14 December 1945
Latham C.J.
Demurrers to statements of claim in three actions instituted by air transport companies against the Commonwealth of Australia, the Treasurer of the Commonwealth, the Minister of State for Air and the Director-General of Civil Aviation of the Commonwealth. Australian National Airways Pty. Ltd. is a company which is engaged in the business of providing air services between stopping places in two or more States, and it also conducts entirely intra-State services. Guinea Airways Ltd. conducts a service between a State of the Commonwealth and a Territory of the Commonwealth, another service with stopping places in two or more States, and also intra-State services. This company also proposes to re-establish air services wholly within the Territories of Papua and New Guinea, which were suspended during the war with Japan. MacRobertson-Miller Aviation Co. Ltd. conducts a service between Perth in the State of Western Australia and Katherine in the Northern Territory, with intermediate stopping places both in the State of Western Australia and in the Northern Territory.
The plaintiffs conduct their various services under licences issued under the Air Navigation Regulations (Statutory Rules 1937 No. 81, as amended), reg. 79, which assumed its present form in 1940. Regulation 79, sub-reg. (1), provides that no aircraft shall be used in a regular public transport service except under the authority of and in accordance with a licence issued by the Director-General, and sub-reg. (3) provides that the Director-General may issue a licence upon such conditions, in addition to compliance with the Regulations (which relate to airworthiness of craft, training and licensing of pilots, safety rules for flying &c.), as the Director-General considers necessary, or he may refuse to issue a licence. All the plaintiff companies hold licences which expire on 31st December 1945.
Regulation 6 provides that the provisions of the Regulations, other than those contained in the First Schedule (which are made in pursuance of an International Air Convention—cf. R. v. Burgess; Ex parte Henry[1]) shall apply to—
(a)
international air navigation within Australian territory,
(b)
air navigation in relation to trade and commerce with other countries and among the States,
(c)
air navigation within the Territories,
and to aircraft engaged in such navigation and aerodromes open to public use by such aircraft.
The plaintiffs claim a declaration that the Australian National Airlines Act 1945 and reg. 79 are invalid, together with appropriate injunctions. The defendants have demurred to the whole of each statement of claim upon the grounds that the facts alleged do not disclose any cause of action, that the relevant provisions of the Air Navigation Regulations are valid, and that the Australian National Airlines Act is valid.
The Act, s. 6, provides for the establishment of a commission to be known as the Australian National Airlines Commission which (s. 6 (2)) is to be a body corporate. The function of the Commission (s. 19) is to provide
airline services for the transport for reward, of passengers and goods by air—
(a)
between any place in a State and any place in another State;
(b)
between any place in any Territory of the Commonwealth and any place in Australia outside that Territory; and
(c)
between any place in any Territory of the Commonwealth and any other place in that Territory.
Section 19 (1) provides that these services are to be provided "with full regard to safety, efficiency and economy of operation." Section 19 (2) is as follows:—
It shall be the duty of the Commission to exercise the powers conferred by the last preceding sub-section, as fully and adequately as may be necessary to satisfy the need for the services specified in that sub-section, and to carry out the purposes of this Act.
The plaintiffs founded an argument on this provision to the effect that it showed an intention that it should be the duty of the Commission to satisfy completely by its own services the need for all the services specified, and therefore to establish a monopoly in those services. For the defendants it was contended that this provision meant no more than that it should be the duty of the Commission to supplement existing services in so far as they did not satisfy existing needs from time to time, and not necessarily to insist upon providing the whole of the services. Section 19 (3) (misprinted 19 (2)) provides that the Commission, with the approval of the Minister, may exercise in relation to airline services between any place in Australia and any place outside Australia the like powers as it has in relation to the other airline services referred to in the section.
The Commission is given power to lease or purchase property (s. 21) and is empowered (s. 22) to enter into agreements with the Minister for the transport of mails by air. Section 24 makes the Commission a common carrier, and under s. 25 the Minister may, if he is satisfied that it is in the interests of the development of Australia to do so, direct the Commission to establish, alter or continue to maintain any inter-State or Territorial airline service. There is a provision in s. 25 (2) intended to protect the Commission against financial loss in certain cases where it suffers a loss by reason of carrying out any such direction.
Section 29 applies the provisions of the Air Navigation Regulations to the Commission in the same manner as they apply to any other persons. The Treasurer may provide £3,000,000 for the purposes of the Commission (s. 30). Section 37 provides that the Commission shall pay all rates, taxes and charges (other than income tax) imposed by or under any law of the Commonwealth and such other rates, taxes or charges as the Minister specifies. Apparently under this provision the Commission will not be liable to pay income tax, and will only pay such other Commonwealth and State taxes as the Minister may elect to specify.
Section 39 provides for the disposition of any profits derived by the Commission. Such profits may be applied after payment of interest and repayment of advances in the establishment and development of airline services. Any balance of profits is to be applied in such manner as the Minister, with the concurrence of the Treasurer, directs.
Under Part III. the Commission is given powers of compulsory acquisition of any aircraft or other property required for the purposes of the Commission. No question as to this part of the Act has been raised in these proceedings.
Part IV., containing ss. 46-49, has been the subject of special attention in the arguments submitted to the Court. Section 46, sub-s. (1), refers to inter-State airline services, and sub-s. (2) refers to Territorial airline services. These terms are defined in s. 4. The definitions show that an inter-State airline service is a service which has scheduled stopping places in two or more States, and that a Territorial airline service is one which (not being an inter-State service) has a scheduled stopping place in a Territory of the Commonwealth. Section 4 also contains a definition of "adequate airline service" in the following terms:—
"adequate airline service" means—
(a)
an inter-State airline service which is adequate to meet the needs of the public for inter-State transport by air between scheduled stopping places of the service; or
(b)
a Territorial airline service which is adequate to meet the needs of the public for transport by air between scheduled stopping places of the service of which at least one is within a Territory of the Commonwealth.
Section 46 (1) provides that where an airline licence is issued to the Commission in respect of an inter-State airline service and the Commission has established that service, any airline licence held by any person (other than the Commission or a contractor with the Commission) in respect of any service providing inter-State transport by air between any of the scheduled stopping places of the service established by the Commission shall (with an exception in respect of international airline services) and insofar as it authorizes inter-State transport by air between any of those stopping places of passengers or goods embarked or loaded for transport solely between those stopping places, be inoperative "so long as there is an adequate airline service between those stopping places by reason only of the services operated by the Commission and the services operated by contractors." Section 46 (2) is a corresponding provision relating to Territorial airline services, the precise terms of which will be considered later.
Under these provisions the Commission will obtain a monopoly of inter-State and Territorial services in all cases in which, and so long as, the Commission provides an "adequate airline service."
Section 47 provides that the licensing authority (that is, the licensing authority under the Air Navigation Regulations) shall not issue to any person other than the Commission or a contractor with the Commission, any airline licence (a) which would authorize inter-State transport between any scheduled stopping places of any airline service operated by the Commission, or by a contractor with the Commission, or (b) which would authorize transport between any scheduled stopping places, not being places in a State, of any airline service so operated, unless and except to the extent to which the licensing authority is satisfied that, having regard to the airline service operated by the Commission or any contractor, the issue of the licence is necessary to meet the needs of the public with respect to inter-State or Territorial airline services.
Section 49 provides that a person shall not enter into a contract to transport by air for reward any person or goods, to be transported by air for reward, or to have any other person or any goods transported by air for reward in the course of the operation of any prescribed inter-State airline service or Territorial airline service operated by any person other than a person holding an airline licence in respect of that service, not being a licence which is inoperative by virtue of s. 46.
Part V. of the Act contains provisions with respect to compensation for property compulsorily taken and for loss or damage suffered by reason of the application of s. 46.
Section 69 authorizes the Commission to make by-laws with respect to various matters relating to the operation of air services.
The Act is introduced by a preamble which recites that it is expedient to provide for the fostering and encouragement of trade and commerce with other countries and among the States, the maintenance and development of the Defence Force, the development of the Territories and the carriage of mail by air. There are no provisions in the Act which relate to defence and the Act has no more relation to defence than any legislation which deals with any means of transport in general terms. The Act provides that the Commission may make contracts for the carriage of mail, but otherwise has no relation to the power to make laws with respect to postal and telegraphic services. The arguments in support of the Act were based upon the trade and commerce power contained in s. 51 (i.) of the Constitution and the power to legislate with respect to the Territories of the Commonwealth: See s. 122 of the Constitution.
The Act provides for the establishment by the Commission of both inter-State airline services and Territorial airline services. Different considerations affect the constitutional validity of these respective provisions. I propose first to refer to the provisions dealing with inter-State airline services. The relevant provisions of the Constitution are s. 51 (i.), which provides that the Commonwealth Parliament shall 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," and s. 92, which 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."
It is argued for the plaintiffs that the power to make laws with respect to inter-State trade and commerce does not enable the Commonwealth Parliament to pass legislation creating a corporation and authorizing it to take part in such trade and commerce. This legislative power, it is contended, is limited to regulating such trade and commerce conducted by persons other than the Commonwealth or authorities created by the Commonwealth. The Act does not purport to permit or authorize or require the Commonwealth Government itself to take part in such trade and commerce. The Commission created by the Act, however, is subject in various matters to ministerial control: See, for example, ss. 19 (3), 21 (2) and (3), 25, 31, 32, 33, 35, 37, 38, 39.
It is next contended for the plaintiffs that the Act is directed towards setting up a monopoly for the Commonwealth in all the services to which the Act relates, including inter-State services. The establishment of such a monopoly is said not to be authorized by s. 51 (i.) or any other provision of the Constitution, and to constitute an infringement of s. 92. This argument is based upon the contention that s. 92 protects inter-State transportation as being in itself inter-State trade and commerce, and therefore must concede that under s. 51 (i.) there is power to legislate with respect to inter-State transportation.
It is also argued in relation to services from and to the Territories that the Commonwealth Parliament has no power to make laws with respect to trade and commerce between the States and the Territories. Section 51 of the Constitution gives power only to make laws with respect to trade and commerce among the States and with foreign countries, and contains no reference to the Territories. Section 122, it is conceded, gives full power to make laws for the Territories, but not, it is contended, to project (as it were) Territorial laws into the States so as to give Federal legislative control in any State of any part of a service with any Territory.
It is contended for the plaintiffs that if any of the provisions to which reference has been made are invalid the whole Act is invalid, because the invalid provisions cannot be severed from the other provisions of the Act.
Further, the operation of the Act depends upon the grant of a licence to the Commission under the Air Navigation Regulations. It provides (s. 46) that if the Commission provides an adequate service any licence to competitors with the Commission in respect of that service shall be inoperative. It is contended for the plaintiffs that reg. 79 gives to the licensing authority an uncontrolled discretion not limited by any matters relative to the exercise of any Federal power, and therefore creating an arbitrary power of prohibiting inter-State trade and commerce, and that such a provision is an infringement of s. 92.
For the defendants it is contended that the Act is a law with respect to trade and commerce with other countries and among the States and for the government of the Territories. It is argued that the monopoly of air services which the Act seeks to establish is conditioned upon the provision of adequate services by the Commission, so that the operation of the Act cannot bring about any diminution or restriction of inter-State trade and commerce by air, with the result that the Act does not constitute an infringement of s. 92. It is argued that even if Part IV. of the Act, which contains what have been called the monopoly provisions, is invalid, these provisions are severable from the rest of the Act and that the rest of the Act is valid. It is further contended that the Territorial provisions are valid and are all severable from any provisions relating to inter-State trade and commerce. Regulation 79 of the Air Navigation Regulations is said to be valid because it should be regarded as authorizing the granting and refusal of licences only upon grounds which are associated with the legitimate exercise of Federal power in relation to inter-State trade and commerce and to the Territories.
The first question which I consider relates to the power of the Commonwealth Parliament to legislate with respect to air transportation under the trade and commerce power contained in s. 51 (i.) of the Constitution. The Act is an Act which deals entirely with transportation. It does not deal with trade and commerce between the States in the sense of commercial transactions by way of the purchase, sale and exchange of commodities between a person in one State and another person in another State. It has been argued for the plaintiffs that transportation of passengers or goods between States for profit is necessarily trade and commerce among the States.
The plaintiffs must contend that transportation is trade and commerce in order to obtain protection from s. 92. On the other hand, the defendants claim that legislation with respect to transportation is legislation with respect to trade and commerce under s. 51 (i.) so as to justify the Act, but when s. 92 is approached they are willing to draw distinctions between trade and commerce itself and instruments used in trade and commerce, such as aircraft, motor cars or other means of carriage, thus endeavouring to prevent or limit the application to the Act of any considerations arising from s. 92. For the defendants much reliance was placed upon Willard v. Rawson[2]; R. v. Vizzard; Ex parte Hill[3]; and Riverina Transport Pty. Ltd. v. Victoria[4]. It was contended that these cases show that a distinction should be drawn between transportation as a subject and trade and commerce as a subject. It is true that in these cases certain statutes were construed as relating to motor cars regarded as integers of traffic and instruments of commerce rather than as relating to the transportation of goods and persons by motor cars. But I think that it is a mistake to regard these cases as establishing the proposition that inter-State transportation is not itself included within the category of inter-State trade and commerce. In Willard v. Rawson[5], Rich J. based his view with respect to the Act there in question (which was a motor car Act requiring registration of motor cars) upon the opinion that the statute was not concerned with trade, commerce or intercourse as such, but only with motor vehicles considered as machines, integers of traffic, users of the highway and potential sources of danger and annoyance to the public; that is, as I understand the distinction, a law with respect to motor cars does not become a law with respect to trade and commerce simply because motor cars can be used in trade and commerce. In R. v. Vizzard[6], Rich J. took the same view of the statute there in question[7]. But his Honour, in referring to McArthur's Case[8], pointed out that McArthur's Case "denied that trade between the States was limited" (my italics) "to mere inter-State movement of persons or things"[9], it plainly being conceded that trade between the States included such movement. So also his Honour was at pains to point out that the transactions to which the Act related did not include "the actual transfer of goods from one place to another and the actual movement of individuals"[10]. Starke and Dixon JJ., who dissented, each took the view that inter-State transportation was inter-State trade and commerce: See the report[11]. The difference of opinion between the learned judges was based upon the different view taken of the character of the Act in question: See, e.g., per Dixon J.[12] as to motor vehicles being regarded as machines, integers of traffic, &c. Evatt J. drew a distinction between trade and commerce and instruments of trade and commerce, but referred to s. 92 as postulating "the free flow of goods inter-State" and said that that produced the result that, "consignment and delivery, being part of commercial intercourse," could not be prevented or obstructed by State legislation[13]. McTiernan J. said "trade, commerce and intercourse includes the carriage of passengers or goods for hire or in the course of any trade or business"[14]. Accordingly I am of opinion that Willard's Case[15] and Vizzard's Case[16] do not prevent the Court from holding that inter-State transportation, certainly when conducted for profit, is itself inter-State trade and commerce.
In construing both s. 51 (i.) and s. 92 it should be remembered that the words to be considered are not only "trade and commerce," but "trade and commerce among the States." The conception of trade and commerce among the States is in my opinion quite inseparable from movement of goods and persons. Commerce in itself does not necessarily involve transportation or movement of goods. There may be a sale of goods on the spot by a vendor to a purchaser, the commercial transaction being concluded without any movement of the goods. But when the trade or commerce is inter-State there must be either actual or contemplated movement of goods or persons.
In my opinion this view is strongly supported by the words of s. 92. Section 92 does not merely refer to trade, commerce and intercourse among the States, but it refers to such trade, commerce and intercourse "whether by means of internal carriage or ocean navigation." Internal carriage and ocean navigation are not only means by which trade and commerce may incidentally be conducted or effectuated. They are means without which inter-State trade and commerce cannot possibly take place.
In the United States of America, where the Congress has power to regulate commerce among the States, it is well settled that inter-State transportation is inter-State commerce. Such transportation includes the transportation of persons as well as of goods, of telegrams, of gas, of electric current. All this is trade and commerce: See Pensacola Telegraph Co. v. Western Union Telegraph Co.[17]; Gloucester Ferry Co. v. Pennsylvania[18]; United States v. Hill[19]. In the leading case of Gibbons v. Ogden[20] it was held that navigation itself was commerce, and this case has been followed and applied on very many occasions: See County of Mobile v. Kimball[21]. In Caminetti v. United States[22] the Mann Act, prohibiting the transportation of women over State lines for immoral purposes, was upheld and it was again decided that the Congress had power to legislate under the commerce power with respect to the transportation of passengers.
The Act is essentially a transport Act. It deals with airline services which are conducted for profit. They are, in the ordinary sense of the word, commercial enterprises and are inter-State in character. By these services passengers may be carried who are not on commerce bent, e.g. holiday-makers and school children. So also goods may be carried which are not being conveyed for the purpose of being bought and sold. But those who provide the services carry on the business of providing air transport between the States. In my opinion the providers of these services, irrespective of the relation to trade and commerce of the persons whom or the goods which they carry, are themselves engaged in inter-State trade and commerce. The Act, being a law with respect to inter-State transportation, is, in my opinion, a law with respect to trade and commerce among the States.
It is further argued, however, that the power to make laws with respect to trade and commerce does not include a power to prescribe the persons who may engage in trade and commerce, and, more particularly, does not include a power to create a corporation for the purpose of engaging in trade and commerce. It is pointed out that s. 51 (xx.) entitles the Commonwealth Parliament to make laws with respect to "foreign corporations and trading or financial corporations formed within the limits of the Commonwealth." These words assume that the corporations in respect of which this legislative power is exercised are corporations which exist by reason of some law other than a Federal law enacted under this power (Huddart, Parker & Co. Pty. Ltd. v. Moorehead[23]).
In the case of some of the subjects with respect to which the Commonwealth Parliament is given power to legislate under s. 51, it is plain that the power is a power to make laws with respect to the conduct of persons other than the Commonwealth or any agency of the Commonwealth. Placita (xvii.) bankruptcy and insolvency, (xxi.) marriage, (xxii.) divorce and matrimonial causes, (xxiii.) invalid and old-age pensions, (xxvii.) immigration and emigration, (xxviii.) the influx of criminals, and others, are matters in which the Commonwealth does not take part, but in respect of which the Commonwealth Parliament may legislate. In the case of other subjects, however, it appears to me to be quite plain that the nature of the subject is such as to entitle the Commonwealth to make laws with respect to the Commonwealth (by itself, or by a Commonwealth agency) taking part in the very subject matter itself. For example, placita (ii.) "taxation" is plainly taxation by the Commonwealth; (iii.) "bounties" are bounties to be granted by the Commonwealth; (iv.) "borrowing money" relates to borrowing money by the Commonwealth; (v.) "postal &c. services" include such services provided by the Commonwealth; (vi.) "the naval and military defence of the Commonwealth" includes defence by the Commonwealth. Under the power to legislate with respect to "(vii.) lighthouses, lightships, beacons and buoys" Parliament may authorize the Commonwealth to establish lighthouses &c. So also under (viii.) "astronomical and meteorological observations" the Commonwealth Parliament may legislate, as in fact it has done, for the actual making and control of such observations. Similarly, under (xi.) "census and statistics" the Commonwealth itself can take a census. Under (xiii.) "banking other than State banking" the Commonwealth Parliament can create a bank, as in fact it has done in the case of the Commonwealth Bank. It is unnecessary to extend the illustrations beyond those already given. There can be no reason in law why the power to make laws with respect to trade and commerce with other countries and among the States should not include a power to make laws enabling the Commonwealth itself, or a body established by the Commonwealth, to take part in such trade and commerce.
It is true that the Commonwealth has no general power to create corporations, but when the Commonwealth Parliament exercises a legislative power it is for the Parliament, subject to any constitutional prohibition, to determine the means of securing an object which it is legitimate under the power for the Parliament to pursue. Thus the establishment of the Commonwealth Bank was a means of giving effect to an approved policy with respect to banking. In the well-known case of McCulloch v. Maryland[24] it was held that if Congress can exercise a power it can create a corporation to carry that power into effect: See Jumbunna Coal Mine No Liability v. Victorian Coal Miners' Association[25], relating to the creation of corporations for the purpose of giving effect to the industrial arbitration power.
In the United States of America it has been held that Congress can, under the commerce power, provide for the incorporation of a bridge company to build a bridge between two States (Luxton v. North River Bridge Co.[26]); or to construct railways across States (California v. Central Pacific Railroad Co.[27]). Such decisions were doubtless responsible for the grant of power to the Commonwealth Parliament to make laws with respect to the acquisition and construction of railways by the Commonwealth but subject to an express limitation requiring the consent of the State concerned: See Constitution, s. 51 (xxxiii.) and (xxxiv.). If this limitation had not been introduced, the Commonwealth Parliament would have been able to create corporations to construct and operate inter-State railways in Australia as it thought proper.
For these reasons in my opinion the fact that the Act authorizes the establishment by the Commonwealth of a corporation to carry on inter-State trade and commerce does not constitute any objection to the validity of the Act.
If s. 51 (i.) of the Constitution were the only relevant constitutional provision it may be that the Commonwealth Parliament could create any monopoly of which it approved in any form of inter-State transportation. But the inter-State trade and commerce power of the Commonwealth Parliament is limited by s. 92. Can such trade and commerce, including as it does inter-State transportation, be said to be absolutely free if a Federal law can confer an exclusive right to provide such transportation upon a single approved Federal agency? If this can be done in the case of air transport it can also be done in the case of land and sea transport.
The next question for consideration, therefore, is whether the Act, in so far as it deals with inter-State transport, infringes s. 92. In the first place, for reasons already stated, inter-State transportation is protected by s. 92, which specially provides for the freedom of inter-State movement of persons and goods whether by internal carriage or ocean navigation. Inter-State air transport is plainly a form of internal carriage.
The mere giving of authority to any person, whether a natural person or a corporation, to enter into inter-State trade and commerce cannot be any infringement of s. 92. But the Act is plainly designed, in some of its provisions, to give a monopoly of inter-State air transport to the Commission, and therefore to exclude all other persons from providing such transportation. Reference has already been made to ss. 19 (2), 46, 47 and 49.
The Act is very different from the statutes which were considered in Willard's Case[28] and Vizzard's Case[29]. It cannot be described as an Act for the purpose of co-ordinating and regulating transport. These provisions of the Act (ss. 46, 47, 49) will (as the Commission establishes adequate services) absolutely prevent any person or company other than the Commission or a contractor with it providing inter-State air transport, however efficient and safe and satisfactory that transport might be.
It is true that the establishment and continuance of the monopoly of the Commission is conditioned upon the provision of adequate services by the Commission. It may be doubted whether this provision can be taken at its face value. Theoretically, as soon as the Commission failed to provide an "adequate service," other persons could obtain licences and establish services, and existing licences, if any, would cease to be inoperative. But an airline service cannot be organized overnight, and it cannot be maintained in operation if at any moment the Commission could by using more aeroplanes or otherwise improving facilities, provide an adequate service, and so make the licence of any competitor inoperative. Thus the statutory provision that, if the Commission does not provide adequate services, it will be open to other persons to do so may well be an illusory guarantee of adequate services for the users of airlines. But I deal with the question apart from these considerations, which may be said to depend upon opinion or anticipation rather than upon actual existing fact.
The Act has been drafted upon the basis that if adequate services are provided for the users of airlines, there can be no infringement of s. 92. But if, as I have said, s. 92 protects inter-State carriers as well as persons who use the services of carriers for the transport of goods or passengers, the fact that the Act will secure adequate services (if that can be taken to be the case) does not exclude the application of s. 92. I consider the operation of the Act, therefore, not only in relation to members of the public using inter-State air services, but also in relation to persons who are engaged, or who may desire to engage, in the business of providing inter-State air services.
In James v. The Commonwealth[30] the Privy Council expounded the meaning of s. 92. I have endeavoured to apply the principles of this decision in a number of cases, and I refer particularly to Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd.[31] and Gratwick v. Johnson[32]. I venture to repeat what I said in the former case: "One proposition which I regard as established is that simple legislative prohibition (Federal or State), as distinct from regulation, of inter-State trade and commerce is invalid. Further, a law which is directed against inter-State trade and commerce is invalid. Such a law does not regulate such trade, it merely prevents it. But a law prescribing rules as to the manner in which trade (including transport) is to be conducted is not a mere prohibition and may be valid in its application to inter-State trade, notwithstanding s. 92"[33].
In the present case the Act is directed against all competition with the inter-State services of the Commission. The exclusion of other services is based simply upon the fact that the competing services are themselves inter-State services. The Act is a prohibition, with a single exception, of such services, and that prohibition is quite independent of any considerations relating to safety, efficiency, airworthiness, &c., which otherwise might have been relied upon as the basis of an argument that the statute regulated such services in the sense of introducing regular and orderly control into what otherwise might be unregulated, disorderly, possibly foolishly competitive, and therefore inefficient services. The exclusion of competition with the Commission is not a system of regulation and is, in my opinion, a violation of s. 92. If a provision of this character does not infringe s. 92 when applied to carriers, I can see no answer to the contention that a similar provision might be applied to all inter-State traders without any breach of s. 92. If that were the case, the Commonwealth Parliament could create a corporation and give it an exclusive right to engage in every form of inter-State trade and commerce, or, without creating a corporation, could give an exclusive licence to a particular person to engage in such trade and commerce. Such a result would reduce s. 92 to almost complete insignificance. In my opinion Part IV. of the Act, so far as it relates to limitations in respect of inter-State airline services, is invalid because it offends against s. 92 of the Constitution.
It is now necessary to consider the provisions of the Act relating to Territorial airlines. In this case no difficulty arises from s. 92, which applies only to trade and commerce among the States, and not to trade and commerce as between the States and any Territory or as between the Territories themselves. As already stated, s. 51 (i.) is irrelevant as a source of power. A Territory cannot be held to be "another country" within the meaning of that provision. Section 122 provides that the Parliament may make laws for the government of any Territory. Under this provision the Parliament has full power to make such laws for the government of a Territory as it thinks fit.
Thus the Commonwealth Parliament in the case of a Commonwealth Territory has the same power as a colony of Australia had before Federation. The Commonwealth legislative power in respect of a Territory to-day includes all the power of a State Parliament in respect of a State, but includes that power as if it were not limited by the co-existence of the Commonwealth with certain paramount powers. The Commonwealth Parliament may make laws which completely control all matters within a Territory, and therefore can provide for a monopoly of air services and exclude all competition within a Territory. It can, as between Territory and Territory, establish complete control over air services because it can in each Territory control all landings and all departures and all other activities in relation to the services. But a law for the government of a Territory cannot operate as law in a State. For example, a law for the government of the Northern Territory can control any matter in the Northern Territory and therefore can prevent aircraft from Western Australia landing in the Territory. So also under a Territorial law aircraft could be prevented from leaving the Territory for Western Australia or for any other place. But no law passed under a power to make laws for the government of the Northern Territory can operate as law in Western Australia or in any other State. The position is exactly the same as between, for example, Western Australia and South Australia. A Western Australian law does not operate in South Australia and vice versa. A Western Australian law cannot control the conduct of persons in South Australia so as to make them amenable to any punishment in South Australia—or elsewhere than in Western Australia. So a Territorial law, though fully effective in relation to the Territory, cannot be enforced outside the Territory in respect of which it is made.
Thus the Commonwealth Parliament can legislate under s. 122 with respect to what may be called the Territorial end of a service between a Territory and a State, even though a Territorial law cannot deal with the State end of such a service. In this sense, but in this sense only, the Commonwealth Parliament can provide for the establishment of an air service between a Territory and a State—in just the same way and to the same extent as the Commonwealth Parliament can authorize the establishment of an air service between Australia and India. Such legislation would be effective in Australia, but it could not change the law or operate as law in India, and the effective establishment of the service would depend upon Indian co-operation. Thus provisions with respect to services between the Territories and the States are not effective, in my opinion, otherwise than as Territorial law, that is, as controlling the services by law in the Territory and not elsewhere. There cannot, however, in my opinion, be any objection to the enactment of an Act so far as it authorizes the establishment in a Territory of a service between the Territory and the State. Whether the service can be established in fact depends, however, not only upon the Commonwealth, but also upon the State concerned, as in the case of the illustration which I have given with respect to India.
These limitations upon the possible scope of Territorial law are, I think, recognized in the Act. Section 46 (2) is in the following terms:—
Where an airline licence is issued to the Commission in respect of a Territorial airline service and the Commission has established that service, any airline licence held by any person, other than the Commission or a contractor, in respect of any airline service which provides transport by air between any of the scheduled stopping places of the service established by the Commission, not being places in a State, shall, by virtue of this section (unless it has been issued in respect of a section of an international airline service authorized by the Commonwealth) and insofar as it authorizes transport by air between any of those stopping places of passengers or goods embarked or loaded for transport solely between those stopping places, be inoperative so long as there is an adequate airline service between those stopping places by reason only of the services operated by the Commission and the services operated by contractors.
This provision must be read with the following definitions contained in s. 4:—
"Australia" includes the Territories of the Commonwealth.
"inter-State airline service" means a service providing for the transport by air, for reward, of passengers or goods and operating from one place in Australia to another place in Australia and having scheduled stopping places in two or more States.
"Territorial airline service" means a service (not being an inter-State airline service) providing for the transport by air, for reward, of passengers or goods and having a scheduled stopping place in a Territory of the Commonwealth.
Thus a Territorial airline service is either a service with all its stopping places in a Territory or Territories, or with stopping places in a Territory or Territories and also in a single State. If it had stopping places in two or more States, it would be an inter-State service and would therefore be excluded from the category of Territorial airline services by reason of the words in the definition of such services "not being an inter-State airline service."
The definitions which I have mentioned produce the result that services which provide inter-State transport are not affected by ss. 46 (2) and 47 (b). In those sections the words "not being places in a State" are important. They show that intra-State transport in not affected by these provisions. Thus first, ss. 46 (2) and 47 (b) cannot infringe s. 92, and, secondly, they do not purport to give any operation within a State to laws enacted under s. 122 for the government of a Territory. In my opinion there is no valid objection to s. 46 (2) or s. 47 (b) upon constitutional grounds.
Section 49 creates offences in relation to inter-State airline services as well as in relation to Territorial airline services. These offences consist in certain dealings with persons operating airline services without a licence or with a licence rendered inoperative by s. 46. If the licensing provisions are invalid with respect to inter-State services (a matter with which I still have to deal), s. 49 is invalid in relation to inter-State services. Further, if the provisions of s. 46 as to inter-State licences becoming inoperative are invalid (as in my opinion they are) s. 49 is invalid on that ground in relation to inter-State licences.
I am therefore of opinion (1) that the provisions authorizing the establishment of the Commission and its entry into the service of inter-State air transportation which are contained in Part II. of the Act are not invalid upon any of the grounds relied upon by the plaintiffs. (I express no opinion with respect to s. 37, authorizing the Minister to exempt the Commission from the payment of State taxes); (2) that Part IV., Limitations in respect of Airline Services, is invalid in its application to inter-State services by reason of infringement of s. 92; that is, ss. 46 (1) and 47 (a) are invalid and s. 49 is invalid in so far as it applies to inter-State services.
The next question which arises is whether the invalid provisions contained in Part IV. can be severed from the rest of the Act so as to allow the rest of the Act to stand.
It was contended for the plaintiffs that the provisions of the Act show a clear intention of Parliament which could be described in the words "monopoly or nothing," and that if the monopoly provisions, that is Part IV., fail, the whole Act must fail. It was argued in a general way that the Commonwealth Parliament would not think of entering into air services at all upon a competitive basis, but this argument, unless founded upon the actual terms of the Act, is only speculation upon policy, as to which varying views may be entertained with equal propriety. A court cannot merely assume that monopoly is of the essence of the Act. The intention of Parliament must be ascertained by an examination of the terms of the Act, and not otherwise.
I do not agree with the contention on this point of the plaintiffs. In my opinion the Act has been carefully drafted so as to avoid difficulties in the application of s. 15A of the Acts Interpretation Act 1901-1941. I regard this provision as a direction to the Court to treat all statutes as being valid as far as possible, and to assume, as the general intention of Parliament, that as much of an Act shall operate as can operate, even if other parts may fail. In the present case special pains have been taken, it appears to me, to make the different provisions of the Act severable. For example "adequate airline service" is defined separately in relation to inter-State and Territorial services; the powers of the Commission to establish services in s. 19 are described under separate heads; the provisions relating to monopoly of services are separated completely from the other parts of the Act. I agree with the contention of the plaintiffs that s. 19 (2) means that it shall be the duty of the Commission to establish adequate (i.e. full) services as defined. This provision doubtless "looks towards" ss. 46 and 47. But it is not inseparably bound up with these provisions—that is, in other words, it cannot be said that s. 19 (2) would not have been enacted apart from ss. 46 and 47. It is possible for s. 19 (2) to operate even if the monopoly provisions fail. Section 15A of the Acts Interpretation Act is a direction that it shall be held to be valid so as to operate as far as possible.
The invalidity of the inter-State provisions in Part IV. does not, in my opinion, affect the Territorial provisions. The two sets of provisions are separately expressed and can operate quite independently of each other. The definitions of the two classes of services in s. 4 are carefully expressed so as to be mutually exclusive. If the inter-State provisions are struck out of Part IV.
the rest of the Act can operate according to its terms. Thus I am of opinion that the invalid provisions are severable and that the Act as a whole is not invalid by reason of the invalidity of portion of Part IV.
I see no reason to question the validity of the regulation in this form.
Statutory Rules 1940 No. 25 provided as follows:—
The question which arises is whether this provision is valid.
Unless a person who is proposing to provide an air transport service is in a position to show that he has complied with all the various regulations to which I have referred, he cannot (apart altogether from any considerations depending upon reg. 79) use his aircraft or employ his personnel in such a service. Regulation 79 (3) reinforces the other regulations by expressly requiring complipliance with those regulations as a condition of obtaining a licence. The provision in reg. 79 that the Director-General may issue a licence upon such conditions "in addition to compliance with these Regulations" as he considers necessary shows (1) that compliance with the regulations is necessary, and (2) that, before he issues a licence, the Director-General may require compliance with some conditions which are not specified in or ascertainable by reference to any of the regulations. Thus reg. 79 (3) as enacted by Statutory Rules 1940 No. 25 gives to the Director-General in this respect a quite general and uncontrolled discretion. The defendants relied upon Shrimpton v. The Commonwealth[34], where what was called an absolute discretion was entrusted by a regulation to the Treasurer. The Court held that the discretion was not absolute, but was to be limited by reference to the purposes disclosed by other provisions in the Regulations. In the present case, however, it is impossible to apply such a principle for the purpose of limiting the discretion of the Director-General under reg. 79 (3). The purposes of the Regulations in all their other provisions are completely provided for by those provisions and in the requirement of reg. 79 (3) that all other regulations must be complied with. Accordingly the effect of reg. 79 (3) is to set the Director-General absolutely at large, with the result that he could exercise his discretion upon any grounds whatever.
I consider this provision in the first place in its application to inter-State air services, when s. 92 is relevant to its validity. The vesting of such a discretion to control inter-State transportation is, in my opinion, inconsistent with s. 92 of the Constitution. I am unable to distinguish reg. 79 (3) from the provision which the Court held to be invalid in Gratwick v. Johnson[35]. In that case I was of opinion that there were no provisions "which can be relied upon for the purpose of preventing the Director-General of Land Transport from exercising his powers in a completely arbitrary manner. No indication is given of the matters which he is to take into account in determining whether to grant or refuse a permit"[36]. The position is the same in the present case as to the conditions "in addition to compliance with these Regulations" which the Director-General can impose upon applicants for licences. Accordingly reg. 79 (3) is seen to be a provision that persons cannot take part in providing air transport services in relation to trade and commerce among the States (see reg. 6) unless they are permitted to do so by the Director-General of Civil Aviation. Such a provision is "directed against" inter-State transportation in the sense condemned by the Privy Council in James v. The Commonwealth[37]. Accordingly, in my opinion, reg. 79 (3) is invalid in its application to inter-State services.
All the States, except Tasmania, have passed Air Navigation Acts adopting the Commonwealth Air Navigation Regulations as amended from time to time. See the Air Navigation Acts of New South Wales of 1938, and of Victoria, Queensland, South Australia and Western Australia of 1937. The effect of this State legislation is to enact reg. 79 as State law and as applying in the same manner in the State as the regulation applies, as a piece of Territorial legislation, in the Territories. These provisions can validly operate, however, only within the respective States and only in relation to other than inter-State services. The objections to reg. 79 as Commonwealth legislation are based upon s. 92, and those objections are equally applicable to reg. 79 as State legislation, for s. 92 binds both the States and the Commonwealth (James v. The Commonwealth[38]). Thus the State Acts do not affect in any way the conclusion that reg. 79 is invalid in relation to inter-State services. They do give effect to reg. 79 in the States in which they are in force in respect of intra-State services and "the State end" of Territory-single State services. But Commonwealth and State legislation combined cannot overcome s. 92 of the Constitution in relation to inter-State services.
If then reg. 79 is invalid in relation to inter-State air services, is it invalid altogether?
I am of opinion that reg. 79, which applies to international, inter-State and Territorial services (see reg. 6), can be held to be invalid as to inter-State services, and to be valid in relation to other services. I base this view upon the separation of categories of air navigation made by reg. 6, which specifies in (a), (b) and (c) the scope of application of the Part of the Regulations which contains reg. 79. Air navigation between the States is comprehended within category (b). Even if the application of the regulation to such air navigation is prevented by reason of s. 92, there is nothing to prevent the full operation of the regulation in relation to categories (a) and (c) and the rest of (b)—air navigation in relation to trade and commerce with other countries. In Newcastle and Hunter River Steamship Co. Ltd. v. Attorney-General for the Commonwealth[39] a single collective expression applied to both inter-State and intra-State trade and commerce. If limited to the former subject it would have been valid. If limited to, or as applied to, the latter subject it was invalid. The court held that the provision in question was valid as applied to inter-State commerce. It is much easier in the present case, where categories are separately expressed (Pidoto v. Victoria[40]), to apply the doctrine of severability, so as to preserve the validity of reg. 79 as applied to other than inter-State air services.
The first question is whether such a provision is within the trade and commerce power conferred by clause 51 (i.), assuming that power not to be restricted in any relevant respect by any other part of the Constitution. "Trade is a very wide term: it is one of the oldest and commonest words in the English language. Its great width of meaning and application can be seen by referring to the heading in the Oxford English Dictionary. But it must always be read in its context. That gives it the special connotation appropriate to the particular case" (per Lord Wright in Aristoc Ltd. v. Rysta Ltd.[41]). In a particular context, it may be seen to be intended to be restricted to selling or otherwise trading in goods; but here we find it in a Constitution, and "a Constitution must not be construed in any narrow and pedantic sense" (James v. The Commonwealth[42]). I have no doubt that, as here found, the phrase "trade and commerce" is wide enough to include not only the sale and disposition of goods but the transport of goods and persons, and not only the transport of goods and persons incidentally to the disposition of goods, but such transport as an end in itself.
I am of opinion also that the Commonwealth Parliament's trade and commerce power is not restricted to the regulation of trade and commerce carried on by private persons, but is wide enough to authorize provision for the carrying on of trade and commerce by the Commonwealth itself. It was pointed out in Reg. v. Burah[43] that when a question arises in regard to a Constitution whether the prescribed limits have been exceeded, the only way in which a court of justice can properly determine the question is by looking to the terms of the instrument by which, affirmatively, the legislative powers were created, and by which, negatively, they are restricted. If what has been done is legislation, within the general scope of the affirmative words which give the power, and it violates no express condition or restriction by which the power is limited, it is not for any court of justice to inquire further, or to enlarge constructively those conditions and restrictions. The Constitution contains no express provision against trading by the Commonwealth, and no necessary implication of a prohibition of such trading is involved in any of the express provisions.
The next question is concerned with the validity of Part IV. of the Act, which provides for conferring upon the Commission a monopoly in respect of the airline services which it is to establish and operate. Section 46 (1) provides that, when the Commission has established a service, any airline licence held by anyone else in respect of any service which provides inter-State transport by air between any of the Commission's stopping-places (unless it is for an authorized international service) shall, so far as it authorizes transport between those stopping-places of passengers or goods embarked for transport solely between them, be inoperative so long as the Commission itself supplies an adequate airline service between them. Section 47 prevents, among other things, the issue of a licence which would interfere with the Commission's inter-State monopoly so long as it is maintaining an adequate service. The fact that the Parliament is here seeking to enable the establishment of a trading monopoly for the Commonwealth does not, of itself, affect the validity of Part IV. There is nothing in the Constitution which prevents the setting-up of monopolies as such. It has been urged, however, that the vesting in the Commonwealth of a monopoly of a particular class of inter-State trade infringes the express provision of clause 92 of the Constitution that trade, commerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free. How, it is said, can trade, commerce and intercourse among the States by air transport be said to be free if the Commonwealth arrogates to itself the right not merely to engage in this class of trade but to exclude everyone else from it? Authorities on the meaning and operation of clause 92 are numerous and not altogether consistent. The leading case is James v. The Commonwealth[44], but even this does not, and could not be expected to, provide a ready solution for every question that arises in practice. Their Lordships put the matter in a nut-shell by saying that, "The true criterion seems to be that what is meant is freedom as at the frontier." They went on to elaborate this by saying that it means freedom from customs duties, imposts, border prohibitions, and restrictions of every kind. "Freedom in s. 92 must be somehow limited, and the only limitation which emerges from the context, and which can logically and realistically be applied, is freedom at what is the crucial point in inter-State trade, that is at the State barrier"[45]. Their Lordships point out, however, that it is not necessary, in order to be obnoxious to clause 92, that an Act should discriminate against inter-State trade; it may contravene it though it operates in restriction both of intra-State and inter-State trade[46]; and burdens and hindrances on inter-State trade may take diverse forms and appear under various disguises. "In every case it must be a question of fact whether there is an interference with this freedom of passage"[47]. It would appear from their Lordships' comments on s. 98 of the Post and Telegraphs Act 1901-1923 that they took the view that the monopolization by the Commonwealth of some forms of intercourse is not necessarily repugnant to clause 92 to the extent to which it may affect inter-State intercourse; but I do not regard their Lordships as meaning that no form of monopolization of a particular class of inter-State trade should be regarded as impeding it if it can be described as "canalization." They appear to have been influenced in their remarks by the consideration that letter-carrying is a very specialized form of intercourse, as to which, at the establishment of the Commonwealth, the limitation notoriously existed in ordinary usage in all modern civilized communities[48]. The question in every case being one of fact, I am unable to feel any doubt that, on the facts of the present case, the monopoly provisions of ss. 46 (1) and 47 (a) do constitute a direct infringement of the express provision of clause 92 for freedom of trade, commerce and intercourse among the States, and are therefore invalid. Since, however, clause 92 is applicable only inter-State, it does not invalidate the non-inter-State provisions of ss. 46 (2) or 47 (b) or 49 of Part IV.
The constitutional powers relied upon in support of the Airlines Act and the licensing regulations are the postal power (Constitution, s. 51 (v.)), the defence power (Constitution, s. 51 (vi.)), the trade and commerce power (Constitution, s. 51 (i.)), and the power in relation to the Territories (Constitution, s. 122). But the Act cannot be sustained under either the postal or the defence power; its provisions afford no reasonable or substantial basis for the conclusion that the Act is one with respect to postal services or defence and that, if I am not mistaken, was in the end conceded in argument. The object of the Act is to establish national and commercial airline services to the exclusion of other airline services. The Act must find its constitutional basis in the trade and commerce power and in the power relating to the Territories, for there is no other that can support it. The Parliament has, subject to the Constitution, power to make laws for the peace, order and good government of the Commonwealth with respect to trade and commerce with other countries and among the States and this power extends to navigation and shipping and to the railways of the State (Constitution, s. 51 (i.), s. 98; Australian Steamships Ltd. v. Malcolm[49]). In the Constitution of the United States the power is to regulate commerce with foreign nations and among the several States and with the Indian tribes. In the Constitution of Canada, British North America Act 1867 (30 & 31 Vict. c. 3), it is the regulation of trade and commerce. But there is little if any difference, I think, between the power to make laws with respect to trade and commerce and the power to make laws to regulate, or for the regulation of, trade and commerce. And since the decision, Huddart Parker Ltd. v. The Commonwealth[50], in this Court the view can no longer be maintained that the constitutional power in the Australian Constitution to make laws with respect to trade and commerce with other countries and among the States is limited to general rules of conduct to be observed by those engaged in the operation of commerce with respect to those operations (Australian Steamships Ltd. v. Malcolm[51]), and does not enable the Commonwealth itself or its instrumentalities to engage in or carry on commerce. In Gibbons v. Ogden[52] Marshall C.J. said: "Commerce, undoubtedly, is traffic, but it is something more; it is intercourse", and Griffith C.J. in Australian Steamships Ltd. v. Malcolm[53] accepted that description. Trade and commerce among the States is not an isolated journey across a State boundary line (See Willis on Constitutional Law, p. 288), but the flow of business among the States. It includes the movement of goods or persons from one State to another, transportation by land, sea or air, and it also includes something more such as sales of goods tangible or intangible by persons in one State to persons in another. Or as was said in this Court in W. & A. McArthur Ltd. v. Queensland[54]: "Trade and commerce between different countries—we leave out for the present the word intercourse—has never been confined to the mere act of transportation of merchandise over the frontier. That the words include that act is, of course, a truism. But that they go far beyond it is a fact quite as undoubted. All the commercial arrangements of which transportation is the direct and necessary result form part of trade and commerce." The power to regulate commerce or to make laws with respect to commerce is "to prescribe the rule by which commerce is governed. It extends not only to those regulations which aid, foster and protect the commerce, but embraces those which prohibit it" (United States v. Darby[55]). The power "is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the Constitution" (Gibbons v. Ogden[56]). Accordingly there is no reason for denying that the Parliament can under the trade and commerce power exclude all persons from the field and grant the Commonwealth itself and its instrumentalities an exclusive right or monopoly in that field: Cf. Wilson v. Shaw[57].
The object and effect of the Airlines Act is to exclude every person but the Commission established by the Commonwealth and its contractors from traffic and intercourse among the States by air so long as there is an adequate airline service established by the Commission or its contractors. It is contended that the Transport Cases in this Court established the validity of the Airlines Act and that it does not contravene the provisions of s. 92 (R. v. Vizzard; Ex parte Hill[58]; O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways (N.S.W.)[59]; Bessell v. Dayman[60]; Duncan and Green Star Trading Co. Pty. Ltd. v. Vizzard[61]; Riverina Transport Pty. Ltd. v. Victoria[62]). "A law," it has been said, "prescribing rules as to the manner in which trade (including transport) is to be conducted is not a mere prohibition and may be valid in its application to inter-State trade notwithstanding s. 92" (Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd.[63]). But why this is so is by no means clear. It is said that the provisions which operated in restriction of the free movement of goods in the Transport Cases were no invasion upon the freedom of inter-State trade, but a mere co-ordination and rationalizing of services (Duncan and Green Star Trading Co. Pty. Ltd. v. Vizzard[64]), which, I suppose, means that as a matter of fact there was no interference with the freedom of the passage of goods passing into or out of a State (James v. The Commonwealth[65]), and that even though the restriction operated upon the movement of goods in inter-State trade. But the Airlines Act cannot be justified as a mere co-ordination and rationalizing of services.
Willard v. Rawson[66] was also relied upon, but that was an Act to regulate the use of motor cars on the highways, and a majority of the Court denied that it operated so as to interfere with the absolute freedom of inter-State trade. The case has no application to the Airlines Act.
A more difficult case to my mind is that of the Milk Board (N.S.W.) v. Metropolitan Cream Pty. Ltd.[67]. There are expressions in that case repeating similar expressions in the case of Peanut Board v. Rockhampton Harbour Board[68], asserting that s. 92 does not preclude the nationalization or socialization of industries although some effect upon inter-State commerce may be caused thereby. The Court expressed no opinion upon the matter, but what it held was that the Milk Act 1931-1936 of New South Wales, which established a system of control of production, transport and marketing, wholesale and retail, of milk and cream in every milk distributing district established by the Act and compulsory marketing, was not obnoxious to the provisions of s. 92. It was conceded, I think, that the decision was contrary to prior decisions of the Court, but it was said that the view of the Judicial Committee in James v. The Commonwealth[69] was that legislation might be enacted for the administration of a compulsory marketing scheme so long as it was not directed against inter-State trade without contravening the provisions of s. 92. In my opinion, that decision conflicts with the decision of this Court in the Peanut Board Case[70] which, I think, was approved by the Judicial Committee in James v. The Commonwealth[71] and I prefer the decision in the Peanut Board Case[72].
The legislative power of the Commonwealth with respect to trade and commerce with other countries is not limited by s. 92 and subject to other provisions of the Constitution, e.g. s. 98, may be exercised to its full extent. Likewise the authority of the Parliament to make laws for the Government of the Territories is undoubted (Constitution, s. 122) and that power is not limited by the provisions of s. 92. It is a plenary power complete in itself, and acknowledges no limitations other than are prescribed by the Constitution (Gibbons v. Ogden[73]). Cf. Dorr v. United States[74]; Rassmussen v. United States[75]. But I would add that the Territories are not independent political bodies separated and detached from the Commonwealth. They are under the authority of the Commonwealth which might, I should think, assist them financially and establish and maintain communication with them in such manner as Parliament thinks fit subject to any limitations prescribed by the Constitution. This authority flows from the relationship of the Commonwealth and the Territories if not from the incidental power contained in the Constitution (s. 51 (xxxix.)).
It has also been contended that the Airlines Act is wholly bad and cannot be severed from the provisions relating to inter-State trade which are obnoxious to s. 92. That contention is untenable both because of the provisions of the Acts Interpretation Act 1901-1941, s. 15A, and because there is left intact in the Airlines Act, dealing with matters within the power of the Commonwealth, a body of provisions, namely, air transport with other countries and in the Territories, consistent, workable and effective (Deputy Federal Commissioner of Taxation (N.S.W.) v. W. R. Moran Pty. Ltd.[76]). It may be that these provisions will be ineffective commercially, but that is not a matter for the consideration of this or any Court.
If an inter-State transportation service is regarded, not as itself constituting commerce among the States, but only as a means by which such commerce is or may be conducted and at the same time the inter-State movement of people is considered not of itself to form commerce among the States, it would seem to follow that the purpose of the airline services to be established under the Act is not confined to inter-State trade and commerce and exceeds the power. In R. v. Smithers; Ex parte Benson[77] Higgins J. draws a contrast, in reference to the movement of persons from one State to another, between, on the one hand, school children returning from holidays and friends visiting friends, and, on the other hand, commercial travellers returning to their warehouses. Notwithstanding the addition, in s. 92, of the word "intercourse" to the words "trade" and "commerce," I am not disposed to think that there is much covered by the word "intercourse" that falls outside the commerce power. Actual movement of persons or goods among the States will, I should imagine, be regarded as enough here as it is in America. See Covington & Cincinnati Bridge Co. v. Kentucky[78]; Caminetti v. United States[79]; United States v. Hill[80]. Probably, too, it will be taken to extend to acts and transactions involving such movement. But this view is part and parcel of a more general interpretation or understanding of the conception of inter-State commerce under which the place given to the carriage of goods and persons, transportation, is anything but subsidiary. That is to say, as it is inseparable from the movement of things and people, it cannot be regarded as something which falls within the power only because it is ancillary or auxiliary, incidental or conducive to the essential object of the power, as perhaps might be the case if the inter-State buying and selling of commodities were regarded as the exclusive object. From the beginning, the doctrine prevailing in the United States has been that transportation occupied a central place in the conception of commerce as a subject of the power. In the concurring opinion which Johnson J. added to that of Marshall C.J. in Gibbons v. Ogden[81], an opinion relying more than did that of the Chief Justice on the exclusive characteristics of the commerce power, there occurs the following passage: "When speaking of the power of Congress over navigation, I do not regard it as a power incidental to that of regulating commerce; I consider it as the thing itself; inseparable from it as vital motion is from vital existence." In Hannibal & St. Joseph R.R. Co. v. Husen[82] Strong J. for the court said: "Transportation is essential to commerce, or rather it is commerce itself." How far the reasoning in the Transport Cases in this Court[83] accommodates itself with this doctrine is a matter for consideration. There is, I think, some logical force in the view that, if inter-State transportation is relegated to the position of an operation that is merely ancillary or 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 than the power. For it provides an air service, and an exclusive air service, for passengers independently of the commercial or non-commercial character of their journey. But I am not prepared to accept the hypothesis and to give effect to it as restrictive of the trade and commerce power. On the contrary, 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 persons are in transit.
The provisions of the Airlines Act expressly dealing with the Territories are s. 4 (definitions of "Territorial airline service" and "adequate airline service"); s. 19 (1) (b) and (c); s. 46 (2); s. 47 (b); s. 49, and par. (c) of the preamble. It must be conceded that these clauses considered in combination with the general provisions of the Act, amount to laws operating in Australia and elsewhere with respect to air communication with the Territories. To support such legislation some power seems to be needed to make laws in that connection which will have an operation in Australia. It was contended that even although the power given by s. 122 might be regarded as an independent legislative power restricted in its geographical operation to the Territories, at the same time it could be used to justify the establishment of services radiating out, so to speak, from each Territory. The analogy is that of a State which in virtue of its power to make laws in and for the State might establish a shipping service with any place outside its boundaries, whether within or beyond Australia. The law passed by the State would not in such a case operate coercively outside the State but would nevertheless authorize the carrying on of the service and the use of such port facilities and the like as were made available in other jurisdictions. This appears to me to be an artificial and narrow justification of the legislation and, moreover, does not recognize that the Airlines Act is meant to operate on the same basis throughout Australia and its Territories as a law of the Parliament. I should see no difficulty myself in treating s. 122 as aided by s. 51 (xxxix.) and in interpreting the Constitution as a whole as meaning that the Commonwealth Parliament could make laws concerning the Territories including communications and all other matters arising from the connection between the Commonwealth and the Territory or dependency. However, it is said that such cases as Buchanan v. Commonwealth[84], R. v. Bernasconi[85] and Porter v. The King; Ex parte Chin Man Yee[86] make it necessary to treat s. 122 as an independent power complete in itself and outside the general system of government. I admit that it is difficult to reconcile the Australian cases on the subject, but I think that the decision in Porter's Case[87] tends in the contrary direction and that so does some of the reasoning in Mainka v. Custodian of Expropriated Property[88], and also that of some of the judgments in Ffrost v. Stevenson[89], where antecedent steps of the reasoning in Mainka's Case[90] were criticized. As to the commerce power, it is not easy to see how such a Territory as the Northern Territory could be described either as another country or a State; but it is to be noted that, under the analogous American power, Holmes J. appears to have been prepared to adopt the assumption that trade with the Territories could be covered (Hanley v. Kansas City Southern Railway Co.[91]), giving the power no doubt a wide general interpretation implying some extension beyond its exact text. Moreover, Congress has included the Territories in many laws otherwise referable to the commerce power. One such law is dealt with in Cincinnati Soap Co. v. United States[92]. Clearly the commerce power is treated as embodying a principle. But, however that may be, it seems to me that, by placing a territory under the authority of a government with full power to govern it by direct legislation and otherwise, it is necessarily implied that it may control communications, including transport between the two countries, if they are separated by sea, or, if not, across the common boundary by inland means.
We should avoid pedantic and narrow constructions in dealing with an instrument of government and I do not see why we should be fearful about making implications. It is absurd to contemplate a central government with authority over a territory and yet without power to make laws, wherever its jurisdiction may run, for the establishment, maintenance and control of communications with the territory governed. The form or language of s. 122 may not be particularly felicitous but, when it is read with the entire document, the conclusion that the legislative power is extensive enough to cover such a matter seems inevitable. For my part, I have always found it hard to see why s. 122 should be disjoined from the rest of the Constitution and I do not think that Buchanan's Case[93] and Bernasconi's Case[94] really meant such a disjunction. I think the provisions I have mentioned affecting the territory are valid.
It is not material to inquire why this principle was adopted. It may have been adopted as a matter of policy. On the other hand, it may have been adopted because it was thought that it would involve less inconsistency with the constitutional freedom of trade, commerce and intercourse among the States by internal carriage than if the exclusion from inter-State air routes of all but government airlines were absolute. Some ground for such a view might be found if two assumptions were justified. The first is that trade, commerce and intercourse among the States is nothing but the interchange of goods and the movement of people. The second is that s. 92 may be confined by interpretation to a denial to the various governments only of legislative or executive authority to obstruct the flow or reduce the volume in which the people move or the traffic in goods proceeds. If these assumptions were made out, it is, perhaps, not difficult to see in them a basis for a contention that a law establishing a monopoly of a form of transport might be compatible with s. 92, provided that it contained sure stipulations for the furnishing of transport or of that form of transport, adequate to the flow or volume. It is interesting to find in the opinion of Johnson J. in Gibbons v. Ogden[95], already cited, an emphatic statement of the opposite view of the effect of a monopoly in a form of transport. As is well known, that great case turned upon the monopoly which the State of New York had granted to Fulton and Livingston at the end of the eighteenth century upon condition that they constructed a steamboat that would navigate against the current of the Hudson. They fulfilled the condition and, as a result, enjoyed for some years an exclusive franchise for navigating New York waters by steam. The decision in Gibbons v. Ogden[96] was that it was inoperative against Federal law. Johnson J. placed his judgment upon the quasi-exclusiveness of the commerce power, a doctrine which though not part of the ratio decidendi of the Court was expounded by Marshall C.J. in such a way as to establish it. Johnson J. treated the matter as evident and used some of the very words of s. 92. He said: "The grant to Livingston and Fulton interferes with the freedom of intercourse among the States; and on this principle its constitutionality is contested"[97]. His Honour, in effect, took the view that the principle did form part of the constitutional law of the United States and for that, among other reasons, the monopoly did not avail. It is, however, better not to pursue the analogy presented in the United States, if for no other reason, because in America it is always invasive action by a State that is in question. Here I think that we should apply s. 92 in the light of the general guidance given by the two decisions of the Privy Council and of the authority of the Transport Cases[98]. The Transport Cases formed the foundation of the argument in support of Part IV. and to my mind our decision must in a great measure depend upon a proper interpretation of those authorities. There is an extensive passage in the judgment of Rich J. in Vizzard's Case[99], set out in the judgment of Evatt and McTiernan JJ. in Gilpin's Case[100], a judgment in which Rich J. himself agreed. Having set it out, Evatt and McTiernan JJ. say that, in their opinion, it truly describes the legislation under consideration in that case, and they proceed to say: "Absolute freedom of trade, commerce and intercourse among the States does not mean that a resident of one State possesses the right to transport goods or travel to a place in another State in whatever vehicle or by whatever route or at whatever time or at whatever speed he may choose. And a law which imposes a limitation upon his choice is not necessarily inconsistent with s. 92 of the Constitution."
In the case of Duncan and Green Star Trading Co. Pty. Ltd. v. Vizzard[101], Evatt J. recurs to the same idea in expressing the effect of the Transport Cases: "Those cases determine that the imposition of non-discriminatory limitations of choice as to the means and routes of land transport is not necessarily inconsistent with s. 92, and that the New South Wales State Transport (Co-ordination) Act 1931 is valid."
The Airlines Act, however, appears to me to raise quite a different question. It is whether the elimination by governmental action, legislative and executive, of the business of inter-State transportation as such in favour of a State undertaking is consistent with s. 92. If the test laid down by Lord Wright in James v. The Commonwealth[102], freedom at the frontier, be applied, it is plain that it is because the business involves crossing the frontier that it is eliminated. It is not like the post office, something which undertakes an exclusive function independently of State boundaries. Nor, may it be added, does it resemble the post office in being a traditional function of government, dealt with as such in the Constitution, and nowhere forming a business. It is no answer to the application of Lord Wright's test to say that, because the general exclusion in time and place of the business of air transport in favour of a government undertaking could only be accomplished under the commerce power, the freedom infringed must necessarily be related to State boundaries. If, on the other hand, the answer is offered that the transmutation of the business into a government undertaking means that the function is still freely carried on, it is met by the proposition, so often enunciated by Isaacs J., that in s. 92 "free" means free from governmental restriction or obstruction, whether legislative or executive, a proposition for which the judgment of Lord Atkin in James v. Cowan[103] is authority. It comes back, in my opinion, to the position of the business of inter-State transportation as part of commerce and intercourse. If it is part of the denotation of that expression in s. 92, as I think it clearly must be, then I see no escape from the conclusion that Part IV. is inconsistent with that constitutional restraint. If, on the other hand, carrying on inter-State transportation were held to be outside the protection of s. 92, it would be hard indeed to bring it directly under s. 51 (i.). In that case the legislative power could affect it only as an incident of the subject matter of the power. There would then arise the difficulty to which I have already referred, that to provide for the carriage of passengers not concerned in commerce might be considered outside the power. My opinion, however, is that inter-State transportation falls directly under s. 51 (i), but is also within the protection of s. 92. For the reasons I have given, I think that s. 92 invalidates so much of Part IV. as is not concerned with the Territories.
The other and more important question is whether Part IV., as a whole, can be severed from the rest of the Airlines Act. It is said on the part of the plaintiffs that it contains provisions indispensable to the conception upon which the statute is based. To authorize the establishment of an airline service to operate as a monopoly is one thing, to authorize one to compete in air transport is another. Accordingly, it is said, the invalidity of Part IV. changes the character of the measure. Further, it is pointed out that sub-s. (2) of s. 19, to which reference was made in the earlier part of this judgment, is linked with Part IV. It imposes upon the Commission the duty of exercising its powers of establishing, maintaining and operating airline services as fully and adequately as may be necessary to satisfy the need for such services: compare the definition in s. 4 of . Reliance is placed upon this provision as itself contemplating an exclusive service and as measuring the Commission's duty on that assumption. These considerations are, no doubt, important and, prior to the enactment of s. 15A of the Acts Interpretation Act 1901-1941, they might have proved decisive. But that provision has, in effect, introduced a rule of construction whereby 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. The application of the provision is seldom easy, but it is illustrated by a number of decisions of this Court, a collection of which will be found in Fraser, Henleins Pty. Ltd. v. Cody[104], and it is further elucidated by the industry expended in the United States upon the exposition of similar clauses. But I think little help is to be gained from abstract discussions of the effect of severability provisions. As a practical conclusion, it comes back to the manner in which the intention of the legislature is to be ascertained, that is to say, the presumptions to be made. My view, which I repeat, is that such severability clauses "establish a presumption in favour of the independence, one from another, of the various provisions of an enactment, to which effect should be given unless some positive indication of interdependence appears from the text, context, content or subject matter of the provisions"[105].
Now the general considerations upon which the argument against severability is founded may be conceded. But the difference, great as it is between the establishment of an exclusive and a non-exclusive government airline service, does not control the answer to the question what did Parliament intend. To say that Parliament intended that the service in the conditions prescribed by s. 46 and s. 47 should be exclusive is to throw little or no light on the question whether the intention that they should be exclusive was paramount, so that the intention that there should be a government service was completely dependent upon it. In many departments of the law we are faced with the problem of deciding what is essential and what is not essential for the purpose of carrying out sub modo an intention which is expressed on the assumption that it will be entirely effective: See Attorney-General (N.S.W.) v. Perpetual Trustee Co. (Ltd.)[106]. The solution often depends on an intuitive understanding of the underlying purpose of the plan of the framer of the instrument. But it is precisely that uncertain and undesirable mode of solution that s. 15A supersedes.
This, if valid, effected a change in the character of reg. 79. It became, so far as its natural meaning goes, a prohibition subject to licence, with power to grant or refuse the licence and impose conditions upon the licensee without any express restriction as to the grounds. Unless restrained by interpretation or by the operation of s. 46 (b) of the Acts Interpretation Act 1901-1941, I should think that a regulation of that nature would be bad as contrary to s. 92, in its operation on inter-State transport. It is enough, I think, to refer to Gratwick v. Johnson[107]. But the question is whether it ought to be read down in some way so as to be valid. It is suggested that with the help of s. 46 (b) and upon a survey of the other purposes of the Regulations, the exercise of the discretion might be confined by interpretation so as to avoid inconsistency with s. 92. An analogy was sought in the course taken in Shrimpton v. The Commonwealth[108]. But there we were dealing with the ambit of a constitutional power and with regulations affording some guidance as to purpose. The difficulty here lies in the fact that Part VII. deals with a subject standing apart from the field covered or the general purpose served by the rest of the Regulations and by the further fact that the object of the amendment of 1940 appears to have been to enlarge the discretion; while we are invited to confine it almost within its former limits.
"adequate airline service" means—
Section 19 (1) (b) refers to an airline service between any place in any Territory of the Commonwealth and any place in Australia outside that Territory. Since Australia is defined by s. 4 of the Act to include the Territories of the Commonwealth, such a service could exist between a Territory and another Territory, or between a Territory and a State, or between one or more Territories and one or more States. But if the service had scheduled stopping places in more than one State it would be an inter-State airline service and not a Territorial airline service. The operation of s. 19 (1) (b) is, therefore, confined to airline services operating in two or more Territories, or in one or more Territories and in one State. The Parliament of the Commonwealth would have power to provide what services should operate in one or more Territories. But in the case of a service between one or more Territories and a State, I am unable to find any power in the Constitution which would enable the Parliament to legislate so as to bind the State. The words "other countries" in s. 51 (i.) do not, in my opinion, include Territories. Section 51 (xxxix.) empowers the Parliament to make laws for the peace, order and good government of the Commonwealth with respect to matters incidental to the execution of any powers vested by the Constitution in the Parliament. Assuming that this placitum applies to legislation under s. 122, it would not, I think, be incidental to laws for the government of a Territory to make a law affecting the sovereignty of a State. If the Parliament has power under this placitum to make a law binding a State in respect to communications between a Territory and a State the strange result follows that it possesses as a legislative power incidental to s. 122 a power analogous to s. 51 (i.), but without the limitation imposed by s. 92. I can find nothing in Buchanan v. The Commonwealth[109], R. v. Bernasconi[110], Mainka v. Custodian of Expropriated Property[111], Porter v. The King; Ex parte Chin Man Yee[112], or Ffrost v. Stevenson[113] to support the existence of such a power, and there is a great deal in the reasoning of these cases to the contrary. The Commonwealth is not helpless in the matter. It can, if it wishes, admit the Territories to the Commonwealth as States under s. 121 of the Constitution, and the new and previous States would then all be subject to Commonwealth legislation under s. 51 (i.) and entitled to the protection of s. 92. If, therefore, a State would not agree to co-operate with the Commission the result would be that there would be no services between that State and the Territory, but this would not affect the validity of s. 19 (1) (b), if severable, as a valid exercise of the powers conferred upon the Parliament by s. 122.
The Constitution must be construed as a whole, and so as to reconcile, as far as possible, the existence of these legislative powers with the prohibition upon their exercise imposed by s. 92. In performing this task the Court must be guided by the views expressed by Lord Wright upon the meaning, scope, and operation of the section when delivering the judgment of the Privy Council in James v. The Commonwealth[114]. In the judgment his Lordship discussed a number of the previous decisions of this Court. He pointed out that, in the cases preceding McArthur's Case[115], this Court was concerned with the question of freedom in passing the State borders. These cases all proceeded on the basis that s. 92 bound the Commonwealth as well as the States. In McArthur's Case[116] it was held that the section did not bind the Commonwealth and this opinion prevailed until it was overruled by the Privy Council in James v. The Commonwealth[117]. It is evident that Lord Wright considered that McArthur's Case[118] was wrongly decided, not only in holding that s. 92 did not bind the Commonwealth, but also in holding that the Queensland Act, there in question, infringed the section. He said: "There was no prevention or hindrance under the Act in respect of the passage of goods from State to State; the law applied equally to all goods sold in the State whether or not they came across the border ... in truth the decision deprived Queensland of its sovereign right to regulate its internal prices"[119]. It is also evident that his Lordship considered that Vizzard's Case[120] was correctly decided, that he accepted the general approach to s. 92 and reasoning of Evatt J. in that case, and that he gave his express approval to the particular passage in the judgment of Evatt J. cited[121]. Lord Wright concluded by saying that "the true criterion seems to be that what is meant is freedom as at the frontier or, to use the words of s. 112, in respect of goods passing into or out of the State," that "in every case it must be a question of fact whether there is an interference with this freedom of passage," and that "as a matter of actual language, freedom in s. 92 must be somehow limited, and the only limitation which emerges from the contest and which can logically and realistically be applied, is freedom at what is the crucial point in inter-State trade, that is at the State barrier"[122].
In the United States the business of carrying passengers and goods for reward from one State to another has been held on many occasions to be of the essence of inter-State commerce (Chicago and Northwestern Railway Co. v. Fuller[123]; Philadelphia Mail Steamship Co. v. Pennsylvania[124]; Hoke v. United States[125]; Dahnke-Walker Milling Co. v. Bondurant[126]; Caskey Baking Co. v. Virginia[127]; Edwards v. California[128]; Northwest Airlines v. Minnesota[129]). I shall cite a few short passages from these cases. In Chicago and Northwestern Railway Co. v. Fuller[130] it is said: "Commerce is traffic, but it is much more. It embraces also transportation by land and water, and all the means and appliances necessarily employed in carrying it on." In Philadelphia Mail Steamship Co. v. Pennsylvania[131] it is said: "This transportation was an act of inter-State and foreign commerce. It was the carrying on of such commerce. It was that, and nothing else." In Hoke v. United States[132] it is said: "Commerce among the States, we have said, consists of intercourse and traffic between their citizens, and includes the transportation of persons and property. There may be, therefore, a movement of persons as well as of property; that is, a person may move or be moved in inter-State commerce." In James v. Cowan[133] Isaacs J., in a judgment which Lord Atkin referred to in the Privy Council on appeal as "a convincing judgment"[134], pointed out that the right of inter-State trade and commerce protected by s. 92 is a personal right attaching to the individual, and that is a right of passing from one State to another, of transporting goods from one State to another, and dealing with them in another State. There can be no doubt, in my opinion, that to engage in the business of transporting passengers and goods by air for reward from one State to another is to engage in inter-State commerce. If it is not, then the provisions of the Air Navigation Regulations and of the National Airlines Act relating to air navigation among the States must fall to the ground, because they derive their entire validity from s. 51 (i.) of the Constitution. In order, therefore, that reg. 79 (3) and the National Airlines Act in their relation to commerce among the States should be valid, they must be, in the former case a delegated exercise, and in the latter case an exercise, of s. 51 (i.) which does not contravene s. 92. As ss. 51 (i.) and 92 appear in the same Constitution, there must be a field of legislation open to the Parliament of the Commonwealth under s. 51 (i.), just as there must be a field of legislation preserved to the Parliaments of the States by s. 107, which does not coincide with the area fenced off by s. 92.
It was contended on behalf of the defendants that the reasoning of the majority of this Court in Vizzard's Case[135] (and the analogous cases of O. Gilpin Ltd. v. Commissioner for Road Transport and Tramways (N.S.W.)[136]; Duncan & Green Star Trading Co. Pty. Ltd. v. Vizzard[137]; Riverina Transport Pty. Ltd. v. Victoria[138]) should be followed, and that, if this is done, reg. 79 (3) and the Act, in their relation to inter-State commerce, must be held to be valid. But Lord Wright has said that the question whether an Act contravenes s. 92 is in every case one of fact, and these decisions must, therefore, in my opinion, all be regarded as decisions upon their particular facts. The question in each case is, does the legislation in fact interfere with the freedom of passage from one State to another. In answering this question, the considerations adverted to as material in the judgments in Vizzard's Case[139] and the analogous cases must be given careful attention, but they all appear to be based fundamentally on the right of a State to make laws of a general non-discriminatory character for regulating the care and upkeep and preserving the financial stability of public utilities, particularly railways and roads, established and maintained at the expense of the State. So in the United States, where the power to regulate commerce among the States has been held to be an exclusive power, it has also been held that the laws of a State may validly provide for such matters as the licensing of drivers, the registration of motor vehicles, and the exaction of a licence fee as a contribution to the upkeep of the roads; and for a licensing system which limits the number or the weight and size of vehicles using the roads in the interests of the public safety (Bradley v. Public Utilities Commission[140])—and see the cases in the Supreme Court of the United States cited in the Constitution of the United States (annotated by the Senate to 1st January 1938, pp. 187-189) and in the judgment of McTiernan J. in Vizzard's Case[141]. In Vizzard's Case[142] and the analogous cases this Court has perhaps gone further in upholding State legislation of this nature than the Supreme Court of the United States. But this would appear to be because the railways in Australia are all owned by the States, so that, in establishing and maintaining roads, the States are creating means of competition with their own instrumentalities.
It is a matter of public notoriety that a few years after the end of the last war there was a tremendous increase in the amount of motor traffic in Australia and that about this time great improvements were made to the main roads of many of the States. Thus in New South Wales the Main Roads Board was constituted by the Main Roads Act 1924, and in 1926 the Federal Aids Roads Act was the first of a number of Commonwealth Acts which authorized the expenditure, under agreements between the Commonwealth and the States, of Commonwealth revenue upon the establishment and maintenance of the main roads of the States. This increase in motor traffic caused competition between carriage by road and rail, and this led to the passing in New South Wales of the Transport Co-ordination Act, which was held to be valid in Vizzard's Case[143], restricting the carriage of passengers and goods in New South Wales by road to vehicles licensed under the Act. In Vizzard's Case[144] Evatt J. said that "the Act proceeds upon the broad principle that the interests of the State call for the regulation of the whole service of land transport wherever it is conducted upon the roads of the State of New South Wales." There is no obligation imposed upon the States to facilitate trade and commerce by building roads, so that, if they choose to do so and thereby provide means for competition with their own railways, it is simply an exercise of their own sovereign rights to co-ordinate traffic by rail or road, and to confine the use of the roads to particular persons and vehicles. If the choice of these persons and vehicles has no relation to their passage across the border, but the legislation operates without discrimination with respect to all persons and vehicles desirous of using the roads, such legislation is not aimed or directed at inter-State commerce but at regulating, maintaining, and co-ordinating a number of utilities for trade, commerce, and intercourse, State and inter-State, provided by the State. So a State could, I should think, build a number of aerodromes, and provide that only aeroplanes which fulfilled certain conditions could use such aerodromes, or it could confine their use to aeroplanes owned by itself. Provided the conditions of use were non-discriminatory and were unrelated to flying across the border, the legislation would not infringe s. 92. It would be legislation regulating the use of a further facility for all trade and commerce provided by the State. And it would seem to follow that if the Commonwealth built aerodromes it could also pass non-discriminatory legislation regulating the use of such aerodromes, or confining their use to its own purposes: Cf. reg. 110A of the Air Navigation Regulations. But it would be a different matter if a carrier or carriers of persons or goods by land were able to persuade the owners of private land on each side of the border to build a road on which to carry on their business, and one of the border States passed a law preventing such carriers crossing the border by such a road. Such a law would not be made to regulate, preserve and co-ordinate facilities provided by the State, but would be aimed at inter-State commerce and would contravene s. 92. In the same way legislation by a State or the Commonwealth simply to prevent aeroplanes flying from one State to another, and from using suitable aerodromes built in the States by private enterprise, would be an infringement of this section. Such legislation would be an interference with the freedom of passage of persons and goods from one State to another. And it would not matter, in my opinion, that the Commonwealth was providing a service which was fully adequate to transport all business offering in persons and goods from one State to another.
References in Vizzard's Case[145] and the analogous cases, to Acts, such as the New South Wales Transport Co-ordination Act, providing a more orderly system of land transport, and to their having the effect of facilitating and increasing the passage of persons and the flow of commodities to and from the States concerned, must be read in the light of the particular facts of those cases, and particularly in the light of the fundamental fact that the flow was facilitated and increased along routes provided by the State itself. But in the case of air routes the only facilities which the Commonwealth can provide are aerodromes and aids to navigation. Vizzard's Case[146] and the analogous cases are, as I have said, authorities that the Commonwealth can exercise very wide powers of control over the use of such facilities provided by itself. But private enterprises can also provide suitable aerodromes and aids to navigation. These cases fall far short of establishing that it is not a contravention of s. 92 for the Commonwealth to attempt to monopolize the business of transporting persons and goods by air, although adequate facilities can be provided for this purpose by private enterprise, and persons engaged in the business do not need to use aerodromes and aids to navigation provided by the Commonwealth. Isaacs J., in the judgment already cited, said the freedom guaranteed by s. 92 is a personal right attaching to the individual. To say to an individual that he may not engage in the business of inter-State air carriage is a direct negation of that right. No doubt that right can be regulated so far as may be necessary to make air navigation safe. But reg. 79 (3) and ss. 46 (1) and 47 (a) of the Act go far beyond anything that is required to regulate safety in the air, or to give the Commonwealth reasonable control over those facilities which it can itself provide to increase the flow of inter-State traffic by air. The only limit that can be imposed upon the discretion conferred upon the Director-General of Civil Aviation by reg. 79 (3) to refuse a licence is that the discretion must be exercised bona fide in furtherance of the purpose for which it was given (Weinberger v. Inglis[147]; Liversidge v. Sir John Anderson[148]; Point of Ayr Collieries Ltd. v. Lloyd-George[149]; Yoxford and Darsham Farmers' Association Ltd. v. Llewellin[150]; Swan Hill Corporation v. Bradbury[151]). It is impossible to limit his discretion to matters related to safety in navigation by air, because the amending regulation expressly extends his discretion beyond these matters and provides that he may refuse to issue a licence. No guide can, therefore, be found in the purpose and scope of the regulations which would enable reg. 79 (3) to be read down by construction in accordance with s. 46 (b) of the Acts Interpretation Act 1901-1941 so as to confine the discretion to refuse a licence to matters which would not contravene the right of the individual to engage in the particular phase of inter-State commerce in question. It could be argued, however, that reg. 6 would save the sub-regulation in its application to air navigation within the Territories, and that it has an independent validity under the State Acts in relation to intra-State air navigation. But its operation under the State Acts could affect inter-State commerce, and it is probable that it is as invalid under these Acts as it is invalid as part of the law of the Commonwealth. In Pidoto's Case[152] I expressed my opinion upon the manner in which ss. 15A and 46 (b) of the Acts Interpretation Act operate. It appears to me that reg. 79 (3) was intended to have a complete and inseverable operation under the laws of the Commonwealth, of the Territories, and of the States at the same time, and that to construe it as valid in relation to the Territories, or even to the Territories and States, would cause it to have a partial operation in these respects which would be altogether different to that which it would have had if it had been completely operative. Sub-regulation 79 (3) is, in my opinion, as great a contravention of s. 92 as the legislation held to be invalid in Gratwick v. Johnson[153], and is inseverable and therefore wholly void.
But I am of opinion that the contention that s. 51 (i.) of the Constitution does not authorize the Commonwealth to incorporate an authority to engage in trade and commerce on its behalf must fail. The power of legislation conferred by the placitum is plenary in its fullest sense, and must be given a wide and liberal interpretation. It is not, like the commerce power in the Constitution of the United States, a power to regulate trade and commerce. It is a power to make laws with respect to trade and commerce. Even under the more limited power, the Supreme Court of the United States has held that Congress can incorporate authorities to carry on businesses ancillary to facilities which it has provided to promote the flow of commerce, such as the business of generating and selling electricity as ancillary to the construction of reservoirs to control the flow of navigable rivers (Oklahoma Ex Rel. Phillips v. Guy F. Atkinson Co.[154]). A law incorporating an authority to carry on trade and commerce on behalf of the Commonwealth is, I think, a law with respect to trade and commerce. Under s. 122 the Commonwealth can incorporate an authority to engage in trade and commerce on its behalf in the Territories. The position is, therefore, that, except so far as prohibited by s. 92, the Parliament of the Commonwealth can under s. 51 (i.) set up an authority to engage in the business of carrying persons and goods by air for reward amongst the States, and can under s. 122 do so in respect of such carriage in, into, and out of the Territories. Section 92 does not prevent the Commonwealth creating a monopoly in such a business except in the case of trade and commerce and inter-course among the States. Sections 46 (1) and 47 (a) of the Act, like reg. 79 (3), contravene s. 92. But s. 46 (2) is carefully limited to rendering inoperative existing Territorial airlines licences in respect of scheduled stopping places other than stopping places in a State, and s. 47 (b) is carefully limited to prohibiting the licensing authority issuing a licence in respect of a Territorial airline service which would authorize the transport by air between any scheduled stopping places, not being stopping places in a State. I can see no reason, therefore, why these sub-sections, to which s. 92 does not apply, should not be valid.
Solicitors for the plaintiff in each action, Malleson, Stewart & Co.
Solicitor for the defendants, H. F. E. Whitlam, Crown Solicitor for the Commonwealth.
[1] [1936] HCA 52; (1936) 55 C.L.R. 608.
[2] [1933] HCA 12; (1933) 48 C.L.R. 316.
[3] [1933] HCA 62; (1933) 50 C.L.R. 30.
[4] [1937] HCA 33; (1937) 57 C.L.R. 327.
[5] (1933) 48 C.L.R., at p. 324.
[6] [1933] HCA 62; (1933) 50 C.L.R. 30.
[7] (1933) 50 C.L.R., at p. 51.
[8] [1920] HCA 77; (1920) 28 C.L.R. 530.
[9] (1933) 50 C.L.R., at p. 50.
[10] (1933) 50 C.L.R., at p. 51.
[11] (1933) 50 C.L.R., at pp. 56, 59.
[12] (1933) 50 C.L.R., at p. 68.
[13] (1933) 50 C.L.R., at p. 87.
[14] (1933) 50 C.L.R., at p. 98.
[15] [1933] HCA 12; (1933) 48 C.L.R. 316.
[16] [1933] HCA 62; (1933) 50 C.L.R. 30.
[17] [1877] USSC 167; (1878) 96 U.S. 1 [24 Law. Ed. 708].
[18] [1885] USSC 125; (1885) 114 U.S. 196 [29 Law. Ed. 158].
[19] [1919] USSC 32; (1919) 248 U.S. 420 [63 Law. Ed. 337].
[20] [1824] USSC 18; (1824) 22 U.S. 1 [6 Law. Ed. 23].
[21] [1880] USSC 40; (1881) 102 U.S. 691 [26 Law. Ed. 238].
[22] (1917) 242 U.S. 470 [61 Law. Ed. 442].
[23] [1909] HCA 36; (1909) 8 C.L.R. 330.
[24] (1819) 17 U.S. 316 [4 Law. Ed. 579].
[26] [1894] USSC 169; (1894) 153 U.S. 525 [38 Law. Ed. 808].
[27] [1888] USSC 161; (1888) 127 U.S. 1 [32 Law. Ed 150].
[28] [1933] HCA 12; (1933) 48 C.L.R. 316.
[29] [1933] HCA 62; (1933) 50 C.L.R. 30.
[30] [1936] UKPCHCA 4; (1936) A.C. 578; 55 C.L.R. 1.
[31] [1939] HCA 28; (1939) 62 C.L.R. 116.
[32] [1945] HCA 7; (1945) 70 C.L.R. 1.
[33] (1939) 62 C.L.R., at p. 127.
[34] [1945] HCA 4; (1945) 69 C.L.R. 613.
[35] [1945] HCA 7; (1945) 70 C.L.R. 1.
[36] (1945) 70 C.L.R., at p. 15.
[37] [1936] UKPCHCA 4; (1936) A.C. 578; 55 C.L.R. 1.
[38] [1936] UKPCHCA 4; (1936) A.C. 578; 55 C.L.R. 1.
[39] [1921] HCA 31; (1921) 29 C.L.R. 357.
[40] [1943] HCA 37; (1943) 68 C.L.R. 87.
[41] (1945) A.C. 68, at p. 102.
[42] [1936] UKPCHCA 4; (1936) A.C. 578, at p. 614; 55 C.L.R. 1, at p. 43.
[43] (1878) 3 App. Cas. 889, at pp. 904, 905.
[44] [1936] UKPCHCA 4; (1936) A.C. 578; 55 C.L.R. 1.
[45] (1936) A.C., at pp. 630, 631, 55 C.L.R., at pp. 58, 59.
[46] (1936) A.C., at p. 628; 55 C.L.R., at p. 56.
[47] (1936) A.C., at pp. 630, 631; 55 C.L.R., at pp. 58, 59.
[48] (1936) A.C., at pp. 625, 626; 55 C.L.R., at pp. 54, 55.
[49] [1914] HCA 73; (1914) 19 C.L.R. 298, at pp. 307, 314, 327, 335.
[50] [1931] HCA 1; (1931) 44 C.L.R. 492.
[51] [1914] HCA 73; (1914) 19 C.L.R. 298, at pp. 305, 306.
[52] [1824] USSC 18; (1824) 22 U.S. 1, at p. 189 [6 Law. Ed. 23, at p. 68].
[53] (1914) 19 C.L.R., at p. 305.
[54] [1920] HCA 77; (1920) 28 C.L.R. 530, at p. 546.
[55] [1941] USSC 49; (1941) 312 U.S. 100, at p. 113 [85 Law. Ed. 616].
[56] [1824] USSC 18; (1824) 22 U.S. 1, at p. 196 [6 Law. Ed. 23, at p. 70].
[57] [1907] USSC 16; (1907) 204 U.S. 24, at pp. 33-35 [51 Law. Ed. 351, at pp. 356-357].
[58] [1933] HCA 62; (1933) 50 C.L.R. 30.
[59] [1935] HCA 8; (1935) 52 C.L.R. 189.
[60] [1935] HCA 5; (1935) 52 C.L.R. 215.
[61] [1935] HCA 43; (1935) 53 C.L.R. 493.
[62] [1937] HCA 33; (1937) 57 C.L.R. 327.
[63] [1939] HCA 28; (1939) 62 C.L.R. 116, at p. 127.
[64] [1935] HCA 43; (1935) 53 C.L.R. 493, at p. 503.
[65] [1936] UKPCHCA 4; (1936) A.C. 578, at p. 631; 55 C.L.R. 1, at p. 59.
[66] [1933] HCA 12; (1933) 48 C.L.R. 316.
[67] [1939] HCA 28; (1939) 62 C.L.R. 116.
[68] [1933] HCA 11; (1933) 48 C.L.R. 266, at pp. 302, 303.
[69] [1936] UKPCHCA 4; (1936) A.C. 578; 55 C.L.R. 1
[70] [1933] HCA 11; (1933) 48 C.L.R. 266.
[71] [1936] UKPCHCA 4; (1936) A.C. 578; 55 C.L.R. 1
[72] [1933] HCA 11; (1933) 48 C.L.R. 266.
[73] [1824] USSC 18; (1824) 22 U.S. 1, at p. 196 [6 Law. Ed. 23, at p. 70].
[74] [1904] USSC 157; (1904) 195 U.S. 138 [49 Law. Ed. 128].
[75] (1905) 197 U.S. 516 [49 Law. Ed. 862].
[76] [1939] HCA 27; (1939) 61 C.L.R. 735, at p. 772.
[77] (1912) 16 C.L.R. 99, at p. 118.
[78] [1894] USSC 192; (1893) 154 U.S. 204 [38 Law. Ed. 962].
[79] (1917) 242 U.S. 470 [61 Law. Ed. 442].
[80] [1919] USSC 32; (1919) 248 U.S. 420, 423 [63 Law. Ed. 337, 339].
[81] [1824] USSC 18; (1824) 22 U.S. 1, at p. 229 [6 Law. Ed. 23, at p. 78].
[82] [1877] USSC 181; (1877) 95 U.S. 465, at p. 470 [24 Law. Ed. 527, at p. 530].
[83] [1933] HCA 62; (1933) 50 C.L.R. 30; (1935) 52 C.L.R. 189, 215 [1935] HCA 43; ; (1935) 53 C.L.R. 493; (1937) 57 C.L.R. 327.
[84] [1913] HCA 29; (1913) 16 C.L.R. 315.
[85] [1915] HCA 13; (1915) 19 C.L.R. 629.
[86] [1926] HCA 9; (1926) 37 C.L.R. 432.
[87] [1926] HCA 9; (1926) 37 C.L.R. 432.
[88] [1924] HCA 20; (1924) 34 C.L.R. 297.
[89] [1937] HCA 41; (1937) 58 C.L.R. 528.
[90] [1924] HCA 20; (1924) 34 C.L.R. 297.
[91] [1903] USSC 7; (1903) 187 U.S. 617, at p. 619 [47 Law. Ed. 333, at p. 335].
[92] [1937] USSC 97; (1937) 301 U.S. 308, 322 [81 Law. Ed. 1122, 1133].
[93] [1913] HCA 29; (1913) 16 C.L.R. 315.
[94] [1915] HCA 13; (1915) 19 C.L.R. 629.
[95] [1824] USSC 18; (1824) 22 U.S. 1 [6 Law. Ed. 23].
[96] [1824] USSC 18; (1824) 22 U.S. 1 [6 Law. Ed. 23].
[97] (1824) 22 U.S., at p. 229 [6 Law. Ed., at p. 78].
[98] [1933] HCA 62; (1933) 50 C.L.R. 30; (1935) 52 C.L.R. 189, 215 [1935] HCA 43; ; (1935) 53 C.L.R. 493; (1937) 57 C.L.R. 327.
[99] (1933) 50 C.L.R., at pp. 50, 51.
[100] (1935) 52 C.L.R., at pp. 212, 213.
[101] (1935) 53 C.L.R., at p. 508.
[102] [1936] UKPCHCA 4; (1936) A.C. 578, at p. 630; 55 C.L.R. 1, at p. 58.
[103] (1932) A.C. 542, at pp. 558, 561; 47 C.L.R. 386, at pp. 396, 398.
[104] [1945] HCA 49; (1945) 70 C.L.R. 100.
[105] (1945) 70 C.L.R., at p. 127.
[106] [1940] HCA 12; (1940) 63 C.L.R. 209, at pp. 226, 227.
[107] [1945] HCA 7; (1945) 70 C.L.R. 1.
[108] [1945] HCA 4; (1945) 69 C.L.R. 613.
[109] [1913] HCA 29; (1913) 16 C.L.R. 315.
[110] [1915] HCA 13; (1915) 19 C.L.R. 629.
[111] [1924] HCA 20; (1924) 34 C.L.R. 297.
[112] [1926] HCA 9; (1926) 37 C.L.R. 432.
[113] [1937] HCA 41; (1937) 58 C.L.R. 528.
[114] [1936] UKPCHCA 4; (1936) A.C. 578; 55 C.L.R. 1.
[115] [1920] HCA 77; (1920) 28 C.L.R. 530.
[116] [1920] HCA 77; (1920) 28 C.L.R. 530.
[117] [1936] UKPCHCA 4; (1936) A.C. 578; 55 C.L.R. 1.
[118] [1920] HCA 77; (1920) 28 C.L.R. 530.
[120] [1933] HCA 62; (1933) 50 C.L.R. 30.
[121] (1936) A.C., at pp. 621, 622.
[122] (1936) A.C., at pp. 630, 631.
[123] [1873] USSC 131; (1873) 84 U.S. 560, at p. 568 [21 Law. Ed. 710, at p. 714].
[124] [1887] USSC 204; (1887) 122 U.S. 326, at p. 336 [30 Law. Ed. 1200, at p. 1201].
[125] [1913] USSC 60; (1913) 227 U.S. 308, at p. 320 [57 Law. Ed. 523, at p. 526].
[126] [1921] USSC 197; (1921) 257 U.S. 282, at pp. 290, 291 [66 Law. Ed. 239, at pp. 243, 244].
[127] [1941] USSC 95; (1941) 313 U.S. 117, at p. 119 [85 Law. Ed. 1223, at p. 1226].
[128] [1941] USSC 156; (1941) 314 U.S. 160, at p. 172 [86 Law. Ed. 119, at p. 124].
[129] [1944] USSC 114; (1944) 322 U.S. 292 [88 Law. Ed. 1283].
[130] [1873] USSC 131; (1873) 84 U.S. 560, at p. 568 [21 Law. Ed. 710, at p. 714].
[131] [1887] USSC 204; (1887) 122 U.S. 326, at p. 336 [30 Law. Ed. 1200, at p. 1201].
[132] [1913] USSC 60; (1913) 227 U.S. 308, at p. 320 [57 Law. Ed. 523, at p. 526].
[133] [1930] HCA 48; (1930) 43 C.L.R. 386, at pp. 418, 419.
[135] [1933] HCA 62; (1933) 50 C.L.R. 30.
[136] [1935] HCA 8; (1935) 52 C.L.R. 189.
[137] [1935] HCA 43; (1935) 53 C.L.R. 493.
[138] [1937] HCA 33; (1937) 57 C.L.R. 327.
[139] [1933] HCA 62; (1933) 50 C.L.R. 30.
[140] [1933] USSC 71; (1933) 289 U.S. 92, at pp. 95, 96 [77 Law. Ed. 1053, at p. 1056].
[141] [1933] HCA 62; (1933) 50 C.L.R. 30, at pp. 104-107.
[142] [1933] HCA 62; (1933) 50 C.L.R. 30, at pp. 104-107.
[143] [1933] HCA 62; (1933) 50 C.L.R. 30.
[144] (1933) 50 C.L.R., at p. 76.
[145] [1933] HCA 62; (1933) 50 C.L.R. 30.
[146] [1933] HCA 62; (1933) 50 C.L.R. 30.
[147] (1919) A.C. 606, at p. 626.
[148] [1941] UKHL 1; (1942) A.C. 206.
[150] (1945) 173 L.T. 103, at p. 107.
[151] [1937] HCA 15; (1937) 56 C.L.R. 746, at pp. 757, 758.
[152] [1943] HCA 37; (1943) 68 C.L.R. 87, at pp. 130, 131.