Grannall v C Geo Kellaway & Sons Pty Ltd [1955] HCA 5; (1955) 93 CLR 36 (3 March 1955)

HIGH COURT OF AUSTRALIA

GRANNALL v. C. GEO. KELLAWAY AND SONS PTY. LTD. [1955] HCA 5; (1955) 93 CLR 36

Constitutional Law - Agreement made in New South Wales

High Court of Australia
Dixon C.J.(1), Webb(1), Fullagar(1), Kitto(1) and Taylor(1) JJ.

CATCHWORDS

Constitutional Law - Freedom of inter-State trade and commerce - Farm produce - Apples - Sale or disposal - Farm produce agent - Payment - Commission - Quantum - Statutory restriction - Inter-State commerce - Quaere, impairment of freedom - The Constitution (63 & 64 Vict. c. 12), s. 92 - Judiciary Act 1903- 1950, ss. 18, 40 - Farm Produce Agents Act 1926-1952 (N.S.W.), ss. 2 (2), 23.

Agreement made in New South Wales - Payment thereunder - Document silent as to place - "Within New South Wales" - Statutory requirement - Interpretation Act of 1897 (N.S.W.), s. 17.

HEARING

Sydney, 1954, March 29, 30; 1955, March 3. 3:3:1955
REMOVAL under s. 40 of the Judiciary Act 1903-1950.

DECISION

March 1.
THE COURT delivered the following written judgment: -
This cause is before the Court pursuant to an order of removal made under s. Court of Petty Sessions at Sydney. The proceeding is an information for a summary offence against s. 23 of the Farm Produce Agents Act 1926-1952 (N.S.W.). Before the order for removal was made the information had been heard upon evidence and the evidence had been concluded. The order for removal referred the cause to the Full Court pursuant to s. 18 of the Judiciary Act 1903-1950. The evidence consisted for the most part of some documents put in as exhibits and of mutual admissions made between the parties. The constitutional element which brought the cause within s. 40 of the Judiciary Act was supplied by s. 92 of the Constitution. (at p43)

2. The defendant is a company registered under the Companies Act of New South Wales and carries on business as a farm produce agent within the definition of that occupation contained in s. 2 (1) of the Farm Produce Agents Act 1926-1952 (N.S.W.). Section 23 (1), which creates the offence in respect of which the information was laid, provides that no farm produce agent shall charge, sue for or recover any fees, charges, commission, reward or other remuneration - (a) for or in respect of the sale or disposal of farm produce except commission not exceeding the prescribed commission. A commission is prescribed by the regulations made under the Act. Regulation 10 which was given its present form as from 2nd January 1953 (1953, No. 1) prescribes a commission of seven and one-half per cent of the price realized where the farm produce is fruit, as distinguished from vegetables, potatoes and other edible roots or tubers. The information alleges that the defendant company on 4th August 1953 contravened s. 23 of the Act and reg. 10 in that it did charge commission for or in respect of the sale or disposal of farm produce, to wit 144 cases of apples consigned from one B. G. Direen, in excess of the commission prescribed. The information proceeds to give figures showing that the charge was ten per cent. Section 23 (1) (a) does not cover the whole ground of a farm produce agent's remuneration. The subject of the reward which par. (a) restricts is described by the words "for or in respect of the sale or disposal of farm produce". Paragraphs (b) and (c) of sub-s. (1) of s. 23 go on to deal with further incidental work in connection with the sale or disposal of farm produce. These provisions cover fees, charges, commission, reward or other remuneration for or in respect of the performance or doing of any service, act or thing incidental to the sale or disposal of farm produce or in relation to any farm produce sold or disposed of by the farm produce agent or forwarded or delivered to or received by him for sale or disposal. Paragraph (b) provides that remuneration of this kind may not be charged, sued for or recovered, unless such service, act or thing is a service, act or thing prescribed as one in respect of which fees, charges, commission, reward or other remuneration may be charged, sued for or recovered. Then paragraph (c) of the same sub-section provides that the amount charged, sued for or recovered in respect of any service, act or thing so prescribed shall not be in excess of the fees, charges, commission, reward or other remuneration prescribed for such service, act or thing. Regulation 10 (2) prescribes certain services, acts or things, for the purposes of par. (b) of s. 23 (1), as those in respect of which fees, charges, commission, reward or other remuneration may be charged, sued for or recovered, and it fixes the maximum remuneration for the services, acts or things so prescribed. The relevant items are "stamps and stationery 6d. per consignment" and "unloading, storing and handling fruit forwarded from other States 1d. per case". (at p45)

3. From the evidence, which is very scanty, it appears that Direen, whose address is given as Lymington South, Tasmania, caused to be consigned 144 cases of apples by a certain ship from some unspecified port in Tasmania to Sydney. From the documents it appears that there were shipping charges of 48 pounds 6s. 0d. and an amount of 9 pounds described as representing charges made for bringing the goods from the place where grown to the port. Regulation 12 (1) requires every farm produce agent to keep a "Consignments Received and Account Sales Book", and the defendant company did so. The material entries in this book, a copy of an account sales directed to Direen and certain admissions were put in evidence. These documents show that the defendant company sold the apples for 159 pounds 3s. 0d. and that deducted from that amount were: 48 pounds 6s. 0d. for shipping charges; 9 pounds for the Tasmanian charges; 12s. for the handling charges; 6d. for stamps and stationery and 15 pounds 18s. 3d. for commission. These deductions, which amount to 73 pounds 16s. 9d. are shown upon the account sales together with the balance, 85 pounds 6s. 3d. with the word "cheque" against it. Some more facts appear from the admissions: The defendant company is registered under the Act as a farm produce agent and it carries on business in Quay Street, Sydney. It "received" the 144 cases of apples on 4th August, the same date as that shewn in the account sales as if it were the date of realization. The amount of 15 pounds 18s. 3d. was for commission only and did not include any amount for freight, handling, storage, stamps and stationery. (at p45)

4. Further, there is an admission that the 144 cases of apples were consigned to the defendant company pursuant to a contract of agency made by the acceptance by Direen in Tasmania of an offer despatched to him by post from Sydney to Tasmania by the defendant; by the terms of the contract the defendant was appointed the agent of Direen to receive, inter alia, apples consigned to it by him from Tasmania to Sydney and to sell such apples on his behalf upon terms, inter alia, that the defendant should be paid a commission for such work as agent equal to ten per cent of the gross proceeds of sale of such apples. The documents to which this admission refers were put in evidence. They are two in number. One is from a body called the New South Wales Chamber of Fruit and Vegetable Industries. The other is a letter from the defendant to Direen dated 17th July 1953. It is assumed that the letter enclosed the circular. The circular states in effect that, although seven and one-half per cent has been the commission charged for over 100 years, it has been found insufficient to cover the selling costs since the war, that the members of the Chamber have been advised that they are free to make their own arrangements and that it has therefore been determined that as from 1st July 1953 the rate of commission charged by all members acting as agents for growers in States other than New South Wales will be ten per cent. The letter addressed to Direen states that because of the increased costs it has been found necessary to increase the rate of commission to ten per cent. The letter goes on: "This rate, therefore, will be charged by us on all consignments received on or after 31st July 1953. All other charges will remain unaltered." The letter ends with an assurance that close attention will be given to future business from Direen. The basis of the admission is that Direen, by consigning his apples to the defendant company after receipt of the letter, appointed it his agent on the terms the letter states. (at p46)

5. On this footing the admission cannot be read as referring to a general contract of agency. It must be understood as describing an agency constituted on each occasion by a consignment of fruit to the defendant company. (at p46)

6. The admissions include a general statement that in the course of its business the defendant company receives farm produce for sale and disposal as agent from growers and producers in New South Wales and other States and that it conducts a substantial business of acting as agent for the receipt and disposal in Sydney of fruit and vegetables of inter-State origin consigned to it under contracts of agency made in the same manner as the contract with Direen and containing similar provisions. No evidence was given of the course of business of farm produce agents or of the defendant company in particular. It does not appear under what arrangements fruit is discharged from the ship, where it is taken or how or at what point it is sold and delivered. It may have been assumed that the Court would know this, but the assumption is not well founded. Presumably the amount of twelve shillings calculated at one penny a case covers the cost of receiving the cases as the ship discharged. It will be borne in mind that in the regulations the services for which one penny per case is fixed are described as unloading, storing and handling fruit forwarded from other States. No doubt the ship's charges are all included in the 48 pounds 6s. 0d. and the word "unloading" in the item in the regulations can cover no more than the cost of receipt of the goods by or on behalf of the consignee at earliest from ship's tackle as the ship discharges. The commission, 15 pounds 18s. 3d., therefore, appears to be confined to the service involved in disposing of the fruit. It does not appear whether there is any ground for supposing that the sale is inseparably connected with the inter-State transportation of the fruit so as to form a part of the inter-State transaction. Such an inseparable connection is not inconceivable. But the first sale of a commodity after importation usually is a separate distinct and subsequent transaction. It may perhaps be surmised that charges which reg. 10 fixes as maxima are interrelated. The commission which is prescribed under the statutory description "for or in respect of the sale or disposal of farm produce", the one penny per case prescribed for the additional services called "unloading, storing and handling" and the sixpence for stamps and stationery, may possibly have been fixed as aggregating a sufficient remuneration rather than each on its own basis as a proper valuation of the services it comprised. But again the evidence does not explain what in practice these items respectively cover or, if the surmise is correct, how they are interrelated. Yet these are not matters which can be safely ignored when the contention is that an act or transaction or series of acts or transactions occurring conceivably at, but more probably after, the final point of inter-State transportation has been reached enjoys the freedom of inter-State trade and that the attempt of the State to control such things invades s. 92. (at p47)

7. The answer which the defendant company sets up to the information depends altogether upon the effect of s. 92 upon the operation of the provisions of s. 23 (1) (a) and of reg. 10. The contention is that these provisions cannot validly operate to make it an offence for a produce agent to charge, sue for or recover commission or other reward for or in respect of the sale or disposal of farm produce in excess of the prescribed commission of seven and one-half per cent or of any other rate on the ground that to limit the remuneration of the commission agent is to impose a restriction on his employment in an integral part of an inter-State commercial transaction. (at p47)

8. The work of the farm produce agent by which he earns commission is treated by the contention as wearing two aspects which in combination or as alternatives give it the character of inter-State commerce freed by s. 92 from the kind of control complained of. First, as it is said, the agent directly engages for himself in inter-State trade by contracting with the grower in the other State to receive and sell his fruit and by performing the work in pursuance of his contract. Secondly, it is contended that in any case the work of the agent is incidental to the inter-State trade in which his principal the grower engages when he consigns the fruit to Sydney for sale in Sydney; as an incident it enjoys the freedom bestowed by s. 92 upon the principal transaction. (at p48)

9. No attempt is made on behalf of the defendant company to impugn the validity of the Act generally as inconsistent with s. 92. The attack is almost confined to s. 23. Indeed s. 29A appears to be the only other provision involved and that only as in some way complementary to s. 23. But while the validity of the Act considered generally is conceded, for a proper understanding of the place which s. 23 (1) occupies the scope, purpose and character of its provisions must be regarded. The general purpose of the Act may be seen from the description which the long title contains, viz. an Act to provide for the registration and regulation of farm produce agents, to prohibit certain practices and to regulate in certain respects the sale and disposal of farm produce. It was first passed in 1926 but it has been much amended and s. 23 in the form in which it affects this case was actually introduced by Act No. 40 of 1952. (at p48)

10. The chief provision of the Act forbids the carrying on of the business of a farm produce agent except by the holder of a licence. A register is established of licensed farm produce agents but unless a farm produce agent is disqualified on specific grounds stated by the Act he is entitled to be registered and receive a licence. He must, however, give a bond in a prescribed form to comply with the Act and in effect fulfil his duties to his principals. The chief disqualifications depend on being under age, on having been convicted of certain offences or judicially found to have committed a fraud, on bankruptcy or on making an assignment for the benefit of creditors under which less than ten shillings in the pound is paid (ss. 5-8). If the agent is a corporation it must remove persons so disqualified from its share register (s. 9). A licence may be revoked on grounds it is unnecessary to enumerate but which in the main are of a similar or analogous character. There is an appeal to a judge of the District Court from any refusal or cancellation of a licence (s. 11). The books of a farm produce agent are required to be open for inspection for the purpose of ascertaining whether any offence has been committed, and for a like purpose certain other powers of investigation may be exercised (ss. 13 and 13A). Within fourteen days after the sale or disposal of farm produce the agent must render account sales and pay his principal the amount of the purchase money less commission and other charges at the prescribed rate and any other out of pocket expenses properly payable by the principal and any amount owing by him to the agent (ss. 14 and 15). False accounts are penalized (s. 16). A farm produce agent may not buy farm produce consigned or delivered to him or to any firm of which he is a member by a principal unless he previously obtains the consent in writing of the principal to such purchase (s. 18). There are certain other provisions directed at the proper conduct of the farm produce agent's business and to evidentiary matters which it is unnecessary to discuss. The argument for the defendant company treats s. 29A as of more importance for present purposes. That section provides that no person shall purchase any farm produce from the person by whom it was produced unless, at the time of the purchase or before delivery of the farm produce, whichever is the earlier, the price for which he purchases such farm produce has been definitely fixed and agreed to by his vendor at a sum of money certain and one which is not to be ascertained by reference to any other transaction. The purpose of this is to insure that the farmer who produces the fruit or vegetables, if the dealing is directly with him, shall have a sum certain stated in the bargain as the price upon which he can rely. The provision, so it is argued, seeks where there is a direct sale and purchase, including an inter-State transaction, to limit the competence of the parties to contract on whatever terms they find convenient, just as s. 23 (1) seeks to do where the transaction is one of agency entered into between the producer and an agent to whom he sends his fruit for sale. (at p49)

11. Section 23 (1) itself does not in terms create an offence: it prescribes no penalty. It might perhaps be supposed that it did no more than ensure that remuneration of a kind or quantum outside or beyond what the regulations allowed was not chargeable, actionable or recoverable. But while no penalty is prescribed by s. 23, s. 30 provides that any person contravening any of the provisions of the Act shall, when no other penalty is expressly provided, be liable on conviction to a penalty not exceeding fifty pounds. It was not denied that this provision applied to s. 23 (1). It is to be noted that in its original form s. 23 simply provided that an agent should not "be entitled to sue for or recover" remuneration other than that prescribed. (at p49)

12. No reason appears for doubting the view, which on behalf of the defendant was conceded, that, speaking in general terms, the provisions of the Act other than the two expressly attacked are not inconsistent with s. 92. It is so simply because, in requiring registration, exercising some control over the conduct of produce agents and authorizing a certain degree of supervision and inspection, no real impairment of freedom of trade is involved. In the form in which the Act stood before it was amended in 1932 an attack upon its validity before this Court failed: Roughley v. New South Wales [1928] HCA 48; (1928) 42 CLR 162 . But that is not a very satisfactory authority and in any case the Act has been much amended since that date. It was by a majority of the Court that the then Act was held to be valid. It seems that Knox C.J., Higgins and Powers JJ. were of opinion that in no specific respect did the Act include any invasion or possible invasion of s. 92. The Act did not contain s. 2 (2), embodying the severability clause and that explains the wide survey of its provisions contained in the reasons. Isaacs J. and Starke J., however, were of opinion that much of the Act could not validly operate upon transactions of inter-State trade. Nevertheless Isaacs J. was of opinion that the Act could be read as excluding inter-State trade and Starke J. was of opinion that in the particular case no transaction of inter-State trade was disclosed by the pleading demurred to. Gavan Duffy J. in effect concurred upon the ground that he was relieved from applying the decision in McArthur's Case [1920] HCA 77; (1920) 28 CLR 530 from which he had dissented, because Knox C.J. and Starke J., who were in the majority in that case, now found themselves able, on the grounds already stated, to decide that the attack on the Act failed. In this state of opinion the decision could hardly provide a very satisfactory precedent upon the validity of the present legislation. But in any case much of the reasoning found, both in the majority and the minority judgments, departs from the interpretation and the mode of application of s. 92 which now are accepted and are established or illustrated by Australian National Airways Pty. Ltd. v. The Commonwealth [1945] HCA 41; (1945) 71 CLR 29 ; Bank of New South Wales v. The Commonwealth (1948) 76 CLR 1 (HCA); [1949] HCA 47; (1950) AC 235; (1949) 79 CLR 497 (PC) ; Cam & Sons Pty. Ltd. v. Chief Secretary of New South Wales [1951] HCA 59; (1951) 84 CLR 442 ; Carter v. Potato Marketing Board [1951] HCA 60; (1951) 84 CLR 460 ; Fergusson v. Stevenson [1951] HCA 49; (1951) 84 CLR 421 ; R. v. Wilkinson; Ex parte Brazell, Garlick and Coy [1952] HCA 6; (1952) 85 CLR 467 ; Hospital Provident Fund Pty. Ltd. v. Victoria [1953] HCA 8; (1953) 87 CLR 1 ; Williams v. Metropolitan & Export Abattoirs Board [1953] HCA 93; (1953) 89 CLR 66, at pp 73-76 and Hughes & Vale Pty. Ltd. v. New South Wales (No. 1) (1955) AC 241; (1954) 93 CLR 1 . (at p50)

13. It will be seen that in the present case no very wide question is involved. To no small extent it depends upon what is actually done in the course of business and how the working of the challenged provision actually affects those steps which truly form part of inter-State trade. Unfortunately the exact facts, upon which important distinctions may turn, do not fully appear. It is clear, however, that it is in the interests of the grower who consigns the fruit that the restriction on the charges that may be made by farm produce agents are imposed. The purpose and prima facie operation of the limitation are to lessen or prevent any increase of the burden of cost which arises from his consigning his fruit for sale. It is his action in consigning from Tasmania the farm produce to New South Wales which produces the inter-State trade. If the agent in selling and disposing of the commodity or in performing any other services for him is engaged in inter-State trade it is in consequence of such a consignment. How then, it may fairly be asked, can a limitation upon the description of services for which charges may be made and of the amount to be charged operate to restrict the consignor in his inter-State trade? If the answer is given that such a limitation may tend to reduce or destroy the grower's opportunity of obtaining the services which are indispensable to the transaction the question immediately arises whether in point of fact the limitations imposed do have any such tendency or effect. So far as appears there is no reason at all to suppose that any impediment or difficulty in carrying out the transaction comprising the consignment, transport and the sale or disposal of the fruit is experienced by the growers as a result of the limitation imposed upon the services that may be charged for and the amount of the charge. If, therefore, the challenged statutory provisions are bad under s. 92 it cannot be because they interfere with the grower's right to sell the fruit in inter-State commerce; it must be because the farm produce agent himself engages in inter-State trade by undertaking the work of selling the fruit consigned to him and is entitled in his own right to the constitutional protection which the provision affords. But again a difficulty of fact arises. It does not appear that when the defendant company sold or disposed of Direen's apples the sale formed in fact part of the inter-State operation. Clearly enough when reg. 10 provides one penny a case as the charge for services of unloading, storing and handling fruit forwarded from other States it covers some services, viz. the unloading, which are part of the inter-State transit. Until the goods are unloaded they remain in inter-State trade, and they may continue in inter-State trade until they are actually stored awaiting disposal. But the sale of the fruit is almost certainly a transaction forming part of the domestic trade of the State. There is neither proof nor probability that the fruit had not come to rest, that the operation of inter-State trade was not over and that the sale was not a fresh transaction of an intra-State character. To say this does not mean that legislation, if so framed as to impede or prejudice the sale of the fruit, might not impair the grower's or consignor's freedom to engage in or conduct inter-State commerce. But it does mean that the agent's services at this point concern what in itself is an intra-State sale and not services which form part of or attend upon a transaction of inter-State trade. Yet it is for this service in the sale and disposal of the fruit that the commission is charged. There is not material before us to support the suggestion that, in the case of an inter-State consignment, an interdependence exists between the percentage commission prescribed and the other charges allowed. Nor is it made to appear that any part of the cost to the agent of unloading, storing and handling the fruit of his principal forwarded from another State is not covered by the charge of one penny per case and that it must be provided out of the percentage commission. (at p52)

14. For the foregoing reasons there is no ground for a conclusion that the restriction imposed by s. 23 (1) (a) and reg. 10 (1) (a) applies to an operation of the farm produce agent falling under the protection of s. 92 or for a conclusion that the restriction is one that necessarily impairs the freedom, whether of Direen or of the defendant company, to carry on inter-State commerce. (at p52)

15. The case made by the defendant company in reliance upon s. 92 therefore fails. (at p52)

16. During the argument of the cause, however, a question was raised by Kitto J. which, upon consideration, appears to require the dismissal of the information. It is whether the evidence shows that the offence of charging more than seven and one-half per cent commission was committed by the defendant within New South Wales. This question depends on the meaning of the word "charge" in s. 23 (1) (a) and upon the application to that meaning of the rule that all offences are local and territorial. That rule is reinforced by s. 17 of the Interpretation Act of 1897 of New South Wales, which provides that all references to localities, jurisdictions and other matters and things shall, unless the contrary intention appears, be taken to relate to such localities, jurisdictions and other matters and things in and of New South Wales. It is not a question of the jurisdiction of the forum. Nor is it altogether a question of the territorial power of the legislature. For doubtless the acts or conduct of the defendant company in the present case include elements sufficiently connected with New South Wales to enable the legislature of that State to deal with them. But, just as the words in s. 23 (1) (a) "sue for" and "recover" must be understood as "sue for or recover in New South Wales", so must the word "charge" be interpreted as "charge within New South Wales". (at p53)

17. It appears from the facts already stated that an account sales was made out in New South Wales showing as a deduction the amount of the commission calculated at ten per cent. It is to be inferred that a cheque for the net amount was drawn and that this was directed to Direen at his address in Tasmania and was posted. The question is in effect whether the defendant company had committed the offence of charging Direen more than seven and one-half per cent before the communication reached its destination in Tasmania. If in the circumstances of this case the commission had not been "charged" until the charge was communicated to Direen, the offence was not committed in New South Wales. The word "charge" is no doubt a wide one capable of a flexible application. But it does seem in the context to convey the idea of a claim or demand or an effective imposition of a pecuniary burden, effective if not de jure at least de facto. Here if, for example, the cheque had been lost in the post Direen would not have been paid the net amount; there would have been no demand or claim, no imposition effective de facto. It may be true that to impose the burden of the amount upon Direen no further overt acts of the defendant company remained. But the post was the chosen means of communication and if communication was necessary to complete the "charging", the communication was not made when the letter was posted; delivery of the letter was needed to complete it. "A letter is intended to act on the mind of the recipient, its action upon his mind takes place when it is received. It is like the case of the firing of a shot, or the throwing of a spear. If a shot is fired, or a spear thrown, from a place outside the boundary of a county into another county with intent to injure a person in that county, the offence is committed in the county within which the blow is given. So with a letter." - per Field J., Reg. v. Rogers (1877) LR 3 QBD 28, at p 34 ; cf. Rex v. Munton (1793) 1 Esp 62 (170 ER 280) . It may be that the meaning of the word "charge" can be satisfied in some circumstances without actual communication. A farm produce agent might, for example, be entitled by his relations with his principal to appropriate funds, to settle liabilities by entries in accounts kept for the benefit of both parties, or in some other way effectively to burden the principal with the amount without communication. But in the present case the "charge" was made not otherwise than by means of the account sales reflected in the accompanying cheque. These documents were not operative without communication. As the communication was not made until delivery by the post of the missive in Tasmania, the essential element of the offence occurred outside New South Wales. (at p54)

18. It follows that the information should be dismissed. (at p54)

ORDER

Information dismissed. Informant to pay the costs of the hearing in the Court of Petty Sessions at Sydney. Otherwise no order as to costs.