The foregoing are special facts which, in my opinion, bring the purpose of the Cream (Disposal and Use) Order, namely the purpose of increasing the exportable surplus of butter and cheese, within the defence power.

The two Governments made the agreement for a term of years which, it may be surmised, was regarded in 1944 as covering not only the concluding stages of the war but also an ensuing period of expected food shortage and of difficulty of supply of the same character as during actual hostilities and proceeding from the same causes. That such a period should ensue was an inevitable consequence of the diversion of effort, the reshaping for war of the whole Allied economy, the absorption of manpower, the displacement of people and the physical destruction of war.

The agreement by Australia for the supply of butter and cheese for four years was thus a measure taken in the prosecution of the war by the Allies. The subsequent fixing of 60,000 tons of butter per annum as the quantity which Britain in making her arrangements could rely upon Australia's supplying under the agreement ought not perhaps to be considered in itself as incident to the state of war. Hostilities were then over and the state of war was manifested in the occupation and administration of enemy territory and the like. But it was a step in dealing with a situation in contemplation of which the agreement had been made, a situation contemplated as a necessary result of the manner in which the war was being carried on when the agreement was made.

In these circumstances I think that the finding by Australia at this time of at least 60,000 tons of butter per annum for export under the agreement is a matter fairly falling under the defence power.

It is a legislative power the application of which after the final cessation of hostilities in a war must be very different from its application while resistance to the enemy or his overthrow still forms the central purpose of its exercise. But its operation and the ascertainment of the practical measures which it authorizes must continue to depend upon the facts as they exist from time to time. Speaking generally, the fulfilment of agreements with other countries made as an incident in the prosecution of a war or the completion or winding up of arrangements made in the course of a war and designed to further its prosecution, whether by this country, other British countries or their Allies, will constitute a purpose for which the power may be exercised. It is an end relevant to the power. When an end is relevant to a power, the only inquiry that remains is whether the means adopted are appropriate to the end.

The most immediate step for achieving the end in this instance is the production of a greater surplus of butter or cheese, as the case may be. If that is secured the agreement itself operates upon the surplus. The National Security (Dairy Produce Acquisition) Regulations arm the Commonwealth with enough authority to see that the butter and cheese are exported as required by the agreement. That the Cream (Disposal and Use) Order is appropriate to securing the increased production of butter or cheese can hardly be doubted. Other measures might have been adopted for the purpose. Whether less drastic restrictions might have sufficed, whether reduction in the consumption of butter and a regulation of the trade in cream would have been enough, these are matters to be decided by those who exercise the power; they do not go to its application or extent. They are not matters which affect a question of ultra vires. Such a question depends on the relevance of the end to the power and the appropriateness of the means to the end. It is not concerned further with the choice of means. Nor is it concerned with the manner in which the nature of the end appears. It is enough if it appears from the operation of the means adopted upon and in relation to the facts that exist. The legislative or other instrument need not itself declare the purpose by which it is animated. Indeed without the necessary foundation of fact and an inherent tendency in the means adopted to achieve the end, a profession of purpose might prove fruitless. It is for this reason that I have taken the view that the question upon which the validity of the order depends is whether facts exist which make the production of a greater exportable surplus of butter an object falling within Federal power, that is, as I view it, the defence power.

For the reasons I have given I think that such facts do exist. In reaching that conclusion I have confined myself to the specific circumstances I have mentioned. I have done so notwithstanding larger claims on the part of counsel for the Commonwealth and notwithstanding his reliance upon additional circumstances, sometimes vague, sometimes more or less precise. These, in my opinion, are matters deserving, as indeed counsel scarcely denied, a much more detailed statement and examination than the materials laid before us contain or admit before their real effect upon the constitutional power is determined, and upon those materials I am not at present prepared to pronounce in favour of the validity of the order, except upon the very special and limited grounds I have assigned.

The question upon which the result of this case depends is whether the Cream (Disposal and Use) Order is ultra vires. It was made on 22nd August 1947 by the Minister of State for Commerce and Agriculture. He declared in the order that he made it in pursuance of reg. 9 of the National Security (Food Control) Regulations. This regulation derives its force as a law from s. 6 of the Defence (Transitional Provisions) Act 1946. By this section Parliament intended to authorize the Minister to exercise the powers contained in reg. 9 until the end of 1947. In passing this Act the Parliament has, plainly, exerted its power to make laws with respect to "Defence." After hostilities began, this power extended to a wider range of subjects than those which could have come within it before the outbreak of the war. But upon the cessation of hostilities the power did not ipso facto become limited to the latter range of subjects. Thereafter it extends to the making of a law on any subject, if the law is an appropriate means of coping with a national emergency attributable to the war.

The existence of emergencies of this nature characterize the period described in the preamble of the Act as "a time of transition from war conditions to conditions of peace."

The present order is in terms which are authorized by the provisions of reg. 9. It is necessary that the order should be within the legislative powers with respect to defence and within the purposes of the Defence (Transitional Provisions) Act 1946. It satisfies both these conditions if it is an appropriate means of coping with a national emergency attributable to the war. The reasons which the Minister had for making the order are not stated upon its face. The evidence shows that they are founded upon the agreement which was made in 1944 between the Government of the United Kingdom and the Government of the Commonwealth relating to the supply of butter and cheese from Australia to Great Britain. In that agreement the two Governments declared that they recognized the necessity of maintaining and if possible increasing the production of butter and cheese in Australia and the Government of the Commonwealth therein promised that it would make available for purchase by the Government of the United Kingdom all butter and cheese produced in Australia from 1st July 1944 to 30th June 1948, in excess of certain specified requirements. The present order is calculated to increase the production of butter and cheese in Australia and consequently the amount of these foods which will be available for purchase by Great Britain, because local consumption is or may be controlled under the Commonwealth Rationing Regulations. The agreement is not legally enforceable. It calls for action on the political level to implement it. The working of the agreement depends upon the adoption in Australia of government policies appropriate to foster the production of butter and cheese in sufficient quantities to provide a surplus for export to Great Britain. The agreement was made under the necessity of war. The commitments of the Commonwealth Government under the agreement are in the nature of emergencies attributable to the war. The evidence proves that the Minister made the order with the sole object of providing a surplus of butter and cheese for export to the United Kingdom. The order is in my opinion an appropriate means of honouring such commitments.

I am of opinion that the Cream (Disposal and Use) Order is not ultra vires and that the action should be dismissed with costs.

The question that arises for decision in this action is whether the Cream (Disposal and Use) Order is valid. This order was made on 22nd August 1947 and came into force on 1st September 1947. It was made by the Minister of State for Commerce and Agriculture in pursuance of reg. 9 of the National Security (Food Control) Regulations. The order provides in par. 4 that without the consent of the Controller-General of Food a person shall not sell exchange or give away or otherwise dispose of cream except (a) to a person who is registered or licensed in respect of premises which are required to be registered or licensed under the law of any State or Territory of the Commonwealth providing for the registration of butter factories or cheese factories, or (b) under the authority of or in accordance with the terms and conditions of a permit: par. 5; except with such consent or authority a person shall not purchase receive or otherwise acquire cream unless he is so registered or licensed: par. 6 (1); a person shall not without such consent use any cream except (a) for the manufacture of butter or cheese at such premises or at the farm where the cream is produced or (b) under the authority of and in accordance with the terms and conditions of a permit.

The effect of the order is therefore to prohibit the use of cream, except for manufacture into butter or cheese, without the consent of the Controller-General of Food or a permit. Regulation 9 (1) of the Food Control Regulations provides, so far as material, that the Minister of State for Commerce and Agriculture shall have power to control regulate and direct the distribution disposal use and consumption of food (then follow a number of specific powers). Regulation 9 (2) provides that the Minister may make such orders, give such directions, enter into such contracts on behalf of the Commonwealth, and do all such other things as appear to him to be necessary or expedient for the purposes of the regulations. The Food Control Regulations first came into force on 28th June 1943. They then contained reg. 3, which provided that the object of the regulations was to secure for the purposes of the defence of the Commonwealth and the effectual prosecution of the war, that adequate provision of food ... was made and maintained ... and these regulations should be administered accordingly. The regulations were continued in force by the Defence (Transitional Provisions) Act 1946 until 31st December 1947 with the omission, however, of reg. 3. The Defence (Transitional Provisions) Act contains a preamble which recites, inter alia, that legislative provision is required in order to bring a gradual and orderly return to conditions of peace, and that it is necessary for the peace, order and good government of the Commonwealth to make certain provisions to operate during a time of transition from war conditions to conditions of peace. There had been two previous orders restricting the use of cream. The first order prohibited the use of cream except for high priority dairy products and the sale of cream as sweet or table cream except on approved medical grounds. In February 1944 this order was superseded by a new order in a slightly changed form which remained in force until 11th November 1946. The restriction of the use of cream during these periods was rendered necessary by the decline of milk production in Australia occasioned by conditions due to hostilities and the heavy demands for butter from the armed forces of the Commonwealth and the United Kingdom.

When the restriction was removed in November 1946 it was anticipated that there would be an improvement in the manpower position in the dairying industry brought about by releases from the services which would result in an increased production of butter, and that this increase, together with some 12,000 tons of butter per annum no longer required for the allied services based on Australia, would assure an annual surplus of 60,000 tons of butter which the Commonwealth had promised the Government of the United Kingdom would be available for export to that country. But on account of a continued shortage of manpower, materials, and farm equipment in the industry, and of pastures becoming more impoverished owing to the continued shortage of supply of fertilizers, this anticipation proved incorrect, and it was found necessary in August 1947 to reimpose restrictions on the use of cream except for manufacture into butter and cheese to create the promised surplus.

In July 1944 an arrangement embodied in a document entitled Heads of Agreement was made between the Government of the United Kingdom and the Government of the Commonwealth of Australia for the purchase by the Government of the United Kingdom of supplies of butter and cheese in Australia between 1st July 1944 and 30th June 1948. This document, after reciting that these Governments recognized the necessity of maintaining and if possible of increasing the production in Australia of butter and cheese, provided that in this period the Government of the Commonwealth of Australia would make available for sale to the Government of the United Kingdom and the latter Government would purchase all butter and cheese in excess of that required to satisfy the needs of Australia including those of the Australian forces and certain other purposes. The document also provided that the Government of the Commonwealth of Australia in determining the quantities to be made available from the milk production of each season would consult with the Government of the United Kingdom and would, within the limits of the productive capacity of Australia, take all necessary steps to ensure that supplies of butter and cheese were made available for sale in such proportions as might be required by the Government of the United Kingdom.

It appears that conferences of representatives of the United Nations were held in the United States of America at Hot Springs in May 1943 and at Atlantic City in November 1943, and that in accordance with the principles there agreed upon allocations of world supplies of food were made first by the Combined Food Board and later by the International Emergency Food Council in Washington. Mention of these conferences was made in a covering letter to the Heads of Agreement dated 23rd March 1945 written by the British Minister for Food to the Australian High Commissioner in England. The writer, after referring to the desire of the Governments of the United Kingdom and the Commonwealth of Australia to facilitate the allocation of supplies by the Combined Food Board in accordance with the principles there agreed upon, stated that he expected that the supplies to be purchased by the United Kingdom under the arrangement would be allocated to the United Kingdom, but that he regarded them as purchased on behalf of the United Nations and subject to allocation by the Combined Food Board so long as that body continued to allocate food supplies among the United Nations.

There is evidence that in accordance with these expectations the fact that the arrangement between the Government of the United Kingdom and the Government of the Commonwealth of Australia provided for the anticipated Australian surplus of butter and cheese to be allocated to the United Kingdom was taken into account by the International Emergency Food Council as part of the general scheme of distribution of world supplies.

The defence power, that is s. 51 (vi.) of the Constitution, provides that the Commonwealth Parliament may make laws with respect to the naval and military defence of the Commonwealth and of the several States. It was not disputed that legislation having as its object the supply of essential foodstuffs such as butter and cheese to the United Kingdom to assist in sustaining the people of Britain and enable them to take a predominant part in the common war effort was entirely within the ambit of this power during hostilities. But it was contended that upon the termination of hostilities the legislation of an economic character authorized by this power relating to the period of transition from hostilities to peace was confined to legislation for the restoration of the people of Australia to conditions of peace, and did not extend to the restoration of any people outside Australia, even those of the United Kingdom. It was urged that the Cream (Disposal and Use) Order was independent legislation of an economic character enacted two years after the termination of hostilities, that its purpose was the restoration of the economy of the people of the United Kingdom and not of Australia, and that it was not therefore authorized by the power. If, two years after the termination of hostilities, the United Kingdom had become for the first time largely dependent on Australia for its supplies of butter and cheese, it might be open to argument that there was no sufficient connection between the order and the defence of Australia. But the order is not in any sense a piece of independent legislation. It is part of a connected series of steps taken to meet an emergency which arose during hostilities, and which did not cease to exist upon their termination. If there had been no arrangement like that embodied in the Heads of Agreement, but the Commonwealth had in fact been supplying the United Kingdom with butter and cheese for the purpose stated, I should have thought that the decisions of this Court in Dawson's Case[6] and Miller's Case[7] show that the defence power would have continued to be wide enough after the termination of hostilities to support legislation having as its object the maintenance of such supplies during a reasonable period of readjustment after the fighting had ceased.

It is not disputed that it was competent for the Commonwealth Parliament and those to whom it delegated its powers to pass legislation under the defence power during hostilities conferring upon the Minister of State for Commerce and Agriculture authority to control, regulate and direct the distribution, disposal, use and consumption of foodstuffs. In my opinion it was also competent for the Commonwealth Parliament to pass legislation to continue that authority for a reasonable period thereafter, so that commitments entered into during hostilities could be gradually liquidated. In Fort Frances Pulp & Power Co. Ltd. v. Manitoba Free Press Co. Ltd.[8] and recently in Co-operative Committee on Japanese Canadians v. Attorney-General for Canada[9] the Privy Council has made it plain that the Executive "must be ... left with considerable freedom to judge" what legislation is still required to cope with the transition from hostilities to peace. In the latter case Lord Wright said[10]: "But very clear evidence that an emergency has not arisen, or that the emergency no longer exists, is required to justify the judiciary, even though the question is one of ultra vires, in overruling the decision of the Parliament ... that exceptional measures were required or were still required."

In the present case the position is clarified by the existence of the arrangement. The period for which this arrangement is to operate was agreed upon during hostilities; it is a reasonable period, and it is still current. The main purpose of the arrangement was to meet to the fullest possible extent the requirements of the United Kingdom in butter and cheese after satisfying the needs of Australia. It was contended that the expression "the needs of Australia" in the Heads of Agreement referred to the actual Australian consumption. I cannot accept this contention. In my opinion the expression refers to the reasonable dietary needs of Australia, and the determination of the amount of butter and cheese required for this purpose is a matter for the Government of the Commonwealth. Australian consumption of butter is controlled by the system of butter rationing instituted under the National Security (Rationing) Regulations. The purchase of the butter and cheese required to give effect to the arrangement is made by the Dairy Produce Control Committee constituted under the National Security (Dairy Produce Acquisition) Regulations. Both of these sets of regulations have been continued in force by the Defence (Transitional Provisions) Act. The interaction of the Cream (Disposal and Use) Order with the system of Australian butter rationing and the purchase of the surplus Australian butter and cheese by the Dairy Produce Control Committee is plain and clear. It was suggested that the required exportable surplus of butter for the United Kingdom could be obtained by reducing the Australian butter ration. This may be true. But once it is decided, as in my opinion it should be decided, that in all the circumstances it was competent for the Parliament of the Commonwealth and its authorized delegates to legislate under the defence power to maintain the supplies of essential foods promised to the Government of the United Kingdom during hostilities for a reasonable period thereafter, the determination of the policy to be followed to give effect to this object is a matter for the Government of the Commonwealth.

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

[1] (1945) 72 C.L.R. 37.

[2] [1916] HCA 36; (1916) 21 C.L.R. 433.

[3] [1944] HCA 36; (1944) 69 C.L.R. 457.

[4] [1943] HCA 22; (1943) 67 C.L.R. 413.

[5] [1943] HCA 19; (1943) 67 C.L.R. 335, at p. 375.

[6] [1946] HCA 41; (1946) 73 C.L.R. 157.

[7] [1946] HCA 42; (1946) 73 C.L.R. 187.

[8] (1923) A.C. 695.

[9] (1947) A.C. 87.

[10] (1947) A.C., at pp. 101-102.

High Court of Australia

Sloan v Pollard [1947] HCA 51; (1947) 75 CLR 445 (12 December 1947)

HIGH COURT OF AUSTRALIA