HIGH COURT OF AUSTRALIA

                                                          King

                                                           Vs.

                                                        Vizzard

                     (Gavan Duffy C.J., Rich, Starke, Dixon, Evatt and McTiernan JJ.)

                                                 15 December 1933

Gavan Duffy C.J.

Thirteen years ago this Court, in the case of W. & A. McArthur Ltd. v. State of Queensland[1], laid
down the following propositions with respect to sec. 92 of the Constitution of the Commonwealth of
Australia:--(1) The section in no way limits or restricts the legislative power of the Commonwealth.
(2) The section precludes the Parliaments of the States from in any way regulating or controlling
trade, commerce, and intercourse among the States. Since then members of this Court in various and
varying judgments have attempted to explain or attenuate the second proposition but the validity of
both propositions has remained without any formal challenge until the present case.

The Parliament of New South Wales passed an Act--State Transport (Co-ordination) Act, No. 32 of
1931, as amended by the Transport (Division of Functions) Act, No. 31 of 1932, intituled: "An Act
to provide for the improvement and for the co-ordination of means of and facilities for locomotion
and transport; to constitute a Board of Commissioners for that purpose; to amend the Government
Railways Acts 1912-1930, and certain other Acts; and for purposes connected therewith." It
contained the following provisions:--Sec. 3 (2). "This Act shall be read and construed so as not to
exceed the legislative power of the State to the intent that where any enactment thereof would, but
for this subsection, have been construed as being in excess of that power, it shall nevertheless be a
valid enactment to the extent to which it is not in excess of that power." Sec. 12(1). "Any person
who after a date appointed by the Governor and notified by proclamation published in the Gazette
operates a public motor vehicle shall, unless such vehicle is licensed under this Act by the board and
unless he is the holder of such license, be guilty of an offence against this Act: Provided that this
subsection shall not apply to a public motor vehicle that is being operated under and in accordance
with an exemption from the requirement of being licensed granted under section nineteen or a
permit granted under section twenty-two of this Act." Sec. 19 (1). "The board may grant exemption
from the requirements to be licensed under this Act in respect of any public motor vehicle or class
of public motor vehicles in such cases and under such conditions as they think fit." The applicant
used a motor car in the course of inter-State trade without having obtained either a licence or an
exemption, and was convicted under sec. 12 (1). He is clearly within the words of this section, and
the question for our consideration is whether he is removed from its operation by sec. 92 of the
Constitution and sec. 3 (2) of the Act. In this case the Commonwealth and the State of Victoria
obtained leave to intervene and on the hearing all parties were asked to discuss McArthur's Case[2].
They did so and an elaborate argument was addressed to us on the true meaning of sec. 92. The
result of our deliberations on this question have been unsatisfactory. It appears to be impossible to
obtain a distinct ruling by a majority of the Court but my brothers Evatt and McTiernan and I are of
opinion that neither of the propositions I have mentioned is justified by the language of sec. 92. We
think, however, that it would be undesirable that their validity should be affected by the casting vote
of the presiding Judge in an equally divided Court and having expressed our opinion, we pass on to
consider the present case on the hypothesis that those propositions correctly expressed the law.

The cases cited by my brothers Evatt and McTiernan afford ample authority for the proposition that
before determining that an Act of the legislature is forbidden by sec. 92 of the Constitution the
Court must be able to say that the real intention of the legislature as expressed in the statute was to
interfere with freedom of trade, commerce, and intercourse between the States. If the intention of
the legislature is merely to deal with a subject within its own jurisdiction the fact that the enactment
indirectly results in an interference with inter-State trade does not bring it within the prohibition
implied in sec. 92. In this case I think that the intention of the Legislature was that stated in the title
of the Act, namely to provide that transport within the State should be carried on in the most
effective and economic manner and to co-ordinate the means for carrying on such transport so as to
obtain the best available services. This being the intention, sec. 3 (2) provides against any
unconstitutional exercise of the powers conferred by the Act and sec. 19 (1) enables anyone who
because he is engaged in inter-State transport, or who should, for any other reason, be free of the
provisions of the Act, to obtain an exemption from those provisions. In other words, the Act of
Parliament recognizes that the State officials cannot distinguish persons operating motor cars who
are subject to the laws of the State with respect to transport from those who are not so subject and
inflicts a penalty not for travelling without a licence, but for travelling without either obtaining a
licence or obtaining an exemption from the necessity for having a licence. Again, a distinction has
been made between interfering with trade, commerce and intercourse and interfering with the
methods by which they are carried on. No one would suggest that the State must furnish such roads
or other conveniences as the inter-State traveller may desire, nor, I think, would any one suggest
that the State must leave unaltered all conveniences for travelling which are already in existence. It
has been said that the Legislature is not necessarily controlling or regulating inter-State trade when
it prescribes the facilities it will offer for carrying on trade generally, though if, on examination, it
appears that the object of the Legislature is really to prejudice inter-State trade, its enactment may
be invalid.

Again, some of the Justices who were parties to the decision in McArthur's Case[3] have stated that
what is forbidden by sec. 92 is any State law which obstructs or restricts the freedom of trade or
commerce among the States and the law may control in some degree the conduct and liability of
persons engaged in inter-State commerce. Now, for anything disclosed in the evidence, this Act of
Parliament may on the whole benefit not only inter-State trade and commerce at large but even that
part of inter-State trade and commerce which is carried on by the applicant. It is true that the
obtaining of a licence and the payment of a licence fee cannot of themselves be regarded as
beneficial to the licensee, but the rights acquired by and the other consequences which follow from
the possession and exclusion of others from such possession may be of very great value to the
licensee and his business.

On the whole, having regard to the liberal interpretation which the Justices who formulated the
second proposition have chosen to put upon it, I feel at liberty to say that the conviction was right
and the rule should be discharged.

Rich J.

This case calls upon us once more to apply the vague language of sec. 92 of the Constitution. It
arises upon a new aspect of the legislation relating to the use of roads, vehicles and railways--an
aspect which could scarcely have struck the minds of those who resorted to the emphatic but
uncertain terms of sec. 92. In Peanut Board v. Rockhampton Harbour Board[4] and in Willard v.
Rawson[5] I stated or restated the interpretation of sec. 92 which I adopted and adhered to. I still
consider that what sec. 92 forbids is government action (State action) in respect of trade, commerce,
and intercourse when it operates to restrict, regulate, fetter or control it and to do this immediately
and directly as distinct from giving rise to some consequential impediment. In so far as inter-State
trade, commerce, and intercourse are included within the operation of such government action that
action is rendered ineffectual by sec. 92. The question whether the Commonwealth is governed by
sec. 92 does not arise in this case at any rate, directly, but as counsel for the Commonwealth, which
intervened by leave, presented an argument which involved a return to the view that sec. 92 does
apply to the Commonwealth I think it is right to say that the opposite conclusion has been adopted
by this Court both in McArthur's Case[6] and in James v. The Commonwealth[7] and I do not think
we ought to depart from those decisions. If they are wrong they can be set right in the Privy
Council. In Willard v. Rawson[8] I said at the conclusion of my judgment "I intend in no way to
depart from the doctrine of McArthur's Case, which is that, when State legislation attempts to
restrain commercial dealings of a description wide enough to embrace inter-State operations, it is
void to the extent to which it would affect acts, conduct or transactions, part of trade, commerce and
intercourse among the States." I realize that there has been much difference of judicial opinion in
the application of that decision and that in cases where State legislation has been upheld Judges who
dissented from that conclusion have done so upon the grounds inter alia that it involved an
inconsistency with the principle of McArthur's Case. But whether the majority of the Court
reasoned well or ill from the major premise stated in McArthur's Case to their conclusion they did
not, I think, intend to deny the validity of that premise. The difficulty is, I think, to enunciate any
general interpretation of sec. 92 which, if precise, does not err in stating that which is not expressed
in sec. 92, or if general, is not so wide as to admit of varying applications. McArthur's Case[9]
denied the correctness of certain contentions as to the meaning of sec. 92, which has been put
forward. It denied, for instance, that sec. 92 was limited to emancipating inter-State trade from
differential or discriminatory laws. It denied that it was limited to freedom from pecuniary imposts
and prohibitions of importation. It denied that trade between the States was limited to mere inter-
State movement of persons or things and it explained how wide is the conception of inter-State
trade. But it did not formulate a precise and inflexible interpretation of the words of the section. It
did not profess to substitute a legal formula or legal formulę expressed with technical exactness for
the language of the section. This serves to explain the differences of opinion which have been
experienced by this Court in the attempt to perform the extremely difficult task of deciding what
State statutes have been and what have not been obnoxious to the provision. In the present case the
statute is entitled State Transport (Co-ordination) Act. Its long title describes it as an Act to provide
for the improvement and for the co-ordination of means and facilities for locomotion and transport,
and to constitute a Board of Commissioners for that purpose. It is directed to secure an ordered
system of public transportation in which the integers (not the least important of which are State
railways) do not engage in mutual slaughter by irrational competition. As part of the means to this
end it sets up a licensing system for motor vehicles which act as common carriers or which
otherwise engage in the carriage of goods. The grounds upon which a licence may be granted or
withheld are concerned with the public need for such transport, the suitability of routes, the mutual
relation of the proposed service with other services and other matters which attend the co-ordination
of a random system of transport. The appellant complains of a conviction for operating a public
motor vehicle without a licence and he has proved that upon the occasion when he offended he was
performing an inter-State journey. The operation of the Act in no way depends upon the inter-State
character of his journey: it applies uniformly to transport in New South Wales and does not concern
itself with the difference between inter-State and intra-State traffic. I should think that a law of this
character which did differentiate between the two kinds of traffic might well be held directly to
restrain inter-State trade. The fact that it does not so differentiate does not establish that its operation
is indirect or consequential. But the question whether it is direct or indirect must be determined by a
consideration of the nature of the statute and the character of the act or transaction which it affects.
The statute professes to be, and in fact is, an attempt not to suppress but to regulate transportation
and to do so in such a way as to help rather than to retard or obstruct the movement of commercial
goods throughout New South Wales. It takes a broad view of what does in the long run facilitate and
help commercial transportation, and adopts the assumption that a superabundance of means of
transport to-day followed by a consequential insufficiency or inappropriateness to-morrow cannot
aid but must hamper trade, commerce, and intercourse. The acts or transactions with which the
statute is concerned, and upon which it operates, are not actual commercial dealings, the actual
transfer of goods from one place to another and the actual movement of individuals. No one is
required, not to go here or there, not to send his goods here or there, not to make this or that bargain
or not to engage in this or that communication. The material parts of the statute deal with vehicles in
a double sense. The motor cars or trucks are the instruments--the vehicles for accomplishing these
ends. No one can doubt their importance as means to trade, commerce, and intercourse inter-State or
intra-State, but they are aids or implements to effect the thing, they are not the thing itself. The
question which I have to ask myself is whether, in a scheme which allows complete freedom to go
or to send from one place to another but in the process of co-ordinating the means and of
rationalizing the facilities, denies a completely unregulated choice of means, a direct restraint upon
or interference with trade, commerce, and intercourse is imposed. In answering this question I do
not think one should concentrate on the individual to the exclusion of the position of other
individuals. In modern social conditions the consideration expressed in the maxim sic utere tuo ut
alienum non laedas cannot be confined to the occupation and use of property. A regulation of an
incident of commerce which is calculated to guide the stream but not to obstruct it does not impose
a direct restraint merely because it conditions the individual's exercise of rights which previously
existed. Courts of justice ought not to be blind to realities. To concentrate upon the inhibition of
which the present appellant complains, and upon the indisputable fact that it prevents him carrying
goods in New South Wales in the course of a journey from a point outside that State to a point
within it, is to lose sight of the fact that if all were permitted to carry goods where and how they
liked there might soon be none who could provide any systematic means of carrying the constant
stream of inter-State freight at all. The considerations in the present case which may be stated in
favour of the view that the interference is direct are, no doubt, weighty, and, I hope, I have not
overlooked any of them. But taking into account the fact that the statute deals only with the means
of inter-State carriage, that the policy disclosed is to organise and co-ordinate all means of
transportation, and that it is not open to the objection that it discriminates and looking at inter-State
trade as a whole in which one integer is not to be considered to the exclusion of others I have come
to the conclusion that any burden which the statute imposes on or any restriction which may result
to inter-State trade or commerce is not sufficiently direct to render it obnoxious to sec. 92.

For these reasons I am of opinion that the rule nisi should be discharged.

Starke J.

This is a rule or order nisi for a writ of prohibition made by the Supreme Court of New South Wales
and removed into this Court under sec. 40 of the Judiciary Act 1903-1932. Hill was charged with an
offence against sec. 12 of the State Transport (Co-ordination) Act 1931 of New South Wales in that
he did operate a public motor vehicle not then being licensed under the Act and he not being the
holder of a licence under the Act in respect of the vehicle. It appears that the firm of which Hill was
a member operates motor vehicles and transports goods between Victoria and New South Wales, but
that neither the vehicles nor the drivers of those vehicles are licensed as required by the provisions
of the Act. Hill was convicted of the offence charged (see, as to evidence, sec. 44). The question for
the consideration of the Court is whether that conviction can stand in view of the provisions of sec.
92 of the Constitution.

The State Transport (Co-ordination) Act 1931 is described in its preamble as "An Act to provide for
... the co-ordination of means of and facilities for locomotion and transport." It provides for the
appointment of a Board of Commissioners to carry into effect the objects and purposes of the Act
(sec. 4). It prohibits any person operating a public motor vehicle unless the vehicle is licensed by the
Board and unless he is the holder of such licence (sec. 12). A public motor vehicle means (sec. 3) a
motor vehicle (as defined in the Act) "used or let or intended to be used or let for the conveyance of
passengers or of goods for hire or for any consideration or in the course of any trade or business
whatsoever," or "plying or travelling or standing in a public street for or in hire or in the course of
any trade or business whatsoever." The Act also requires the licensing of any person who acts or
carries on or advertises or notifies that he acts or carries on the business of an agent for persons
operating a public motor vehicle &c. (sec. 20). It gives the Board wide discretionary powers as to
the issue of licences. Routes areas or districts and terms and conditions may be prescribed, as may
fares freights and charges and the use of the vehicle, whether as to passengers only or goods of a
specified class or description only, and as to the circumstances in which conveyance may be made
or may not be made, including the limiting of the number of passengers or the quantity weight or
bulk of the goods that may be carried on the vehicle (secs. 15-17). The Board may impose
conditions that the licensees make certain payments to it in respect of passengers or goods carried
(sec. 18 (4), (5)). It may require any applicant for a licence to give reasonable security for due
compliance with the conditions of the licence (sec. 18 (7)). A fund called the State Transport Co-
ordination Fund is created (sec. 26 (1)), and to the credit of this fund are placed any moneys
appropriated by Parliament and moneys directed by the Act or any other Act to be paid into such
fund. Payments may be made out of the fund with the approval of the Minister as subsidies in
respect of any feeder services to railways or tramways or to the Government Railways Fund (sec. 26
(6)), but otherwise the fund may be applied to the purposes for which they are appropriated by
Parliament (sec. 26 (8)).

But the Constitution, sec. 92, provides that trade, commerce, and intercourse among the States,
whether by means of internal carriage or ocean navigation, shall be absolutely free. The State Act
here in question assumes complete control of public motor transport. Its object is to co-ordinate the
means and facilities of transport and possibly to protect the State railways from ruinous competition.
It does not actually prohibit the transport of passengers or goods from one State to another, but it
penalizes persons engaging in such transport, whether inter-State or domestic, unless the vehicle is
licensed and the person operating it is the holder of such licence. The object and necessary effect of
the Act is to regulate and control transport by motor vehicles, and persons are penalized for
engaging in that transport without a licence in order to effect that object and no other. In my opinion
such an Act is, according to the decisions of this Court, in contravention of the provisions of sec. 92
of the Constitution, in so far as it affects inter-State trade or commerce. The decision in W. & A.
McArthur Ltd. v. State of Queensland[10] establishes, so far as this Court is concerned, four
propositions: 1. The expression "trade and commerce" in sec. 92 of the Constitution includes all
commercial dealings and accessory methods adopted to initiate continue and effectuate the
movement of persons and things from State to State. It is not limited to the mere act of
transportation over territorial frontiers[11]. 2. The words "absolutely free" in sec. 92 cannot be
confined to pecuniary enactments or customs laws, but must have their natural meaning of absolute
freedom from every sort of impediment, regulation or control by the States with respect to trade,
commerce, and intercourse between them[12]. 3. A general restriction or prevention of trade and
commerce, e.g. domestic inter-State and foreign trade, does not avoid the operation of sec. 92[sec.
92 does not affect the legislative power of the Commonwealth[14]. It appears to me that the
decision in James v. Cowan[15] supports the first and third propositions, and also the second
proposition in so far as it asserts that sec. 92 cannot be confined to pecuniary enactments or customs
laws. The cases of The Commonwealth and Commonwealth Oil Refineries Ltd. v. South
Australia[16]; James v. South Australia[17]; Roughley v. New South Wales; Ex parte Beavis[18]; Ex
parte Nelson [No. 1][19]; Peanut Board v. Rockhampton Harbour Board[20]; and Willard v.
Rawson[21], are but illustrations of one or other of these four propositions, in various
circumstances. It may be that the propositions were not always rightly applied, but that is no reason
for disregarding them. In Roughley's Case, the majority of the Court rest upon a denial--as I
understand the reasoning--that the farm produce agents there concerned were engaged in inter-State
trade and commerce. In Nelson's Case there was an even division of opinion, but the decision rests
upon a denial that a law restricting the introduction into New South Wales of stock from any
country or State in which there was reason to believe any infectious or contagious disease in stock
existed was a regulation of inter-State trade and commerce, though it controlled in some degree the
conduct and liability of those engaged in the trade and commerce. Willard v. Rawson rests upon the
interpretation given to the Act there in question; the object of the Act was not restrictive of trade but
protective, and consequently the imposition of registration and licence fees was not in contravention
of sec. 92. But the direct object and effect of the State Transport (Co-ordination) Act 1931 of the
State of New South Wales, whatever the political motive may be, is to restrict, regulate and control
transport, or the movement of passengers and goods in motor vehicles, whether engaged in domestic
or inter-State trade and commerce. Transport is, as I said in Willard's Case[22], an essential element
of trade and commerce, and the burdening of inter-State transport by means of taxes, duties or
imposts, or impeding regulating or controlling it by the requirement of licences, is obnoxious to the
provisions of sec. 92 as interpreted by this Court in W. & A. McArthur Ltd. v. State of
Queensland[23].

The State Act, however, provides (sec. 3 (2)):--"This Act shall be read and construed so as not to
exceed the legislative power of the State to the intent that where any enactment thereof would, but
for this subsection, have been construed as being in excess of that power, it shall nevertheless be a
valid enactment to the extent to which it is not in excess of that power." This is a legislative
declaration that the Act shall operate on so much of its subject matter as Parliament might lawfully
have dealt with, and so as not to exceed the legislative power. (See Newcastle and Hunter River
Steamship Co. v. Attorney-General for the Commonwealth[24].) It excludes, I think, from its
operation any interference or control of trade and commerce obnoxious to the provision of sec. 92
of the Constitution. But, whether by reason of this sub-section or by the direct operation of sec. 92
itself, the conviction of Hill cannot stand, and as the parties have raised no objection in this case to
the procedure by a rule or order nisi for a writ of prohibition, the rule should be made absolute.

Dixon J.

A. J. Hill & Son, a firm of carriers, conveyed goods or merchandise from a depot in Swanston
Street, Melbourne, in the State of Victoria to a depot in Wagga Wagga in the State of New South
Wales. The articles were carried in a motor lorry which was used solely in transporting goods from
Melbourne to Wagga Wagga. The motor lorry was registered under the Motor Traffic Act 1909-1915
of New South Wales, but was not licensed under the State Transport (Co-ordination) Act 1931-1932
by the State Transport Co-ordination Board, and had not been granted an exemption from the
requirement that it should be so licensed. It is an offence under sec. 12 of the Act to operate in New
South Wales a public motor vehicle, which is neither licensed by the Board nor exempt. Any
mechanically propelled vehicle is a motor vehicle unless used on a railway or a tramway and the
expression includes aircraft. If a motor vehicle is used for the conveyance of passengers or of goods
for hire or for any consideration or in the course of any trade or business whatsoever, it is a "public
motor vehicle"; and if it carries passengers or goods for hire or for any consideration or in the
course of any trade or business whatsoever, it is "operated" (sec. 3 (1)).

The members of the firm were convicted under sec. 12, and, upon the facts stated, it is clear that its
express terms were contravened. But the express terms of the section, in common with the rest of
the statute, are restrained by the provision contained in sec. 3 (2), which requires that the Act shall
be read and construed so as not to exceed the legislative power of the State to the intent that where
any enactment thereof would, but for the sub-section, have been construed as being in excess of that
power, it shall nevertheless be a valid enactment to the extent to which it is not in excess of that
power. It follows that no provision of the State enactment is meant to apply where to do so would
amount to an invasion of the freedom secured to trade, commerce, and intercourse among the States
by sec. 92 of the Commonwealth Constitution. Thus the question so raised for our decision is
whether sec. 12 can operate to prohibit the use of a motor vehicle for the carriage of goods between
a place in New South Wales and a place in another State, and, yet, leave trade, commerce, and
intercourse by internal carriage absolutely free. The statute makes all carriage of goods for reward,
or in the course of trade, unlawful if done by motor transport unless authorized by the Board either
by licence or by exemption. The Board consists of a Chief Commissioner and three other
Commissioners appointed by the Governor (sec. 4). The first duty imposed upon it was to report
upon the steps to be taken to co-ordinate the services of the Railway Commissioners, the
Commissioner of Road Transport, the Management Board appointed under the Transport Act 1930
and the Main Roads Board and to place the services under one body (sec. 10). Next, after its
concern with these governmental agencies, the Board's most important duty appears to be the
control of commercial transport by road and air. This control is given by the provisions which
prohibit, except under licence or exemption, the carriage of passengers or goods by motor vehicle
including aircraft, for reward or in the course of trade, the carriage in a motor vehicle of the
proprietor's or driver's own goods unless they have not been sold and are not intended for sale by
him, and the consignment or despatch of goods by motor vehicle (secs. 12 (1) and (2) and 13). The
Board has complete authority to grant or refuse a licence (sec. 17 (4)). If a licence is granted, it may
confine the vehicle to a specified route or routes or authorize it to operate anywhere except on
specified routes (sec. 15 (1)). The licence may be subject to conditions relating to the tariff or
charges and these conditions may fix either maximum or minimum or specified rates. The licence
may be limited to the carriage of passengers or of goods or of particular descriptions of goods (secs.
17 (1) and (2) and 48 (8) (a)). Further, the licence may impose a condition that the licensee shall
make payments to the Board. The amounts to be levied are in the discretion of the Board, but they
may not exceed specified limits, which, however, are sufficiently high to be often prohibitive. In the
case of passengers, the payments are calculated at a sum per passenger mile, not exceeding a penny,
and, in the case of goods, or goods and passengers together, the sums may be ascertained in any
manner, but the total burden must not exceed three pence per ton mile of the vehicle and freight
(sec. 18 (4), (5) and (6)). An exemption from liability to these impositions may be granted if the
route involves a journey of not more than twenty miles, or, in the case of goods, if the vehicle feeds
the nearest practicable railway (sec. 18 (8) and (9)). The payments go to a fund, which may be
applied in costs of administration, in subventions to the Government Railways Fund and to the
general fund of a transport trust, and in subsidies to public motor vehicles used to provide feeder
services to railways or tramways. The matters to be considered by the Board in refusing or granting
an application for a licence include the extent to which the proposed service is necessary or
desirable in the public interest, local needs, the elimination of unnecessary services and the co-
ordination of all forms of transport including that by rail and tram (sec. 17 (3) (b), (c) and (d)).
Finally, the Board is given a discretionary power to grant exemptions from the obligation to obtain a
licence (sec. 19 (1)).

The effect of these provisions is to suppress mechanical road transport for commercial purposes,
except in cases where an agency of the State Government thinks fit to allow it. It is suppressed in
virtue of its commercial character. The ground upon which the prohibition against operating the
vehicle rests is that it carries passengers or goods for reward or otherwise in the course of trade. The
discretion to licence it is exercisable upon considerations which may include the competition of
State railways for the trade borne by mechanical road transport and must include the railway
facilities existing. Finally, transportation may be taxed when it is licensed. If unaffected by sec. 92,
the suppression is "pointed at" inter-State carriage as well as domestic carriage. It is true that the
prohibition in sec. 12 does not differentiate between inter-State and intra-State transportation. But
uniformity or absence of discrimination is not a criterion, and, even if it were, is scarcely a quality
to be ascribed to provisions, which enable a government authority to discriminate between vehicles
and routes upon any basis which it chooses.

In my opinion, it is inconsistent with the absolute freedom of trade, commerce, and intercourse
between Victoria and New South Wales to allow the prohibition of sec. 12 to include the carriage of
goods by road upon a continuous course of transportation between a place in Victoria and a place in
New South Wales. There is, I think, no act or transaction which better answers the description trade,
commerce, and intercourse between the States than the carriage of merchandise from a place in one
State across the border to a place in a neighbouring State. It is at once commerce and intercourse,
commercial intercourse. Movement of persons and things from one State to another is the very thing
to which absolute freedom is given. It is not the mere act of crossing the border which must be
unobstructed. "Among the States" means between any part of one State and any part of another.
Between places situated in different States, from commencement to completion, the transfer of
goods and the passage of persons alike are free.

Before the establishment of the Commonwealth, the Parliament of New South Wales possessed a
legislative power, which was plenary, and, except for the territorial limitation, unrestrained by
reference to subject matter or otherwise. Among other encroachments upon that undefined mass of
power made by the Federal Constitution, positive prohibitions were imposed upon any exercise
which would produce specified effects, or amount to legislation of a particular description.
Examples are contained in secs. 90, 114, 115, and 117 as well as sec. 92. Power to make such laws
under any guise or for any purpose was withdrawn as effectually as if the disabling provision had
from the beginning stood in the Colonial constitution as part of the grant of legislative power. Sec.
92 is not expressed in terms of restraint, but, whatever else it does, it disables the States from any
exercise of legislative power inconsistent with the absolute freedom of trade, commerce, and
intercourse among the States. These considerations, which lie on the surface, do not aid in
determining what amounts to an inconsistency with that freedom, but they do appear to me to make
it clear that the purpose which the State legislature had in view in making the law, its description
and nature, and the category to which it may be referred in a classification of legislation, are beside
the question. The State legislature can have no power which it may exercise so as to impair the
freedom of inter-State commerce and intercourse. There are no competing powers to be reconciled.
There is no defined area or specified subject of State legislative authority which is placed outside
the range of the inhibition: no apparent or possible repugnancy between a specific grant of power
and a specific restraint. Not only does the position appear to contain nothing to call for the
application of the principles or methods by which the provisions of secs. 91 and 92 of the British
North America Act 1867 have been harmonized, but it appears actually to be the converse case.
Whatever be the end which the prohibition of carrying merchandise by motor vehicle, unless under
licence, was designed to promote, as an end it, doubtless, is one to which the State legislature is
entitled to address itself. But to whatever end it addresses itself, the State legislature may not adopt
means which infringe upon the freedom of inter-State commerce and intercourse. When a restraint
or prohibition is imposed upon acts or conduct, which, from their very nature, form part of trade,
commerce, or intercourse, the restraint or prohibition must be a derogation from the freedom of
trade, commerce, and intercourse, and, therefore, cannot extend to inter-State transactions. Trade,
commerce, and intercourse may suffer effects from the regulation or burdening of acts or things
which are not in themselves part of trade, commerce, or intercourse. A law which apparently does
no more, may, upon a full examination, prove to have an actual operation upon trade, commerce,
and intercourse as distinguished from producing consequences of an economic, business, or other
character which are prejudicial to it. Similarly, an administrative order may, upon a proper
understanding of its application to the circumstances, turn out to be an attempt to control or restrain
trade, commerce, or intercourse although, upon its surface, it may not appear to do so. Thus, in
James v. Cowan[25], the State legislation gave to the Minister a power of compulsorily acquiring
dried fruits for the purposes of the statute, but not so as to interfere with the freedom of inter-State
trade. In delivering the opinion of the Privy Council, Lord Atkin said[26]: "It may be conceded that,
even with powers granted in this form, if the Minister exercised them for a primary object which
was not directed to trade or commerce, but to such matters as defence against the enemy, prevention
of famine, disease and the like, he would not be open to attack because incidentally inter-State trade
was affected." But their Lordships thought it was made plain that the direct object of the exercise of
the powers was to interfere with inter-State trade. Distinctions in respect of scope, object, purpose,
immediacy or indirectness of operation, and remoteness or proximity of effects may be material in
such cases. But there appears to me to be no warrant for applying such considerations to statutory
provisions which prescribe duties or impose liabilities or burdens by reference to acts or conduct
which go to constitute trade, commerce, and intercourse including that of an inter-State character.
The present law requires all persons, unless specially licensed by the State Government authority, to
refrain from carrying out in New South Wales an ordinary transaction of commercial intercourse. It
forbids it by reference to the exact characteristics of commercial intercourse. It is rendered unlawful
because of these characteristics. It follows that when the commercial intercourse is between a place
in another State and a place in New South Wales, then, the enactment purports to render acts of
inter-State commerce and intercourse unlawful, and it does so by reference to the characteristics of
commerce and intercourse. If sec. 92 does not protect it, the transportation of goods and persons in
the course of inter-State commerce by an ordinary means is stopped, except in so far as an agency of
the State thinks fit to permit it and even then it is liable to a pecuniary impost. To say that the State
of New South Wales can forbid so much of the transportation of merchandise by motor vehicle
between a place in Victoria and another in New South Wales as lies within its territorial jurisdiction
is to affirm a proposition, which, in my opinion, is flatly opposed to the constitutional declaration
that trade, commerce, and intercourse among the States, whether by means of internal carriage or
ocean navigation, shall be absolutely free.

The chief reason given in argument against this view depends upon a restrictive interpretation of the
constitutional provision. It is said that the expressions in sec. 92 are composite, that it is a mistake to
inquire what constitutes inter-State trade and insist upon freedom for what composes it, and that it
should be understood in the same way as would a convention establishing free trade between
independent countries. "Free trade" is defined in a dictionary of political economy as "that system of
commercial policy which draws no distinction between domestic and foreign commodities, and,
therefore, neither imposes additional burdens on the latter nor grants any special favours to the
former" (Prof. C. F. Bastable in Palgrave's Dictionary of Political Economy, vol. ii., p. 143). But it
is not now, if it ever was, possible to construe sec. 92 as confined to giving immunity from restraints
upon the introduction of commodities or the entry of persons into a State: For the legislation
condemned as invalid in James v. Cowan[27] restrained exportation. The contention, however, is
that what sec. 92 does is to establish mutual "free trade" between the States and that it does no more
and so should be interpreted by reference to that economic doctrine. Accordingly, the freedom it
confers is only from restrictions and burdens which are not also suffered by domestic trade.
Attempts have often been made to induce this Court to interpret sec. 92 as preventing nothing but
the differential treatment of inter-State commerce, whether inward or outward, the imposition of
burdens not shared by domestic commerce. Except in Duncan's Case[28], they have always failed.
Such a contention is inconsistent with the decision in Foggitt Jones & Co. v. State of New South
Wales[29], with the judgments of Barton and Isaacs JJ. in Duncan's Case, which were upheld in
McArthur's Case[30], with James v. South Australia[31] (where this Court dealt with sec. 20 of the
Dried Fruits Acts 1924 and 1925 (South Australia) as a uniform restraint), and with Peanut Board v.
Rockhampton Harbour Board[32]. Further, it appears to me to be inconsistent with the opinion of
the Judicial Committee in James v. Cowan[33] delivered by Lord Atkin. In that case, an argument
had been advanced before the Judicial Committee that the power under sec. 20 of the Dried Fruits
Act to determine where and in what quantities the output of dried fruit should be marketed, and the
determinations under the power that only ten or fifteen per cent should be marketed within
Australia, "did not affect inter-State trade as such, since it imposed upon it no restriction not
imposed upon intra-State trade"[34]; that in deciding how sec. 92 operated "the true test is whether
what is complained of discriminates between intra-State trade and inter-State trade, and so interferes
with inter-State trade as such"[35], and that, accordingly, the decision of this Court in James v.
South Australia[36] was wrong[37]. In reference to this argument, Lord Atkin said[38]:--"It appears
to their Lordships unnecessary to undertake the difficult task of defining the precise boundaries of
the absolute freedom granted to inter-State commerce by sec. 92. In the present case they are clearly
of opinion that sec. 20 and the determinations made under it were directed at inter-State commerce
as such. They were intended to prevent persons in South Australia from selling more than the fixed
quota in any of the Australian States. The quota was fixed by reference to the needs of all the States;
and the prohibition of the sale of the surplus was against selling to any of the States. As the
determination said, The proportion which may be marketed in the Commonwealth of Australia shall
not be more than the prescribed proportion. If this leaves inter-State commerce absolutely free, the
constitutional charter might as well be torn up. Their Lordships have no hesitation in agreeing with
the decision of the High Court on this point." By this passage I understand his Lordship to mean, not
that the South Australian provision, or the determinations under it, imposed upon sales for export to
another State a restraint not applied equally to sale for domestic consumption, for the section plainly
forbade both alike, but that sale for delivery into another State suffered, although in common with
sale for delivery or consumption within South Australia, a restriction imposed by reference to the
very characteristics which were essential to its existence as inter-State trade. In the same way in
Attorney-General for Manitoba v. Attorney-General for Canada[39], quoted by Isaacs J. in James v.
Cowan[40], their Lordships entirely rejected absence of discrimination as an answer to the
impairment of the status and capacities of Dominion companies which was produced by the
Provincial enactment prohibiting the sale of shares issued by any company. Viscount Sumner[41]
said:--"Neither is the legislation which is in question saved by the fact, that all kinds of companies
are aimed at and that there is no special discrimination against Dominion companies. The matter
depends upon the effect of the legislation not upon its purpose." If its provisions were not qualified
by the requirement that they should be read subject to the Constitution, the State Transport (Co-
ordination) Act, in my opinion, would deal with inter-State commerce as such: its suppression or
restriction of the commerce by means of inter-State road transportation is accomplished
simultaneously with the suppression or restriction of the like domestic commerce, but it is done by
reference to the essential characteristics upon which the existence of that commerce as inter-State
trade depends. In any case under this statute, the absence of discrimination against inter-State trade
in its general prohibitions does not necessarily mean that it will operate without such a
discrimination. The very things, which the Board is required to consider in dealing with applications
for licences, namely, public interest, local needs, the elimination of unnecessary services and the co-
ordination of forms of transport, including that by railway, may lead it to a conclusion which works
such a discrimination. Moreover, as its discretion to grant a licence or not is complete, there is
nothing to prevent it granting a licence for routes which terminate within the New South Wales
border and refusing a licence for any route which allows the border to be crossed. The statute itself
makes it unlawful for any motor transport to proceed upon its journey into New South Wales after
crossing the border. Whether or not discrimination against inter-State trade results from the manner
in which licences are granted, that provision, in my judgment, involves an invasion of the freedom
of inter-State commerce and intercourse.

I find nothing in Roughley's Case[42] which tends against this conclusion. The ground upon which
the regulation of produce agents by a system of licensing was upheld by Knox C.J. was that their
activities were not transactions of inter-State commerce in such a sense that freedom of trade,
commerce, or intercourse was interfered with; by Higgins J., on the ground that the object of the
statute being to regulate the status and conduct of agents in that State, whether handling the produce
of another State or not, it did not restrict, burden or hamper the entry of goods or persons into the
State or trade with another State; Gavan Duffy J., as he then was, appears to have followed the view
of Knox C.J., and Powers J. concurred with Higgins J. Isaacs J. and Starke J. dissented. This
decision may not apply consistently the judgment of McArthur's Case[43], as the minority thought,
but, if so, the respect in which it fails to do so is in giving a narrower denotation to inter-State trade
and resorting to a test of interference which takes into account the subject matter with which the
State law deals and its scope and purpose. But there is nothing in this decision, or in these
judgments, opposed to the main grounds upon which McArthur's Case[44] proceeds, namely, that
sec. 92 frees inter-State trade from burdens and restrictions although they equally affect intra-State
trade, and the expression "absolutely free" involves complete immunity from attempts to hinder or
burden trade, commerce, and intercourse as such, if it is in fact inter-State. The expression more
often used in the judgment of the Court in McArthur's Case is "control." This expression may be
capable of a meaning which would include legislative directions for the proper conduct of trade not
amounting to a burden or obstruction. The judgment also insists upon a wide connotation for "inter-
State trade and commerce." It appears to me that it is the effect produced by the combination of
these two considerations which made relevant the question whether the Commonwealth was bound
by sec. 92, and that its relevance did not arise out of the question whether the immunity given by
that provision is confined to burdens or restrictions imposed on commerce and intercourse in virtue
of its inter-State character. The opinion expressed by the majority of the Court in McArthur's Case
that the Commonwealth was not bound, whether necessary for the decision of that case or not, was
afterwards translated into a definite decision: (James v. The Commonwealth[45]), which since has
been acted upon in this Court; Huddart Parker Ltd. v. The Commonwealth[46]. So far as we are
concerned, we should treat it as settled. But when the view prevailed in this Court that the
Commonwealth was bound by sec. 92, neither Barton J. nor Isaacs J., in Duncan's Case[47], found
in that circumstance any obstacle to completely rejecting absence of discrimination as a final
criterion of the consistency of a law with freedom of inter-State trade, and now, if I have correctly
understood the judgment of Lord Atkin[48], the Privy Council has felt able to arrive at the same
conclusion, without deciding that the Commonwealth is not bound. To my mind the conclusion that
a burden or restraint imposed uniformly on inter-State and domestic trade is obnoxious to sec. 92, in
so far as it burdens or restrains inter-State commerce, necessarily destroys the validity of sec. 12 of
the State Transport (Co-ordination) Act, unless it be read as applying only to intra-State
transportation.

The contention was advanced, however, that the statute could be supported by means of the
reasoning adopted by the Court in Willard v. Rawson[49]. In my opinion that reasoning is absolutely
fatal to the provisions of sec. 12 of the New South Wales statute. Both Rich J. and McTiernan J.
adhered to and applied the test of consistency with sec. 92, which Rich J. formulated first in James
v. Cowan[50], and, after the decision of the Privy Council in that case, elaborated in Peanut Board v.
Rockhampton Harbour Board[51]. According to his Honor's test, what is forbidden by sec. 92 is
State action in respect of trade and commerce when it operates to restrict, regulate, fetter or control
it, and to do this immediately or directly as distinct from giving rise to some consequential
impediment. In deciding that the Victorian statute, which dealt with traffic in general, survived this
test, his Honor placed some reliance upon the analogy of American decisions upon enactments in
pari materiā, but the decisive reasons for his conclusion were expressed as follows[52]:--"In the
present case it is important to observe that the statute is not concerned with trade, commerce or
intercourse as such. It is concerned with motor vehicles considered as machines, integers of traffic,
users of the highway and potential sources of danger and annoyance to the public. From the point of
view of the legislation it is an accident that they provide an implement of commerce and a means of
conveyance over long distances. It is true that these qualities are inherent in the very purpose and
character of many of the vehicles, but it is not in that aspect that they are dealt with. Again, it is
important to notice that the licence fee levied upon them, although taken into the revenues of the
central Government, is appropriated for expenditure by a body which provides services upon which
they may run and repairs to the damage which they do. All these considerations satisfy me that I am
justified in treating the burden which may be put upon inter-State commerce and intercourse as the
result of the levy of a fee upon registration as consequential, mediate or indirect, and not as a direct,
immediate or intended burden or restraint imposed upon trade, commerce or intercourse among the
States."

In my opinion, the New South Wales statute is concerned with trade, commerce, and intercourse as
such. It is not concerned with motor vehicles as machines, integers of traffic, users of the highway
and potential sources of danger and annoyance to the public. Doubtless, these are matters not
excluded from the Board's consideration in granting a licence. But, from the point of view of the
legislation, the fact that they provide an implement of commerce and a means of conveyance over
long distances is not an accident but the essential criterion of the application of the legislation.
Further, the licence fees, which may be levied upon the grant of the licence, are measured by
reference to the operation or earnings of the vehicles, and the money is used for anything but the
purpose of providing a service for the licensee. So far as the United States cases are material, it
appears from the latest of them that this statute would there be held void. In Bradley v. Public
Utilities Commission[53], Brandeis J. says, in reference to Stephenson v. Binford[54]:--"But there
promotion of safety was merely an incident of the denial. Its purpose was to prevent competition
deemed undesirable. The test employed was the adequacy of existing transportation facilities; and
since the transportation in question was inter-State, denial of the certificate invaded the province of
Congress." But, in my opinion, the principle upon which the United States' decisions proceed is
quite inapplicable to sec. 92. That principle is that, although it is not competent for a State to
regulate inter-State commerce, where Congress has left it unregulated, the State is precluded only by
an actual exercise by Congress of the commerce power from enacting, for purposes within the
province of the State, laws, which, while including inter-State commerce within their operation, do
so only because it is reasonably necessary in order to effectuate the State object. Thus, in the United
States, a State may impose upon motor vehicles, including those engaged exclusively in inter-State
commerce, a charge as compensation for the use of the public highways which is a fair contribution
to the cost of constructing and maintaining them and of regulating traffic on them. But, to be valid,
it must clearly appear that the character of the imposition is that of such a compensation. "As such a
charge is a direct burden on inter-State commerce, the tax cannot be sustained unless it appears
affirmatively, in some way, that it is levied only as compensation for use of the highways or to
defray the expense of regulating motor traffic. This may be indicated by the nature of the
imposition, such as a mileage tax directly proportioned to the use ... or by the express allocation of
the proceeds of the tax to highway purposes ... or otherwise. Where it is shown that the tax is so
imposed, it will be sustained unless the taxpayer shows that it bears no reasonable relation to the
privilege of using the highways or is discriminatory. ... But the mere fact that the tax falls upon one
who uses the highway is not enough to give it presumptive validity" (Inter-State Transit, Inc., v.
Lindsey[55]). Similarly the State may impose an occupation tax, which includes persons engaged in
inter-State as well as intra-State trade. But "the privilege of engaging in such commerce is one
which a State cannot deny. ... A State is equally inhibited from conditioning its exercise on the
payment of an occupation tax" (Sprout v. South Bend[56]). Therefore, to be valid, it must clearly
appear that it has no such purpose or effect. "In order that the fee or tax shall be valid, it must
appear that it is imposed solely on account of the intra-State business; that the amount exacted is not
increased because of the inter-State business done; that one engaged exclusively in inter-State
commerce would not be subject to the imposition; and that the person taxed could discontinue the
intra-State business without withdrawing also from the inter-State business" (Sprout v. South
Bend[57]). To my mind, such a doctrine has no place in the interpretation of sec. 92. Indeed, that
section may be regarded for the purposes of the doctrine as an express enactment, which, if made by
Congress, would invalidate all State legislation interfering with trade and commerce. Further, it will
be observed that the doctrine is not based upon any distinction between directness or indirectness of
operation. If the required conditions giving "presumptive validity" are satisfied, and there is nothing
such as discrimination against inter-State trade to rebut it, a State law is permitted directly to affect
trade which is inter-State.

In Willard's Case[58], McTiernan J. adopted a view similar to that of Rich J. He said[59]:--"An
examination of the provisions of the Motor Car Acts 1928-1930 clearly shows, in my opinion, that
the primary object or real object of the Legislature is not directed to trade or commerce or
intercourse, but to the control and supervision of motor traffic in Victoria." For the reasons I have
given, this statute is directed to trade, commerce, and intercourse and not primarily to the control
and supervision of motor traffic.

Starke J. applied the criterion which he formulated in the Peanut Board's Case[60]. He
considered[61] "that the requirement that fees be paid is attached as a reasonable adjunct to the main
provisions of the Acts--just as are the registration and licensing requirements themselves." His
Honor continued[62], "If the necessary effect of the Act, or its object, or character--whichever
word or phrase is preferred--as gathered from the words used, is to protect the State highways and
those who use them, how does a provision imposing a fee as an appropriate method of aiding that
purpose, obtain a different character, aspect or effect? It takes its colour, its character, and its effect
from the Acts, and aids, protects or hinders trade, commerce and intercourse as much or as little as
the main provisions themselves. In my opinion, therefore, the provisions prescribing registration
fees and licence fees do not infringe the Constitution." This test certainly differs from that of Rich J.
but perhaps only in latitude. Every consideration which was relied on in its application to the
Victorian Act, which it sustained, is absent from that of New South Wales, which wears the aspect
of a regulation of commerce, exhibits the colour of a restriction upon competition with State
railways, and has the effect of suppressing inter-State road transport by motor vehicle.

Evatt J., adopting an expression of Higgins J., held that the Victorian Act was not "pointed directly
at the act of entry, in course of commerce, into the second State"[63]. This phrase, like most
figurative expressions, needs some elucidation. I should have thought that it would be correct only
of some burden or restriction imposed upon the actual introduction of commodities into the State.
But, however this may be, it cannot be without significance that Evatt J. also relied upon the
features in the Victorian law, which, in the New South Wales statute, are replaced by their opposites
in character.

Finally, the authority given to the judgment of Isaacs J. in James v. Cowan[64] by the approval it
received in the Privy Council[65] cannot be ignored. Their Lordships said[66] that they found
themselves in accord with the convincing judgment delivered by Isaacs J. in the High Court. No
doubt this does not necessarily amount to an adoption of everything that judgment contains, but it
must mean that the main principles upon which it proceeded commend themselves to the Board.
Those principles appear to me decisive in the present case.

For these reasons, I am of opinion that, whether the matter is considered more at large or is treated
as governed exclusively by the judgments in Willard v. Rawson[67], sec. 12 of the State Transport
(Co-ordination) Act 1931 cannot, and so does not, apply to the operation of a motor vehicle in the
course of a continuous journey carrying goods from a place in another State to a place in New South
Wales.

The conviction, therefore, should be quashed.

Evatt J.

The present applicant, who carries on a carrying business, was convicted for having operated, at
Wagga, in the State of New South Wales, a public motor vehicle which was not licensed under the
New South Wales State Transport (Co-ordination) Act 1931, and in respect of which the applicant
was not the holder of such a licence. He applied to the Supreme Court of New South Wales which
made an order nisi for a statutory prohibition, which is an appropriate method of calling into
question the legal correctness of the conviction. Before the hearing of the application to make
absolute the order nisi, the Attorney-General of the Commonwealth applied to this Court for an
order removing the cause into the High Court and, pursuant to sec. 40 of the Judiciary Act, the order
was made.

Upon the hearing before us, the applicant's argument, except for one additional contention, was
based upon the provisions of sec. 92 of the Commonwealth Constitution. The additional contention
was that there was no evidence to prove that the applicant had himself "operated" the public vehicle
mentioned in the information. It is quite true that such proof was not furnished by the evidence of a
witness who deposed to statements made to him by the driver of the applicant's vehicle. In the
circumstances, this evidence should not have been admitted at all. But the established rule in these
cases is that the mere wrongful admission of evidence by the magistrate does not invalidate a
conviction. In the present instance there was the clearest possible evidence that, at the times to
which the conviction relates, the applicant himself both owned and was operating the particular
vehicle, and was transporting goods in it for the purposes of his business. It follows that the
conviction cannot be impeached upon this minor point.

It therefore becomes necessary to determine whether, by the overriding constitutional provision that
"trade, commerce, and intercourse among the States, whether by means of internal carriage or ocean
navigation, shall be absolutely free," the New South Wales statute is deprived of legal effect in
relation to any public vehicle which, though operated within New South Wales, is so operated in the
course of an inter-State journey.

The State Transport (Co-ordination) Act 1931, provided, as its title asserts, "for the improvement
and for the co-ordination of means of and facilities for locomotion and transport." A Board of four
Commissioners is set up (sec. 4 (1)), and called "The State Transport (Co-ordination) Board" (sec. 4
(7)). The Board is required to furnish a report as to the steps which should be taken to co-ordinate
the activities of the following services, namely, the Railway Commissioners, the transport trusts,
Commissioner of Road Transport, the Management Board, and the Main Roads Board (sec. 10 (2)).

By the Act, every person desirous of operating a "public motor vehicle" owned by him, is required
to apply to the Board or other prescribed authority for "a license for such vehicle" under the Act
(sec. 14 (1)). A motor vehicle is "public" if it is (1) used or let for the conveyance of passengers or
of goods (a) for hire or (b) for any consideration or (c) in the course of any trade or business or (2)
plying in a public street for hire or in the course of any trade or business (sec. 3 (1)). An application
for a licence must contain full particulars as to the vehicle and its proposed routes of operation, and
must be accompanied by the fee prescribed (sec. 14 (2)). In dealing with an application for a
licence, a wide discretion is committed to the Board, but it is required to have regard to the
suitability of the route or road of service, the extent of existing services, the elimination of
unnecessary services, the needs of the district as a whole, the prevention of unreasonable damage to
roads, the fitness of the applicant, the suitability of the vehicle, and, generally, the co-ordination of
all forms of transport including rail and tram transport (sec. 17 (3)). The Board is expressly
empowered to refuse any application for a licence (sec. 17 (4)). A licence may grant authority to
operate the vehicle by reference to routes or areas (sec. 15 (1)). The holder of a licence is required
to keep records of the services provided by his vehicle, to produce them, to make and verify returns,
and to issue tickets or receipts in a prescribed form (sec. 18 (1)). The licence may impose a
condition that the licensee make payments in respect of passengers or goods carried by the vehicle
(sec. 18 (4) and (5)); but if a public motor vehicle is operated solely as a feeder for the carriage of
goods by railway, no payment is to be required (sec. 18 (9) (a)). The amounts payable are to be
placed in a special State fund (secs. 25, 26), from which the Board, with the approval of the
Executive Government, may make payments or subsidies to feeder services (sec. 26 (6)).

There are machinery provisions inserted in the Act in order to ensure that unlicensed vehicles shall
not operate and that, as and when licences are issued, their requirements shall be observed. One of
these provisions is sec. 12 (1), which makes it an offence for any person who is not exempted to
operate a public vehicle unless the vehicle is licensed under the Act and unless such person holds
the licence. Sec. 12 (2) expressly applies the provisions of the Act to every person who operates a
motor vehicle for the purpose of carrying his own goods to be marketed or of delivering goods
already sold by him. It was under sec. 12 (1) that the present applicant was convicted.
The facts of the applicant's case can be stated shortly. His motor lorry was being used by his servant
in a public street at Wagga, New South Wales, for the purpose of the carriage of goods. There was
no evidence as to the ownership of the goods, but they were either intended for sale or were being
delivered pursuant to a contract of sale. The applicant held no licence under the Act in respect of the
motor lorry, but held a licence in respect of another vehicle engaged upon similar journeys. Upon
official inquiry the applicant justified his operating without a licence by stating: "I have it on good
authority that I am not compelled to license." It was proved by the driver of the lorry that the goods
he was conveying had been loaded at Melbourne and that "the lorry is used exclusively to convey
goods from Melbourne to Wagga."

This last phrase is fast becoming a formula. The suggestion is that some particular quality attaches
to a vehicle because its owner is restricting its use "exclusively" to inter-State journeys. But no
special constitutional significance attaches to this fact. For if the State of New South Wales is not
debarred by sec. 92 from requiring a licence in respect of a motor vehicle which uses its roads in the
course of one inter-State journey, neither can it be so debarred in the case of a vehicle which, being
"exclusively engaged" upon such journeys, makes a more frequent or more regular, i.e., a far
greater, use of its roads. The attack upon the validity of the present legislation must necessarily
involve the assertion that the States of Australia are powerless to organize or regulate the public
utility or service of railroad and highway transport without being compelled to make or submit to a
special exception in favour of each and every motor vehicle so far as its employment in the State is
part of an inter-State journey.

Before the magistrate, the defendant gave no evidence to indicate what were the commercial
dealings affecting the goods which were being carried upon his unlicensed motor lorry at the time of
the alleged offence. For all that appears, the goods came from Sydney to Melbourne by sea and
were carried from Melbourne to Wagga in the lorry. It would be a curious perversion, even of sec.
92, if the delivery of goods from one point in a State to another point in the same State, the full
regulation and control of which is--by universal consent--within the jurisdiction of the State
Legislature, can be placed beyond its jurisdiction by a deliberate selection of some route of delivery
which includes the crossing of State borders by a common carrier.

Reference may now be made to sec. 3 (2) of the Act, which provides:--

This Act shall be read and construed so as not to exceed the legislative power of the State to the
intent that where any enactment thereof would, but for this subsection, have been construed as being
in excess of that power, it shall nevertheless be a valid enactment to the extent to which it is not in
excess of that power.

This or an analogous formula is now to be found incorporated in many Commonwealth and State
Acts (Compare the Commonwealth Acts Interpretation Act, sec. 15A; Victorian Acts Interpretation
Act 1930). In inserting such a formula, the various Parliaments are seeking to guard against the risk
that some controlling constitutional provision will invalidate an important part of their enactments,
and that the Courts will then refuse to enter upon the task of separating, and by separating saving,
such part of their enactments as, considered by themselves, would be deemed valid. For instance, if,
in the present case, the Court considered that sec. 12 (2) of the Act was invalid so far as it applied to
the owner of goods carrying them upon an inter-State journey, sec. 3 (2) might still operate to
preserve sec. 12 (1) in its application to common carriers. The result of such an application of sec. 3
(2) might be to uphold the present conviction because the applicant is a carrier, not an owner of
goods.

It is clear, however, that sec. 3 (2) requires that, in the first instance, the statute should be considered
quite independently of that sub-section; it is only after a decision that invalidity attaches to some
portion of the statute that any attempt has to be made to obey sec. 3 (2) by separating the valid from
the invalid portion of the statute and so preserving the former. In the present case, it will appear that
it is not necessary to invoke the rule laid down by sec. 3 (2).

Construing the New South Wales statute apart from sec. 3 (2), the conclusion is that its Legislature
intended to secure the regulation, control and co-ordination of the service of commercial transport
upon the roads of the State. In a scheme so comprehensive and general in character, one does not
expect to find exceptional treatment of certain services or of particular vehicles merely because they
include or are used in the transport of goods outside the territories of the State. The business of a
particular carrier is no less conducted within New South Wales because it is also conducted in
Victoria or its operations are confined to inter-State journeys. And whether a particular vehicle is
engaged solely, or partly, or not at all, in transport between one State and another is not a question
which can easily be determined upon sight or summary inspection or interrogation. In the
circumstances, it is reasonably plain that the New South Wales statute intends no differential
treatment of a public vehicle by reason of its owner's general or particular course of business outside
the State, or by reason of the nature of the commercial operations in the course of which the goods
are being carried within the State. 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.

The general framework of the Act provides a striking contrast to sec. 28 of the South Australian
Dried Fruits Acts 1924-1925, the provision which was interpreted by the Privy Council in James v.
Cowan[68]. Sec. 28 enacted that "subject to sec. 92 of the Common-wealth of Australia Constitution
Act ... the Minister may ... acquire compulsorily any dried fruits in South Australia. ..." Such
conditional grant showed, upon its very face, that the South Australian Legislature regarded the
power of expropriation as one which, but for the safeguard inserted, might be used to interfere with
inter-State trade. The form of sec. 28 also showed the Legislature's intent that the power of
expropriation should never be exercised so as to interfere with an individual owner's obligation or
intention or right of selling goods inter-State. Not only did sec. 28 permit, it provoked, the inquiry
whether the individual, James, whose goods were taken in purported pursuance of the section, was
dispossessed by the State in order to carry out the prevailing policy of limiting inter-State sales of
dried fruit. That policy, clearly evidenced by sec. 20 of the Act, by the determinations made
thereunder, and by the trial Judge's express finding of fact, was designed for the specific purpose of
limiting inter-State trade in dried fruits, and therefore constituted an obvious infringement of sec. 92
of the Commonwealth Constitution, as this Court held in James v. South Australia[69].

This was emphasized in Lord Atkin's judgment when the case came before the Privy Council. He
indicated that the State's scheme of control was being carried out so as to "place restrictions on
inter-State commerce"[70], for the "prevention of the sale" inter-State of "the balance of the
output"[71], and in order to "prevent persons in South Australia from selling more than the fixed
quota in any of the Australian States"[72]. The action of the State Executive was deemed unlawful
because it was "plain that the direct object of the exercise of the powers was to interfere with inter-
State trade"[73]. Accordingly, the Privy Council held that the expropriation of James was not
authorized by sec. 28, because, contrary to the express condition of the section, it was effected as
part of the fixed policy of preventing the sale inter-State of part of the commodity.

In the present case, however, it is impossible to reach the conclusion that the New South Wales
statute was designed for the purpose of preventing, hindering, limiting or obstructing, trade,
commerce or intercourse among the States. Further, there is no evidence that the Act has had the
effect of reducing or restricting inter-State commerce or intercourse. So far as appears, its effect is,
by providing a more orderly system of land transport, to facilitate and increase the passage of
persons and the flow of commodities to and from the State. In James v. Cowan[74], the facts were
quite otherwise, and it was clearly established that the direct purpose and necessary effect of the
State's intervention was to place a definite prohibition upon all inter-State trade in dried fruits
beyond a permitted and defined limit.

But the applicant has one very plausible argument. "I do not suggest," he says, "that a trader is
prevented by the Act from despatching his goods to or from New South Wales. He has at his
disposal the elaborate transport service provided by the railway systems of the States, and there are
many carriers who will contract to carry his goods upon licensed motor vehicles. But I am a carrier,
and the Act prevents me from using this particular vehicle within the State of New South Wales. I
admit that I have not applied for any licence, but I have dedicated this vehicle to the business of
transporting goods from Melbourne to Wagga. I also admit that, considered as a whole, and in
reference to every species of commercial goods, trade and commerce will not be diminished, and
may even be increased by the New South Wales scheme of regulating the whole service of transport.
But I have a constitutional right to use this lorry in New South Wales as and when I think fit,
provided that I restrict its user to inter-State carrying."

This argument seizes upon the fact that, by the operation of the State scheme, some interference or
impediment or punishment may be suffered by a person in respect of the very act of carrying
commercial goods from State to State. The same argument was used by the unsuccessful appellant
in Willard v. Rawson[75]. There, too, the motor vehicle was used solely for the purpose of carrying
goods for hire from places in New South Wales to places in Victoria, and from places in Victoria to
places in New South Wales. The vehicle was not registered under the Victorian Motor Car Act, and
this Court held that the provision requiring registration and the payment of a fee, and the provision
punishing the driving of a car which was not so registered, were all unaffected by sec. 92 of the
Constitution.

Now Willard v. Rawson[76] has been subjected to some criticism upon the ground that sec. 92
protects the inter-State trader and traveller as such, and that it is not material to inquire into the
nature and character of the State law which in fact operates so as to "interfere with" or "burden" an
individual's passage from State to State; whether, for instance, the law is one with respect to motor
vehicles or taxation or transport or some other topic within the general competence of the State
Legislature. This criticism either misunderstands or affects to misunderstand the purpose of the
inquiry it condemns. For it is quite impossible to deduce from the mere fact that a State law
"interferes with" the passage of a person from State to State in the course of trade or intercourse,
that the State Act constitutes an infringement of sec. 92. A trader proceeding inter-State with his
goods may be arrested by State functionaries, brought before a Court and confined to a State gaol.
In such a case, no one could suggest that the enforcement in due course of the ordinary criminal law
of the State amounts to anything prohibited by sec. 92. So clear an illustration shows that the mere
adverse operation of a State law upon particular persons whilst they are proceeding inter-State does
not even suggest that the State law infringes sec. 92. Therefore, in applying sec. 92, it is often
essential to ascertain the general character of the State enactment which is being enforced against
the inter-State trader or traveller in order to ascertain the relationship between the State enactment
and that "trade, commerce, and intercourse among the States," which alone is given constitutional
protection. To take another illustration, no one disputes that the State Legislature may impose
taxation upon persons resident within its own territories. Nothing is more clearly an "interference
with" or "burden upon" an inter-State trader than an obligation to pay taxation upon an income
derived solely from inter-State trade. Yet it would be impossible to hold, by reason of sec. 92, that
persons engaged solely in commercial transactions of an inter-State character gain exemption from
the operation of a State statute which imposes taxation upon the income of all its residents from
whatever source derived.

Another illustration is Willard v. Rawson[77] itself. There the vehicle was taxed by the State of
Victoria, but taxed in common with all other commercial vehicles using the roads of the State. Such
taxation was considered by the inter-State trader to be a grievous "burden" upon his business. His
refusal to pay the tax imposed in respect of his vehicle caused him trouble, inconvenience and delay.
But sec. 92 gave him no immunity from having to register his vehicle and pay his tax, although the
vehicle was employed solely in carrying his goods from State to State. Other examples may be
given. No one could, I suppose, contend that the imposition of a toll upon all commercial vehicles
using Sydney Harbour bridge, would, by sec. 92, be prevented from applying to vehicles crossing
the bridge in the course of carrying goods from Sydney to Queensland. Could anyone contend that a
city traffic by-law which permits the passage of cattle through its streets during certain hours only,
does not, because it cannot, bind persons driving cattle from State to State in the course of trade?
Many analogous illustrations may be given, and it must, I think, be taken that, although the law of
the State may impose "burdens upon" and "interfere" with a person in respect of some act or
movement in the course of his carrying on inter-State transactions or journeys, the State law cannot,
on that account only, be adjudged inapplicable to him because inconsistent with sec. 92. It may,
however, be conceded that the facts of an adverse or burdensome operation of a State statute upon
an individual will often illustrate some necessary consequence of the statute and, in that way, will
suggest the possibility that sec. 92 has been infringed. But it is impossible to accept the theory that,
in applying sec. 92, one need not look past the mere operation of the State law upon the inter-State
trader, traveller or carrier and that one should disregard the nature and character of the State law
which is impugned.

It is now established that the application of sec. 92 is not confined to the prevention of hostile action
at the State borders and that the section operates within the territories of a State. For instance, by
sec. 92, a State is prohibited from imposing a tax in respect of the actual entry of goods into its
territory; but the section also prohibits a tax upon the first sale in the State after the importation of
the commodity, although that sale may take place at a point distant hundreds of miles from the
border, and although a considerable interval of time may have elapsed since the border was crossed
(The Commonwealth and Commonwealth Oil Refineries Ltd. v. South Australia[78]). But this
consideration, that sec. 92 has effect wherever and whenever the State legislates against the freedom
of inter-State commerce and intercourse, also shows that if, as the present applicant argues, a
common carrier derives an inalienable right from sec. 92 to project every one of his motor lorries
upon the State's roads and use them there so long as he does so for the purpose of carrying goods
from one State to another, sec. 92 must also secure to all carriers, traders and travellers, an
immunity from obedience to very many State laws which are analogous in scope and object to the
State Transport (Co-ordination) Act 1931. This position may be illustrated.

If a State, desiring to organize its port and harbour facilities with a view to more economical and
efficient working, limits the number of permitted piers and wharves, or issues licences only to such
a number of dock and wharf labourers as will be sufficient to perform all the work of loading and
unloading required in the port, or itself monopolizes the service of transport from wharf to
warehouse then, according to the applicant's argument, the scheme of organization could never be
carried out without making a special exception or exemption to meet the case of any person, who is
using the port in the course of the inter-State transport of goods. Although it would probably mean
the breaking down of the State's scheme of regulating the port facilities, it is said that sec. 92
permits the inter-State trader to say, "Notwithstanding the State scheme, I choose to build and
operate my own wharf as and when I think fit; the State cannot compel me to use one of the licensed
wharves." And so also the contracting stevedore may say "I have a constitutional right to ignore the
State's licensing system; I shall select any persons I like to go on to the State's wharves for the
purpose of performing my contracts for the loading and unloading of goods." So also, a carrier who
has contracted to complete the inter-State journey of goods from wharf to warehouse may say, "Sec.
92 enables me to defy the local transport laws which require persons taking commodities from the
wharves of the State to the warehouses to use the service provided and controlled by the State
itself."

For the berthing of a vessel carrying only commodities from other States, the unloading of the
goods from the vessel, and their transport to their destination within the State are, and each act
performed in the course of such operations is, as much a part of the inter-State transport of goods as
is the land transport of commodities across the actual boundary line of the State.

But, in my opinion, it is erroneous to say that sec. 92 confers upon every inter-State trader and upon
every person co-operating with him for the purpose of such trade, a legal right, available not only to
himself but to his servants and agents, to construct and use any and every wharf, whether licensed or
not under the State law, and to engage and employ wharf labour irrespective of the State's system of
regulating and licensing that portion of its port industries. On the contrary, I think that a State does
not infringe sec. 92 if, having no concern, interest or object in restricting or prohibiting trade
between States, or commerce between States, or intercourse between States, it chooses to organize,
regulate and co-ordinate those facilities and services which are provided and conducted within the
State as instruments essential to all trade, commerce and intercourse, including inter-State trade,
commerce and intercourse. Any given organization, regulation or co-ordination may infringe sec. 92
if it is proved that the State is really directing its authority against commerce or intercourse between
itself and any other State, or between any two other States. But it is not enough to show that
individual traders or travellers are incommoded or "burdened" in the course of their inter-State
transactions or journeys by having to obey general State regulations which, in their particular
application to individuals, may control and determine the manner and method of their trading or
travelling. For instance, it cannot be said that sec. 92 necessarily prevents the State from
monopolizing the service of land transport within its borders. Nor does sec. 92 necessarily prevent a
State from ending all road transport within its borders by adopting the simple if drastic expedient of
destroying the roads, though the direct result of such action would be to force all traders and
travellers, including those trading or travelling inter-State, to use or contract to make use of, the
State's own railway services.

The illustration of a State's being compelled to monopolize the whole service of road as well as rail
transport is by no means farfetched, for although the problem of co-ordinating land transport is
world-wide in character, in Australia the problem is particularly acute, because the very solvency of
the States is wrapped up in the successful maintenance of their own governmental railway systems.
As the Privy Council said many years ago in Farnell v. Bowman[79]:--
It must be borne in mind that the local Governments in the Colonies, as pioneers of improvements,
are frequently obliged to embark in undertakings which in other countries are left to private
enterprise, such, for instance, as the construction of railways, canals, and other works.

In New South Wales alone, to take one instance, over £140,000,000 of capital moneys are
represented by the assets belonging to the existing State railway system, and the annual interest
payment amounts to no less than £7,500,000. Indeed, the "financial responsibilities incurred by any
State in connexion with the construction and maintenance of its railways" are given express
recognition in sec. 102 of the Commonwealth Constitution. As Griffith C.J. said in The Federated
Amalgamated Government Railway and Tramway Service Association v. The New South Wales
Railway Traffic Employes Association (Railway Servants' Case)[80]:--

In each case the actual administration of the railways was entrusted to a body specially constituted
under State law for the purpose, but the revenue from the railways was State revenue, and the
obligations incurred by their managers were State obligations. It is a fact also that the ability of the
Colonies to meet their financial obligations in respect of loans was largely dependent upon the
successful and profitable employment of the railways.

Where the States have also expended large sums of money for the purpose of constructing and
maintaining roads, the problem of "co-ordination" of the railway and road services becomes one of
direct national concern. Thus the Transport Regulation Board of Victoria in making its statutory
report under the Act of 1932, stated that the existing system of railway transport

is sustaining financial damage which is a national danger, directly so where the system is State-
owned, or indirectly so through the effect on the financial position of banks, insurance companies,
trustees, and other holders of railway securities where the system is privately owned.

The main argument for the present applicant necessarily turns upon some of the reasoning which
was adopted in McArthur's Case[81]. That reasoning we have now been invited to reconsider. In
McArthur's Case it was decided that the Profiteering Prevention Act of 1920 of the State of
Queensland, which fixed the Queensland prices of certain commodities, was invalid so far as it
attempted to govern the terms of those contracts of sale which stipulated that goods delivered
pursuant thereto should come from New South Wales to Queensland. The actual decision may be
supportable upon a number of grounds but, in the course of the leading judgment, it was said that
the words "absolutely free" in sec. 92 meant free "from all governmental control by every
government authority to whom the command contained in the section is addressed"[82], that the
words could not be confined to pecuniary exactions or customs laws, but

have their natural meaning of absolute freedom from every sort of impediment or control by the
States with respect to trade, commerce and intercourse between them, considered as trade,
commerce and intercourse[83].
It was also said:--

that the "true office of sec. 92 is to protect inter-State trade against State interference, and not to
affect the legislative power of the Commonwealth"[84].

And it was stated:--

that "all State interference with inter-State trade and commerce should for ever cease, and for that
purpose Australia should be one country"[85].

It would appear that this judgment adopted two distinct principles, first, that all legislative power to
regulate or control trade and commerce among the States was vested exclusively in the
Commonwealth Parliament so that the Parliament of each State was powerless to regulate or control
trade and commerce between itself and any other State; second, that the Commonwealth Parliament
was not bound by the provisions of sec. 92. In McArthur's Case[86] the Commonwealth was not
represented, but in the present case, Sir Robert Garran, in his valuable argument on behalf of the
Commonwealth, which obtained leave to intervene in the proceedings, argued, (1) that the
Commonwealth is as much bound by the provisions of sec. 92 as are the Parliaments of the States,
and (2) that the State has legislative authority to regulate (inter alia), trade commerce and
intercourse between itself and any other State of the Commonwealth.

From its position in the framework of the constitutional document, and from the general tenor of its
command, it would seem plain that sec. 92 was intended to bind the Commonwealth Parliament in
the exercise of its legislative power, as well as the State Legislatures. Further, the supposed
contradiction between the existence of legislative power in the Commonwealth under sec. 51 (I.) to
pass laws with respect to inter-State trade and commerce, and the restriction in sec. 92 upon the
manner of exercising such power, is more apparent than real. Even the appearance of contradiction
seems to vanish so soon as it is observed that the word "intercourse" occurs in sec. 92 but does not
appear in sec. 51 (I.). It is true that, since 1920, it has been an accepted thesis that the
Commonwealth Parliament is not bound by sec. 92. Before 1920, the contrary view was accepted in
this Court. If the Commonwealth is not bound, it must be entitled to erect customs barriers at State
boundaries, providing it obeys sec. 99 of the Constitution and treats all States alike. In my opinion,
the only possible ground for holding that the Commonwealth is not bound by sec. 92 is that sec. 92
forbids all legislative control and regulation of inter-State trade and commerce, and is therefore
inconsistent with the power to legislate conferred upon the Commonwealth by sec. 51 (I.). If sec. 92
has no such operation, no reason is left for exempting the Commonwealth from obedience to the
general declaration of sec. 92.

Does then sec. 92, as McArthur's Case[87] asserts, forbid the State Parliament from legislating in
any way with respect to inter-State trade and matters affecting it? The line of reasoning adopted
was, first, to define "trade, commerce, and intercourse," and then to assert that absolute freedom
"extends to the whole of it"[88]. It was considered that the terms are terms of common knowledge,
better understood in detail, by traders than by judges. They were then defined to include

the mutual communings, the negotiations, verbal and by correspondence, the bargain, the transport
and the delivery are all, but not exclusively, parts of that class of relations between mankind which
the world calls "trade and commerce"[89].

This definition is extremely wide and it certainly seems rather to describe all matters "relating to" or
"with respect to" trade and commerce, than trade and commerce itself.

The next step in the reasoning was to assert that the only effect of the phrase "among the States" in
sec. 92 was to exclude

purely domestic trade and commerce, but does not alter the nature of the operations which constitute
"trade and commerce" wherever it takes place[90].

I am of the opinion that the addition of the words "among the States" was for a much wider purpose
and had a more far reaching effect than is conceded by this judgment. The framers of the
Constitution employed the term "among" because of the grammatical difficulty attending the use of
the word "between" to describe inter-State trade and intercourse, there being six Colonies or States.
The predominant object of sec. 92 was to secure free trade and free intercourse among what had
formerly been self-governing colonies and what were then to become States which should still
possess very large powers of internal self-government. To assert freedom of trade between such
organized communities was to lay down in formal expression a well-known economic doctrine and
ideal, which was one of the chief motive forces of Federation. Neither the words used, nor the
underlying doctrine they declare would seem to warrant an interpretation by which, first, "trade,
commerce, and intercourse" is resolved into the infinite number of acts, transactions and operations
which must occur in the course of it, secondly, from this infinite aggregation there is subtracted that
infinite number of acts, transactions and operations into which "purely domestic" trade can similarly
be resolved, and, thirdly, each and every one of the acts, transactions and operations, still infinite in
number, which comprise the remainder, the States are rendered unable to touch or regulate in any
way whatsoever. Such a test seems to be incapable of satisfactory application. The advance of a
criminal towards the border of a State, considered by itself, is as much an "operation" or "act" of
intercourse among the States, as the advance of an inter-State traveller from one train to another at a
border town. The holding up of a vehicle travelling inter-State and the arrest of its driver because its
speed endangers safety or its lights are defective may interfere as much with a "transaction" or "act"
of inter-State trade as a decision of a State market authority to postpone the sale of goods simply
because their place of origin is another State.

The declaration of sec. 92 loses much of its significance if parts of it are analysed separately and the
results of the analysis are subsequently put together again. The section, if read as a whole, postulates
the free flow of goods inter-State, so that goods produced in any State may be freely marketed in
every other State, and so that nothing can lawfully be done to obstruct or prevent such marketing.
The section may be infringed by hostile action within the State of origin of the goods, as was
attempted to be done in the Dried Fruits legislation of South Australia, or at the border by means of
prohibitions upon exit or entry, or by laws preventing or prohibiting sale or exchange within that
State to the markets of which the commodities are destined. The declaration of sec. 92 covers goods
which are consigned to the market as well as goods which have been already sold, and are in the
course of delivery, in this sense, that consignment and delivery, being part of commercial
intercourse, cannot be prevented or obstructed by State legislation. But this does not necessarily
mean that either the common or contract carrier, who is engaged in the business of transport, or the
owner, if such there be, who himself carries his goods inter-State in order to sell or deliver, or the
agent or servant who is the selected instrument for selling the commodities at the market place, or
the person who acts as intermediary in receiving the proceeds of sale and remitting them to the
owner in another State--are, each and all of them, at liberty to ignore the general laws of a State
which regulate how and when and where goods must be carried, delivered, sold and accounted for.

Nor is this general position really affected by the use of the words in sec. 92 "whether by means of
internal carriage or ocean navigation." It may be suggested that the specific reference to the two
methods by which trade, commerce, and intercourse are conducted, is indicative of an intention that
all the instruments of internal carriage are to be accorded the same protection as the subject "trade,
commerce, and intercourse among the States." But the words have been inserted lest it should be
thought that, if conducted by land as opposed to sea, or by sea as opposed to land, the general rule
of freedom is to be altered. "Internal carriage" is the most general description of the way in which
all inter-State trade, commerce, and intercourse by land must be conducted if it is to be conducted at
all. Carriage is an instrument of trade, not trade itself. As has well been said:--

Buying and selling are the essential elements of international commerce. Carriage, insurance, and
finance are after all only ancillary to the main purpose of the interchange of goods (Dr. H.C.
Gutteridge K.C. in B. Y. International Law (1933), at p. 77).

Despite the reasoning of the leading judgment in McArthur's Case[91], this Court should accede to
Sir Robert Garran's argument that the Commonwealth's law-making authority upon the subject of
inter-State trade and commerce is not exclusive of that of the State. Overwhelming importance
attaches to the terms of sec. 107 of the Constitution, and to the fact that it is in sec. 52, not in sec. 51
of the Constitution, that the heads of the Commonwealth's exclusive power are set forth. The
Constitution, if interpreted as a document, would seem to postulate that upon the topic of trade and
commerce between itself and any other State, each State possesses a concurrent legislative power. In
the exercise of such concurrent power, the State is, of course, subject to the provision in sec. 109 of
the Constitution which makes valid Commonwealth laws prevail if they are inconsistent with those
of the State. Like the Commonwealth, the State Parliaments are at liberty to enact laws which touch
and concern inter-State trade, commerce, and intercourse, so long as such laws leave inter-State
trade or commerce or intercourse absolutely free. And although this view is not consistent with
much of the reasoning of, as distinct from the decision in, McArthur's Case it is in strict conformity
with the subsequent decisions of this Court in Nelson's Case[92]; Roughley's Case[93]; and Willard
v. Rawson[94].

In several respects Roughley's Case presents a close analogy to the present case. The headnote of the
report is inadequate. It appears that, at the Sydney Produce Market, certain persons acted solely as
agents for the sale of farm produce grown by their principals in other States of the Commonwealth.
Sale through these inter-State agents was therefore the method of trade adopted by their principals.
The latter consigned the farm produce to Sydney, and subsequently received the net proceeds of sale
from these inter-State agents. Until sold in Sydney, the produce remained the property of the
grower, and the unloading and sale of the produce was entirely conducted by the inter-State agents.
The farm produce was sold by the agents in the original packages and cases in which it was
forwarded from the other States.
Upon this recognized method of conducting trade, the New South Wales statute, The Farm Produce
Agents Act 1926, supervened. By its provisions, as interpreted by this Court, all farm and produce
agents, including those employed solely as inter-State agents, were penalized unless they took out a
licence. The licence could be refused upon certain specified grounds, including the commission of
any offence under the Farm Produce Agents Act itself. Regulations were imposed for the inspection
of books, for the method in which the agent should advise his principal as to sales, for the
establishment of trust accounts, for the protection of such accounts, and for the regulation of the
agents' fee or commission.

Isaacs J. and Starke J. thought that the reasoning of McArthur's Case[95] should be applied.
Although their views were not accepted by the Court, it is of significance to observe what those
views were. Thus, Isaacs J. said:--

A producer in Queensland sends pine-apples, not only to other States of the Commonwealth but also
to Sydney to an agent there, to receive and sell them forthwith to Sydney merchants. Forbid the
agent, and the trade in New South Wales disappears, for the principal cannot be present everywhere
at once. Prescribe a licence for the agent, and the trade is regulated, because what in actual fact is an
indispensable means of transacting it, is interfered with. Nor is it an answer to say the inter-State
transaction is not interfered with, but only the contractual relation between principal and agent[96].

The same learned Judge said also:--

For instance, a certain educational capacity might be enacted to enable any man to contract, and a
penalty might be enacted if any person not having that capacity should enter into an agreement as a
contract. But, in the presence of sec. 92 of the Commonwealth Constitution, is that power still
universally exercisable by a State Parliament? Assuredly not as to principals in an inter-State
transaction. The State may, if it pleases, say "We will not enforce such a bargain," and then the
bargain would be unenforceable by State law, or at all, unless the Commonwealth Parliament
provided a remedy. But the State, while at liberty to refrain from assisting or enforcing such a
bargain, could not penalize the making of it, or make it the subject of a direct tax, or require a
licence--which is the State's permission--before the owner of goods sells them inter-State. That
would be attempting to regulate the very act of inter-State trade. Nor, for the same reason, could a
State forbid its citizens the "capacity" to purchase inter-State unless licensed, at any cost and under
any conditions of punishment or otherwise the State thinks fit--for there is no limit if the power
exists. Consequently, "capacity" and "status" cannot be the discrimen or the test. The only test is: Is
what is done an attempted regulation of inter-State trade and commerce?[97].

Reading down the Act so as to apply it to "purely intra-State transactions"[98], Isaacs J. thought that
the validity of the Act could then, and only then, be sustained. Starke J. came to the same
conclusion. He said:--

So far as it applies to farm produce agents engaging in inter-State transactions, the Act is, in my
opinion, obnoxious to the provisions of sec. 92[99].

And he concluded--
Therefore, in my opinion, the State Act should be held to operate--as was the State Act in
McArthur's Case[100]--on the intra-State or domestic business of farm produce agents in New
South Wales[101].

The majority of the Court held that a State Act was not rendered invalid by sec. 92 although it laid
down certain regulations which controlled those co-operating in the conduct of inter-State trade, and
Knox C.J. who had been a party with Isaacs and Starke JJ. to the main judgment in McArthur's
Case, also reached a different conclusion from that of Isaacs and Starke JJ., stating inter alia that

what is forbidden by sec. 92 is any State law which obstructs or restricts the freedom of trade or
commerce among the States[102].

The actual decision of the majority of the Court was that the New South Wales Act applied to all
persons engaged in the business of selling farm produce, whether such produce came from within or
without the State, and whether or not the agents were exclusively engaged in inter-State trade. It was
considered that no part of the Act was rendered either invalid or inapplicable by reason of sec. 92 of
the Constitution.

Now it is quite clear that the Farm Produce Agents Act of New South Wales, although a law with
respect to the carrying on of a certain kind of business within New South Wales, was also a law
which controlled and restricted in a definite way those engaged in trade and commerce, whether
domestic or inter-State. The Act selected the class of persons who alone could lawfully conduct the
business of selling primary produce consigned from other States, and, for all practical purposes, it
cut down the pre-existing right of the inter-State trader to select his own selling agent. By the Act,
his area of selection was restricted to licensed agents. The unlicensed agent was completely
debarred from co-operating in the inter-State trade.

Therefore the decision in Roughley's Case[103] shows that it is not every regulation and control by
the State of the methods of conducting inter-State commerce, which is forbidden by sec. 92.
Roughley's Case is entirely inconsistent with the notion that, by sec. 92, every person who is
engaged, even solely, in inter-State trade is given an unconditional right to choose his own method
of conducting that trade within the borders of each and every State. The case proceeds upon the
contrary hypothesis that the State may prescribe general rules for the conduct of trade and business
and to these rules all persons must conform without sec. 92 being in any way affected. Roughley's
Case is analogous to the present in that the unlicensed produce agent there corresponds to the
unlicensed carrier here, and the inter-State owner of the farm produce there, corresponds to the
owner of the commodities carried by the present applicant.

Nor is Roughley's Case in any way inconsistent with the decision of the Privy Council in James v.
Cowan[104]. No doubt James v. Cowan decides that it is possible for inter-State trade, commerce,
and intercourse to be interfered with contrary to sec. 92, although the State law may also restrict
purely domestic trade. But it also shows that the action of South Australia was held to be unlawful,
not merely because it took certain action in relation to inter-State trade, but because its action was of
a hostile character and carried out the predetermined State policy of limiting and prohibiting the
marketing of dried fruits in the other States of the Commonwealth. James v. Cowan nowhere
suggests that the laws of the States must never trespass in any way upon the domain of inter-State
trade. By the Privy Council's close investigation of the marketing policy of South Australia, the
judgment rather lends support to the view that the validity of State action depends upon whether the
impugned State legislation or administration was directed against inter-State trade by fencing off the
inter-State market.

The principle that the Parliaments of the States may legislate in relation to matters which relate to
and concern and affect inter-State trade, commerce, and intercourse, so long as such legislation
leaves trade, commerce, and intercourse among the States absolutely free, is therefore recognized by
Roughleys' Case[105]. Further, the various State Sale of Goods Acts which govern contracts whether
or not they call for the delivery of goods from one State to another, are obvious illustrations of laws
which deal (inter alia) with matters affecting inter-State trade and commerce but do not offend
against sec. 92.

Moreover, as appears from Nelson's Case [No. 1][106], even if State laws deal solely with matters
persons or things connected with inter-State trade, nevertheless the laws may be found not to offend
against sec. 92. It is difficult to see how any real impediment would be imposed upon commerce or
intercourse among the States if, for instance, for purposes of statistics or perhaps of police, a State
required certain particulars to be furnished by persons arriving from other States, or if persons
passing into a State with cattle were required to cross the border at prescribed places. It is quite
consistent with this view that in all such cases, and whether the State laws deal solely with inter-
State trade and intercourse or with trade in general, it may be found possible to show that sec. 92 is
being infringed, because the real purpose of State intervention is to destroy or limit inter-State trade
or intercourse. For there is hardly any legislative or executive power of the State which is not
capable of being used for a purpose forbidden by sec. 92.

There are many State laws which relate to, and concern, not only trade, commerce, and intercourse,
but other subject matters. It is often of importance to examine the nature and character of all State
laws which are challenged as being contrary to sec. 92 in order to ascertain and measure the
relationship and degree of relationship between them and inter-State trade, commerce, and
intercourse (Nelson's Case [No. 1][107]). Absence of discrimination against inter-State trade and
intercourse, and the presence of legislative purposes other than the purpose of dealing with trade and
commerce may tend to show that the State is not erecting barriers against, or placing embargoes
upon, inter-State trade and intercourse. If a State law discriminates against inter-State trade and
intercourse so as to prohibit it, it will be invalidated by sec. 92 (Fox v. Robbins[108]). And such
discriminatory legislation may exist although, in form, the law is of general application. Thus a
State may attempt to enact a general law fixing the price of commodities which, in fact, are
produced in only one other State, the price operating so as to destroy all trade in such commodities
between the States. Such discriminatory effect is, of course, provable by evidence. Sec. 92 also
confers rights upon individuals in the sense that any person may invoke its aid in an appropriate
case; but it gives no constitutional right either to individuals engaged solely in the inter-State trade,
or to individuals whilst they are so engaged, to determine for themselves the manner in which and
the means by which, they will conduct their business or commerce in each State (Roughley's
Case[109]). Nor are traders or carriers who are engaged solely in the inter-State trade entitled by
virtue of sec. 92, so to dedicate and use their motor vehicles in inter-State trade as to procure an
immunity from the operation of general State laws dealing with the taxation of motor vehicles
(Willard v. Rawson[110]), or the regulation of the business of commercial transport within the State.
But, if it is established that State laws which regulate transport or the vehicles used therefor or trade
or business conducted within a State are designed for the express purpose of restricting or
prohibiting inter-State trade and commerce, and have such effect, the State laws, by whatever name
called, or with whatever subjects they deal, are inconsistent with sec. 92 (James v. Cowan[111]).

The New South Wales State Transport (Co-ordination) Act affects and relates to certain acts, things
and matters which are intimately bound up with inter-State trade, commerce and intercourse. It
controls and regulates the methods by which the services of commercial transport within New South
Wales must be conducted. The main purpose of the Act is to secure a better and more economical
system of public transport by land within New South Wales, the scheme of organization being to
compel co-operation between the transport services provided by the Government railways and road
transport services. The statute seeks to secure better facilities for all trade and commerce and
intercourse. For all practical purposes the State has already monopolized rail and tram transport, and
it must be remembered that the railway systems of the States are themselves the main
instrumentalities for conducting trade, commerce and intercourse among the States. There is no
evidence in this case, either upon the face of the Act or otherwise, that the system of licensing
public motor vehicles using New South Wales roads was intended to, or by administration had the
effect of, disadvantaging, discriminating against, or even limiting, inter-State trade or commerce in
any commodity.

Sec. 92 does not guarantee that, in each and every part of a transaction which includes the inter-
State carriage of commodities, the owner of the commodities, together with his servant and agent
and each and every independent contractor co-operating in the delivery and marketing of the
commodities, and each of his servants and agents, possesses, until delivery and marketing are
completed, a right to ignore State transport or marketing regulations, and to choose how, when and
where each of them will transport and market the commodities.

One of the results of the contrary view, recently rejected by this Court in Willard v. Rawson[112],
would be to exempt the inter-State carrier from the payment of motor vehicle taxation in either of
two States, although he makes a very extensive use of the roads of both. The argument rejected in
that case assumes that sec. 92 primarily protects persons, but its real object is to secure the free flow
and passage and marketing of commodities among the States and to secure the right of passage of
persons from State to State. Absolute freedom is ascribed to trade, to commerce and to intercourse,
and is not ascribed to traders or to travellers, considered merely as individuals.

In the United States, for reasons which need not be examined, a doctrine was enunciated that inter-
State trade and commerce is exclusively a matter for Federal control and regulation, and that, as a
consequence, any dealing with that subject by the State was regarded as a trespass upon the domain
of Federal power. But, as time went on, exceptions had to be engrafted upon this principle in order
to prevent chaotic and absurd results. But in Australia the situation is, or should be, entirely
different. Upon the States, as well as the Commonwealth, has been conferred legislative power over
the subject matter of inter-State trade and commerce. Commonwealth laws are given supremacy in
the case of inconsistency, and the State, and, in my opinion, the Commonwealth also, should
observe the general command laid down in sec. 92.

In the present case the question is whether it can truly be said:--"Before this Act was passed, trade
and commerce in all commodities and the intercourse of persons between New South Wales and
Victoria was absolutely free, but since this Act it has ceased to be absolutely free." All that has been
shown is that owners of public vehicles may be refused a New South Wales vehicle licence, even if
the vehicle is used upon inter-State journeys. But it has not been shown that a single vehicle so used
has not been licensed upon application made. And, even if the present applicant had deigned to
request a licence for his vehicle and his request had been refused, that would not prove an
infringement of sec. 92.

The order nisi should be discharged.

McTiernan J.

In my opinion, the order nisi for prohibition should be discharged. It is unnecessary to reiterate in
detail the facts proved before the Magistrate or the provisions of the State Transport (Co-ordination)
Act 1931 (Act No. 32 of 1931) as amended by Act No. 31 of 1932. The applicant attacked his
conviction for an offence against sec. 12 of this Act on two grounds. (1) That the Magistrate was in
error in finding that the evidence was sufficient to support the allegation that the applicant operated
the vehicle on the relevant occasion. (2) That by force of sec. 92 of the Constitution of the
Commonwealth and sec. 3 (2) of the State Transport (Co-ordination) Act he was not bound by the
provisions of sec. 12 of this Act even if he did in fact "operate a public motor vehicle" in New
South Wales in the circumstances which were proved before the Magistrate. In my opinion the first
ground is untenable. It is sufficient to say that there was evidence upon which the Magistrate was
entitled to find that the applicant did operate the motor vehicle on the occasion in question. I have
nothing to add to the reasons, which have been given by my brother Evatt, for declining to quash
the conviction on this ground.

The applicant's second ground of attack raises a question of great constitutional importance. It was
contended on his behalf that, upon the true construction of sec. 92 of the Constitution, sec. 12 of the
State statute is in excess of the legislative power of the State, if "any person" is read to include a
person who "operates a public motor vehicle" within New South Wales in the course of an inter-
State journey. The question, therefore, is what is the true construction of sec. 92? In James v.
Cowan[113] the Judicial Committee said "It appears to their Lordships unnecessary to undertake the
difficult task of defining the precise boundaries of the absolute freedom granted to inter-State
commerce by sec. 92." Their Lordships added[114] "In the present case they are clearly of opinion
that sec. 20 and the determinations made under it were directed at inter-State commerce as such.
They were intended to prevent persons in South Australia from selling more than the fixed quota in
any of the Australian States." The boundaries of the "absolute freedom" granted to inter-State
commerce by sec. 92 do not appear to have been precisely defined in the judgments of this Court.
Indeed, in James v. Cowan[115], Isaacs J., as he then was, issued a warning against making such a
definition. He said[116]: "I would say for myself that a paraphrase is especially dangerous in the
case of a Constitution. In my opinion it would under the best of circumstances be unfortunate to
adopt that or any other supposed verbal equivalent for the words of the Commonwealth Constitution
itself." In Huddart Parker Ltd. v. The Commonwealth[117], Dixon J. drew attention to the course
recommended by Viscount Haldane L.C. in John Deere Plow Co. v. Wharton[118], of confining
decisions upon questions on constitutional interpretation to concrete questions and avoiding general
definitions of expressions occurring in the Constitution. We were therefore treated to an elaborate
argument by counsel as to the nature of the prohibition implied by sec. 92. The terms of this section
are perhaps more characteristic of the platform than the draftsman's desk. The difficulty of
measuring its terms exactly, so that nothing is added or subtracted is a perplexing one. The nature of
a Constitution, as Chief Justice Marshall said in M'Culloch v. State of Maryland[119], "requires,
that only its great outlines should be marked, its important objects designated, and the minor
ingredients which compose those objects be deduced from the nature of the objects themselves."
Sec. 92 appears to be deficient even according to that standard.
The applicant, however, relies mainly on certain propositions enunciated in McArthur's Case[120]
and submits that they conclude the constitutional question in his favour. This case further decides
that sec. 92 does not bind the Commonwealth. The propositions in McArthur's Case as to the nature
of the prohibition which sec. 92 imposes upon the State Legislatures are stated in a number of ways.
"Absolutely free--The primary meaning of these words used as they are with reference to
governmental control, is that the subject matter of which they are predicated is to be absolutely free
from all governmental control by every governmental authority to whom the command contained in
the section is addressed. The expression absolutely free naturally means free as trade, commerce,
and intercourse, and does not extend beyond the subject matter spoken of. It is not said of goods or
persons, but of the acts which constitute trade, commerce, and intercourse"[121]. "The State cannot,
in our opinion, either by laws directly and openly applying to trade and commerce, or by laws
creating discrimination, which is the same thing (see per White J. in Pullman v. Kansas4(1909)
[1910] USSC 25[1910] USSC 25; ; 216 U.S. 56, at p. 65.), impose a prior restraint on trade,
commerce, and intercourse among the States"[123]. "The words absolutely free in sec. 92 cannot,
therefore, be confined to pecuniary exactions or customs laws, but in order to have any substantial
effect must, unless some better reason be found, have their natural meaning of absolute freedom
from every sort of impediment or control by the States with respect to trade, commerce and
intercourse between them, considered as trade, commerce and intercourse"[124]. Sir Robert Garran
who appeared for the Commonwealth, which intervened in these proceedings, attacked the
proposition which these passages express as to the nature of the constitutional prohibition imposed
by sec. 92 and the further proposition laid down by the case that the section does not bind the
Commonwealth as well as the States. These propositions are not, I think, justified by the language
of sec. 92. But as they should not now be overruled the present application must proceed upon the
basis that they are right.

Trade, commerce and intercourse includes the carriage of passengers or goods for hire or in the
course of any trade or business. The terms "operate" and "public motor vehicle" are defined in sec. 3
(1) of the State Transport (Co-ordination) Act. Sec. 12, therefore, unless it is read down by sec. 3
(2), affects both inter-State and domestic trade and commerce. Its effect is to regulate and control
such trade and commerce to some degree. Although this is the effect of the section, the
constitutional question is not, in my opinion, concluded in favour of the applicant by the proposition
laid down in McArthur's Case[125] as to the nature of the constitutional prohibition implied by sec.
92. In a further passage in this case Knox C.J., Isaacs J. and Starke J. expressed their view as to the
meaning of "absolute freedom" in respect of inter-State trade and commerce. They said[126] it
"does not connote privilege to break all other laws. Liberty is not equivalent to anarchy or licence.
Though there is absolute freedom in every Victorian to cross into New South Wales and mingle with
his fellow Australians there without the least hindrance or condition on the part of the State of New
South Wales, it is his intercourse only which is unfettered, not the man himself under all
circumstances. If the man, while in New South Wales, steals or cheats or begs ... or is in such a
condition as to constitute a danger to his fellows--matters wholly distinct from intercourse--he is
as amenable to the laws of the State on those subjects, so far as they are unaffected by sec. 109 of
the Constitution, as any permanent resident of the State. If he brings goods into the State, he is free
to do so, and to pass through the State with them (say) to Queensland, equally without hindrance or
condition by State law, so far as regards the passage through. But if, for instance, the goods are
dangerous, as gun-powder, or wild cattle or a mad dog, or are stolen or offensive, he cannot deny his
obligation to submit in respect of them to whatever laws are in force in the State on those subjects.
The constitutional freedom predicated begins and ends with respect to the act of trade, commerce,
and intercourse." The principles expressed in this passage were applied by Knox C.J., Gavan Duffy
J., as he then was, and Starke J. in Ex parte Nelson [No. 1][127]. In affirming that the Stock Act
1901 of New South Wales did not contravene sec. 92 their Honors said[128]:--"In a measure it must
be conceded that the Stock Act of New South Wales does regulate the free flow of inter-State trade
and commerce in stock. ... The seeming conflict may be resolved, in our opinion, by considering the
true nature and character of the legislation in the particular instance under discussion. The grounds
and design of the legislation, and the primary matter dealt with, its object and scope, must always be
determined in order to ascertain the class of subject to which it really belongs; and any merely
incidental effect it may have over other matters does not alter the character of the law. ... The Stock
Act of New South Wales is not in itself a regulation of inter-State commerce, though it controls in
some degree the conduct and liability of those engaged in the commerce. ... In truth, the object and
scope of the provisions are to protect the large flocks and herds of New South Wales against
contagious and infectious diseases, such as tick and Texas fever: looked at in their true light, they
are aids to and not restrictions upon the freedom of inter-State commerce. They are a lawful
exercise of the constitutional power of the State. There are passages in W. & A. McArthur Ltd. v.
Queensland3(1920) 28 C.L.R., at pp. 550-551. which in our opinion support this view." Their
Honors cited from the passages at pages 550-551, in which the meaning of "absolute freedom" in
respect of inter-State commerce is explained. The decisions since McArthur's Case[130] have
explained, perhaps liberalized the principles upon which the Court proceeded in that case in
outlining the class of State laws which are untouched by sec. 92. These decisions are binding
equally with McArthur's Case[131]. In Roughley's Case[132] it was decided that the provisions of
the Farm Produce Agents Act 1926 of New South Wales were not obnoxious to the provisions of sec.
92. Knox C.J. stated[133]: "It is manifest from the provisions of the Act that its sole object is to
ensure, as far as may be practicable, honest dealing on the part of persons described as farm produce
agents towards their principals and to prevent the owners of farm produce, whether resident in New
South Wales or in other States, from being defrauded by persons who carry on the business of
selling farm produce." Continuing, the Chief Justice said[134]:--

It may well be that the Parliament of New South Wales is prevented by sec. 92 of the Constitution
from either prohibiting the owner of goods produced in another State or the servant of such an
owner bringing such goods into New South Wales or selling them there, and from imposing
conditions on the exercise of his right to do so. But it does not follow that a State law regulating the
conduct of auctioneers or commission agents carrying on their business in New South Wales, or
requiring them to be licensed, or prescribing rules for the regulation of traffic in the streets of its
towns is rendered inoperative by that section whenever the auctioneer, or agent, or carrier is in fact
dealing with goods consigned from another State for sale in New South Wales. What is forbidden by
sec. 92 is any State law which obstructs or restricts the freedom of trade or commerce among the
States. A law may control in some degree the conduct and liability of persons engaged in inter-State
commerce without being itself a regulation of inter-State commerce (Judson on Inter-State
Commerce, 2nd ed., p. 50); and a person whose business consists wholly or in part of affording
facilities for the transaction of inter-State commerce is not necessarily engaged in inter-State
commerce so as to prevent the regulation by State legislation of his conduct in connection with that
business.

Higgins J. said[135]:--"But the State Legislature is subjected to another veto by sec. 92: it must not
make a law which infringes the provision that trade, commerce and intercourse among the States
shall be absolutely free. Freedom is really a negative idea: I take it as meaning that there shall be no
restraint, no obstruction, no control of trade, &c., between the States. This cannot mean, if we are to
give due effect to sec. 107, that State laws which merely affect such trade indirectly are vetoed; for
all legislative action of the State must affect inter-State commerce. State laws for public works, for
public order, for police, for roads, for railways, for finance, even education or for morality, must,
more or less, have an influence on inter-State commerce." In Willard v. Rawson[136] it was not
questioned that the provisions of the Motor Car Act of Victoria there in question did by their
operation affect inter-State trade and commerce. But the Court decided that the appellant was not
excused by sec. 92 from obedience to them. This case was decided after James v. Cowan[137] and
certain principles enunciated by the Judicial Committee were resorted to for the purpose of
distinguishing between legislation which sec. 92 was intended to prohibit and legislation which the
State Legislatures were left free to enact, although it affected trade and commerce. These principles
were stated by Lord Atkin[138]. His Lordship said:--"If the real object of arming the Minister with
the power of acquisition is to enable him to place restrictions on inter-State commerce, as opposed
to a real object of taking preventive measures against famine or disease and the like, the legislation
is as invalid as if the Legislature itself had imposed the commercial restrictions. ... It may be
conceded that, even with powers granted in this form, if the Minister exercised them for a primary
object which was not directed to trade or commerce, but to such matters as defence against the
enemy, prevention of famine, disease and the like, he would not be open to attack because
incidentally inter-State trade was affected."

These authorities, in my opinion, establish that the absolute test of invalidity under sec. 92 is not
whether the provisions of the State statute in question have the effect of regulating, or controlling
trade and commerce, including inter-State trade and commerce. Although no precise, or exact
statement of the true nature of the prohibition emerges from the present state of the decisions, yet,
they furnish clear guidance in an inquiry into the question whether the provisions of a State Act
contravene sec. 92. An Act which discriminates against inter-State trade is invalid. An Act which
affects inter-State and domestic trade indiscriminately is wholly bad unless severable, if it directly
affects such trade or in other words affects it as trade. An Act affects trade directly which is passed
with a real or primary object directed to trade of prohibiting, regulating, controlling, restricting or
burdening trade as opposed to a real or primary object not directed to trade, which is within the
acknowledged power of the Legislature to accomplish. The real or primary object of an Act is to be
gathered from what it enacts. See Peanut Board v. Rockhampton Harbour Board[139], and cases
there cited. When the real or primary object of an Act is not directed to trade and commerce, but
trade and commerce are incidentally affected by the Act such an incidental effect does not render
the Act void under sec. 92.

The Commonwealth and the States respectively may enact legislation in the same terms with respect
to subjects within their legislative powers respectively. But it does not follow that each Parliament
would be exercising a power of legislation with respect to the same subject. The Commonwealth,
for example, may as a regulation of commerce enact that motor vehicles engaged in inter-State trade
should be licensed. But an Act of a State Legislature in similar terms, with respect to all motor cars
which are driven in its territory should not be described as a regulation of commerce as such. The
tests, which have just been outlined and which should, in my opinion, be applied in the present
inquiry as to the validity of sec. 12 really depend upon a recognition of the distinct powers of
legislation reserved to the States by the Commonwealth Constitution. It remains to apply these tests
to the provisions of the State Act now in question.

The State Transport (Co-ordination) Act is described by the preamble as "An Act to provide for the
improvement and for the co-ordination of means of and facilities for locomotion and transport; to
constitute a Board of Commissioners for that purpose; to amend the Government Railways Acts
1912-1930, and certain other Acts; and for purposes connected therewith." Sec. 4 empowers the
Governor to appoint a Board to carry out objects and purposes which are substantially those stated
in the preamble. The Board is directed by sec. 10 (2) to report to the Minister as to the steps, which
they consider desirable to co-ordinate and unify the control of, the facilities and means for
locomotion provided by various Governmental bodies namely the Railway Commissioners,
constituted under the Government Railways Acts 1912-1930, the authorities constituted under the
Transport Act 1930 for the control of tramways and road transport, and the Main Roads Board,
constituted under the Main Roads Act 1924-1929. The Government Railways of New South Wales
are practically a monopoly and were built out of money borrowed on the public credit. An
examination of the Government Railways Acts shows the direct connection between the
Government of the State and its railways and how closely interwoven are governmental and railway
finance. The Transport Act provides for the creation of transport trusts for defined areas. These
trusts are concerned with the supervision, regulation and co-ordination of all public transport and
omnibus services in their respective areas. The powers of the Railways Commissioners in relation to
tramways are transferred to these trusts. Another authority set up by the Act is the Commissioner of
Road Transport. Part XV. of the Act vests the administration of the provisions of the Motor Traffic
Act of the State relating to the registration of motor vehicles and the control and supervision of
them in this authority. The Management Board is constituted to conduct transport services
established by the trusts for the carriage of passengers. The Main Roads Board is a road construction
authority. The Main Roads Act provides for the classification of the roads of the State. The cost of
construction and maintenance is borne by special funds established by the Main Roads Act. These
funds are built up by public moneys derived from sources mentioned in the Acts. The real or
primary object of the provisions of the State Transport (Co-ordination) Act relating to the licensing
of public motor vehicles which the applicant ignored, is not in my opinion, directed to trade and
commerce at all. These provisions empower the State through its instrumentality, the State
Transport (Co-ordination) Board, to limit, upon the principles laid down in the Act, the number of
vehicles plying for hire on the roads of the State or using the roads in the course of any trade or
business. That, in my opinion, is not a regulation of trade and commerce as such, although trade and
commerce may be incidentally affected by it. The information directed to be furnished to the Board
in an application for a licence and the particular matters, which the Board is directed to consider in
dealing with the application, clearly show that the provisions attacked have a real and necessary
connection with the objects and purposes which are declared in the preamble, and which are to be
gathered from the enactment itself. An examination of the provisions of the Act and the Acts
constituting the various public bodies whose activities and services it was passed to co-ordinate and
improve shows that the real object of arming the Board with the powers of granting or refusing
licences to persons desiring to operate public motor vehicles on the roads of New South Wales was
to protect the utility of the public facilities for transport, to save the publicly owned railways of the
State from the destructive effect of the uncontrolled or unrestricted use of the facilities for travelling
provided by the State out of public moneys and to protect the public finances and the credit of the
State. It is, in my opinion, within the legislative power reserved to the States to enact the provisions
which are now in question and such provisions are not affected by sec. 92.

This Court, while recognizing the difference between the Australian and American Constitutions has
frequently referred to the decisions of the Supreme Court of the United States which were given in
cases where State legislation was attacked on the ground of conflict with the commerce clause of the
American Constitution. This precedent encourages reference to some of these decisions. In Sproles
v. Binford[140] the Supreme Court of the United States, in dealing with the provisions of a motor
vehicle Act of the State of Texas said[141]:--"It is said that the exception was designed to favor
transportation by railroad as against transportation by motor trucks. If this was the motive of the
Legislature, it does not follow that the classification as made in this case would be invalid. The State
has a vital interest in the appropriate utilization of the railroads which serve its people as well as in
the proper maintenance of its highways as safe and convenient facilities. The State provides its
highways and pays for their upkeep. Its people make railroad transportation possible by the payment
of transportation charges. It cannot be said that the State is powerless to protect its highways from
being subjected to excessive burdens when other means of transportation are available. The use of
highways for truck transportation has its manifest convenience, but we perceive no constitutional
ground for denying to the State the right to foster a fair distribution of traffic to the end that all
necessary facilities should be maintained and that the public should not be inconvenienced by
inordinate uses of its highways for purposes of gain." This statement applies with special force
where the railways as well as the roads are built and maintained out of public funds and are owned
and managed and controlled by the State. In Frost v. Railroad Commission[142] the "effect" of the
State Act in question was "to offer a special privilege of using the public highways to the private
carrier for compensation upon condition that he shall dedicate his property to the quasi-public use of
public transportation." Mr. Justice Sutherland said[143], in delivering the opinion of the Court:--"It
is very clear that the Act, as thus applied, is in no real sense a regulation of the use of the public
highways. It is a regulation of the business of those who are engaged in using them. Its primary
purpose evidently is to protect the business of those who are common carriers in fact by controlling
competitive conditions. Protection or conservation of the highways is not involved." In my opinion,
in view of the public ownership of the railways in New South Wales the opinion of Mr. Justice
Holmes who dissented throws more light on the constitutional question arising in the present case.
He said[144]:--"The point before us seems to me well within the legislative power. We all know
what serious problems the automobile has introduced. The difficulties of keeping the streets
reasonably clear for travel and for traffic are very great. If a State speaking through its Legislature
should think that, in order to make its highways most useful, the business traffic upon them must be
controlled, I suppose that no one would doubt that it constitutionally could, as, I presume, most
States or cities do, exercise some such control. The only question is how far it can go. I see nothing
to prevent its going to the point of requiring a licence and bringing the whole business under the
control of a railroad commission so far as to determine the number, character and conduct of
transportation companies and so to prevent the streets from being made useless and dangerous by
the number and lawlessness of those who seek to use them." In the State of New South Wales the
uncontrolled use of the roads by an inordinate number of "public motor vehicles" is calculated to be
dangerous to the efficiency of the railways and directly injurious to the interest of the State. Mr.
Justice Brandeis concurred with Mr. Justice Holmes, and Mr. Justice McReynolds also dissented in a
separate opinion in which he repeated in substance the views which he expressed as a dissentient in
Bush & Sons Co. v. Maloy[145]. In that case he made a noteworthy statement of the problem arising
from the increase of motor vehicles in a State where the railways are not publicly owned. In
Louisville and Nashville Railroad Co. v. Kentucky[146], the Court referred to the difference between
State legislation affecting the instruments of commerce and legislation with respect to the commerce
itself. In the course of its judgment the Court said:--"But little need be said in answer to the final
contention of the plaintiff in error, that the assumption of a right to forbid the consolidation of
parallel and competing lines is an interference with the power of Congress over inter-State
commerce. The same remark may be made with respect to all police regulations of inter-State
railways. All such regulations interfere indirectly, more or less, with commerce between the States,
in the fact that they impose a burden upon the instruments of such commerce. ... These are,
however, like the taxes imposed upon railways and their rolling stock ... but are still within the
competency of the Legislature to impose ... There are certain intimations in some of our opinions,
which might perhaps lead to an inference that the police power cannot be exercised over a subject
confined exclusively to Congress by the Federal Constitution. But while this is true with respect to
the commerce itself, it is not true with respect to the instruments of such commerce." Finally in
Missouri Pacific Railway Co. v. Larabee Flour Mills Co.[147] the Court dealt with the power of the
State over the vehicles of inter-State commerce. It quoted and approved the following statement
from Cleveland &c. Railway Co. v. Illinois[148]:--"Few classes of cases have become more
common of recent years than those wherein the police power of the State over the vehicles of inter-
State commerce has been drawn in question. That such power exists and will be enforced,
notwithstanding the constitutional authority of Congress to regulate such commerce, is evident from
the large number of cases in which we have sustained the validity of local laws designed to secure
the safety and comfort of passengers, employees, persons crossing railway tracks, and adjacent
property owners, as well as other regulations intended for the public good." The Court then gave a
digest of such cases.

For these reasons, I am of the opinion that the application to make absolute the order nisi, should be
dismissed.

Rule nisi discharged.

Solicitor for the appellant, C. Throsby Young, agent for Lusher, Young & Stellway (Wagga Wagga).

Solicitor for the respondent, F. W. Bretnall, Solicitor for Transport.

Solicitor for the Commonwealth (intervening), W. H. Sharwood, Crown Solicitor for the
Commonwealth.

Solicitor for the State of Victoria (intervening), F. G. Menzies, Crown Solicitor for Victoria.

[1] [1920] HCA 77; (1920) 28 C.L.R. 530.

[2] [1920] HCA 77; (1920) 28 C.L.R. 530.

[3] [1920] HCA 77; (1920) 28 C.L.R. 530.

[4] (1933) 48 C.L.R., at pp. 274-275.

[5] (1933) 48 C.L.R., at p. 322.

[6] [1920] HCA 77; (1920) 28 C.L.R. 530.

[7] [1928] HCA 45; (1928) 41 C.L.R. 442.

[8] (1933) 48 C.L.R., at p. 324.

[9] [1920] HCA 77; (1920) 28 C.L.R. 530.

[10] [1920] HCA 77; (1920) 28 C.L.R. 530.

[11] (1920) 28 C.L.R., at p. 549.

[12] (1920) 28 C.L.R., at pp. 550-554.
[13] (1920) 28 C.L.R., at pp. 551-552.
[14] (1920) 28 C.L.R., at pp. 556-558.
[15] (1932) A.C. 542; 47 C.L.R. 386.
[16] [1926] HCA 47; (1926) 38 C.L.R. 408.
[17] (1927) 40 C.L.R. 1.
[18] [1928] HCA 48; (1928) 42 C.L.R. 162.
[19] [1928] HCA 33; (1928) 42 C.L.R. 209.
[20] [1933] HCA 11; (1933) 48 C.L.R. 266.
[21] [1933] HCA 12; (1933) 48 C.L.R. 316.
[22] (1933) 48 C.L.R., at p. 325.
[23] [1920] HCA 77; (1920) 28 C.L.R. 530.
[24] [1921] HCA 31; (1921) 29 C.L.R. 357.
[25] (1932) A.C. 542; 47 C.L.R. 386.
[26] (1932) A.C., at pp. 558-559; 47 C.L.R., at pp. 396-397.
[27] (1932) A.C. 542; 47 C.L.R. 386.
[28] [1916] HCA 67; (1916) 22 C.L.R. 556.
[29] [1916] HCA 28; (1916) 21 C.L.R. 357.
[30] [1920] HCA 77; (1920) 28 C.L.R. 530.
[31] (1927) 40 C.L.R. 1, at p. 39.
[32] [1933] HCA 11; (1933) 48 C.L.R. 266.
[33] (1932) A.C. 542; 47 C.L.R. 386.
[34] (1932) A.C., at p. 546.
[35] (1932) A.C., at p. 546.
[36] (1927) 40 C.L.R. 1.
[37] (1932) A.C., at p. 546.
[38] (1932) A.C., at p. 555; 47 C.L.R., at pp. 393-394.
[39] (1929) A.C. 260.
[40] (1930) 43 C.L.R., at p. 420.
[41] (1929) A.C., at p. 268.
[42] [1928] HCA 48; (1928) 42 C.L.R. 162.
[43] [1920] HCA 77; (1920) 28 C.L.R. 530.
[44] [1920] HCA 77; (1920) 28 C.L.R. 530.
[45] [1928] HCA 45; (1928) 41 C.L.R. 442.
[46] [1931] HCA 1; (1931) 44 C.L.R. 492
[47] [1916] HCA 67; (1916) 22 C.L.R. 556.
[48] (1932) A.C. 542; 47 C.L.R. 386.
[49] [1933] HCA 12; (1933) 48 C.L.R. 316.
[50] [1930] HCA 48; (1930) 43 C.L.R. 386.
[51] [1933] HCA 11; (1933) 48 C.L.R. 266.
[52] (1933) 48 C.L.R., at p. 324.
[53] [1933] USSC 71; (1933) 289 U.S. 92, at p. 95 [1933] USSC 71; ; 77 L.Ed. 1053, at p. 1056.
[54] [1932] USSC 164; (1932) 287 U.S. 251; 77 L.Ed. 288.
[55] [1931] USSC 90; (1931) 283 U.S. 183, at p. 186 [1931] USSC 90; ; 75 L.Ed. 953, at pp. 965-
968.
[56] [1928] USSC 111; (1928) 277 U.S. 163, at p. 171 [1928] USSC 111; ; 72 L.Ed. 833, at p. 837.
[57] [1928] USSC 111; (1928) 277 U.S. 163, at p. 171 [1928] USSC 111; ; 72 L.Ed. 833, at p. 837.
[58] [1933] HCA 12; (1933) 48 C.L.R. 316.
[59] (1933) 48 C.L.R., at p. 338.
[60] [1933] HCA 11; (1933) 48 C.L.R. 266.
[61] (1933) 48 C.L.R., at p. 328.
[62] (1933) 48 C.L.R., at p. 328.
[63] (1933) 48 C.L.R., at p. 337.
[64] [1930] HCA 48; (1930) 43 C.L.R. 386.
[65] (1932) A.C. 542; 47 C.L.R. 386.
[66] (1932) A.C., at p. 561; 47 C.L.R., at p. 398.
[67] [1933] HCA 12; (1933) 48 C.L.R. 316.
[68] (1932) A.C. 542; 47 C.L.R. 386.
[69] (1927) 40 C.L.R. 1.
[70] (1932) A.C., at p. 558; 47 C.L.R., at p. 396.
[71] (1932) A.C., at p. 559; 47 C.L.R., at p. 397.
[72] (1932) A.C., at p. 555; 47 C.L.R., at pp. 393-394.
[73] (1932) A.C., at p. 559; 47 C.L.R., at p. 397.
[74] (1932) A.C. 542; 47 C.L.R. 386.
[75] [1933] HCA 12; (1933) 48 C.L.R. 316.
[76] [1933] HCA 12; (1933) 48 C.L.R. 316.
[77] [1933] HCA 12; (1933) 48 C.L.R. 316.
[78] [1926] HCA 47; (1926) 38 C.L.R. 408.
[79] (1887) 12 App. Cas., at p. 649.
[80] [1906] HCA 94; (1906) 4 C.L.R. 488, at p. 535.
[81] [1920] HCA 77; (1920) 28 C.L.R. 530.
[82] (1920) 28 C.L.R., at p. 550.
[83] (1920) 28 C.L.R., at p. 554.
[84] (1920) 28 C.L.R., at p. 556.
[85] (1920) 28 C.L.R., at p. 558.
[86] [1920] HCA 77; (1920) 28 C.L.R. 530.
[87] [1920] HCA 77; (1920) 28 C.L.R. 530.
[88] (1920) 28 C.L.R., at p. 546.
[89] (1920) 28 C.L.R., at p. 547.
[90] (1920) 28 C.L.R., at p. 548.
[91] [1920] HCA 77; (1920) 28 C.L.R. 530.
[92] [1928] HCA 33; (1928) 42 C.L.R. 209.
[93] [1928] HCA 48; (1928) 42 C.L.R. 162.
[94] [1933] HCA 12; (1933) 48 C.L.R. 316.
[95] [1920] HCA 77; (1920) 28 C.L.R. 530.
[96] (1928) 42 C.L.R., at p. 184.
[97] (1928) 42 C.L.R., at p. 184.
[98] (1928) 42 C.L.R., at p. 191.
[99] (1928) 42 C.L.R., at p. 206.
[100] [1920] HCA 77; (1920) 28 C.L.R. 530.
[101] (1928) 42 C.L.R., at p. 208.
[102] (1928) 42 C.L.R., at p. 179.
[103] [1928] HCA 48; (1928) 42 C.L.R. 162.
[104] (1932) A.C. 542; 47 C.L.R. 386.
[105] [1928] HCA 48; (1928) 42 C.L.R. 162.
[106] [1928] HCA 33; (1928) 42 C.L.R. 209.
[107] [1928] HCA 33; (1928) 42 C.L.R. 209.
[108] [1909] HCA 81; (1909) 8 C.L.R. 115.
[109] [1928] HCA 48; (1928) 42 C.L.R. 162.
[110] [1933] HCA 12; (1933) 48 C.L.R. 316.
[111] (1932) A.C. 542; 47 C.L.R. 386.
[112] [1933] HCA 12; (1933) 48 C.L.R. 316.
[113] (1932) A.C., at p. 555; 47 C.L.R., at p. 393.
[114] (1932) A.C., at p. 555; 47 C.L.R., at pp. 393-394
[115] [1930] HCA 48; (1930) 43 C.L.R. 386.
[116] (1930) 43 C.L.R., at p. 417.
[117] (1931) 44 C.L.R., at p. 514.
[118] (1915) A.C. 330, at p. 338.
[119] (1819) 17 U.S., 316, at p. 407 [1819] USSC 5; ; 4 L.Ed. 579, at p. 601.
[120] [1920] HCA 77; (1920) 28 C.L.R. 530.
[121] (1920) 28 C.L.R., at p. 550.
[122] [1910] USSC 25; (1909) 216 U.S. 56, at p. 65.
[123] (1920) 28 C.L.R., at p. 551.
[124] (1920) 28 C.L.R., at p. 554.
[125] [1920] HCA 77; (1920) 28 C.L.R. 530.
[126] (1920) 28 C.L.R., at pp. 550-551.
[127] [1928] HCA 33; (1928) 42 C.L.R. 209.
[128] (1928) 42 C.L.R., at pp. 218-219.
[129] (1920) 28 C.L.R., at pp. 550-551.
[130] [1920] HCA 77; (1920) 28 C.L.R. 530.
[131] [1920] HCA 77; (1920) 28 C.L.R. 530.
[132] [1928] HCA 48; (1928) 42 C.L.R. 162.
[133] (1928) 42 C.L.R., at p. 177.
[134] (1928) 42 C.L.R., at p. 179.
[135] (1928) 42 C.L.R., at pp. 193-194.
[136] [1933] HCA 12; (1933) 48 C.L.R. 316.
[137] (1932) A.C. 542; 47 C.L.R. 386.
[138] (1932) A.C., at pp. 558-559; 47 C.L.R., at pp. 396-397.
[139] (1933) 48 C.L.R., at pp. 309-310.
[140] [1932] USSC 123; (1932) 286 U.S. 374; 76 L.Ed. 1167.
[141] (1932) 286 U.S., at p. 394; 76 L.Ed., at p. 1182.
[142] [1926] USSC 160; (1926) 271 U.S. 583; 70 L.Ed. 1101.
[143] (1926) 271 U.S., at p. 591; 70 L.Ed., at p. 1104.
[144] (1926) 271 U.S., at p. 601; 70 L.Ed., at p. 1108.
[145] [1925] USSC 55; (1925) 267 U.S. 317; 69 L.Ed. 627, at p. 629.
[146] [1896] USSC 89; (1895) 161 U.S. 677, at p. 701.
[147] (1909) 211 U.S. 612, at pp. 621, 622; 53 L.Ed. 352, at p. 360.
[148] [1900] USSC 110; (1900) 177 U.S. 514, at p. 516 [1900] USSC 110; ; 44 L.Ed. 868, at p.
869.

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