Tamar Timber Trading Co Pty Ltd v Pilkington [1968] HCA 15; (1968) 117 CLR 353 (1 April 1968)

HIGH COURT OF AUSTRALIA

TAMAR TIMBER TRADING CO. PTY. LTD. v. PILKINGTON [1968] HCA 15; (1968) 117 CLR 353

Constitutional Law

High Court of Australia
Barwick C.J.(1), Kitto(2), Taylor(3), Menzies(4) and Owen(5) JJ.

CATCHWORDS

Constitutional Law - Freedom of inter-State trade commerce and intercourse - Carriage of timber within Tasmania from sawmill to racking yard - Racked timber subsequently sold and delivered inter-State - Timber carried on public vehicle between mill and yard - No permit held for such journey as required by Tasmanian law - Whether timber subject of inter-State trade at that stage - The Constitution (63 & 64 Vict. c. 12), s. 92 - Traffic Act (Tas.) 1925, s. 24.

HEARING

Hobart, 1968, February 6, 7;
Sydney, 1968, April 1. 1:4:1968
APPEAL from the Court of Petty Sessions at Launceston, Tasmania.

DECISION

April 1.
The following written judgments were delivered: -
BARWICK C.J. Tamar Timber Trading Co. Pty. Ltd. (Tamar Timber Trading), the Sawmilling), the appellant in the second matter, are both subsidiaries of Tamar Timber Industries Pty. Ltd. That holding company has five subsidiary companies, the group being engaged, apparently, in differing aspects of the timber business in Tasmania. Tamar Timber Trading operates a sawmill at Rocherlea, near Launceston, Tamar Sawmilling operates a sawmill at Legerwood in north-eastern Tasmania, Tasmanian Timber Yard Pty. Ltd. carries on the racking operations of the group in Rocherlea, Rocherlea Timber Co. Pty. Ltd. operates a sawmill with an attached racking yard at Rocherlea, and Tamar Timber Processing Pty. Ltd. carries on the business of kiln-drying and timber-dressing at Rocherlea. (at p354)

2. On 18th August 1965 an officer of the Transport Commission of the State of Tasmania stopped two vehicles owned by Tamar Timber Trading and Tamar Sawmilling respectively whilst they were carrying green sawn timber from Legerwood. Both vehicles carried an ordinary motor vehicle registration number and were licensed as well under the Traffic Act 1925 of the State of Tasmania as ancillary vehicles. This licence restricted their use to a particular area of the State unless a permit had been issued permitting the vehicle to move out of the area (see the Traffic Act, s.24). No such permits had been issued with respect to the subject vehicles. Though when stopped by the officer they were not out of the area to which their licences restricted their use, their subsequent travel was outside that area. Complaints were laid against the appellants for unlawfully using motor vehicles as public vehicles in a place which the licences in respect thereof did not authorize the vehicles to be so used, the relevant use being the carriage of the timber outside that area. On the hearing of the complaints, each appellant claimed that s. 92 of the Constitution protected its use of its vehicle in the proved circumstances and that, accordingly, the relevant restrictions of the Traffic Act did not apply to that use. (at p355)

3. The magistrate rejected this claim and convicted each appellant as charged. They have appealed to this Court from those convictions. (at p355)

4. It was established in evidence that the timber in question had come from the sawmill at Legerwood and was in fact in due course delivered to the racking yard known as the George Town Road yard at Rocherlea. Evidence to this effect was not controverted by the respondent, and was supported by the evidence of the transport officer. It was further established in evidence and accepted by the magistrate that ninety-five per cent of the total output of the Legerwood mill was carried by road to Rocherlea, the remaining five per cent being sold locally in the Legerwood district. There was some direct evidence that at the time of the interception each of the two vehicles was proceeding with its load to Rocherlea and in any case the proper inference from all the relevant evidence is that the timber from the time it left the mill was being carried to Rocherlea to be racked in the yard known as the George Town Road yard. (at p355)

5. At Rocherlea there were two yards, known respectively as the George Town Road yard and the Rocherlea yard, in which timber was racked for drying. All timber racked in these yards was sold and delivered inter-State. None of the timber there racked was sold in Tasmania. The managing director of the holding company in evidence said: "George Town Road yard is used exclusively for timber coming from Legerwood and also for other timber that we buy from other mills, and is delivered to our yard. Timber from the yard is used exclusively to supply the contract with Parbury Henty. I refer to it as the export yard or inter-State yard. I use Rocherlea yard for the same purpose. The Rocherlea sawmill and racking yard is used for sawmilling at Rocherlea. Sawn timber produced by Rocherlea mill is racked only at this yard." (at p356)

6. The timber racked in this third yard was sold in Tasmania, or at least not exclusively inter-State. (at p356)

7. It appears from the evidence that for quite some time it had been the practice of the group of companies to sell timber inter-State. These sales were basically through or to a Melbourne based company, Parbury, Henty and Co. Pty. Ltd. (Parbury Henty). (at p356)

8. At the time of the incidents with which this case is concerned, there was in operation an agreement in writing with Parbury Henty (the Company) of which the material parts were as follows:

"2. The Company undertakes to advance to the Millers: (a) an amount of 10,000 Pounds with the conditions of a Mortgage

Debenture which was already registered in January
1953 and
(b) a further amount of up to 15,000 Pounds to cover a racking
contract specified as follows:
All sawn timber produced by the Millers in their mills at
Legerwood and Rocherlea and which timber is racked in
the 3 timber yards known as George Town Road Yard
situated in Rocherlea, Rocherlea Yard situated in Lilydale
Road, Rocherlea and Wharf Yard situated in Taroona
Street near Kings Wharf, Launceston as well as timber
packed for shipment inter-State in this yard and the Marine
Board Yard at Kings Wharf becomes the absolute property
of the Company and the quantity of timber in these yards
must at any time cover the amount advanced plus interest
such value to be calculated on a basis 60/- per 100 super
feet.
The Company has the right to check the quantities in the
aforementioned yards at any time to satisfy themselves
that the quantities racked at least cover the advances.
The conditions for the final sales and payment are set
forth in pars. 4 and 5.
None of this timber can be disposed of by the Millers
elsewhere and the Company has the sole right to sell it in
accordance with pars. 4 and 5.
The timber produced in the Rocherlea Mill and racked
in the Mill Yard situated in Lilydale Road, Rocherlea is not
included in the Racking Contract but it is at the discretion
of the Millers to ship this timber for their inter-State trade
outside the Racking Contract or to use all or any part for
their local sales within Tasmania.
3. The Millers shall pay to the Company interest at the current
Bank Rate on amounts advanced such interest to be
calculated on 30th June and 31st December of each year.
4. In consideration of the amounts advanced the Millers hereby
appoint the Company as their sole agents for the sale outside
Tasmania of all timber produced in their mills and racked in
accordance with par. 2 in the aforementioned yards and the
Company agrees to purchase their requirements of Northern
Tasmanian timbers solely from the Millers but in the event
of the Millers being unable to supply an order submitted
by the Company the timber specified in that particular
order may be purchased by the Company from any other
source.
5. The Company shall effect sales on behalf of the Millers
in accordance with prices and conditions of sale to be
mutually agreed upon with the Company's Offices in
Melbourne, Sydney and Adelaide the rate of commission
is fixed at 5 per centum on the F.O.B. Value and this
commission shall be either allowed by the Millers or included
in the price to buyers in accordance with agreement by the
Millers with the relative Inter-State Offices of the Company.
6. This agreement shall be for an unspecified period but can
be terminated with 3 months' notice by either party and
in the case of termination the Millers are bound to supply
all the timber in the specified Racking Yards exclusively
to the Company which has the right to deduct all the
advanced monies and will pay the surplus to the Millers
and the Debenture Mortgage will be discharged on full
repayment of all advances." (at p357)

9. The agreement was executed only by Tamar Timber Trading (the Millers): but it was said in evidence and the magistrate found that the agreement had been "adopted" by all the other companies of the group. The relationship to the timber in question of each of these companies and their interrelationship were not specifically dealt with in the evidence. It was apparently thought by both parties that there was no need to go into detail about these matters, and though I disapprove the laxity of the parties in this respect, I see no need now to found anything upon the absence of relevant information about them. The agreement was treated before the magistrate as binding on each of the timber companies. (at p357)

10. All timber racked in the George Town Road yard and the Rocherlea yard is kept there for drying. Drying may take from nine to twenty-four months. Kiln-drying apparently would occupy a shorter period. It was said in evidence that ninety-nine per cent of the timber thus racked was sent inter-State as dried dressed timber. Some unspecified percentage is kiln-dried and the rest air-dried. Orders, or rather more accurately, requisitions are received from time to time from Parbury Henty for particular amounts of timber and on receipt of these orders or requisitions, timber meeting the requirements is removed from the racks and, if to be dressed, dressed and shipped either to Melbourne, Sydney or Adelaide. In each case the bill of lading is in the name of Parbury Henty except in the case of timber which is destined for sale or delivery in Adelaide in which case they are in the name of Australian Timber Ltd. Parbury Henty has no yard in Adelaide and apparently operates in that city through Australian Timber Ltd. The precise form of these orders or requisitions was not established. (at p358)

11. As this sketchy recital indicates, the facts of the case have not been carefully established and in some important aspects have needlessly been left to inference. It should be remembered that, having regard to the accepted interpretation of the constitutional guarantee, cases coming before this Court in which immunity from State laws by reason of s. 92 is claimed must be decided according to their own particular facts. However much the resolution of such a case is to be approached as a practical problem bearing in mind that it may be part of the nation's trade which is or may be affected by the Court's decision, in the end legal relationships deriving from the ascertained facts must be of singular importance and in many, if not in all, cases definitive of the outcome. Consequently, the facts ought at the outset to be carefully proved and fully explored by both parties. Equally, those who have to decide the facts in the first instance should be astute to realize which are significant for the application of the constitutional provisions and should find such facts precisely and state their findings as to them clearly. (at p358)

12. In the present case, having regard to the way both parties conducted the matter before the magistrate, it seems to me that the essential facts which this Court should regard as proved, either by direct evidence or by inference, are as follows. Each appellant was the carrier of green sawn timber from a mill at Legerwood to the yard in Launceston known as the George Town Road yard. The timber was so transported in order that it could be racked and dried in that yard pending its dispatch from Launceston to the mainland, i.e., to a yard in Sydney or one in Melbourne controlled by Parbury Henty or to a yard in Adelaide controlled by Australian Timber Ltd. (at p358)

13. One of the group of companies was the owner of the timber in the George Town Road yard although that one is not clearly identified in the evidence. In my opinion, we should accept the fact to be that that company which owned the racked timber was in agreement with Parbury Henty in the terms of the writing exhibited in evidence of which I have set out the material parts. It does not matter, in my opinion, which of the companies owned the Legerwood mill or the lorries by which timber was carried from that mill; but it should be accepted that the timber was being carried on behalf of its owner. It should be taken as established that all timber racked in either of the two yards, the George Town Road yard and the Rocherlea yard, Launceston, was the subject of an agreement whereby the owner of the timber gave to Parbury Henty the sole right to sell such timber for delivery inter-State on behalf of the owner of the timber at agreed prices for a stated selling commission. The owner having thus given Parbury Henty the sole right to sell the timber inter-State, undertook not to sell any of such timber elsewhere, i.e., within the State. Parbury Henty was expressly given the right itself to purchase timber from such yards to fulfil its requirements in another State (a necessary provision as it was the owner's agent to sell on the owner's behalf): it also bound itself to purchase all such requirements from the owner. As a collateral matter, Parbury Henty agreed to advance money to the owner of the timber from time to time up to an agreed ceiling, becoming a chargee of all timber racked in the yard ex the Legerwood mill, to secure both actual and the contracted advances and interest thereon, the owner agreeing to maintain in the yards an amount of timber at least adequate at an agreed valuation to cover actual advances and interest thereon. (at p359)

14. In fact, the course of business actually followed by the owner was that all timber brought to these yards ex the Legerwood mill was, when dry, shipped inter-State against the requisition of Parbury Henty who apparently paid the owner its f.o.b. price less commission upon shipment. (at p359)

15. It will be apparent from this summary of the main facts of the matter that, in my opinion, upon its proper construction the agreement with Parbury Henty was primarily one of agency to sell, a right being conceded to the agent to be itself a buyer of timber racked in the yard. I do not regard the agreement as one of sale of that timber to Parbury Henty. Although not clearly established by documents, I infer from such evidence as there is that, where Parbury Henty as agent and in pursuance of the agreement sold timber on behalf of the owner for delivery on the mainland, it followed the course of requisitioning delivery to the mainland from one of the inter-State yards of a quantity of timber to specification, without necessarily communicating the identity of the purchaser, and probably aggregating the quantities required to service several separate sales. In that event, it would be sufficient and commercially practical for Parbury Henty to pay to the owner the f.o.b. price of the timber at the rates agreed between the owner and itself less its selling commission. Doubtless, if Parbury Henty itself desired to purchase timber for delivery to itself on the mainland, it would follow a like course of requisition and payment, though in that case the net price payable may have been the subject of specific agreement, because the exhibited agreement does not fix that price. (at p360)

16. It will also appear from that narrative that the true meaning of the expression "their requirements" in cl. 4 of the agreement is the requirements of Parbury Henty for timber delivered on the mainland. They had no office in Tasmania; nothing in the evidence suggests that they traded there in timber; and there is no suggestion that they exported, or carried on business in, timber beyond the confines of continental Australia. Further, the undertaking of the owner of the timber by the agreement is not to sell it "elsewhere" which I read as a geographical reference and not as establishing Parbury Henty as the sole purchaser. That negative engagement of the owner is unqualified and not subject to an exception in favour of Parbury Henty. (at p360)

17. In my opinion, it should be accepted as the fact that substantially the whole of the timber racked in the "inter-State yard" was dressed and perhaps lengthed and sized as well as dressed at the yard before delivery and that the requisitions by Parbury Henty were at least principally for dressed timber. It does not seem to me to matter which of the companies carried out these operations for the owner of the racked timber. (at p360)

18. The claim of the State is that it may lawfully prevent the movement of the timber being carried by the owner or on its behalf from the mill to its "inter-State" yards. Whilst the legislation under challenge requires an out of area permit for which a fee is charged, the grant of the permit is discretionary and the amount of the fee, so far as the State is concerned, arbitrary. The case should therefore be regarded for present purposes as one of prohibition upon movement from the mill notwithstanding the circumstance that because the vehicles were licensed as ancillary vehicles they could carry the timber from the mill to the perimeter of the area to which that licence related. (at p360)

19. The case, unlike that of Deacon v. Mitchell [1965] HCA 28; (1965) 112 CLR 353, as the majority saw the facts, is not one in which, in my opinion, the movement from mill to yard was to enable a sale there to be effected to a buyer who was free to sell the timber within Tasmania. As I have already indicated, in my opinion, there was no sale to Parbury Henty in Tasmania either in contemplation or in fact otherwise than as a sale by the owner of the racked timber for delivery or removal inter-State. Some discussion of cl. 6 of the agreement took place in the course of the argument. But, in my opinion, the proper meaning of that clause is that the termination of the contract is not to bring to an end the sole right of sale given by it to Parbury Henty in respect of all timber racked in the yards ex Legerwood mill. Thus all timber in the yards at the date of the termination of the agreement remains subject to that right. Notwithstanding that termination, that timber must be delivered to Parbury Henty so that it may sell it on behalf of the owner though itself still a chargee of it or itself purchase it to satisfy pro tanto its inter-State requirements and from the proceeds of its sale or purchase as the case may be reimburse itself the whole or part of the amount of any outstanding advances and interest. Thus cl. 6, in my opinion, provides no exception to the statement that all timber racked in their yards ex Legerwood mill was destined for delivery on the mainland in the course of the timber owners' inter-State trade in timber. (at p361)

20. But, I should add that even if that construction be wrong and the clause properly construed means that upon the termination of the agreement the then stock in the yard is to be sold to Parbury Henty, without restriction as to where it may subsell it, the clause so construed and its consequences would not have any effect, in my opinion, upon the conclusion of this case. On that footing, at most it could be said that upon termination of the business governed by the agreement, some timber may not be shipped inter-State. But no one suggests the termination of the agreement was likely at the relevant time. We are dealing with a business in operation not with an enterprise contemplating its own demise. The fact that at the termination of the contract some timber might be sold locally is, to my mind, as irrelevant as the possibility that it might all be burnt or thieved or because of a depression in business stand there so long, or be so badly racked that it warped itself out of merchantability. I am of opinion that one should deal with the current course of business and not allow marginal and doubtful possibilities to enter into the resolution of so vital a problem as one concerning the freedom of inter-State trade. (at p362)

21. I conclude from the facts which I take to be established that the owner of the timber which came from the Legerwood mill and was racked in one of the two "inter-State" yards was itself engaged in inter-State trade in timber of which cartage from mill to yard was a central step. That it was then carted as green timber and that which was sent inter-State was dried and dressed timber seems to me not to matter. It was in fact the same timber: drying it was, in an economic sense, an indispensable step in the inter-State trade in it and thus partook of the nature of the inter-State trade itself. There is, in my mind, no significance in the length of time the drying operation took, nor in the length of time involved in finding a buyer who required delivery in another State. The owner of the timber was engaged in inter-State trade in the timber throughout, the input of green timber into the racks most probably being broadly matched by the outflow of dried timber. (at p362)

22. The process of drying the timber is not a process of manufacture nor, in my opinion, is the dressing or sizing of the timber. That manufacturing is not relevantly commerce is established but, in my opinion, is irrelevant in the present case. This case, in my opinion, cannot properly be regarded as an instance of the assembly by a manufacturer of components for the creation by him of a new and different product. The subject matter of the inter-State trade should in this case, in my opinion, be regarded as timber, and the drying and dressing, and if need be sizing, no more than stages in placing it into a saleable or deliverable condition. In connexion with the suggestion made in argument that there was no inter-State trade, but only intra-State trade in the green timber, I am tempted to ask, does the merchant who sells ripened bananas or ripened tomatoes exclusively inter-State carry on two trades: one in the assembly of his green unpacked fruit or vegetables and the other in the sale of ripened and cased fruit or vegetables? Does the merchant selling apples exclusively inter-State carry on a separate trade when he brings his apples to his depot, there to be washed of any spray to which in growth they had been subjected, and then sized, wrapped and cased, thus to remain in store awaiting a market or shipment, and only commence his inter-State trade when he receives an order for delivery into another State? Surely not. Can these merchants be prevented from carrying their green fruit or vegetables to store and yet it be said that the merchant's trade between States in the fruit or vegetables is absolutely free? I am clearly of opinion that they cannot. And if not, what sound distinction in so practical a matter of business can there be between these several and no doubt many other like instances and the present case. (at p363)

23. This, as I understand it, is not a case of immunity stemming from what has been called a single inter-State journey of the commodity itself. There are of course cases of which Deacon v. Mitchell [1965] HCA 28; (1965) 112 CLR 353 is, in my opinion, an example where the movement of the goods themselves is the relevant trade and commerce and must therefore be shown to be an inter-State movement. This, as I see the facts, is a case of the inter-State trade of a merchant in a commodity being hindered or burdened by a prohibition upon the taking of a step in that trade. Consequently, the submission that it is not possible to predicate of every piece of timber in the loads of the two vehicles in question that it would inevitably travel inter-State is not relevant. But in any case it is not to the point that by some chance or mischance some part of that timber may fail to go into another State. We are here dealing with a broad practical concept of an individual or company being engaged in inter-State trade in timber. The general course of that business, with all its possible breakdown is, in my opinion, the determinant and not accidental or insubstantial deviations from it. (at p363)

24. It was said on behalf of the respondent that the case was on all fours with Deacon v. Mitchell [1965] HCA 28; (1965) 112 CLR 353 Consequently, although I have indicated what to my mind is the fundamental difference between the cases, some examination of that case is necessary. (at p363)

25. Although in the minority in that case in the interpretation of its facts, I do not understand any of my brother Justices who formed the majority to question any of the propositions of law which I set out in my reasons for judgment. All members of the majority in one form or another in substance emphasized as a critical matter that the person on whose behalf the goods were being transported at the time the offence was said to have been committed, was not engaged in inter-State trade in timber. See the report: Taylor J., at p. 361, Menzies J., at pp. 364, 366, Owen J., at p. 373. Each regarded the fact that that person was contractually bound to deliver the timber at Devonport to a purchaser who was free to sell it for delivery in Tasmania as both significant and radical to his conclusion. See also per Menzies J. in Webb v. Stagg [1965] HCA 29; (1965) 112 CLR 374, at p 380 (at p363)

26. Consequently, taking the view of the facts of the present case which I do, I cannot regard Deacon v. Mitchell [1965] HCA 28; (1965) 112 CLR 353 as decisive in favour of the respondent. However, I have carefully reconsidered my own views expressed in that case, and in Webb v. Stagg [1965] HCA 29; (1965) 112 CLR 374 With the utmost respect to the opinions expressed by my brother Justices, I adhere to my analysis of the facts of that case and my conclusion of law founded upon my view of the facts. (at p364)

27. Thus, apart from the distinction which I have made between the circumstances of that case and those of this, I would find that analysis sufficient to dispose of this case if it should depend upon the inter-State movement of the specific timber as itself the relevant trade: indeed this, in my view, and on that footing, would be a stronger case. But as I have already indicated, I regard the constitutional immunity in this case to be attracted by the inter-State trade of the owner of the timber and not merely by the nature of the journey upon which the timber had embarked. (at p364)

28. Without attempting to exhaust the relevant effect of s. 92, it can, in my opinion, be said that, consistently with s. 92, a law cannot be allowed an operation which would prevent the movement of a commodity with which the citizen challenging the law trades inter-State: in the same way, such a commodity cannot be acquired if the trader has committed it to his inter-State trade. These propositions, in my opinion, are well documented in the decided cases of this Court. I need only to refer to Foggit, Jones & Co. Ltd. v. New South Wales [1916] HCA 28; (1916) 21 CLR 357, as an indication of the long standing nature of the doctrine in this regard. That case, in my opinion, was treated in James v. The Commonwealth (1936) 55 CLR 1, as involving a "standstill" of a commodity in which there was an inter-State trade: see p. 59 of the report. Upon reading their judgment as a whole this Court's decision in Foggitt Jones' Case [1916] HCA 28; (1916) 21 CLR 357 was, in my opinion, approved by their Lordships of the Privy Council on the footing that the statute there considered did place an impediment upon the movement of cattle which were committed to inter-State trade, at least in the sense that their owners intended to use them for delivery into another State. (at p364)

29. In that case the statutory provision did not in terms forbid movement of the stock but the command to hold the stock at the disposal of the government did operate directly to prevent the movement of the stock in the course of trade. So here the Traffic Act in preventing carriage of goods for reward would operate directly to prevent the movement of the timber in the course of inter-State trade. In this case and on the view of the facts which has commended itself to me, the timber in carriage was committed, by the destination of the vehicles, to the inter-State trade of its owner. Thus, there is no need to place the Privy Council's approval of Foggitt Jones & Co. Ltd. v. New south Wales [1916] HCA 28; (1916) 21 CLR 357 upon a wider footing than I have done. Such a view accommodates the decision of this Court in Carter v. Potato Marketing Board [1951] HCA 60; (1951) 84 CLR 460 , and the relationship of the several cases need not be further pursued in this case. (at p365)

30. As I think the owner of this timber was in inter-State trade with it, it follows that, in my opinion, the section of the Traffic Act could not consistently with s. 92 apply to the use of the appellants' vehicles in moving the owner's timber from the mill to the inter-State yards. (at p365)

31. Accordingly, these appeals should be allowed. (at p365)

KITTO J. The appellants appeal against convictions of having contravened s. 24 (1) (b) of the Traffic Act 1925 (Tas.) as amended, by using certain vehicles on specified occasions as public vehicles in a place in or upon which the public vehicle licences in respect thereof did not authorize the vehicles to be used. On the occasions referred to the appellants did use the vehicles in or upon such a place, and as the use they there made of them was for the carriage of goods in the course of a trade or business they must be deemed by virtue of s. 14AB (2) to have used them as public vehicles. The convictions were therefore right unless the appellants are protected by s. 92 in respect of the use they were making of the vehicles on the relevant occasions; and they were not so protected unless that use was in the course of or for the purposes of trade, commerce or intercourse among the States. (at p365)

2. The appellants were using the vehicles to convey timber from a sawmill in north-east Tasmania to a certain racking yard in a suburb of Launceston. They contend that their conveyance of the timber, an intra-State movement though it was if considered by itself, was in truth a part of an inter-State movement, and that therefore a statutory provision could not operate to make it an offence for them to use vehicles for that conveyance without burdening the inter-State movement. The question thus raised is whether the timber, while on its way to the racking yard, was in truth already upon a journey to another State. (at p365)

3. The consequences that would ensure upon the timber being placed in the racks were governed to some extent by an agreement of 21st April 1958 made between one of the appellants and a Victorian company named Parbury Henty & Co. Pty. Ltd. The appellants and three other companies were subsidiaries of a parent company. A business which was in form divided among the subsidiaries seems in fact to have been conducted as a single business. I shall assume in favour of the appellants that the agreement bound all six companies (to which I shall refer collectively as the timber companies), and that the proved general course of dealing with the timber that was racked at the relevant yard in the Launceston suburb is to be attributed to them all. On these assumptions the following was the situation. The racking of the timber which the appellants were conveying on the vehicles on the occasions in question would bring about, by force of the agreement, the passing of the property in the timber to the Victorian company; after the timber had dried sufficiently in the racks, that is to say for anything from nine months to two years, the Victorian company might call for the timber to be sent to one or other of its yards in other States of the Commonwealth, and the appellants and their associated companies would be bound to dispatch it accordingly; the Victorian company as sole agent of the timber companies would sell the timber on arrival at its inter-State destination, charging a percentage for its services, and would account for the balance to the timber companies either by paying it to them or by crediting it against any debt they might owe to the Victorian company for moneys advanced. (at p366)

4. The agreement was both a marketing agreement and a financing agreement. In so far as it provided for the sending of the timber to the Victorian company in other States and for its sale there "on behalf of the Millers" (i.e., the timber companies) at prices and upon conditions to be mutually agreed, it was a marketing agreement. But it provided also for the making of advances at interest by the Victorian company to the timber companies, and it gave the Victorian company security for such moneys as might be owing from time to time in respect of the advances by means of provisions for the transfer of the title to the Victorian company upon the racking of the timber, provisions for the appointment of the Victorian company as sole agent of the timber companies for the sale of such timber outside Tasmania, and provisions as to the supply of all the racked timber to the Victorian company in the event of the termination of the agreement so that that company might sell it (this was implied, and there is nothing to restrict sales to inter-State sales) and deduct "advanced monies". (at p366)

5. So what the appellants were doing with the timber on the occasions in question was to carry out a process which, if completed by the racking of the timber, would ensure its being sent to an inter-State destination if and when the Victorian company should order it. We were strongly pressed to say that in a practical sense this was a process not merely of putting goods where they would be available for inter-State movement, but of putting them where, because of the terms of the agreement and the experience of the past, it was practically certain that they would be sent inter-State. There was, it was said, no substantial doubt about it: to send the timber to the racking yard was, as a matter of business reality, to send it inter-State - to send it via the racking yard and subject to a nine months to two years period of marking time there, but nevertheless to send it by a single coherent journey reaching from the sawmill to an inter-State destination which the Victorian company would later select. This, however, overstates the facts. The probability that particular timber sent to the racking yard would go inter-State was indeed very great, but the fact remains that the racking would subject the timber not to inter-State trade but only to a right on the part of the Victorian company to direct it into inter-State trade. The inter-State movement which the Victorian company might later bring about by ordering the timber to be sent from the racks to a nominated inter-State destination would of course attract the protection of s.92. But the Victorian company was not bound to give the order. The carriage of the goods to the racking yard was therefore at most a step taken with a view to their probably being made the subject of an inter-State movement the commencement of which would have to wait upon a future contingency; and that being so it is irrelevant that the contingency was very likely to happen. (at p367)

6. The appellants' argument failed, I think, to recognize the fundamental point in Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55 and Beal v. Marrickville Margarine Pty. Ltd. [1966] HCA 9; (1966) 114 CLR 283. The point is that s.92 decress freedom, not for every step a person may take with a view or for the purpose of preparing to carry out an example of inter-State trade, but only for a step which itself is in the course of, or for the purpose of actually carrying out, an example of inter-State trade; and that therefore a step which is only a prerequisite of the initiation of such an example is outside the subject matter of the protection. It is inconsistent with the doctrine elaborated in those cases, and it only confuses the issue, to add together all a person's prerequisite steps and all the examples of inter-State trade in which he engages, to treat the whole as his inter-State trade, and then to say that the freedom extends to every act done in the course or for the purposes of that trade. The cases cited show that the trade or commerce referred to in s.92 is not a general course of conduct, but is a particular act or transaction. They show that it is not right even to add together a particular prerequisite step and the particular example of inter-State trade which the step makes possible and treat the aggregate as an example of inter-State trade. The Court made its point clear by saying that "manufacture or production within, or importation into, the Commonwealth is an essential preliminary condition to trade and commerce between the States in merchandise. But that does not make manufacture, production or importation trade and commerce among the States. It is no reason for extending the freedom which s.92 confers upon trade and commerce among the States to something which precedes it and is outside the freedom conferred": Grannall's Case(1955) [1955] HCA 6; 93 CLR 55, at p 71, 72 The logic of this proposition applies not only to manufacture, production and importation but also to the carriage of goods to a point where their assembly or treatment may be carried out as an essential preliminary to their being sold for delivery to a buyer in another State, or as an essential preliminary to their being held for shipment to a person in another State as and when he calls for them. The theme of Grannall's Case (1955) 93 CLR, at p 71 is that the "freedom to sell and deliver or transport across State borders" is illegitimately enlarged if it is applied to a process of getting goods ready to be sold and delivered or transported across State borders. In my opinion, once the facts of the case are correctly analysed the judgments above mentioned dispose of the appellant's argument. (at p368)

7. I would dismiss the appeals. (at p368)

TAYLOR J. These are appeals against convictions for contraventions of s.24 of the Traffic Act 1925. (at p368)

2. It is necessary to mention at the outset that the two appellants, Tamar Sawmilling Co. Pty. Ltd. (the sawmilling company) and Tamar Timber Trading Co. Pty. Ltd. (the trading company) are subsidiary companies of Tamar Timber Industries Pty. Ltd., as also are three other companies, Tasmanian Timber Yard Pty. Ltd. (the timber yard company), Rocherlea Timber Co. Pty. Ltd. and Tamar Timber Processing Pty. Ltd. The business of the trading company is said to be that of a sawmiller at Rocherlea. The sawmilling company carries on a similar business in a sawmill at Legerwood. It is said that the timber yard company carries on the timber-racking operations for the group of companies in yards at Rocherlea. Rocherlea Timber Co. Pty. Ltd. also has a racking yard in the same district but it seems that what is called the George Town Road yard, which will be mentioned presently, was owned and operated by the timber yard company. (at p369)

3. On 18th August 1965 two vehicles carrying milled timber from the sawmill at Legerwood were intercepted by a transport officer in the course of their journey from the mill to the George Town Road racking yard. Each of the vehicles was carrying milled timber, one of them being owned by the sawmilling company and the other by the trading company. To whom the timber belonged at the time of the interception of the vehicles does not appear. Nor is there any evidence that there was any contractual arrangement between any of the several companies pursuant to which it was being carried from the mill to the yard, or, pursuant to which it was proposed that it should be racked at the George Town Road yard. (at p369)

4. The precise charge in each case was that on the occasion in question the defendant unlawfully used a public vehicle in a place in or upon which the licence in respect thereof did not authorize the said vehicle to be so used contrary to the statutory provision. It is conceded that each vehicle was, in the circumstances, a public vehicle within the meaning of that expression as used in the statutory provision, that each was being used by the respective appellants outside the area for which it was licensed and that permits for their use outside the area had not been obtained. This being so, it was conceded that each vehicle was being used in contravention of the statutory provision unless, as was contended by the defendants, its use was, in the circumstances in which it was being used, protected by the provisions of s.92 of the Constitution. (at p369)

5. The foundation for this contention is to be found, primarily, in an agreement dated 21st April 1958 made between the trading company (as "the Millers") and Parbury, Henty & Co. Pty. Ltd. (the Company). By cl.2 of this agreement the Company agreed to advance to the trading company:

(a) an amount of 10,000 Pounds upon the conditions of a
mortgage debenture which had already been
registered in January 1953 and
(b) a further amount of up to 15,000 Pounds to cover a racking
contract specified as follows:
"All sawn timber produced by the Millers in their mills at
Legerwood and Rocherlea and which timber is racked in the
3 timber yards known as George Town Road Yard situated
in Rocherlea, Rocherlea Yard situated in Lilydale Road,
Rocherlea and Wharf Yard situated in Taroona Street near
Kings Wharf, Launceston as well as timber packed for
shipment inter-State in this yard and the Marine Board
Yard at Kings Wharf becomes the absolute property of the
Company and the quantity of timber in these yards must
at any time cover the amount advanced plus interest such
value to be calculated on a basis of 60/- per 100 super feet.
The Company has the right to check the quantities in the
aforementioned yards at any time to satisfy themselves that
the quantities racked at least cover the advances.
The conditions for the final sales and payment are set
forth in pars. 4 and 5.
None of this timber can be disposed of by the Millers
elsewhere and the Company has the sole right to sell it in
accordance with pars. 4 and 5.
The timber produced in the Rocherlea Mill and racked
in the Mill Yard situated in Lilydale Road, Rocherlea is not
included in the Racking Contract but it is at the discretion
of the Millers to ship this timber for their inter-State trade
outside the Racking Contract or to use all or any part for
their local sales within Tasmania." (at p370)

6. The agreement then proceeded:

"3. The Millers shall pay to the Company interest at the current Bank Rate on amounts advanced such interest to be

calculated on 30th June and 31st December of each year.
4. In consideration of the amounts advanced the Millers hereby appoint

the Company as their sole agents for the sale

outside Tasmania of all timber produced in their mills
and racked in accordance with par. 2 in the aforementioned
yards and the Company agrees to purchase their
requirements of Northern Tasmanian timbers solely from the
Millers but in the event of the Millers being unable to
supply an order submitted by the Company the timber
specified in that particular order may be purchased by the
Company from any other source.
5. The Company shall effect sales on behalf of the Millers in accordance

with prices and conditions of sale to be mutually

agreed upon with the Company's Offices in Melbourne,
Sydney and Adelaide the rate of commission is fixed at
5 per centum on the F.O.B. Value and this commission
shall be either allowed by the Millers or included in the
price to buyers in accordance with agreements by the
Millers with the relative Inter-State Offices of the Company.
6. This agreement shall be for an unspecified period but can be

terminated with 3 months' notice by either party

and in the case of termination the Millers are bound to
supply all the timber in the specified Racking Yards
exclusively to the Company which has the right to deduct
all the advanced monies and will pay the surplus to the
Millers and the Debenture Mortgage will be discharged
on full repayment of all advances." (at p371)

7. The agreement, it seems to me, deals, in a somewhat confused fashion, with two topics. First of all, it purports to provide for an initial advance of 10,000 Pounds and a further advance not exceeding 15,000 Pounds upon the security - additional to that provided by the debenture, which was not in evidence - of all sawn timber produced by the trading company at "its mills at Legerwood and Rocherlea" and which timber "is racked" in any of the three named timber mills. Such timber is to become the "absolute property" of the company and interest is to be paid half-yearly on the amount of the advances outstanding. In the event of the agreement being terminated the company is to be entitled to receive and sell the racked timber to satisfy the amount outstanding. (at p371)

8. There is, I should think, no doubt that so far as the agreement provides that the property in the timber when racked is to pass to the company it is intended to operate merely by way of security and this conclusion is borne out by the other provisions of the agreement. These, in effect, provide that the company shall be the sole agent of the trading company for the sale "outside Tasmania" of the racked timber (cl.4). None of the timber "can be disposed of elsewhere" and the company "has the sole right to sell it in accordance with pars. 4 and 5". The sales effected by the company are to be "on behalf of the Trading Company in accordance with prices and conditions of sale to be mutually agreed upon", and commission is to be payable to the company at the stipulated rate. (at p371)

9. The provisions of the agreement contemplate that orders for timber specifying the quantities, dimensions and type of timber required, and also specifying shipping instructions, will be given by the company from time to time. In practice the trading company informed the company from time to time of the quantity of racked timber which was dry enough for shipment and upon receipt of orders from the company the course of business was for the trading company to withdraw the appropriate timber from the racks to meet the orders, process it, or cause it to be processed, to meet the specifications of the company, transport it to a port of shipment and ship it inter-State in accordance with the company's instructions. On shipment the trading company was paid for the timber at the agreed prices less five per cent commission. (at p371)

10. It is said that the sole purpose of the racking of the timber was to dry the timber preparatory to shipment and that this process usually took from nine to twelve months. But it seems that sometimes orders given by the company would call for specified quantities of kiln-dried timber and dressed timber. There is no evidence to show what percentage of the trade was done in kiln-dried timber but the evidence is that ninety-nine per cent of the trade between the trading company and the company was in dressed timber. When an order was received for dressed timber it would "go to the planer", "then tallied and packed" and then "sent to the wharf". Whether the specification of "dressed timber" in any order would require the removal of the racked timber to other premises - perhaps to those occupied by Tamar Timber Processing Pty. Ltd. - does not appear but it is clear enough that removal from the racking yard was necessary in order that the required process might be carried out. (at p372)

11. In the state in which it was left the evidence does not enable it to be said whether at the time of the interception of the two vehicles the undressed timber which they were carrying was the property of the sawmilling company or whether it had been purchased by the trading company or whether it had simply been milled on its behalf by the sawmilling company. Again, it is by no means clear whether either of the loads was being carried at the stage of their interception by or on behalf of the trading company which alone was a party to the agreement with the company. It was said in evidence that the whole group of companies had acted in accordance with the agreement with Parbury Henty since incorporation and the magistrate found that "each of the six companies (i.e., the parent company and its subsidiary companies) had adopted the agreement from the time of its incorporation". However, I do not profess to understand what this finding means. If it means that each of the companies concerned and Parbury Henty had undertaken mutual obligations of the same description as those imposed by the written agreement upon the latter and the trading company all I can say is that it is a conclusion which not only is unsupported by the evidence but is highly improbable. Probably the true situation was that the business in which the several companies were engaged was, to all intents and appearances, carried on without regard to their individual and separate identities. But for the purpose of deciding the case I am prepared to pass by the difficulties in the path of the appellants to which an analysis of the proved facts give rise and to assume in the appellants' favour that the undressed timber was being carried to George Town Road yard by or on behalf of the trading company, that it was its property and that immediately upon being racked it would become subject to the charge for advances which the trading company had agreed should then be created. (at p373)

12. On this assumption it is clear enough that at the time of its interception the timber had not, as was contended, been embarked upon an inter-State journey to or for the company. Nor can it be said for any other reason that it had then become the subject of inter-State trade. From what appears or has been assumed the timber was being transported from the mill at Legerwood with the intention that it should be taken to the racking yard where (1) it would become subject to a charge in favour of the company and where (2) it would remain to meet specific orders of the company and then be appropriated and dealt with in accordance with the company's instructions. No inter-State element was involved in the physical acts necessary to subject the timber to the charge and the inter-State carriage of the timber, though contemplated at some future time, had not then begun. (at p373)

13. However, it is further contended by the appellants that the legislative provision created a situation which made it difficult, or even impossible for the trading company to perform its agreement with the company and that, in the circumstances, they are entitled to invoke the provisions of s. 92. In considering this contention it is important to bear in mind that the legislative provision is not a law "operating in reference to or in consequence of any matter or thing itself forming part of trade, commerce or intercourse among the States" (Wragg v. New South Wales [1953] HCA 34; (1953) 88 CLR 353, at p 387 ); it is a law applying generally and indifferently to the transport of commodities within Tasmania and as long as the freedom which was thus restricted does not impair the freedom of the individual "to engage in activities conducted across State boundaries, that is to say the freedom which s. 92 gives to transportation, movement, transfer, interchange and communication between one State and another and to all other forms and variety of inter-State transaction whether by way of commercial dealing or of personal converse or passage", (Grannall's Case [1955] HCA 6; (1955) 93 CLR 55, at p 71 ) there can be no question of the infringement of the constitutional provision. In this connexion it should be noticed that by s. 3 of the Acts Interpretation Act 1931 (Tas.) every Act is to be read and construed subject to the legislative powers of the State and so as not to exceed such powers, to the intent that, where any enactment thereof, but for that provision, would be construed as being in excess of such powers, it shall nevertheless be a valid enactment to the extent to which it is not in excess of such powers. It has long been recognized that restrictions on activities imposed by Acts of general application do not infringe the provisions of s. 92 even though such proscribed activities are essential preliminary conditions to trade and commerce between the States. As was said in Grannall's Case [1955] HCA 6; (1955) 93 CLR 55, at pp 71, 72: "No doubt goods are the subject matter of the freedom to sell and deliver or transport across State borders and if, by reason of legislative restrictions, goods of a given description do not come into existence and are not imported into Australia, there is to that extent no subject matter. It is of course obvious that without goods there can be no inter-State or any other trade in goods. In that sense manufacture or production within, or importation into, the Commonwealth is an essential preliminary condition to trade and commerce between the States in merchandise. But that does not make manufacture production or importation trade and commerce among the States. It is no reason for extending the freedom which s. 92 confers upon trade and commerce among the States to something which precedes it and is outside the freedom conferred." (at p374)

14. In my view no significant distinction can be made between the present case and the case of Deacon v. Mitchell [1965] HCA 28; (1965) 112 CLR 353 where the majority of the Court decided that the respondents were not at the time of the offences charged entitled to the protection of s. 92 either on the ground that the relevant acts of transportation were being performed in the course of inter-State trade or on the ground that the restriction was one which, in the circumstances, constituted an impediment to such trade and I adhere to the view which I then expressed. On this latter point I observe that a law of general application which prohibits or restricts an activity which is not, itself, an activity of the character to which s. 92 gives protection does not infringe the provisions of that section. Examples of such laws are those which restrict production of a commodity which it is intended shall be used in inter-State trade (Grannall's Case [1955] HCA 6; (1955) 93 CLR 55) even though the obligation of manufacture for the purposes of inter-State trade is an obligation contractually undertaken (Beal v. Marrickville Margarine Pty. Ltd. (1966) 114 CLR 283); those which prohibit the importation of articles including those intended for use in inter-State trade (Reg. v. Anderson; Ex parte Ipec-Air Pty. Ltd. [1965] HCA 27; (1965) 113 CLR 177), and those which operate, inter alia, to impose restrictions on the disposal of articles imported from other States (Wragg's Case [1965] HCA 29; (1965) 112 CLR 374) I can see no distinction in principle between these cases and the case where a person in one State purchases timber in that State and transports it to an assembly point where, it is either to be there delivered to a purchaser who intends to use it in the course of inter-State trade, or to be stored or stacked in order that it may be used, from time to time, to fill orders from other States for specific quantities and specifications of dressed timber. It would, of course, be otherwise if it appeared that the law imposing restrictions on the initial transport operated by reference to or in consequence of any matter or thing itself forming part of trade, commerce or intercourse among the States but this is not such a case. (at p375)

15. I would dismiss the appeals. (at p375)

MENZIES J. On 18th August 1965 timber was being carried on two trucks upon the Tasman Highway in contravention of s. 24 of the Traffic Act 1925 (Tas.) unless the carriage was protected by s. 92 of the Constitution. The Tamar Timber Trading Co. Pty. Ltd. and the Tamar Sawmilling Co. Pty. Ltd. were each convicted of an offence under the Act, the former in respect of the use of a motor vehicle No. WCS 217 which belonged to it and the latter in respect of a motor vehicle No. WJK 456 which belonged to it. Each defendant, claiming the protection of s. 92, undertook to show that what was prima facie an intra-State journey from a sawmill at Legerwood belonging to Tamar Sawmilling Co. Pty. Ltd. to a racking yard at George Town Road, Launceston, seemingly run by an allied company, Tasmanian Timber Yard Pty. Ltd., was in fact a movement of timber in the course of inter-State trade. I consider the case on the footing that the timber was being carried from the mill to the yard. (at p375)

2. The evidence advanced by the defendants - both cases being heard together - was sketchy. It seems that there is a holding company, Tamar Timber Industries Pty. Ltd., and five subsidiaries, Tamar Timber Trading Co. Pty. Ltd., Tasmanian Timber Yard Pty. Ltd., Rocherlea Timber Co. Pty. Ltd., Tamar Timber Processing Pty. Ltd. and Tamar Sawmilling Co. Pty. Ltd. The defendant Tamar Timber Trading Co. Pty. Ltd. operates a sawmill - as distinct from a racking yard - at Rocherlea and the defendant Tamar Sawmilling Co. Pty. Ltd. operates a sawmill at Legerwood from which the timber was being moved. The group seemingly has three timber yards at Launceston and, as I have said, we are concerned with timber being carried to the George Town Road yard. (at p375)

3. An agreement in writing dated 21st April 1958 between Parbury, Henty & Co. Pty. Ltd., merchants of Melbourne (called therein the "Company") and the defendant Tamar Timber Trading Co. Pty. Ltd. of Launceston (called therin the "Millers") was proved, but what it means is far from clear. The company undertook upon request to make certain advances totalling 25,000 Pounds with interest at the current bank rate to the Millers and it was provided as follows:

"2. All sawn timber produced by the Millers in their mills at Legerwood and Rocherlea and which timber is racked in

the 3 timber yards known as George Town Road Yard
situated in Rocherlea, Rocherlea Yard situated in Lilydale
Road, Rocherlea and Wharf Yard situated in Taroona
Street near Kings Wharf, Launceston as well as timber
packed for shipment inter-State in this yard and the Marine
Board Yard at Kings Wharf becomes the absolute property
of the Company and the quantity of timber in these yards
must at any time cover the amount advanced plus interest
such value to be calculated on a basis of 60/- per 100 super
feet.
The Company has the right to check the quantities in the
aforementioned yards at any time to satisfy themselves
that the quantities racked at least cover the advances.
The conditions for the final sales and payment are set
forth in pars. 4 and 5.
None of this timber can be disposed of by the Millers
elsewhere and the Company has the sole right to sell it in
accordance with pars. 4 and 5
The timber produced in the Rocherlea Mill and racked
in the Mill Yard situated in Lilydale Road, Rocherlea is
not included in the Racking Contract but it is at the discretion
of the Millers to ship this timber for their inter-State
trade outside the Racking Contract or to use all or any
part for their local sales within Tasmania."
"4. In consideration of the amounts advanced the Millers hereby

appoint the Company as their sole agents for

the sale outside Tasmania of all timber produced in their
mills and racked in accordance with par. 2 in the aforementioned
yards and the Company agrees to purchase
their requirements of Northern Tasmanian timbers solely
from the Millers but in the event of the Millers being
unable to supply an order submitted by the Company the
timber specified in that particular order may be purchased
by the Company from any other source.
5. The Company shall effect sales on behalf of the Millers in

accordance with prices and conditions of sale to be mutually

agreed upon with the Company's Offices in Melbourne,
Sydney and Adelaide the rate of commission is fixed at
5 per centum on the F.O.B. Value and this commission
shall be either allowed by the Millers or included in the
price to buyers in accordance with agreement by the Millers
with the relative Inter-State Offices of the Company.
6. This agreement shall be for an unspecified period but can be

terminated with 3 months' notice by either party and

in the case of termination the Millers are bound to supply
all the timber in the specified Racking Yards exclusively to
the Company which has the right to deduct all the advanced
monies and will pay the surplus to the Millers and the
Debenture Mortgage will be discharged on full repayment
of all advances." (at p377)

4. The magistrate found that each of the six companies mentioned adopted the agreement, meaning thereby, I should think, not that each should obtain advances of 25,000 Pounds but that each should carry on its business in accordance with the clauses which I have set out. (at p377)

5. The evidence of the performance of this agreement, given principally by the managing director of Tamar Timber Industries Pty. Ltd., one Ernest Schulhof, was as follows:

"Under this agreement I obtain from time to time advances
from Parbury Henty. I registered a debenture to secure
advances and it is still registered; the amount of the advances
fluctuates.
"I produce accounts for year ended June 1965; I had
advances from Parbury Henty of $65,000. But for the year
ending 30th June 1966, I didn't need any advances. The
arrangement is a continuing one; advances are available at
any time I require them. The wharf yard has since been
discontinued.
"Since the commencement of the agreement it has been
the ordinary course of business to rack all timber coming from
Legerwood to the George Town Road yard or Rocherlea yard,
only. From these yards I draw no timber at all other than
that which goes to Parbury Henty. Part of that timber goes
through the drying and dressing mills, that operation takes
within a week. So that timber racked in one of these yards
is all air-dried; then it is either sent from the yard to the
wharf or from the yard it is brought to the kiln where it is
kiln-dried and then sent to the wharf in that state; or if it
is for dressing it is put in the kiln in the dressing plant to be
dressed. It is then taken from the dressing plant direct to
the wharf.
"All withdrawals from the yard are kept intact as it goes
through the kiln-drying or planing process; then the same
timber is taken to the wharf. At the wharf it is tallied,
numbered and packed according to the order of Parbury
Henty and shipped to Parbury Henty either for Melbourne,
Sydney or Adelaide. I withdraw that timber on orders from
Parbury Henty. On shipment I am paid the price by Parbury
Henty. Parbury Henty charge and receive five per cent.
That is regular course of trading with them. I give Parbury
Henty a statement of how much timber in the yard is dry
enough for shipment so that they can sell accordingly.
"A director of Parbury Henty inspects the timber in the
yard yearly; a salesman inspects the stock in the yard every
two to three months. I am not free to dispose of any timber
in these yards except to Parbury Henty. The sole purpose
of racking the timber in these yards is to dry the timber
preparatory to shipment. Economy makes it prudent to dry the
timber before shipment. That is the reason for interrupting
the journey from Legerwood to the wharf.
"Of my product at Legerwood only five per cent is not
transported to Launceston. It is sold locally.
"All the timber that I cart to Rocherlea is shipped inter-State.
"The bill of lading of all timber shipped through Rocherlea
and George Town Road yards is in the name of Parbury
Henty except in one instance, that being Australian Timber
Ltd. of Adelaide. The reason for that is that Australian Timber
has no yard in Adelaide and they get the bill of lading direct
so that they can sell and distribute it on receiving it. But the
sales are arranged by Parbury Henty. The whole of the export
deliveries are under the agreement with Parbury Henty." (at p378)

6. There was also evidence that the timber being shipped in accordance with orders from Parbury, Henty & Co. Pty. Ltd. for specified timber was paid for by that company; that timber from the George Town Road yard is used exclusively "to supply the contract with Parbury Henty"; that between nine and twenty-four months is required to air-dry the timber; that ninety per cent of the timber shipped is dried dressed timber; that it is only after an order from Parbury, Henty & Co. Pty. Ltd. that timber in accordance with that order is either dressed and/or kiln-dried in accordance with the order; that no Tasmanian sales are made from timber delivered either to the George Town Road yard or the Rocherlea yard; that the price to Parbury, Henty & Co. Pty. Ltd. was always in accordance with the Tasmanian Timber Association's price list less five per cent; that timber sold by the group of companies in 1966 was worth some $270,000 of which only approximately $9,000 came from Tasmanian sales. (at p379)

7. The magistrate found that the carriage from Legerwood to Launceston in question was not part of an inter-State movement of the timber nor was it otherwise protected by s. 92, and we are now asked by the appellants to say that this decision was wrong. (at p379)

8. The first matter for determination is, I think, the meaning of the agreement. My understanding of its operation is that it governs, inter alia, so much of the timber produced at the Legerwood mill as is racked at the George Town Road yard or the Rocherlea yard. Clause 2 of the agreement does not apply to timber until it is actually racked. Notwithstanding the words in cl. 2, "becomes the absolute property of the Company", I think that the agreement does no more than secure that Parbury, Henty & Co. Pty. Ltd. will have any timber racked available for its purchase under cl. 4 or cl. 6 or for its sale for the timber companies under cl. 5; I find no obligation upon Parbury, Henty & Co. Pty. Ltd. to carry to another State any timber which it might purchase under cl. 4 or cl. 6. It seems to me that, having regard to cl. 4 and to the course of business described in the evidence, the sales made by the milling companies were to Parbury, Henty & Co. Pty. Ltd. itself in accordance with cl. 4 rather than the sales by Parbury, Henty & Co. Pty. Ltd. to others on behalf of the Millers in accordance with cl. 5. (at p379)

9. Upon this understanding of the agreement it cannot be concluded that timber in the course of carriage from Legerwood to the George Town Road yard was then moving in the course of inter-State trade notwithstanding that I consider it proper to infer, as a matter of fact upon the probabilities, both that the timber in question would reach the George Town Road yard and that later, after it had been air-dried, ordered and then dressed and/or kiln-dried, it would be delivered from the yard to a ship for carriage to another State. (at p379)

10. This case is, I consider, just another instance of the carriage of green timber by or on behalf of its Tasmanian owner from one place in Tasmania to another place in Tasmania where at best, after a period of up to two years for air-drying, it would be ordered and then, after treatment in accordance with the order, it would, if the purchaser should so require in accordance with its practice, be shipped to another State. The evidence therefore does not establish that while the timber was being carried from Legerwood to Launceston it was being carried in the course of inter-State trade. The interference with trade upon which the appellants complain was in my opinion an interference with intra-State trade, viz. carriage in Tasmania to a place where it would be subjected to contractual obligations under which it was likely, but not necessary, that it would at a later stage and after treatment be carried inter-State. (at p380)

In my opinion Deacon v. Mitchell [1965] HCA 28; (1965) 112 CLR 353 and Webb v. Stagg [1965] HCA 29; (1965) 112 CLR 374 govern the matters and the appeals from the magistrate, applying these decisions, should be dismissed. (at p380)

OWEN J. Each of the appellants was convicted of a breach of s. 24 of the Traffic Act 1925 (Tas.) in that it had in August 1965 unlawfully used a motor vehicle as a public vehicle in a place in which the licence issued in respect of the vehicle did not authorize it to be used. (at p380)

2. In each case the sole question raised before the learned magistrate and on appeal before this Court was whether or not the appellant was entitled to the protection of s. 92 of the Constitution. (at p380)

3. The vehicles were, at the relevant time, being used to carry green sawn timber from a sawmill operated by the second appellant at Legerwood, about thirty miles from Launceston, to a racking yard known as the George Town Road yard at Rocherlea, a suburb of Launceston. The appellants are two of a group of five companies all of which are subsidiaries of a holding company (Tamar Timber Industries Pty. Ltd.). The appellants are sawmillers and two other companies in the group operate timber yards where green sawn timber from sawmills is racked and dried, a process which takes from nine months to two years. There are three such yards at Rocherlea, one of them being the George Town Road yard, and that yard is used exclusively for timber intended to be shipped to the mainland after the racking period is completed. Sometimes the timber is also kiln-dried and in most cases dressed before shipment. (at p380)

4. In April 1958 an agreement in writing was entered into between the first appellant (described in the agreement as the "Millers") and Parbury, Henty & Co. Pty. Ltd. of Melbourne (described as the "Company"). It provided, by cl. 2, for certain advances to be made by the "Company" to the "Millers" and that "all sawn timber produced by the Millers in their mills at Legerwood . . . and which timber is racked" in three specified yards, including the George Town Road yard, "becomes the absolute property of the Company and the quantity of timber in these yards must at any time cover the amount advanced" by the company and interest thereon. It is, however, apparent from later clauses of the agreement that notwithstanding the provision that the timber racked in the named yards should become the "absolute property of the Company", the transfer of the property was intended to be by way of security only since the agreement went on to provide that the "Company" should be the sole agent of the "Millers" for the sale outside Tasmania of all timber produced by the "Millers" and racked in the named yards at a commission of five per cent on the f.o.b. value of the timber sold. The learned magistrate found that the practice was that on shipment Parbury, Henty & Co. Pty. Ltd. paid the agreed price for the timber shipped less the commission for which the agreement provided. (at p381)

5. The evidence does not show what was the nature of the contractual arrangements between the second appellant which operated the mill at which were sawn the two loads of timber with which the cases are concerned and the members of the group which operated the racking yards. For all that appears, the second appellant may have sold the sawn timber to one of the other companies in the group for delivery at the George Town Road yard and in such case it would, I think, be impossible to contend that s. 92 afforded any protection to the carriage of the timber from the mill to the yard pursuant to such a contract. But questions such as this were not raised before the learned magistrate by either side and the cases proceeded upon the basis - and I quote from his findings of fact - that "each of the six companies has adopted the agreement" between Parbury, Henty & Co. Pty. Ltd. and the first appellant "from the time of its incorporation". I am not very clear what is meant by that but, as far as can be gathered from the scanty evidence, it would seem that the subsidiary companies and the holding company carried on business as though they were one entity and this, I think, is what the learned magistrate probably intended to convey. The evidence showed that on receipt of an order from Parbury, Henty & Co. Pty. Ltd. the timber required to meet the order was withdrawn from the racks and, after being kiln-dried and dressed if the order so required, was allocated to the order, packed and shipped. (at p381)

6. The argument addressed to us on behalf of the appellants was that at the moment when the sawn green timber left the sawmill, it moved into the flow of inter-State trade. The movement from mill to yard was, so it was said, merely the first step in what was really one inter-State journey starting at the mill and ending in one or other of the mainland States. For the respondent it was submitted that the carriage from the mill to the yard where the timber would lie until dried on the racks and later perhaps be kiln-dried and almost always dressed and thereafter until it was allocated to fulfil an order from Parbury, Henty & Co. Pty. Ltd. was no more than a step taken preparatory to putting into inter-State trade timber which would thereafter become the subject of an order from Parbury, Henty & Co. Pty. Ltd. and that s. 92 had no application to that preliminary journey. (at p382)

7. In my opinion the respondent's argument should be upheld. It seems to me that the transport of the timber to the racking yard, where it would remain for a long period of treatment and after treatment would be held until such time as an order to ship it inter-State should be received, should not be regarded as the first leg of an inter-State movement of the goods so as to entitle the appellants to the protection of s. 92 during the journey from mill to yard. I see no relevant difference between the present cases and the case of Deacon v. Mitchell [1965] HCA 28; (1965) 112 CLR 353, in which this Court, by a majority, rejected arguments similar to those urged by the appellants in the present cases. (at p382)

8. I would add that the evidence shows that the subject matter of all inter-State orders from Parbury, Henty & Co. Pty. Ltd. was for rack or kiln-dried timber which was almost invariably required to be dressed and never for green timber and, in this respect, the facts seem to me not to differ in any material respect from those which this Court considered in Webb v. Stagg(1965) [1965] HCA 29; 112 CLR 374 (at p382)

9. I would dismiss the appeals. (at p382)

ORDER

Appeals dismissed with costs.