Cantarella v Egg Marketing Board (NSW) [1972] HCA 16; (1972) 124 CLR 605 (29 February 1972)

HIGH COURT OF AUSTRALIA

CANTARELLA v. EGG MARKETING BOARD (N.S.W.) [1972] HCA 16; (1972) 124 CLR 605

Constitutional Law (Cth)

High Court of Australia
McTiernan(1), Menzies(2), Windeyer(3), Owen(4) and Walsh(5) JJ.

CATCHWORDS

Constitutional Law (Cth) - Freedom of inter-State trade and commerce - State law prohibiting sale of certain eggs unless candled and graded by or under supervision of State authority - Operation confined to eggs transported for more than 300 miles in State - Charge for services of authority - Validity - The Constitution (63 & 64 Vict. c. 12), s. 92 - Regulations under Marketing of Primary Products Act, 1927 (N.S.W.), reg. 32A.*

HEARING

Sydney, 1971, November 25, 26; 1972, February 29. 29:2:1972
DEMURRER.

DECISION

February 29, 1972.
The following written judgments were delivered: -
McTIERNAN J. In my opinion the demurrer should be overruled. The regulation the limits of New South Wales. In my opinion this law is in its operation predominantly restrictive and obstructive of the free movement of commerce. I think it cannot be described as purely regulatory. I have read the reasons for judgment of Menzies J. and agree with him that the regulation in question in this case is not compatible with the freedom guaranteed by s. 92 of the Constitution. (at p610)

MENZIES J. A law of New South Wales (reg. 32A of the regulations made under the Marketing of Primary Products Act, 1927 (N.S.W.)) forbids any person from selling, offering or displaying for sale any eggs, by wholesale or retail, which have been transported three hundred miles or more in New South Wales unless such eggs have been candled and graded in premises and under conditions approved by the Egg Marketing Board and subject to the supervision of an officer of the Board. The problem to which the demurrer here gives rise is whether, in the face of s. 92 of the Constitution, this law can validly apply to eggs brought from Queensland into New South Wales for sale in Sydney. I disregard, for the moment, the rights of the various plaintiffs to bring the action, which challenges the application of the regulation to eggs so carried, in order to deal with the substance of the matter which the defendant, no less than the plaintiffs, wishes to have decided upon an amended demurrer to an amended statement of claim, the former asserting inter alia that the regulations validly apply to eggs transported from Queensland to Sydney for sale there. (at p610)

2. This is not, I think, a case in which it is necessary to traverse again the ground covered in S.O.S. (Mowbray) Pty. Ltd. v. Mead Ante, p. 529. . In this case what is required is the application of what seem to me established principles to a simple, but novel, set of facts. Here sale is prohibited because of the carriage of eggs for three hundred miles in New South Wales. When eggs are transported by land from Queensland to Sydney they must be carried for more than three hundred miles in New South Wales. An uninterrupted journey from Queensland to Sydney is, as a whole, an inter-State journey and it follows that the demurrer asserts that the sale of the eggs so carried is prohibited because of part of their inter-State carriage. The law, it is claimed, operates by reason of a carriage which is part of inter-State transport of the eggs. In my opinion s. 92 denies such an operation to the New South Wales law, notwithstanding that it is within the operation of the law that any eggs transported for three hundred miles in New South Wales, otherwise than in the course of inter-State trade, shall not be sold until the stipulated requirements have been fulfilled. The generality of the law cannot save so much of its operation as forbids sales because eggs have been carried for three hundred miles or more in New South Wales as part of their carriage from Queensland to Sydney. A law which in terms prohibited the sale of eggs because of their inter-State carriage, or part of it, would obviously be invalid; in a case where such a prohibition is but part of the operation of a more general law, that prohibition cannot, I think, stand with s. 92. (at p611)

3. This law, in relation to the eggs that have been carried from Queensland to Sydney, directly prohibits the sale of such eggs because of something, forming part of inter-State trade, occurring in relation to the eggs. The restriction imposed could, therefore, only be justified as the permissible regulation of inter-State trade, but in the demurrer book there is to be found no basis for its justification on this ground. Harper v. The State of Victoria [1966] HCA 26; (1966) 114 CLR 361 , is distinguishable. The prohibition upheld there was not conditioned upon something itself forming part of inter-State trade. (at p611)

4. The demurrer, insofar as it asserts the validity of the regulation in its application to eggs carried for more than three hundred miles in New South Wales in the course of inter-State trade, should be overruled. (at p611)

5. The third-named plaintiff is a producer of eggs in Queensland who sends eggs to the first - and second-named plaintiffs as agents for sale. The fourth-named plaintiff is a retailer of eggs in New South Wales who sells eggs produced by the third-named plaintiff and purchased through the agency of the first - and second-named plaintiffs. (at p612)

6. The third-named plaintiff is engaged in inter-State trade in sending his eggs from Queensland to Sydney and in selling them there through the agency of the first - and second-named plaintiffs. The first - and second-named plaintiffs, in acting as agents for the third-named plaintiff in receiving eggs from him and dealing with them for him, are also engaged in inter-State trade. The fourthnamed plaintiff, although not engaged in inter-State trade, is asserting a right to sell eggs which the defendant denies because of their earlier carriage. (at p612)

7. In these circumstances I consider that the plaintiffs are entitled to a declaration that s. 32A does not prohibit the offering for sale, or the selling, of eggs, notwithstanding that they have been transported for three hundred miles or more in New South Wales when that transport has been part of the uninterrupted carriage of eggs from Queensland to Sydney. (at p612)

8. Accordingly I would overrule the demurrer. (at p612)

WINDEYER J. I would allow this demurrer. I am quite unable to see that, if eggs laid by hens in Queensland are brought to New South Wales, they are outside the laws of New South Wales governing the sale of eggs there. The law in question is one of many laws in New South Wales, enacted by numerous statutes, governing the sale and inspection of perishable foodstuffs of various kinds. Eggs laid by hens in Queensland that are brought to New South Wales are subject to the same laws there as eggs laid by hens in New South Wales, unless they be exempted from them by some valid Commonwealth law or by the Constitution. The law of New South Wales now in question is reg. 32A made under the Marketing of Primary Products Act, 1927 (N.S.W.) (as amended). So far as presently relevant it is as follows:

"(1) No person shall sell, offer or display for sale any eggs by
wholesale or retail within the area which have been -
(a) transported three hundred miles or more in New South
Wales; or
(b) in transit for twenty-four hours or more,
unless such eggs have been candled and graded as hereinafter
provided.
(2) Such candling and grading shall be carried out in premises
and under conditions approved by the Board and subject to
the supervision of an officer of the Board who shall thereupon
issue to the person offering the eggs for candling and grading a
certificate that such candling and grading has been carried out.
(3) Such candling and grading may be carried out by the
Board at the request of any person who shall pay to the Board
its charges for such services." (at p613)

2. The plaintiffs claim that this regulation cannot validly apply with respect to any eggs brought from Queensland for sale in Sydney. To require those eggs to be candled and graded in Sydney would, the plaintiffs assert, be an infringement of s. 92 of the Constitution. This is to my mind a quite untenable proposition. Of course anyone in New South Wales is free to import eggs from Queensland; and anyone in Queensland is free to send eggs to New South Wales. The carriage of eggs across the border cannot be frustrated, nor can their onward carriage to a destination in New South Wales. But when goods from another State reach their destination the inter-State movement is at an end. Trade in them thereafter cannot be impeded because they came from another State. But that does not mean that conditions on which they may be sold may not be imposed by law on the basis of events occurring in the State where they are to be sold. The requirement that the eggs in question be inspected and graded arises because of what was done with them in New South Wales. They had been transported three hundred miles or more in New South Wales. I am unable to see that it matters that this carriage was in uninterrupted continuation of a journey that began in Queensland. That would be a material consideration if it were said that there had been any interference with the onward movement of the goods upon the highways of New South Wales. That is not said. On the contrary, the allegation in the statement of claim is that the average duration of the journey is only about fourteen hours; and that "no deterioration is caused to the said eggs by reason of the said journey". The latter statement seems to me to be utterly irrelevant. The question is not whether the eggs are good eggs or bad eggs. It is whether it is lawful to require that they be tested before being sold - at the expense of anyone proposing to sell them - to ascertain whether they be good or bad eggs, and to grade them according to standards prescribed by the law of New South Wales. Moreover, the statement that the journey caused no deterioration to the said eggs is not only irrelevant: it is worthless. It means only that on arrival they were as good, or as bad, as they were when they started: that their condition was no worse. (at p613)

3. In short, my view of this case is that the carriage of eggs from Queensland to Sydney is inter-State commerce: but the selling of eggs in Sydney wherever they came from is merely a sale of goods in New South Wales, and regulated by the law of New South Wales concerning the sale of goods, the inspection of premises and of goods for sale, the opening and closing hours of shops, and other such matters, and in respect of eggs the grading of eggs. Except that potatoes are not eggs, I might be content to refer to two sentences in what I wrote in Boland v. Sneddon [1959] HCA 11; (1959) 102 CLR 280, at p 313 . But I had better cite authority. I therefore mention the judgment of the Court in Grannall v. C. Geo. Kellaway & Sons Pty. Ltd. [1955] HCA 5; (1955) 93 CLR 36, esp at pp 51-52 . However, it was said for the plaintiffs, conceding that in general sales of goods within a State are intra-State transactions, that nevertheless such transactions might have an "inseparable connexion with the importation of the article from another State". The phrase is that of Dixon C.J. in Wragg's Case (1953) 88 CLR 353, at p 385 . It was adopted by Kitto J. in Williams v. Metropolitan Export Abattoirs Board (S.A.) [1953] HCA 93; (1953) 89 CLR 66 , where his Honour refused to find any inseparable connexion between sales in the course of intra-State trade and the importation from another State of the goods sold. (at p614)

4. For the reasons I have given the regulation in question does not, as I see it, put any impediment in the way of the importation of eggs from Queensland or in any other manner operate to contravene s. 92 of the Constitution. The provisions that eggs must be inspected and graded after a lengthy journey, are it seems to me, directed to ensuring that eggs offered for sale are described by reference to prescribed standards. They cannot be said to be "directed against inter-State trade and commerce". I agree with the opinion Menzies J. expressed in his judgment in Harper v. Victoria [1966] HCA 26; (1966) 114 CLR 361, at p 378 , where he said: "I do not regard s. 92 as denying full validity to what may be described as standard-fixing legislation of a general character which has no special features which burden inter-State trade." The regulation here in question is of general application to the transportation for more than three hundred miles of any eggs anywhere in New South Wales. It is not as if Sydney was the only place in New South Wales where eggs are sold and the only places more than three hundred miles from Sydney where hens lay eggs were in some other State. To the extent to which obeying the regulation would affect any inter-State trade of any of the plaintiffs. its effect, as I see it, is only - using the words of the Privy Council in the Banks Case (1950) AC 235, at p310; (1949) 79 CLR 497, at p 639 - "creating some indirect or consequential impediment which may fairly be regarded as remote". (at p614)

5. However, if it be said that I am wrong in my outlook and that the regulation operates inseparably, and directly as distinct from remotely, upon inter-State trade of the plaintiffs, I would still say that it does so in a manner that is compatible with the freedom that s. 92 assures. This can be summed up by saying that "in its true character it is regulatory", to use the phrase that their Lordships used in the Bank Case (1950) AC, at p 313; (1949) 79 CLR, at p 642 . This word "regulatory", compendious, convenient and comfortable but imprecise, is now established in the vocabulary of law on this topic. The concept that it embodies is not to be supplanted by using the word "burden" as a sufficient antithesis. I have several times protested - and just once again I do so now - against a tendency in arguments that we hear to use particular words and phrases taken from judicial expositions in other cases as if they were the words that were expounded, to substitute the paraphrase for the text, and then to pile paraphrase upon paraphrase. In what I wrote in Damjanovic's Case (1968) 117 CLR 390 I referred to the error of this. The too facile use of the word "burden" is a good example. It seems to have entered this realmof discourse as a result of its use by Dixon J. in Gilpin's Case [1935] HCA 8; (1935) 52 CLR 189, at p 204 , where his Honour said that: -

"the nature and operation of the interference or of the
exertion of power complained of, must be considered in order
to determine whether it amounts to a restriction of or burden
upon the acts or transactions for which immunity is claimed
as part of inter-State trade, commerce and intercourse."

But a perusal of the whole judgment from which I have extracted that one sentence shews how mistaken it is to approach a s. 92 case by asking is there a burden upon trade and commerce: and assuming that, whatever sense is given to the word "burden", an affirmative answer to that question will make the challenged law invalid or inoperative in the particular case. I quote only one other sentence from his Honour's lengthy analysis of the concept: "Further, it is not every regulation of commerce or of movement that involves a restriction or burden constituting an impairment of freedom." In every case the question is: Does the law in question operate to deny the freedom that s. 92 expresses? The answer depends upon a compound of concepts which can scarcely be expressed in a single sentence, much less in a single word, unless the meaning that it is used to embody be already fully understood. It is far from enough to say that having to pay a fee for the inspection of eggs brought from Queensland for sale in Sydney is a burden. Words are used to express acts and ideas. Laws are concerned with acts and ideas that words express, not with words used out of context of circumstance. It is, I think, pertinent to say here that, as I understand it, the reason why in the transport cases State laws requiring commercial vehicles to have special licences to use the highways were held not to apply to vehicles engaged in inter-State trade was not that a fee had to be paid for a license and this was a burden: it was that a licence could not be had as of right: it could in law be arbitrarily refused. There was in that a restriction of the common law right to use the King's highway for the carriage of goods which is of the essence of trade and commerce. (at p616)

6. I would allow the demurrer. (at p616)

OWEN J. Regulation 32A of the regulations made under the Marketing of Primary Products Act (N.S.W.) is one of a body of regulations designed (inter alia) to lay down standards of quality to be complied with in New South Wales by those who sell or offer for sale eggs produced in New South Wales or elsewhere. The regulation in question prohibits any person from selling or offering or displaying for sale by wholesale or retail eggs which have been transported three hundred miles or more in New South Wales or have been in transit for twenty-four hours or more unless such eggs are candled and graded in accordance with the requirements of the regulation. The question is whether this provision can validly apply to eggs brought to Sydney by road transport from Queensland for sale in Sydney. The plaintiffs, each of whom claims to be engaged in inter-State trade in eggs, complain that the law is one which burdens their inter-State trade because of necessity eggs produced in Queensland and brought to Sydney for sale must, in the course of their interstate journey, be transported more than three hundred miles in New South Wales and it is the fact that they have been so transported that brings into effect the requirement that they be candled and graded. This is true but, as it seems to me, the regulation can fairly be regarded as regulatory in character designed to ensure that eggs intended to be marketed in New South Wales accord with the standards of quality and the like prescribed by the regulations. (at p616)

2. I would uphold the demurrer. (at p616)

WALSH J. In Harper v. Victoria [1966] HCA 26; (1966) 114 CLR 361 this Court allowed a demurrer to a statement of claim by which the plaintiff, who was a retailer in Victoria of eggs imported by him from New South Wales, sought declarations to the effect that certain provisions of a Victorian Act of Parliament did not apply validly to eggs in which he was trading. He claimed that the application of the provisions to his eggs would infringe the freedom guaranteed by s. 92 of the Constitution. The provisions which were challenged included provisions which are very similar to those of reg. 32A of the regulations made under the Marketing of Primary Products Act, 1927 (N.S.W.), as amended, to which the case now before the Court relates. In Harper's Case [1966] HCA 26; (1966) 114 CLR 361 a majority of the Court held that there was no infringement of s. 92. In the present case learned counsel for the plaintiff did not challenge the correctness of the decision in Harper's Case (1966) [1966] HCA 26; 114 CLR 361 . He said that he accepted it but contended that it was distinguishable. In those circumstances, I am of opinion that I should proceed in this case upon the assumption that the decision of the majority of the Court in Harper's Case [1966] HCA 26; (1966) 114 CLR 361 was correct. (at p617)

2. It was submitted as a ground for distinguishing Harper's Case [1966] HCA 26; (1966) 114 CLR 361 that the fees which were payable, under the Victorian law, for the grading, testing, marking and stamping of eggs were limited to the estimated cost of that service, but under reg. 32A, if the Board carries out the required candling and grading of eggs, the person for whom this is done must pay to the Board its charges for such services. It was said that this leaves it open to the Board to fix charges which include a profit component. In my opinion, there is no substance in these submissions. A dealer in eggs to which reg. 32A applies may cause the candling and grading to be carried out by persons other than the Board, providing that this is done in premises and under conditions approved by the Board and subject to the supervision of an officer of the Board. Alternatively, the dealer may request the Board to perform the services and then he must pay for them. It was said in argument that in practice there is no option but to have the services performed by the Board. But the amended statement of claim does not include any allegation that the Board is refusing to approve or to supervise the carrying out of these services by others. Nor is it alleged that the Board itself is making excessive charges for them or is otherwise acting in a way not in conformity with the requirements of the regulations themselves. We are concerned only with the impact which the Regulations have, when operating and when being administered properly in accordance with their terms, upon the carrying on by the plaintiffs of business in the manner described in the amended statement of claim. Any possibility that the Board may seek to enrich itself at the expense of the plaintiffs by making a profit from the rendering of services has no relevance to the case with which we are dealing. (at p618)

3. Leaving aside difficulties that appear to me to be considerable as to whether or not all of the plaintiffs have an interest to maintain an action for the declaratory relief sought, the real problem raised by the demurrer may now be stated. The prohibition imposed by reg. 32A operates upon the selling, offering or displaying for sale by wholesale or retail (in New South Wales) of eggs which have not been candled or graded in the manner set out in the regulation. But it does not apply to all eggs that are so sold, offered or displayed for sale. If it did so, it would be clear, in my opinion, that the regulation would apply validly to eggs which were the subject of intraState sales or of intended intra-State sales in New South Wales, whether the eggs had been brought from another State or not and whether or not the sale being made or proposed was the first sale after their importation. In the course of the activities alleged in this case in the amended statement of claim, there is not any transaction, prior to those to which the regulation relates, which is itself a transaction in the course of inter-State trade, consisting of a sale of eggs in one State for delivery in another State. But even if there were such a prior transaction, that would not matter. Again, if there had been an inter-State journey by which the eggs were transported from one State to another State, that would not matter. The law would be regarded as one which in its direct operation fell only upon intra-State trade and commerce and which did not impose any relevant burden or restriction, either upon any earlier transaction in the course of inter-State trade in the eggs, or upon any inter-State journey upon which they had in fact been carried. What I have just stated seems to me to be the effect of the decision in Harper's Case [1966] HCA 26; (1966) 114 CLR 361 . (at p618)

4. The critical question is whether the limitation of the application of the law to eggs which have been transported three hundred miles or more in New South Wales or have been in transit for twenty-four hours or more operates to make the law, in so far as it would if valid apply to eggs that have been brought from Queensland to New South Wales in the circumstances described in the amended statement of claim, obnoxious to s. 92. In my opinion, that question should be answered in the negative. The law thus limited remains, in my opinion, a law which operates upon the domestic trade and commerce of the State. In my opinion, it has not any direct effect obnoxious to s. 92 upon any act or activity in the course of interState trade commerce or intercourse, in which any of the plaintiffs is engaged. (at p619)

5. It should be observed that the third plaintiff, who produces eggs in Queensland, does not sell them whilst they are still in Queensland. He sells them through the agency of the first and the second plaintiffs and at the time of the sale they have been transported by or on behalf of the third plaintiff into New South Wales. Thus there is no inter-State sale of the eggs. The case concerns a man who brings his eggs into New South Wales and then sells them in that State. That sale of them by him is not an inter-State transaction, but is a sale of eggs which are in New South Wales to a purchaser in New South Wales who is buying them to sell them again in New South Wales. (at p619)

6. It is true that in the course of transporting the eggs to Sydney the third plaintiff or someone acting on his behalf makes an interState journey and this is, according to the amended statement of claim, an uninterrupted journey. In that journey the eggs are transported more than three hundred miles in New South Wales. In consequence of the fact that they have been transported for more than three hundred miles in New South Wales the eggs answer the description contained in reg. 32A (1) of the eggs to which the regulation applies. But, in my opinion, the circumstance that they have been carried on an inter-State journey is not the circumstance which is selected by the law as that which brings it into operation. In my opinion, the law which is challenged does not restrict or burden in any way obnoxious to s. 92 the making of the inter-State journey or the carrying of the eggs on that journey. The sale of the eggs in New South Wales is not prohibited by the regulation. But it is made subject to the condition that the eggs must have been candled and graded as therein provided. Such a sale takes place after the journey has been completed and it forms part of the domestic trade of the State. The case is not one, in my opinion, in which what brings the law into operation is the making of an inter-State journey or of part of such a journey or the carriage of the eggs upon an inter-State journey or on part of such a journey. What brings it into operation is not the interState character of a journey but the facts that there has been a transporting of eggs for more than a specified distance or for more than a specified period of time and that those eggs are then being sold or offered for sale in the course of the domestic trade of the State. The law is part of a set of regulations dealing with the standard and the qualities of eggs being sold in that domestic trade and what it does is to provide that when the facts that I have mentioned exist, the intending vendor of the eggs must take steps to have the eggs candled and graded and in some cases stamped with words describing their quality. In my opinion, such a law does not impose upon the activties of any of the plaintiffs, as those activities are described in the amended statement of claim, any burden or restriction from which the plaintiffs or any of them can claim protection by reason of s. 92. (at p620)

7. I would allow the demurrer. (at p620)

ORDER

Demurrer allowed with costs.