Damjanovic & Sons Pty Ltd v Commonwealth [1968] HCA 42; (1968) 117 CLR 390 (27 June 1968)

HIGH COURT OF AUSTRALIA

DAMJANOVIC & SONS PTY. LTD. v. THE COMMONWEALTH [1968] HCA 42; (1968) 117 CLR 390

Constitutional Law (Cth)

High Court of Australia
Barwick C.J.(1), McTiernan(2), Kitto(3), Taylor(4), Menzies(5) and Windeyer(6) JJ.

CATCHWORDS

Constitutional Law (Cth) - Freedom of inter-State trade, commerce and intercourse - Interference with freedom - What constitutes - Imposition of levy on poultry owners - "hens kept for commercial purposes" - Eggs produced exclusively for inter-State sale - The Constitution (63 & 64 Vict. c. 12), s. 92 - Poultry Industry Levy Act 1965-1966 (Cth) - Poultry Industry Levy Collection Act 1965-1966 (Cth).

Constitutional Law (Cth) - Determination of constitutional validity of enactments - Use of precedents.

HEARING

Sydney, 1967, October 13, 16; 1968, June 27. 27:6:1968
DEMURRER.

DECISION

1968, June 27.
The following written judgments were delivered: -
BARWICK C.J. The plaintiff company, incorporated in the State of New South of eggs. According to the statement of claim in this suit, its settled course of business is to sell all the eggs produced by the female domesticated fowls from time to time in its possession to purchasers in the State of Victoria upon terms and conditions which require that all eggs so purchased be delivered from the State of New South Wales into the State of Victoria. All eggs so produced and sold by the plaintiff have been so delivered. The plaintiff has no intention to sell any eggs so produced otherwise than in the manner described, and its purpose in keeping domesticated fowls has been for no other purpose than the production of eggs to be so sold and delivered. (at p393)

2. The statement of claim calls attention to the provisions of the Poultry Industry Levy Act 1965 of the Commonwealth (the Levy Act) and to those of the Poultry Industry Levy Collection Act 1965 of the Commonwealth (the Collection Act), the former commencing on 28th May 1965 and the latter naming 1st July 1965 as the appointed day for its commencement. The plaintiff claims a declaration that both Acts are wholly, or partly to a specified extent, invalid, or alternatively, that their provisions cannot validly apply in respect of hens kept by the plaintiff exclusively for the production of eggs for sale in the course of inter-State trade. (at p393)

3. To the plaintiff's statement of claim, the defendant demurred asserting the validity of each Act and the applicability of each to the hens kept by the plaintiff exclusively for the production of eggs for sale in the course of inter-State trade. The plaintiff having joined in demurrer, the question for decision is whether the Acts are valid and applicable in the circumstances of the plaintiff and its course of business. (at p393)

4. It is convenient, first, to refer to the relevant portions of the statutes under challenge. The Levy Act imposes a levy at a rate to be prescribed in respect of "hens kept for commercial purposes" on each prescribed day (ss. 5 and 6). I find no need to refer to the details of the Act by reference to which the prescribed day is to be determined. Suffice it to say that it is a recurrent day set at calculable intervals of time. "Hen" means, according to the definition in s. 4, "a female domesticated fowl that is not less than six months old". The levy is not payable by a person who on the day the levy is imposed does not own more than twenty hens, and it is only imposed "in respect of such number of hens owned by him on the day on which the levy is imposed as exceeds the sum of twenty and a number ascertained in accordance with" a formula expressed in the Act and designed to include in the count only those hens which are used for the production of eggs for sale as distinct from the production of eggs for hatching chickens which are not intended themselves to be used for the production of eggs: see s. 8. Before prescribing the amount of the levy, the Governor-General is to take into consideration any recommendation in that behalf made to the Minister by the Council of Egg Marketing Authorities of Australia (which, as far as I can ascertain, has no corporate existence or statutory basis); and shall not prescribe a rate of levy in excess of the then current recommendation of that Council. The Poultry Industry Assistance Act 1965 (the Assistance Act) sets up a Trust within the Consolidated Revenue Fund of the Commonwealth into which the collections of the levy shall be paid, and out of which payments may be made from time to time to a State by way of financial assistance to be applied by the State for the assistance of the poultry industry as directed by the Commonwealth Minister. The Collection Act provides for the collection of the levy by State egg boards under arrangements to be made between the Commonwealth and such boards. The amount of the levy is made a debt due to and recoverable by the Commonwealth, and the Collection Act provides for the making of regulations requiring the making of returns for the purposes of that Act. (at p394)

5. The submission of the plaintiff is that the levy upon hens kept for commercial purposes constitutes a burden upon the inter-State trade in eggs in which he is engaged, and that such burden is directly, as distinct from remotely or consequently, imposed by the operation of the Act itself. That submission made in that precise form properly acknowledges the limits to which the constitutional guarantee of the absolute freedom of trade, commerce and intercourse among the States extends in a case such as that which is raised by the present demurrer. So to say also acknowledges that the motivation of the legislation in question will not be definitive of its validity. Doubtless one may suspect that the motive prompting the introduction of the present legislation is related to inter-State trade in eggs and to the consequential impact of that trade upon the arrangements made by individual States upon and in respect of the sale of eggs. However, the validity or applicability of these statutes must be determined according to their operation and not according to their motivation. Of course, in an appropriate case the Court can deal with attempts by subterfuge or indirection to burden inter-State trade and commerce. But this is not, in my opinion, such a case. (at p395)

6. It was submitted for the defendant that the question of validity or applicability was determined in its favour by Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55, it being said that the keeping of hens for the purpose of obtaining by their efforts eggs for sale was manufacture. I find no difficulty myself in disposing of this suggestion. I am quite unable to regard the keeping of the hen with that end in view, or the efforts of the hen herself as relevantly manufacture or a process of manufacture. Nor can I find any analogy between the manufacture of margarine and either the keeping of egg-producing hens, or the laying of eggs by hens so kept. Further, I can see no relevant similarity between a law which imposes a quota on the production of margarine - clearly a process of manufacture - and a levy upon the keeping of hens so that they may lay eggs which can be sold. (at p395)

7. But it was further submitted that passages from the reasons of the Court in Grannall's Case(1955) [1955] HCA 6; 93 CLR 55 by their mere application to the circumstances of this case, or by logical deduction therefrom, require its resolution in favour of the validity or applicability of the statutes. I am unable to accept this contention. Grannall v. Marrickville Margarine Pty. Ltd.(1955) [1955] HCA 6; 93 CLR 55 decides that a statute which on its proper construction - and perhaps after the rejection of severable invalid parts of it - does no more than place a restriction upon manufacture, does not by its operation directly, in the relevant constitutional sense, burden inter-State trade. It reaches that conclusion by a fundamental decision that manufacture is not itself trade or commerce within the meaning of s. 92 of the Constitution, and that the particular limitation upon manufacture did not operate to burden in a relevant sense inter-State trade in the product of such manufacture. So much it seems to me may be accepted, and with due respect, so much for my part I do accept. (at p395)

8. But the reasoning of the Court as expressed in the judgment, by which it came to the conclusions that manufacture is not trade or commerce, and that the statute in question did not operate directly to burden inter-State trade is, in my opinion, in a different case. In particular, it may not be used as a substitute for the Constitution. Always the Constitution remains the text. Reasoning towards decision, as distinct from the fundamental conclusions on which the order of the Court is founded is, in my respectful opinion, not in itself authoritative. It may, of course, be persuasive according to the circumstances when a different statute and other particular situations are under consideration. But, in the construction and application of an organic instrument, it seems to me not appropriate for this Court to attempt to build upon such reasons what might seem to be a logical development therefrom, and to apply it in circumstances other than the presice circumstance with which such reasons dealt or circumstances which are indistinguishable therefrom. The common law denied that such a course was warranted or acceptable in the development of the common law: Quinn v. Leathem [1901] UKHL 2; (1901) AC 495, at p 506 For myself, I should think that such a course is even less permissible in constitutional construction. But in thus expressing myself, I would not wish to be taken as suggesting that settled constitutional doctrine emerging from the decisions themselves and the ultimate conclusions on which they are based, should not generally be maintained, and only overturned or departed from when its error is clearly made out. However, apart from this criticism of the use which it was submitted should be made of parts of the reasons for judgment in Grannall v. Marrickville Margarine Pty. Ltd.(1955) [1955] HCA 6; 93 CLR 55, I can myself derive little, if any, assistance in the resolution of this demurrer from any of the parts of those reasons to which we were referred. (at p396)

9. The next submission with which I will deal is one with which I have had no small amount of difficulty. It is said, in substance, that the levy is a tax upon the plaintiff's purpose to trade in eggs. If it were, then, in my opinion, the attempt would infringe the constitutional guarantee, even though it were a tax upon an undifferentiated purpose to trade. Clearly, a purpose to trade inter-State would then fall within the general subject matter of the tax, and the absence of any so-called discrimination or particular selection of the purpose to trade inter-State would not save the law. But after much consideration, I have come to the conclusion that, upon its proper construction, and bearing in mind the mechanics of the levy as disclosed in the description of the prescribed period for the purposes of the imposition of the levy, the Levy Act does no more than tax the possession of hens of a described number and kind. Too much was sought to be taken in argument, in my opinion, out of the word "kept", and out of the use of the description "for commercial purposes". It is upon the fact of the possession of the hens that the levy operates. In a practical sense, the description that they be hens maintained for commercial purposes may have little significance: but none the less the presence of the words "kept for commercial purposes" must be reflected in the construction placed upon the statute. I think, however, that they are merely descriptive of the hens, and that they do not warrant the conclusion that the levy is on the purpose to trade, rather than upon the possession of the described hens. Even if the statute could properly be regarded as imposing a tax upon "the purposive possession" of the hens, it would not, in my opinion, be more than a tax upon their possession: it would not even then, in my opinion, be a tax on the purpose to trade. (at p397)

10. It is accepted that the expropriation of a chattel may operate directly to burden the trade in or with it. The invalidity of acts authorizing or effecting such an expropriation has never been limited to the expropriation of a chattel in actual movement in inter-State trade, or the subject of an actual inter-State transaction. But it has been decided, and as I respectfully think, rightly, that a law which expropriates a chattel as to which no present intention exists to commit it to inter-State trade or commerce is valid: Carter v. Potato Marketing Board(1951) [1951] HCA 60; 84 CLR 460 It may be otherwise when such an intention exists,cf. Reg. v. Wilkinson; Ex parte Brazell, Garlick and Co.(1952) [1952] HCA 6; 85 CLR 467 I do not think that an intention to adventure the unproduced egg when produced into inter-State trade would be sufficient to deny to the Commonwealth or a State the power to expropriate the hen from whom it was hoped the egg would come. In this connexion, a law expropriating the hens kept by the plaintiff for his commercial purposes would, in my opinion, be valid. A tax upon their possession as in the present Act is, in my opinion, a stronger case. (at p397)

11. Consequently, for these reasons, in my opinion, the demurrer should be allowed. (at p397)

MCTIERNAN J. I am of the same opinion as the Chief Justice. (at p397)

KITTO J. I agree in the judgment of Taylor J. which I have had an opportunity of reading, and I would add only a few words in reference to one argument that was addressed to us on behalf of the plaintiff. (at p397)

2. It is true that there is a point of distinction between the legislation we are here considering, and the legislation in question in Grannall's Case [1955] HCA 6; (1955) 93 CLR 55, in that the former operates to place a burden upon persons by reason of their being engaged in certain conduct "for commercial purposes". The liability to pay a levy is made to depend upon the keeping of hens for commercial purposes, which I take to mean for the purposes of selling the eggs or the chickens to be produced. (I do not consider that the purpose of selling the hens themselves is included, because that purpose is not within the concept of keeping hens for commercial purposes.) The plaintiff's contention is that the distinction takes the case out of the principle of Grannall's Case [1955] HCA 6; (1955) 93 CLR 55, because conduct accompanied by a purpose of selling goods is an essential attribute of trade in the goods, "essential in the sense that without" that purpose "you cannot bring into being a particular example of trade, commerce and intercourse among the States", namely, the sale of goods. (at p398)

3. If the Poultry Industry Levy Act had been so framed that a liability to pay the levy would be incurred whenever a person should have a purpose of selling eggs or chickens, I should agree that s. 92 would prevent the levy from being exigible in respect of a purpose of effecting an immediate sale of eggs or chickens inter-State. Otherwise a person could never sell eggs or chickens inter-State without incurring the levy. But the only commercial purpose which is essential to selling, in the sense that without it you cannot bring a sale into being, is a purpose of selling immediately. The purposes upon which the Levy Act operates do not include the purpose of immediate sale, either of chickens or of eggs; they are prospective purposes relating to commodities not yet in existence. Such purposes are not essential attributes of a sale, and the reasoning of Grannall's Case (1) therefore applies notwithstanding the different form of the legislation. In short, it would have made no difference to the decision in that case if the Act there in question had been expressed as prohibiting the manufacture of margarine for commercial purposes. (at p398)

TAYLOR J. In this matter, which was heard together with Morton's Case(1968) [1968] HCA 43; 117 CLR 383, the Commonwealth demurred to a statement of claim by which the plaintiff sought a declaration that the provisions of the Poultry Industry Levy Act 1965-1966 (Cth) and the Poultry Industry Levy Collection Act 1965-1966 (Cth), or, that s. 5 of the former Act and s. 10 of the latter Act, are invalid. Alternatively it sought a declaration that neither Act could validly apply in respect of the hens owned by it and kept by it exclusively for the production of eggs for sale in the course of inter-State trade. Some difficulty might arise in making a declaration in the more limited form but, as will appear, it is not, in my view, necessary to deal with this point. (at p399)

2. It is alleged by the plaintiff that it carries on the business of a poultry farmer and producer of eggs, and that all of the eggs produced by it from its hens are, and have been, produced in the State of New South Wales and have been sold by the plaintiff to purchasers in the State of Victoria, upon terms and conditions that the said eggs be delivered by the plaintiff from New South Wales to the said purchasers in the State of Victoria, and all of the said eggs so sold by the plaintiff, have been delivered by the plaintiff from New South Wales to the purchasers thereof in Victoria. Further it is alleged, that the plaintiff does not intend, and has not intended, to sell any of the eggs so produced other than to purchasers in Victoria and that, apart from the fact that the plaintiff has sold and sells and at all material times has intended to sell its eggs in the manner indicated, it does not and has not at any relevant time kept its hens for commercial purposes. This last allegation I take to mean that it has, at all relevant times, kept its hens for the purpose of producing eggs in order that they might be sold in the course of inter-State trade. (at p399)

3. There can, of course, be no doubt that its dealings with eggs in the manner above described, formed and forms part of inter-State trade, and it is asserted that the levy which is imposed by the Poultry Industry Levy Act constitutes an infringement of the freedom accorded by s. 92 of the Constitution to trade commerce and intercourse among the States. (at p399)

4. In advancing this contention the plaintiff does not challenge the decision in Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55 What is asserted is that, substantially, s. 5 of the Act imposes a levy in respect of the hens kept by it in virtue of its trade in eggs and that, since its trade is part of inter-State trade, it is deprived of the protection which s. 92 affords. It is not suggested that the keeping of hens or the production of eggs in this State forms part of an activity protected by s. 92, but it is contended that the language of s. 5 of the Act distinguishes this case from the case just mentioned. Grannall's Case [1955] HCA 6; (1955) 93 CLR 55, it is said, did no more than prohibit the manufacture of margarine except under and in accordance with the conditions of a licence which might be issued or withheld at the discretion of the Minister. Of the provision which had this effect the Court said: "It deals entirely with the liberty of persons in New South Wales to bring a given commodity into existence by operations in that State, and its validity presumptively stands unaffected by other provisions of the Act. A person may not bring the commodity into existence unless licensed, and if licensed he may bring into existence no greater quantity than is mentioned in the licence. The right or liberty which is thus restricted forms no part of 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: Bank of New South Wales v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1, at pp 381, 382 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 [1955] HCA 6; (1955) 93 CLR 55, at pp 71, 72" The Court did not deny the proposition that a burden, prohibition or restriction imposed on an activity antecedent to, or subsequent to the termination of, activities which form part of inter-State trade, may infringe s. 92. Examples of such cases are to be found in The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia(1926) [1926] HCA 47; 38 CLR 408, and Vacuum Oil Co Pty Ltd v Queensland [1934] HCA 5; (1934) 51 CLR 108, and these cases were examined in Wragg v. New South Wales (1953) 88 CLR 353, at pp 396-398 This proposition was clearly recognized and the Court observed: "But when the entire statute has been examined, when the tendency of its undeniable aims and their bearing upon validity have been fully canvassed, when the plan of the statute, its order of ideas and the provisions of which it is made up have been turned this way and that, and when every experiment with them has been made, it comes back in the end to the simple position stated. In other words, the complaint of the defendant company remains a complaint against a restriction upon the production of table margarine, not against a restriction on inter-State trade. What begins as a restriction upon the production of the commodity remains a restriction on production, the validity of which rests upon an independent foundation. No latent characteristics are brought forth, no secondary meaning and application are affixed to it, amounting to an impairment of the freedom of inter-State commerce (1955) 93 CLR, at p 72" (at p401)

5. In the present case, however, the plaintiff points to the language of s. 5 which purports to impose a levy on all hens kept for commercial purposes, and finds in the italicized words a sufficient indication that the levy is imposed in virtue of its trade. Liability to pay the levy is, it is agreed, not, however, fixed or ascertainable by reference to the extent of the owner's trade in eggs though it is imposed, it is said, in respect of hens kept for commercial purposes, and that must mean kept for the purpose of trade or commerce. It is the italicized words which make all the difference, and it is conceded that if they had been omitted, there could be no objection that the provisions of the Act would infringe s. 92. In my view it was a precisely similar situation which was considered in Grannall's Case(1955) [1955] HCA 6; 93 CLR 55 In terms the question to which the Court gave a negative answer was whether s. 22A of the Dairy Industry Act, 1915-1955 (N.S.W.) constituted an infringement of s. 92. But that section was considered as one of a catena of sections - ss. 22A, 22B, 22C and 22D - which were introduced into the Act in 1940. They formed, it was said, a "coherent set of provisions". It was pointed out that, under the Act as it stood previously to the amendment, no person could use any premises as a dairy produce factory unless he was the holder of a licence issued under the Act. "Dairy produce factory" was defined to mean a building or place where butter, cheese, dried milk, condensed milk, concentrated milk, malted milk, or any other prescribed product of milk, or margarine is prepared or manufactured, or where milk or cream is tested, graded, pasteurized or cooled preparatory to manufacture, or where butter or cheese is processed after manufacture. To these provisions ss. 22A, 22B, 22C and 22D were added so that the first of these sections forbade the manufacture or preparation of cooking or table margarine in a dairy produce factory except under and in accordance with a licence issued pursuant to s. 22A. It is quite impossible, I think, in these circumstances, to regard such a provision as other than one which plainly forbade the manufacture of margarine for commercial purposes, or for sale, and the reasons of the Court clearly recognized that this was so. Also for what it is worth, it may be noticed that although the Court gave reasons for thinking that s. 22C in its operation might, in some circumstances, infringe s. 92, no suggestion was made that the provisions of s. 22B were open to question on any such ground. That section provided that notwithstanding anything in the Act or in any licence, any person who holds a cooking margarine licence may manufacture for sale only to any prescribed person or class of persons in lumps of not less than fourteen pounds, margarine which contains beef fat or mutton fat, or beef fat and mutton fat in a quantity of between seventy-five and ninety per cent. by weight of the total quantity of fat and oil contained in such margarine. (at p402)

6. In my view this aspect of the case is governed by Grannall's Case(1955) [1955] HCA 6; 93 CLR 55 The levy is imposed in respect of hens kept for commercial purposes and not upon, or with respect ot, the owner's trade in eggs, and an examination of the decision in Grannall's Case(1955) [1955] HCA 6; 93 CLR 55 does not bear out the contention that the presence of the words "for commercial purposes" in s. 5 constitutes a feature which, in substance, distinguishes the legislation from that under consideration in the earlier case. (at p402)

7. The other objection which was argued in the case related to s. 10 of the Poultry Industry Levy Collection Act, but after listening to the argument I am unable to see any reason for thinking that this section is invalid. (at p402)

8. I would allow the demurrer. (at p402)

MENZIES J. This demurrer by the defendant asserts the validity of the Poultry Industry Levy Act 1965-1966 (Cth) and the Poultry Industry Levy Collection Act 1965-1966 (Cth) and the applicability of these Acts in respect of hens owned by the plaintiff and kept by it for the production of eggs for sale in the course of inter-State trade and not otherwise. (at p402)

2. The Acts, or alternatively, particular sections of the Acts, are impugned as infringements of s. 92 of the Constitution; alternatively it is contended, that by virtue of s. 92 and s. 15A of the Acts Interpretation Act 1901-1957 (Cth), the plaintiff is entitled to a declaration that it is at liberty to carry on its business free from the requirements of the Acts. (at p402)

3. The plaintiff's business is that of a poultry farmer and producer of eggs in New South Wales. As such it keeps hens, i.e., domesticated fowls not less than six months old, to produce eggs which are sold exclusively to purchasers in Victoria to be delivered from New South Wales into Victoria. It is pleaded in the statement of claim (1) that the plaintiff does not intend, and has not at any relevant time intended, to sell any of the eggs produced by its hens other than to purchasers in Victoria in the manner already stated; and (2) that apart from the sale and intended sale of eggs as aforesaid, the plaintiff does not keep and has not kept its hens for commercial purposes. (at p403)

4. The Poultry Industry Levy Act 1965-1966 imposes on each prescribed day a levy "in respect of hens kept for commercial purposes on that day". The levy so imposed is payable by the owner of the hens. The number of hens upon which the levy is payable is to be calculated in accordance with an elaborate formula designed to exclude the first twenty hens owned and also hens kept for the production of "broiler chickens", i.e. chickens to be used other than for producing eggs. The Poultry Industry Levy Collection Act 1965-1966 provides for the collection of the levies imposed by the Poultry Industry Levy Act 1965-1966. It not only makes an amount of levy that is payable recoverable as a debt due to the Commonwealth, but it imposes penalties for non-payment of levies becoming payable, and for any failure to furnish returns, in accordance with regulations, from which the amount of levy payable is calculable. (at p403)

5. The plaintiff is, without question, a company which engages in inter-State trade in eggs, and the Acts require it under the pain of penalty to pay levies in respect of its hens that produce the eggs for sale and delivery in the course of that trade. The question is whether it can, consistently with s. 92, be subjected, in respect of those hens, to the burdens which the Acts impose. (at p403)

6. It is now established that legislation which does no more than control the production or manufacture of goods for sale and delivery in inter-State trade is not inconsistent with s. 92, unless it is legislation which overtly achieves the impairment of the freedom of inter-State trade in the goods produced or manufactured: Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55 and Beal v Marrickville Margarine Pty. Ltd.(1966) [1966] HCA 9; 114 CLR 283 In the earlier case, after an emphatic statement that the freedom of inter-State trade cannot be impaired by circuitous means or concealed design, there follows a passage which I think must be read as a whole. It is: "But in applying this doctrine it is necessary first to see steadily what freedom is the subject of impairment, detraction or restriction. If some fact or event or thing which itself forms part of trade, commerce or intercourse, or forms an essential attribute of that conception (essential in the sense that without it you cannot bring into being that particular example of trade, commerce or intercourse among the States) is made the subject of the operation of a law which by reference to it or in consequence of it imposes some restriction or burden or liability, it does not matter how circuitously it is done or how deviously or covertly. It will be considered sufficiently direct or immediate in its operation or application to inter-State trade, commerce and intercourse. Provided the prejudice is real or the impediment to inter-State transactions is appreciable, it will infringe upon s. 92: see Hospital Provident Fund Pty. Ltd. v. Victoria [1953] HCA 8; (1953) 87 CLR 1 But generally speaking, it will be quite otherwise if the thing with reference to or in consequence of which the law operates or which it restricts or burdens is no part of inter-State trade and commerce and in itself supplies no element or attribute essential to the conception. It will not be enough that it affects something which, because it is a sine qua non to the existence of some subject of the freedom which s. 92 guarantees, has a consequential effect on what might otherwise have been done in inter-State trade (1955) 93 CLR, at p 78" In conformity with this statement I consider the criterion here to be applied is whether the keeping of hens for commercial purposes, which is what the Acts burden, is properly to be described as "no part of inter-State trade and commerce" and as something which "in itself supplies no element or attribute essential to the conception", i.e., inter-State trade and commerce. (at p404)

7. In my opinion this question should be answered affirmatively. The levy has no operation in respect of the sale of eggs. It would be payable in respect of hens owned on a prescribed day, even if no eggs for sale had been produced, and none were ever to be produced, by the hens. In these circumstances it would, I think, be a mistake to treat the levy as a burden upon the sale of eggs inter-State. Of course, the burdens imposed by the Acts would increase the cost of the production of eggs for inter-State trade, but that is not a circumstance which itself attracts s. 92. As was said in Grannall v. Marrickville Margarine Pty. Ltd. [1955] HCA 6; (1955) 93 CLR 55 the freedom which s. 92 guarantees to trade, commerce and intercourse among the States is not to be extended "to antecedent or subsequent transactions on the plea that they are incidental, ancillary or conducive to inter-State transactions or necessarily consequential upon them" (1955) 93 CLR, at p 79: see, too, Harper v. Victoria [1966] HCA 26; (1966) 114 CLR 361 The concession made in the course of argument that the omission of the words "for commercial purposes" would remove any objection to s. 5 of the Poultry Industry Levy Act 1965-1966, reveals how tenuous is the argument that, as the section now stands, it is contrary to s. 92. Were the offending words to be omitted, the realities of the plaintiff's situation would not be changed. The facts would still be the same; the burden which the Acts impose upon the plaintiff would not be altered; if the plaintiff's inter-State trade is now burdened, it would still be burdened in exactly the same way. The plaintiff's inter-State trade would be no more free than it is with the section as it now stands, yet it is said that the operation of the section would no longer interfere with the freedom of the plaintiff's inter-State trade. How would the plaintiff's inter-State trade be any more free? (at p405)

8. Accordingly I consider this case is covered by the earlier authorities and the distinction put forward on behalf of the plaintiff to distinguish those cases, viz. that the limit upon the production of margarine upheld was not imposed upon production for commercial purposes but simply upon production whereas here the levy is imposed in respect of hens kept for commercial purposes, is quite unreal. In both the earlier cases, and particularly in the second, it is clear that margarine was being produced for commercial purposes, namely sale, and sale to meet inter-State orders. Indeed, the commercial purpose for which the plaintiff keeps hens is one step further removed from trade than was the commercial purpose that was apparent in the earlier cases. The hens here correspond, as it were, not with the margarine in the earlier cases, but with the plant by which margarine was produced for commercial purposes. (at p405)

9. Upon the authority of Grannall v. Marrickville Margarine Pty. Ltd.(1955) [1955] HCA 6; 93 CLR 55 I would allow the demurrer (at p405)

WINDEYER J. The plaintiff company claims that the Poultry Industry Levy Act 1965 and the Poultry Industry Levy Collection Act 1965-1966, enactments of the Commonwealth Parliament, are invalid as involving a contravention of s. 92 of the Constitution. Alternatively it claims that although it has more than twenty hens "kept for commercial purposes", it is not liable to pay the statutory levy because it sells and delivers to persons in Victoria all the eggs which its hens lay in New South Wales. Its hens, it says, are owned and kept by it "exclusively for the production of eggs in the course of inter-State trade". The levy, it says, is an unlawful restriction of its freedom to carry on that trade. (at p405)

2. It was not made clear to me whether the plaintiff's proposition depended upon all the eggs of all its hens being sent to Victoria, or whether the same argument would be available, quantum sufficit, if some of the eggs of all the hens, or all the eggs of some of the hens, were sent there. But I need not determine the ambit of the immunity which the plaintiff claims. In my view it has altogether failed to make good its claim. (at p406)

3. Before dealing with the broader aspects of the case I should refer to the argument founded on the words of the Poultry Industry Levy Act, that the levy is "imposed in respect of hens kept for commercial purposes". I read this phrase as a description of the thing in respect of which the tax is imposed - hens kept for commercial purposes, as distinct from hens kept for domestic purposes. Standing by itself and without s. 10 of the Act, the description would, I should think, comprehend all hens kept by a poultry farmer for the purpose of selling their eggs, or chickens hatched therefrom, or the hens themselves as dressed poultry for eating. However, it is not necessary to decide what is the scope of the description. Its significance is said to lie in its limiting the effect of the statute to matters of commerce. It was conceded that if the reference to commercial purposes were not in the Act the plaintiff's case would fail. A levy upon all owners of more than twenty fowls would be, it was said, valid; but restricted to hens "kept for commercial purposes" it was invalid. Yet a levy in respect of all hens would have the same effect on the plaintiff's sales of eggs to customers, whether in Victoria or in New South Wales, as has the levy in respect of hens kept for commercial purposes. I am unable to think that s. 92 makes the validity of an Act depend on the presence of particular words in it if their presence or absence makes no difference at all to the practical operation of the Act in relation to inter-State commerce. (at p406)

4. The great purpose and object of s. 92 was, as has often been said, to ensure the unity of Australia in an economic sense and to prevent that unity being broken by and at State boundaries. The vision of the founders of the Commonwealth, the framers of the Constitution, was free trade between the Colonies which were to become States in the Federation. Section 92 was to be an assurance of this. That this was at all events the primary intention appears from the well-known articles by Professor Beasley in the Annual Law Review of the University of Western Australia, vol. 1, pp. 97, 273, 433. (at p406)

5. Section 92 continues to ensure the economic integration of the Australian nation. It continues to be the guardian and guarantee of free trade, in the classical sense, between the States. But time has gone on, and that is not the limit of its reach. It is, I think, a mistake to think of the Constitution as just like other statutes. Its words are not to be tied to the very things they denoted in 1901. The words of s. 92 remain unaltered and so does their meaning; but economic methods and the forms of economic organization and the instruments of trade and commerce have expanded and altered, and threats to the freedom of which s. 92 speaks arise in new ways. I shall not quote again the passage from the judgment of Holmes J. in Missouri v. Holland [1920] USSC 87; (1920) 252 US 416, at p 433 [1920] USSC 87; (64 Law Ed 641, at p 648), which I quoted in Spratt v. Hermes (1965) 114 CLR 226, at p 272 I merely remind myself of it and of this Court's reference in 1960 (in Fishwick v. Cleland) to the Constitution as "intended to endure and apply to changing conditions" (1960) 106 CLR, at p 197 I would add a remark of Lord Jowett's in the Privy Council, in a different context but relevant none the less: "It is, as their Lordships think, irrelevant that the question is one that might have seemed unreal at the date of the British North America Act. To such an organic statute the flexible interpretation must be given which changing circumstances require . . . ": Attorney-General for Ontario v. Attorney-General for Canada (1947) AC 127, at p 154 A passage in Story's Commentaries on the Constitution of the United States (Abridged version, 1833, p. 137) is I think relevant to the interpretation of our Constitution, although it is, in legal origin, a statute of the Imperial Parliament not, like the Constitution of the United States, a compact between sovereign States. The passage runs:

"Contemporary construction is properly resorted to, to
illustrate, and confirm the text, to explain a doubtful phrase
or to expound an obscure clause; and in proportion to the
uniformity and universality of that construction, and the
known ability and talents of those by whom it was given is the
credit to which it is entitled. It can never abrogate the text;
it can never fritter away its obvious sense; it can never
narrow down its limitations; it can never enlarge its natural
boundaries."

I quote that as a reminder that it is the words of the Constitution in their relation to the facts alleged in the pleading the subject of the demurrer that we have to consider. In doing so we are not governed by words, formulae and sentences culled here and there from judgments in other cases on different facts. That does not mean that we are to ignore authoritative expositions in earlier cases, or disregard the facts of earlier cases, as illustrations of the operation of the section in the Constitution. These cases establish doctrine, expound principle and, by denotation, give a concrete content to the abstract and general words of the enactment. This restrains the predilections and idiosyncrasies of an individual judge from dominating his interpretation of the Constitution. It thus makes for a stable law and a stable economy. Speaking in a general sense, I therefore hold myself guided, if not strictly governed, by the earlier decisions of this Court on this topic. Nevertheless, when new facts arise for consideration, it is, I think, wise to have always first in mind the words of s. 92 itself. In this I follow, I hope, the advice Dixon J. gave in Gratwick v. Johnson [1945] HCA 7; (1945) 70 CLR 1, at p 19 I once said, in a different context, that to prefer the gloss to the text is an old and besetting temptation for lawyers (Kavanagh v. The Commonwealth(1960) 103 CLR 547, at p 578) The arguments we heard in this and other cases about s. 92 suggest to me that it is a temptation much yielded to. There is often not only a preference for new words instead of the old, but also a mistaken use of analogy. The text becomes submerged in the illustrations. Analogy - not in the strict mathematical sense, but in the sense of a resemblance of facts - has long had a great place in our system of law. It is at the base of the method of precedent in the common law. Perhaps it began with Bracton's "si similia evenerint per simile iudicentur". In modern times it was commented on by Austin. More recently it has been considered by many academic writers, including Professor Cross in his work Precedent in English Law (1961). And in America too it has been the subject of analysis and commentary. Much of this literature, by writers on jurisprudence and on what it has become the fashion to call the philosophy of law, is analytical, profound and abstruse, as for example the recent article by Professor McBride, "The Essential Role of Models and Analogies in the Philosophy of Law", in the New York University Law Review, vol. 43 (1968), p. 53. I would not enter upon a discussion of the topic here, even if I felt competent to do so. But there are two general observations I would make. The first is that in the lawyer's process of analogical reasoning, the discernment of differences is as important as the seeing of similarities. The result of that was summed up by Jordan C.J.: "It by no means follows that because a particular set of facts has been held to warrant or even to necessitate a particular conclusion, another set of facts which bears a considerable resemblance to the former calls for the same conclusion": Davidson v. Mould (1943) 44 SR (NSW) 113, at p 115. My second observation is that reasoning by analogy is a rather different process in the development of the common law from its use in the interpretation and application of a statute or of the Constitution. Sir Owen Dixon, in an extra-judicial address he delivered in 1933 (reprinted in Jesting Pilate (1965), p. 13), said of the common law that

"it has undergone a continuous growth and expansion
accomplished by continual deduction and induction. By
deduction, a new application is given to an existing principle;
many single instances having been thus produced, in course
of time a new or developed principle is discerned in them and
expounded. By this process of imperfect induction, the
secondary principle is established as part of the doctrine of
the common law, and plays its part in turn in the production
of still more doctrine".

This, I would respectfully say, is a wholly apt description of the processes of the common law. It points I think the contrast with expositions of the effect of statutes and codes. The process is then one of deduction and subsumption, rather than of imperfect induction. The words of the enactment provide the major premise. The result is not, or ought not to be, the establishment of any secondary principle embodied in new words, but at most the provision of an illustration of the effect in a new setting of the original principle expressed in the original words. (at p409)

6. I have said so much, and quoted so much, simply because I am unable to see how having to pay a tax calculated by reference to hens, a tax which would be payable in whatever State the hens were kept, can be said to impair the hen-keeper's freedom to send eggs in the course of trade and commerce from New South Wales to Victoria. It was said that it does so because the tax burdens an act of inter-State trade and commerce: that is to say burdens the movement of eggs from State to State. The word "burdens" has had great currency in the discussion of s. 92. It was I think overworked in the argument in this case. Doubtless one can say, metaphorically really, as has been said by high authority, that to burden an act or transaction may curtail the freedom of an individual to do that act or engage in that transaction. But the question is not resolved by asking is there a burden - and then saying that a tax is a burden. Of course it is, for the taxpayer, again in a metaphorical sense. Having to pay the poultry levy makes poultry farming less profitable than it would otherwise be, if the burden cannot be absorbed in the price which the consumer must pay. But that is not enough. A land tax or an excise duty could in other businesses have the same indirect effect. The freedom protected by s. 92 is a personal right. Any subject may complain in the courts that a law which contravenes it is invalid if it directly affects him. That has now been stated by the Privy Council. It had earlier been said, clearly enough, in this Court. But I am unable to see that s. 92 stands in the way of all forms of what Dicey called collectivism. I do not think that it enables every individual, by a judicious use of State boundaries, coupled with an appeal to utilitarian doctrines of laissez-faire and freedom of contract, to escape the obligations of any purely general law applying throughout Australia to a trade in which he is engaged. I may at this point go again to the United States and quote the salutary warning given by Holmes J. in Baldwin v. Missouri [1930] USSC 108; (1929) 281 US 586, at p 595 [1930] USSC 108; (74 Law Ed 1056, at p 1061), when, speaking of the Fourteenth Amendment, he said: "I cannot believe that the Amendment was intended to give us carte blanche to embody our economic or moral beliefs in its prohibitions." The same may, I think, be said of our s. 92. (at p410)

7. It seems to me a mistake to invoke the decisions in the transport cases or what was said in them for the solution of the present case, which is of a wholly different character. I have myself always entertained a wide view of the scope of s. 92 in relation to the carriage and movement of goods and vehicles, a view which I think is supported by authority. That is, because carriage and movement are themselves commerce, and because I adhere to old and deeply rooted ideas of the nature and purpose of highways. I hope I made that clear on other occasions - in Deacon v. Mitchell [1965] HCA 28; (1965) 112 CLR 353 and elsewhere. But, except perhaps by a resort to mere verbalisms, I do not see that what was said in the transport cases has any bearing on this case. I would decide this case on the simple ground that I cannot see that there is any restriction upon the freedom of the plaintiff to send its eggs to Victoria if it wishes to do so. If it be necessary to fit this into the general pattern made by pronouncements in earlier cases, I agree that Grannall v. Marrickville Margarine Pty. Ltd.(1955) 93 CLR 55 and Beal v. Marrickville Margarine Pty. Ltd.(1966) [1966] HCA 9; 114 CLR 283 are the ones to be looked at. I say that because of general statements in them, not because I wish to equate by analogy the keeping of hens to lay eggs for sale with the manufacture of margarine for sale. (at p410)

8. I would add one thing only. It is, I consider, a mistake to measure the effect of s. 92 by reference to the effect of s. 51 (i.). The power of the Parliament with respect to the subject of inter-State commerce is not to be measured by, nor used to measure, the restrictions which s. 92 places upon the manner in which it may be exercised. This matter was dealt with in Grannall's Case [1955] HCA 6; (1955) 93 CLR 55. I do not need to discuss it here. It is enough to say that the very considerations of purpose, policy and economic circumstances which may properly lead to an expansive and wide interpretation of the grant of power over a subject matter to the Commonwealth Parliament make, it seems to me, for a narrow application of the provision which withdraws from all Australian legislatures a capacity to deal with that subject matter in a particular way. Section 92 must be understood as a whole in meaning and purpose. Words like "commerce" and "free" then get their meaning not in isolation but in and from their context. It is not necessary to resort to Bentham for support of this view of legal words and phrases, although support for it can be found in the passages from the Fragment on Government which are referred to by Professor Hart in his lecture "Definition and Theory in Jurisprudence", printed in Law Quarterly Review, vol. 70 (1954), at p. 41. I have seen no reason to change the views which I expressed about the operation of s. 92 in what I wrote in Chapman v. Suttie(1963) [1963] HCA 9; 110 CLR 321, at pp 344, 345 (at p411)

9. I would allow the demurrer. (at p411)

ORDER

Demurrer allowed.