Week 2(a) Trade and Commerce

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1 Week 2(a) Trade and Commerce Section 51(i) Commonwealth Constitution: The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to: (i) Trade and commerce with other countries, and among the States Characterisation of the Trade and Commerce power There is an uneasy interaction between s 51(i) and s 92 of the Constitution Section 92 Commonwealth Constitution provides that on the imposition of uniform duties of customs, trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free. - s92 will override s51(i) since s51 is subject to other provisions of the Constitution i.e. the operation of s51(i) is not unrestricted - s92 is an example of one of the prohibitions in the Constitution - Other examples which constraint the operation of s51(i) o Section 98: power of the Parliament to make laws with respect to trade and commerce extends to navigation and shipping, and to railways o Section 99: the Commonwealth cannot, by the regulation of trade or commerce or revenue, give preference to one State o Section 100: Commonwealth cannot, by regulation of trade or commerce, abridge the rights of a State or residents of a State to the reasonable use of waters of rivers for conservation or irrigation Cole v Whitfield (1988) 165 CLR 360 (not a listed case) - Section 92 was interpreted by the High Court as prohibiting laws that were discriminatory (against interstate trade) in a protectionist sense - This narrow interpretation of s92 opened the scope of s51(i) W&A McArthur Pty Ltd v Queensland (1920) 28 CLR 530 (CB 138) - This case looked at how the term trade and commerce should be characterised - More particularly, whether it should be limited to the transport of goods interstate for the operation of s51(i) - Wide definition and would seem to describe all matters relating to and with respect of trade and commerce rather than trade and commerce itself. Knox CJ, Isaacs and Starke JJ 10

2 - Trade and commerce between different countries has never been confined to the mere act of transportation of merchandise over the frontier - All the commercial arrangements of which transportation is the direct and necessary result from part of trade and commerce - It is therefore impossible to limit the trade and commerce either among the States or with other countries to the mere act of transportation over the territorial frontier. This meant the term trade and commerce should be understood not in legal terms but as a term of common knowledge i.e. in a way that traders and commercial people understand the term. - Meaning of the expression must be the same in s 51 and s 92. Bank Nationalisation Case (not a listed case) - Dixon J (whose view was endorsed by the Privy Council on appeal in Commonwealth v Bank of New South Wales [1950] AC 235) o The trade and commerce power covers the field of activities central to the conception of the term o o It covers intangibles as well as the movement of goods and persons to confine the subject matter to physical things and persons would be quite out of keeping with all modern developments - Latham CJ (with whom McTiernan J agreed) held that although banking was an instrument used by trade and commerce, it was not in itself part of trade and commerce the other Justices disagreed. Commerce may have a broader conception that not only includes trade but communication between people. This may suggest that transportation itself (a process of trade or commerce) may be regulated under this head of power. Australian National Airways Pty Ltd v Commonwealth (1945) 71 CLR 29 (CB 139) (The Airlines case) Facts - The Australian National Airline Act 1945 (Cth) established the ANA Commission to operate a government-owned airline. Section 19(1) empowered the Commission to transport for reward passengers and goods by air o Between any State and any other State o Between any Territory and in any place in Australia outside that Territory o Between any place in an Territory and in any other place in that Territory - The airline was effective granted a monopoly over these service under Part IV of the Act - Issue: did the Act fall within the scope of s 51(i)? Dixon J - Summarised the argument (in absence of s 92) against the Airlines Act being within the commerce power: the argument places upon the words of the constitutional power an interpretation according to which it would fall short of authorising the Parliament to establish a government monopoly or government undertaking in trade or commerce. - If inter-state transportation is relegated to the position of an operation that is merely incidental to the commercial interchange of goods among the States and is not of itself commerce, then it follows that the Airlines Act is wider that the power. o Why? The Act provides an air service, and an exclusive air service, for passengers independently of the commercial or non-commercial character of their journey. 11

3 - Instead Dixon J adopts a wider approach to trade and commerce and accordingly finds that the Airlines Act is within the trade and commerce power (apart from the effect of s 92 which must be separately considered). I shall act upon the opinion that, if not all inter-state transportation, at all events all carriage for reward of goods or persons between states is within the legislative power, whatever may be the reason or purpose for which the goods or person are in transit - Severability (i.e. can Part IV of the Act be severed granting the monopoly) o The question arises whether the consequence is to bring the whole Act down or, on the contrary, the void provisions are to be severed from those which otherwise might be validly enacted o Unless an intention affirmatively appears to the contrary, the provisions of a statute are to be taken as independent of one another and not interdependent an assumption in favour of severability of a void clause. This is unless there is some positive indication of interdependence that appears from an analysis of the context, text, content and subject matter of the provisions. o The arrangement and text of the enactment appear to me to support rather than weaken, the presumption that the main provisions are, so to speak, to stand upon their own feet in a question of ultra vires Dixon J notes that if the provisions dealing with the powers, function and duties of the Commission were void, then the whole Act would fall. Here, the only a specific subject matter on the limitation with respect to the Airline Service was void there is no basis to the assumption that Parliament then intended to the whole Act to fall if the airline wasn t a monopoly A power to regulate is also by implication a power to prohibit others from engaging in trade and commerce. Hence this suggests s 51(1) being a power to regulate is also a monopoly provision. But s 92 states that trade and commerce between states should be absolutely free then the Cth cannot prohibit private operators from engaging in it. Section 92 supersedes s 51 as s 51 is subject to this Constitution. The explicit nature of the provision meant that reading down the provision would not be permitted but severing would be permissible as it was isolated and the provision was purposefully drafted to be severable. Conclusion - Interpret the words of an Act widely activities of trade and commerce should be considered in a broad context as should s 51(i) - Severability depends on the intention of the Parliament (look at how the Act is worded and structured) Distinction between purposive i.e. purpose of the law was to improve economic conditions and non-purposive power which is concerned with subject matter. The commerce power is defined by reference to subject matter not purpose. Hence the power can be exercised for whatever purpose or with whatever motives Parliament thinks fit whether or not they be commercial. Murphyores Inc Pty Ltd v Commonwealth (1976) 136 CLR 1 (CB 144) 12

4 Facts - Murphyores held mining leases granted by the State of Queensland with the mining companies wanting to extract sand from Fraser Island. However under s 112 Customs Act 1901 (Cth) they could only export the minerals if they received written approval from the Cth Minister. Such authorisation was withheld pending the outcome of an environmental inquiry. - Plaintiffs challenged the validity of the provision on the basis that the regulation was not made with the purpose of regulating trade and commerce, but rather the environment. - Issue: is the purpose of the legislation/regulation important is deciding whether s51(i) is a viable head of power? Mason J - By imposing a conditional prohibition on exportation, a prohibition which may be relaxed according to the exercise of discretion, the law is dealing with exportation of goods, a matter at the heart of trade and commerce. - It is not to the point that the selection may be made by reference to criteria having little or no apparent relevance to trade and commerce, it is enough that the law deals with the permitted topic. - It is now far too late in the day to say that a law should be characterised by reference to the motives which inspire it or the consequences which flow from it. Conclusion - s51(i) is not a purposive power. - As long as there is a sufficient connection to trade and commerce, the provision is able to fall under this legislative head of power. Hence the Government was free to select and identify persons who could engage in that activity. - The Government was clearly trying to implement an environmental policy through its trade and commerce at the point of export. As the provision was operating at the point of export then the purpose does not matter (non-purposive). Note importance of this distinction if power is non-purposive then it allows the Cth Government to be clever and do things under its power for purposes outside the ambit of its power i.e. carbon tax is not for revenue but for environmental purposes. Trade and Commerce and the incidental power Questions: - Is there any way that by using the trade and commerce power some control can be given to intrastate trade? - To what extent can you use incidental power to control aspects antecedent to trade and commerce? How far back can you go? Since 1987 the US Supreme Court has adopted a liberal approach and said if the subject matter that is being regulated is not itself interstate commerce i.e. intrastate trade and production it can nevertheless be regulated in circumstances where it substantially affects such commerce. - Regulation of milk: set prices on milk for interstate sales and intrastate sales. In respect to the latter, it was argued that in order to make effective the power to control interstate sales, you would need to control intrastate sales. 13

5 Incidental power A general principle of common law where any power is expressly granted, there is included in the grant (without special mention) every power and every control the denial of which would render the grant itself ineffective D Emben v Pedder (1904) 1 CLR 91 at Essentially if you can bring a power under the incidental power then it is equivalent with any heads of power. High Court has rules that insofar as legislative power is concerned, to bring a law within its scope, it is enough that the provision is appropriate to effectuate the exercise of the power, one is not confined to what is necessary for the effective exercise of the power Nationwide News Pty Ltd v Will (1991)177 CLR 1 at 27 - Regarding s51(i) to what extent does s51(i) enable the Cth to regulate o Intrastate trade and commerce o Ancillary matters (whether prior to or subsequent to interstate or foreign trade) Grannall v Marrickville Margarine (1955) 93 CLR 55 at 77 - Every legislative power carries with it power with respect to acts, matters or things the control of which is necessary to effectuate its main purpose. - Mason J: it is enough that the incidental power is appropriate to effect the exercise of the power, one is not confined to what is necessary. - It appears to be the case now that you can use an incidental power if it is simply conducive to the main head of power or an appropriate means to achieve the heads of power. Authority is necessity but cogent dicta suggest moving towards appropriate test. R v Burgess; Ex parte Henry (1936) 55 CLR 608 (CB 147) Facts - Unlicensed pilot was prosecuted for flying (within NSW) under regulation 6 of the Air Navigation Regulation 1921 (Cth) which held that an unlicensed pilot is prohibited from flying an aircraft within the limits of the Cth. - He challenged the constitutional validity of the regulation the Cth had no head of power with respects to aviation and control of air navigation within NSW. He challenged that the phrase within the limits of the Cth were too broad and they cover both inter and intra-state travel. - Cth argued that the legislative power fell under the trade and commerce with other countries and between States. Regulating intra-state aviation was therefore an incidental power. - Issue: Could the Cth legislate for intra-state aviation by way of an incidental power to s51(i)? o Cth would need to show that the inter and intra state flights were so intermingled that you couldn t regulate the interstate flights properly unless you regulate the intrastate flights as well. The HCA held that the Constitution draws a distinction between intra and interstate flights, which despite being arbitrary needs to be maintained. o It was not obvious to the judges in 1936 that commercial air travel would become more widespread. Latham CJ - Latham CJ discusses the difficulties of any double control of aviation and this might be used to support the contention that it is wise/expedient that there should be a single control for air navigation in Australia 14

6 o Nevertheless considerations of wisdom or expediency cannot, however, control the natural construction of statutory language. The Constitution gives to the Commonwealth Parliament power over inter-state and foreign trade and commerce and does not give to it power over intra-states trade and commerce. - The court has uniformly recognised that the distinction drawn by the Constitution must be fully recognised, and that the power to deal with the former subject (foreign and interstate trade and commerce) does not involve an incidental power to deal with the latter subject (intrastate trade and commerce). - Latham CJ then considers whether incidental powers could be used on the basis of necessity despite the clear distinction drawn by the Constitution o This would require evidence to be established that the intermingling of foreign and inter-state trade and commerce with intra-state trade and commerce was such that it was impossible for the Commonwealth Parliament to regulation the former without also directly regulating the latter o No evidence presented in this case Latham CJ did not deal with this question. There is a concession made by Latham CJ that if you could come to court with evidence and establish that it was impossible to regulate the interstate air navigation without regulating intrastate air regulation then he may consider the case differently. Evatt and McTiernan JJ - Rejection of the comingling theory does not mean in all cases the law will not recognise that intrastate aviation will be seen to occupy such a proximate relationship to interstate aviation that it would need to be within the ambit of the particular Cth legislation for otherwise the Cth legislation will be entirely frustrated and nullified. Dixon J - The express limitation of the subject matter of the power to commerce with other countries and among the States compels a distinction however artificial it may appear and whatever interdependence may be discovered between the branches into which the Constitution divides trade and commerce Conclusion - The HCA held that the phrase would be too broad to get into a Cth head of power. - The express limitations of the granted powers must be maintained when determining what is incidental to the power i.e. maintain distinctions clearly set out by the Constitution. - The reason the term cannot be read down is because it is an undistributed expression meaning an expression that contains both constitutional and non-constitutional subject matter and it does so unambiguously. HCA will strike down phrases that comprise of both constitutional and unconstitutional statements. o Hence if the statement said something about involving the states then it may be read down. What if there is the statement within the limits of the Cth and the next phrase qualifies this by saying within the limits of the Cth, refers to air navigation involving a)interstate trade b)overseas trade and commerce and c) intrastate trade and commerce. In these circumstances the HCA would sever c) as there is an intention by Parliament to make the phrase severable unless evidence shows it would impossible to regulate interstate travel without regulating intrastate travel. 15