LWB Murray McCarthy

Week 4
FREEDOM OF INTERSTATE TRADE AND COMMERCE
s.92 - 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.

Purpose of s.92:
The purpose of s.92 is to create a free trade area and to deny the Cwth and States the power to prevent or
obstruct the free movement of people, goods and communications across state boundaries.
Trigger:
S.92 is used anytime parliament tries to REGULATE interstate trade and makes it HADER or more
DIFFICULT.

ELEMENT 1: Would the incident be in trade or commerce?

In James v Cwth, the PC stated that trade and commerce means the same thing in s.92 as in s.51(i) REFER
S.51(i) is subject to the limitations imposed upon the Federal Parl by s.92.

ELEMENT 2: Does the Legislation impose a discriminatory

burden?

s.92 is intended to catch only those laws which subject interstate trade to a DISCRIMINATORY
BURDEN of a PROTECTIONIST NATURE:

The Legislation must be discriminatory on the FACE of the law and

The Court will look at the practical EFFECT.
The text of the law and the actual effect will hence BOTH be relevant

Cole v. Whitfield
- Tasmanian crayfish regulations (drafted with no regard to the origin of the crayfish - perfectly non-
discriminatory) set a minimum size for the sale of crayfish smaller size than SA regulations required.
- So imports of crayfish which were legal in SA were illegal in Tasmania.
- An Importer argued that this was interference with freedom of interstate trade as similar
restrictions did not apply in South Australia.
- In defence of the regulations it was argued that the protection of the Tasmanian crayfish, a scarce natural
resource was warranted.
HELD: (unanimously)
- Whether a law is discriminatory/protectionist can be judged on the face of the law OR by its
practical effect.
- The court noted that that the regulation applied alike to crayfish caught in Tasmania and those that are
imported hence there was NO discriminatory protectionist purpose..on the face.
- Neither was there such a purpose in effect. The regulations did not have the effect of providing intrastate
traders with a competitive advantage over interstate traders.
- Even if there was some small discriminatory effect, it was probably a reasonable regulation.
- There is nothing on the face of s.92 to say that it only applies to the States. In theory, s.92 can apply to Cth
and State laws, but in practice, it is more likely that it is a State law that is going to run foul of s.92.

Take a law that restricts margarine sales to protect the dairy industry - Lane calls that discrimination
without protection - actually its protecting something, but its not protecting against interstate
competition. The latter is what s.92 is all about.

Vacuum Oil v. Qld

- Qld was insisting that anyone who sells petrol must also buy some pure alcohol as well.
- This was held to be a breach of s.92.
- The old tests were applied.

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- The Cole v. Whitfield test was in fact breached and the outcome would stay the same.
- Dixon and Evatt JJ. suggested that s.92 could be breached by placing a burden on the outside State trader,
as well as by selecting a benefit that has been bestowed on an intrastate trader.

Compulsory Acquisition Schemes

The Constitutional validity of a State scheme for the compulsory acquisition and marketing of
barley was considered in:
Barley Marketing Board v. Norman
- All barley grown in NSW was vested in the Board.
- Any contracts for sale by growers was void (invalid under old cases if affected some interstate contracts).
HELD:
- A compulsory acquisition provision applying to all Barley in the State, but not to imported Barley, did not
breach s.92.
- The Ct reminded us that if there was a restriction on export that advantaged NSW producers (or
purchasers?), that would be invalid.

ELEMENT 3: Can the Govt. mount a defence?

The Reasonable Regulation exception

Indications in Cole v. Whitfield is that reasonable regulations are excepted.

Held that although the regulation imposed a small burden, it was in pursuit of environmental
protection and was reasonable and incidental.
Confirmed in Castlemaine Tooheys but qualified by a requirement that any burden imposed on
interstate trade was incidental and not disproportionate to the object to be achieved.

Castlemaine Tooheys v. SA
- A SA Act made deposits/refunds on bottles compulsory and imposed a higher deposit on non-refillable
bottles than on refillable bottles. It was also compulsory for retailers to accept non-refillable bottles.
- Castlemaine argued that this scheme was discriminatory and protectionist, on the basis that the different
return rates for the different types of beer bottles discriminated against interstate producers who bottled
their beer in non-refillable bottles and that the requirement that suppliers make their own arrangements to
collect their bottles imposed a significant burden on interstate traders in a price-sensitive commodity.
- Evidence was led by the Plaintiff that the object and effect of the legislation was to disadvantage trade in
beer in non-refillable bottles.
- Castlemaine Tooheys and Bond (CT&B) who had their breweries in other States were the ones that used
non-refillable and SA Brewery (SAB) used refillable bottles.
- SAB had lobbied for stronger Act. Was the new Act passed to help the environment or to help the
local manufacturer, or was it a mixture of both?
- SA Govt argued that the objectives of the legislation was the control of the litter and the preservation of
natural gas resources. The legn applied to both local and interstate producers
HELD:
- Legislation was discriminatory because of the different rates of refund and the collection requirements
imposed on interstate traders who used non-refillable bottles.
- The practical effect was to prevent the plaintiffs incursion into the SA beer market.
- The legislation was also protectionist because it gave SA brewers a competitive advantage by raising the
price and production costs of the plaintiff.
- However legislation which discriminates against interstate traders may be valid if the burdens imposed on
interstate trade are a necessary means for achieving the conservation of the natural resources or other
public object which the legislation seek to protect or promote.
- Where there is such a rational ground for action by the Legislature, the Ct said that laws which are
appropriate and adapted to the resolution of the problem, will be valid under s.92, as long as a
burden on interstate trade is
1) incidental; and
2) not disproportionate to the achievement of the laws objects.

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- SA admitted that a lower difference in levels of deposit would achieve equal returns of fillable and
non-refillable bottles, therefore it was NOT a proportional law to the purpose that they were using to
justify it.
- They held that there was no justification for the compulsion in terms of litter control. The system was not
preserving the SA natural gas because the wasteful bottles were manufactured outside the State.
- Therefore, although the sections of the Act relating to non-refillable bottles were directed to a good
purpose, they were disproportionate and thus invalid.
- Is this reasoning plausible? Isnt a State govt entitled to show concern for the planets resources, not just
the States resources? It may be irresponsible of the Ct to say that they should only be concerned with SAs
resources and not everyones resources.
- Was the decision influenced by the fact that SAB had lobbied for the law? It seems that they were.
Is that reasonable? Probably. Often a law to solve pressing social problems will have been passed
because someone who stood to gain protectionist advantage from the reform lobbied for it.

Approach:
Apply phrases like appropriate and adapted and reasonably proportionate and look for evidence for
what was a reasonable response and strike it down if the State has gone too far.

Equalising laws - level playing field defence

What if you impose a discriminatory burden, but the State says it is not intended to protect its traders - it is
intended to level the playing field, to equalise the market, to compensate for some of the advantages that
outside traders have.
E.g. consider pineapples - Qld growers have a natural advantage over Victorian growers. Clearly if
Victoria put a burden on imported pineapples to let local (hothouse) growers sell on equal terms that would
be protectionist. A State cannot equalise against a natural geographic advantage.

But what if sellers in other States have an advantage because of different State laws?
Bath v. Alston Holdings
- In 1988 every State, except Qld, had a tobacco franchise fee (now all abolished- Cth imposes them instead)
- The Victoria Business Franchise (Tobacco) Act imposed a license fee of 25% on the wholesalers (via
backdating device - to get your new license you pay a fee which relates to the amount of sales in some
previous period - s.90).
- All other States imposed the 25% as well, except Qld. Victoria imposed 25% fee on retailers for cigs that
were imported from outside Victoria.
HELD:
- Majority held that attempts to equalise were still protectionist and therefore this breached s.92.
- The minority emphasised the practical operation and held that the effect of the retailer fee was that all
tobacco is subject to the fee at one point or another. But did they overlook something?

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INCONSISTENCY BETWEEN CTH AND STATE LAWS

109. When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the
former shall, to the extent of the inconsistency, be invalid.

ELEMENT 1: Definition of Laws

The terms law of the state and law of the Cth applies to Acts, and to regulations: Noarlunga
Meat
It applies indirectly to Cth awards.
If a Cth Industrial Award is in conflict with a State Act or a ministerial direction under a State Act etc., that
award still overrides an inconsistent State law b/c there is a section in the Cth Act (Workplace Relations
Act) which says that the Awards are to be given the force of law.
The reference to laws in s.109 does NOT extend to administrative decisions of Govt officials:
Airlines of NSW v NSW
Includes laws made under the Territories power: Lambshed v Lake

ELEMENT 2: Are the Laws Valid?

1. Is the Cwth Law supported by a head of power
2. Is the State Law valid?
Where a State Law relates to an exclusive Commonwealth power (eg s.90), it is invalid, so there is no
need to rely on s.109.
3. Do the laws go against any of the prohibitions?

ELEMENT 3: Are the Laws Inconsistent?

There are three main types of inconsistency:
1. Mutually contradictory commands (impossible to obey both laws)
2. One law confers a right or privilege, the other takes it away or modifies it
3. Cth law covers the field

MUTUAL CONTRADICTORY COMMANDS (A DIRECT INCONSISTENCY);

a) One law permits or commands, the other forbids

R v. Licensing Court of Brisbane, ex parte Daniel
- The Qld Act said that there could be local option referenda about whether pubs were to open in a
certain district, and these were to be held on a day to be proclaimed.
- On the other hand, the Cth Elections and Referendums Act said that no State govt election or
referendum should be held on the same day as a Cth election or referendum.
- Despite that, the Qld govt called a local option poll on the same day as a Cth election
- Daniel, a pub owner went to the HC to seek a declaration that the law was invalid.
HELD:
- The two laws were inconsistent because State officials could only obey the State law by disobeying the Cth
law.

Colvin v. Bradley Bros

- This case was to do with women working in a factory during WW2.

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- There was a State order that women were not allowed to work in a certain classification of work, and there
was also some subsidiary legislation under the Cth Act saying that women were allowed to do this
particular work - a direct conflict.
HELD:
- The State law had to give way.

b) Where both laws forbid the activity, but they have different penalties, classes of
crime etc.
Hume v. Palmer
- A case about the negligent navigation of ships so as to cause collisions.
- This was an offence a/g both State and Cth regulations but with different penalties and in this case, with a
different hierarchy of types of crime.
Held
- State law invalid

R v. Loewenthal, ex parte Blacklock

- About damage to the doors of a Cth building
- A breach of the appropriate States Crimes Act, but also a breach of the Cth Crimes Act.
- Ct held that this was inconsistent and the State had to give way.

c) Where the Cth law specifically invalidates certain types of State law:
Mabo v. Qld (No.1)
- Queensland legislation forbidding native title claims
- Commonwealth had passed an anti-discrimination Act
- not a conflict of two laws in their operation
- instead, a Commonwealth law was operating on the actual State law. (actual passage of the law was a
breach)

Recent Case: Telstra v Worthing

- Workers compensation claim by W
- Commonwealth legislation limited the claim, State did not.
- Suing in respect of three injuries,
- At the time of first two injuries the State law did not purport to bind the Cth, and the Cth merely said that
Telstra was not liable, where the Cth itself was not liable.
- Therefore, W had no claim under State Act.

ONE CONFERS A RIGHT, OTHER TAKES AWAY OR MODIFIES THE RIGHT

Clyde Engineering v. Cowburn

- A Cth award prescribing a 48 hour week with a certain pay rate.
- A State order prescribing a 44 hour week.
- The Union argued that the two laws were not invalid because it would be possible for the employer to obey
both. The Cth law was not saying that every worker had to work for 48 hours, but simply saying that the
worker had to be paid a certain amount of money as if they do work 48 hours. The Union said that both
laws could be obeyed by only keeping the worker at work for 44 hours but paying the higher of the two
rates.
HELD:
- This is not the proper way of looking at it.
- What the Cth award is giving is both a right to the employer (that the employee will be there for 48 hours a
week) and to the employee (a right to a certain rate of pay).
- If the State law then says that the employer does not have the right to insist on 48 hours of work, it is
modifying the right that the Cth law is trying to set down.
- State law had to give way.

Blakley v. Devondale Cream

- Similar facts to above.
- Ct held that State law had to give way to the Cth law in this kind of inconsistency.
- Once the Cth has conferred this right, the State cannot take it away, or modify it.

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But, contrast:
You must look at what rights are being conferred. The Cts become quite legalistic in their approach.
Commercial Radio Coffs Harbour v. Fuller
- This case involves licensing requirements to build and operate a radio station.
- The Cth law said you couldnt run a radio transmitter w/o a Cth licence.
- They obtained the licence and then thought that this impliedly meant that they could build the transmitter
and start transmitting, but the Coffs Harbour Council said that they still had to obtain Town Planning
permission.
- The Radio Station tried to argue that the radio licence gave them an implied right to build and to transmit
and this was therefore inconsistent with State Town Planning laws.
HELD:
- The Ct said, no, that they were dealing with two different areas.
- It may be inconvenient and that each of them can block the decisions of the other, but where the Cth is just
giving a bare permission (e.g. cannot transmit w/o a licence), the licence doesnt turn this permission into
a right to go out and disobey State laws.

COMMONWEALTH COVERING THE FIELD

Clyde Engineering v. Cowburn

- Isaacs J. said there can be inconsistency quite apart from a direct textual collision where the Cth expressly
or impliedly evinces its intention to cover the whole field, and another legislature assumes to enter to
any extent upon the same field.

TEST used to determine inconsistency (Isaacs J.):

1. Identify the subject matter or field of the Cth law that the Parl intended to regulate;
2. Ascertain if the Cth law intended to cover the field or regulate that subject completely and exhaustively, i.e.
was the law intended as the law on the subject matter and not just a law?
3. Does the State law attempt to enter the field, to regulate some part of the subject matter?

Sub-Element: Ascertaining the Parliamentary intention

Express Intention
The most straightforward type to cover the field situation occurs where a Federal law evinces the
express intention of the Cwth to cover the field.
e.g. this act shall apply to the exclusion of any other State Act: Wenn v. A-G (Vic)

The Cth may also declare an express intention NOT intend to cover the field: West v. Commissioner of
Taxation:

General Motors Accident Corporation v. SA

- Certain sections of the TPA, where the Cth in putting sections which are parallel with the Sale of Goods
Act, made it quite clear that it is not intended to exclude the SGA, that a consumer can choose b/w the Cth
and State Act.
- The HC gave that declaration of intention effect.

The Cth cant make its declaration of intention retrospective

Metwally v. U of Wgong
- About the Cth and State Anti-discrimination Acts.
- An earlier case had held that the Cth Act was so comprehensive that there was no room for the parallel
operation of a State Act.
- The Cth Executive and Parliament made an amendment to the Discrimination Act declaring that it was not
intended and never had been intended to operate to exclude parallel State Acts.
- The HC said that that doesnt work, s.109 has an automatic operation. They held that although the Cth Act
did not continue to invalidate the State Acts, it couldnt retrospectively rescue the State Act as of before the
date of the amendments.

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Implied Intention
Where there is no express declaration, the Ct will consider factors such as:

1. Whether the subject-matter is such that one would assume the Parliament intended to provide a
uniform code.
Crimes on Cth places: R v. Loewenthal; Ex parte Blacklock - the very fact that the Cth has passed an Act
which makes it an offence to damage Cth property, seemed in the minds of the judges (subjective) to
suggest that the Cth really meant this to be an exhaustive code about damaging Cth property and to leave
no room for State Acts to run in parallel.
Listening devices: Miller v. Miller - the fact that the Cth had passed an Act about the use of listening
devices connected to the Cth telephone system seemed to the HC to make it clear that there is no room for
State laws about listening devices to operate in parallel with the Cth law.
Racial discrimination: Viskauskas v. Niland - argued that there was no room for the State anti-
discrimination law in so far as it relates to racial discrimination, to stand side by side with the Cth Racial
Discrimination Act. The HC agreed - if the Cth is implementing an international Treaty, it seems unlikely
that it would intend that this Treaty would only be implemented in a partial way and be able to be varied
from State to State by contrary State laws.
(After this case, the Cth inserted a provision that said that it is not the Cth Parls intention to exclude State
laws and it never was its intention and although the retrospective operation was struck down, it is clear
from Metwallys Case that the prospect of this operation stands so that now if publicans refuse to serve
somebody in a pub on the grounds of race (as in Viskauskas), it is now possible to go to the Cth or the State
tribunal.

2. Ascertain Parliaments intention by inference from the details of the Act

Wenn v. A-G (Vic)
- two laws about giving preference to ex-servicemen, which happened to differ in one detail (the Cth law
only applied to employment, i.e. dismissal or re-employment, but didnt refer to promotion, whereas the
State law referred to promotions as well as the original employment.
- Despite the fact that the Cth had left that one detail out, the Ct still looked at the Cth Act, and said that
this had gone in to so much detail in everything else that it seems that it did intend to cover the field
and therefore, there is no room for the State Act to work side by side with it.

OSullivan v. Noarlunga Meats

- Cth law regulating export abattoirs was held to be valid under the trade and commerce power.
- OS was a State official that was trying to prosecute NM for operating w/o a State licence, but having
established that the Cth law was valid, the Ct went on to hold that the law was such a comprehensive
code of conduct for export abattoirs that it must be intended to cover the field and therefore if
somebody set up an export-only abattoir, they did not need to get a State licence and could not be
prosecuted for not having one.

Sub-Element: Identifying the Field the Parliament is trying to

regulate

If the Federal law evinces an express or implied intention to cover the field, it is then necessary to
define the field of operation of the supposed conflicting laws.

Another way the State law can operate - whether or not the Cth is intending to cover the field, is if
the State law is not really in the same field, theyre laws about different things.

Forsyth v. Commissioner of Stamp Duties

- Cth Life Insurance Act protected policy proceeds which were still subject to State Death Duty.
- Death and insurance were held to be different fields

Commercial Radio (Coffs) v. Fuller

- (facts above)
- The Cth law was giving a mere permission saying that you could not transmit w/o a licence, doesnt imply
from that when you do have a licence, you may take any necessary steps to transmit.

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- The Ct said the State and local govt were regulating the building and the tower, and the Cth were
regulating the transmission.
- Must comply with both laws because they are different.

NSW v. Cth (Hospital Benefits)

- NSW and Vic had imposed a levy on health funds to pay for better hospital care.
- The health funds, with the assistance of the Cth, said that they were totally set up and regulated under Cth
laws, however, the Cth laws are under s.51(xxiiiA) (payment of health benefits).
- On looking at the Act and its constitutional background, the Ct held that there was nothing in the National
Health Act which is all about the registration of Health Funds etc. that stopped the State imposing a 3%
levy on their receipt of membership money.

Airlines of NSW v. NSW (Both Nos 1 & 2)

- Airlines of NSW had a licence from the Cth to fly certain routes w/i NSW
- Eastwest had a licence from the States to fly those same routes.
- Each Act said that it was a contradiction to fly the route w/o the appropriate licence.
- The Cth Act regulating purely intrastate flights was valid b/c its a safety matter.
- Having decided that the Cth law was valid, did that mean that it overrode the State law?
- no b/c the Ct said that these two laws were for completely different purposes. The State was trying to
regulate which airlines could fly on what flights for economic purposes (it was giving licences to those it
thought could best promote travel to the country towns). The Cth was regulating for safety purposes.
Therefore there was nothing inconsistent b/w them.

All these cases are subjective.

It is unlikely that there will be a clear answer in this area.
Must formulate the arguments - say it can be an inconsistency in one of these direct ways or b/c the Cth
intends to cover the field.
To determine if the Cth has intended to cover the field, look for an express declaration or at the nature of
the law, or look at the amount of detail.
On the other hand, you could look for different characteristics of the fields. Work out what arguments you
could present from the left end of the table and those from the right end of the table and then conclude that
it would be up to the Ct to make the final decision.

ELEMENT 4: Consequences of Inconsistency

Invalid to the extent of the inconsistency
This does not mean that the whole State Act is totally invalid, but a built in requirement that the
State law is only partially invalid.
Extent includes temporal extent as well the State law will only become inoperative and revives if the
Cth law is repealed or becomes invalid i.e. invalid only to the extent of the inconsistency: Butler v. A-
G

Lamb v. Cockatoo Docks

- Inconsistency b/w a Cth award and a State award to the extent that most of the State award was swept
away by the Cth award covering the field.
- The State award had provided for l-s leave, there was nothing about l-s leave in the Cth award.
- The judges held that the State law was only inconsistent to the extent that it covered the topics which the
Cth had covered and the l-s leave provision survived.

If severance of part of the State law, leaves a law that makes no sense, then the whole law is invalid:
Wenn v. A-G (Vic)
- Found that if they severed out the parts of the State Act that were inconsistent with the Cth Act, it would
leave a scattered amount of provisions and they couldnt believe that the Vic Parl intended to enact it in that
way, therefore, the whole Act was invalid.

ELEMENT 5: What if the Law does NOT cover the field?

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The Ct may decide that the law does not cover the field and decide that there is room for two concurrent
laws.
The long-service leave cases
Before long-service leave was provided for in Cth awards, some States had started bringing in l-s leave
either by direct legislation or by amending their industrial legislation so that their industrial tribunal had
the jurisdiction to grant l-s leave.
Collins v. Charles Marshall Ltd
- The Cth law said that the Cth tribunal could not include l-s leave in Cth awards.

Robinson & Sons v. Haler

- The HC has got to work out by inference from the absence of a clause, did the Conciliation
Commission when it put no clause in about l-s leave, mean that there should be no such thing or was it
simply not on their mind and was there room for the State to add it later.
- They decided the latter was the case and the State could add it later.

ATI (Ops) v. Wardley

- Conflict between Victorial Equal Opportunities Act which prohibited descrimination in hiring decisions on
the grounds of sex, marital status and a Federal pilots award which required that certain procedures be
complied with before a pilot could be dismissed..
- The Federal provision made no reference to discriminatory conduct in the course of hiring decisions,
simply saying the employer may employ its pilots.
- Therefore the Federal award re terms of dismissal paid no regard to sexual discrimination
- The Ct found that there was room for parallel legislation.

McWaters v. Day
- a service person was driving a car, intoxicated, through the Enoggera barracks. He was pulled over and
charged by the State police.
- The HC had to make a subjective decision and held that the Defence Force Discipline Act was not
intending to rule out the parallel operation of the Traffic Act.

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