Constitutional Restraints on Trade and Commerce in Australia and Canada

188 The University of Queensland Law Journal, Vol. 9, NO.2 Constitutional Restraints on Trade and Commerce in Australia and Canada

J.M. HERLIHY*

When the two federations of Canada and Australia were established, it was understood that thereafter the several provinces or colonies would, within each federation, constitute one trading area. This understanding of the founders of both nations has been met within the constitutional framework of both federations, and it is the purpose of this article to examine the different provisions, and their application, in relation to the concept of freedom of trade within the two countries. Freedom of trade will be discussed in the constitutional context, and not in the sense of freedom from trade restraints. The discussion will relate to the guaranteed freedom from governmental interference, either National, Provin- cial or State, given to citizens of both countries by their respective Constitu- tions. I shall first discuss Australia. Under the Constitution of the Commonwealth, powers to legislate over trade and commerce are distributed between the Commonwealth and State Parlia- ments. The Federal Parliament has been given power over interstate and foreign trade and commerce, while the State Parliaments have the residue power to legislate with respect to intrastate trade activity.' The Federal power was construed rather narrowly in the early years of Federation, for example, in the Railway Servants Case,2 the High Court of Australia stated that the power only authorised laws, the effect of which, upon interstate and overseas trade was "direct, substantial and proximate".' These, it is seen, are indefinable words, but as interpreted by the High Court were used to cut down any wide sweep that may have been given to the Commonwealth under Section 51(1) of the Constitution. The above case, however, was virtually overruled in Huddart Parker v. The Cornm~nwealth,~and the legislative grant has been more expansively interpreted. To avoid repetition of judicial pronouncements, I need only quote from a recent decision of the High Court in the case of Airlines of N.S. W. Pty. Ltd. v. The State of N.S. W. and Commissioner for Motor TransportS where Barwick C.J. stated as follows:- "It remains a power to make laws with respect to Interstate and Foreign trade and commerce. This Court has never favoured, in relation to Commonwealth power, the more extensive view of the Commerce power under the Constitution of Congress which has, at some times, found expressions in decisions of the Supreme Court of the United States. To say this, however, is not to deny that there are occasions, and the safety procedures designed to make Interstate and Foreign Trade and Commerce as carried

* B.A., LL.B. (Qld.); LL.M. (London); Barrister-at-Law; Lecturer in Law, University of Queensland. 1. Vide S.51 and S.107 of the Commonwealth Constitution. 2. (1906) 4 C.L.R. 488. 3. 1bid. 545. 4. (1931) 44 C.L.R. 492 particularly the judgment of Dixon J 5. (1965) 38 A.L.J.R. 388. Constitutional Restraints on Trade and Commerce 189

on by air transport secure are a ready instance, when it can be no objection to the validity of the Commonwealth law that it operates to include in its sweep intrastate activities. Occasions when, for example, the particular subject matter of the law and the circumstances surrounding its operation require that if the Commonwealth law is to be effective as to Interstate or Foreign Trade and Commerce, that law must operate indifferently over the whole area of the relevant activity whether it be intrastate or interstate but this involves no change in the subject matter of the Com- monwealth power. The power is not enlarged by circumstance though what might be validly done in its exercise may be more extensive because of the factual situation. Some decisions of the Supreme Court of the United States on close examination real- ly place the matter in relation to the commerce power of the Congress no higher. The total validity of a law which operates on more than Interstate or Foreign Trade and Commerce and which is sought to be justified by reference to Section 51(1) of the Constitution will be determined by resolving the question whether the law as so operating, is in substance a law with respect to Interstate or Foreign trade."" Before that in O'Sullivan v. Noarlunga Meat Ltd.' it was held that the power under Section 51(1) extends to the regulation of goods within a State, if the goods are to be set aside for export. These cases have, I hope, given some idea of the intertwined relationship of Commonwealth and State powers over the subject of Trade and Commerce. The field is covered legislatively by both Parliaments, and the question has always been how far the Commonwealth power extends, for what the Com- monwealth cannot do (subject to what appears later) under Section Sl(1) must, by the constitutional framework in Australia, be within the power of the States. So far I have mentioned what may be termed the Postive Grants of legislative power to the respective Australian Parliaments. These are grants which enable the Commonwealth or States (within their own ambits) to legislate with respect to Trade and Commerce; but there is another side to the coin, for the Constitu- tion also contains prohibitions on legislative activity. The Parliaments are either expressly (as in Section 1 16 of the Constitution) or impliedly for-bidden to legislate over certain fields of activity. One of these prohibitions covers the Trade and Commerce field. The article will now move on to discuss that prohbition, and the way in which Courts have interpreted it since Federation in 1901. Since Federation some five appeals to the Privy Council and over eighty odd decisions at the High Court have been reported in which the lucid words (on their face at least) of Section 92 of the Constitution have been elucidated and applied. From the figures given just now, one will realise that it would be well nigh impossible in an article of this sort to outline what, to many, are conflicting and confusing decisions on the prohibition, so what is hereafter attempted is my explanation of the cases rather than a statement of' the Law as it has been declared to be. These are the principles which I have come to see the cases as deciding. The statement may appear to be terse in places, but this is done for the sake of keeping the article in manageable proportions. First, to quote Section 92 of the Constitution. The essential words are "Trade, Commerce and Intercourse among the States shall be absolutely free". Although McArthur's Cases was the sixth case to come before the High Court on Section 92, it is, for my purpose, the best beginning. In the joint judgement of Knox C.J., Isaacs and Starke JJ's it was said:-

6. Ibid. at 391 and 392. 7. (1954) 92 C.L.R. 565. 8. (1920) 28 C.L.R. 530. 190 J. M. Herlihy

"The notion of a person or a thing tangible or intangible, moving in some way from one State to another is no doubt a necessary part of the concept of Trade, Commerce and Intercourse among the States. But all the commercial dealings and all the acces- sory methods in fact adopted by Australians to initiate, continue and effectuate the movement of persons and things from State to State are also parts of the concept because they are essential for accomplishing the acknowledged end. Commercial transactions are multi-form and each transaction that is said to be interstate must be judged by its substantial nature in order to ascertain whether and how far it is, or is not of the character predi~ated."~ This pronouncement squarely poses some of the main issues which must be faced when endeavouring to interpret Section 92. Three essential matters are raised in the above passage. They are:- (a) The use of the phrase "Trade, Commerce and Intercourse among the States"; (b) by what activities does a person engage in interstate Trade, Commerce and Intercourse? (c) when does a law come within the prohibition imposed by Section 92? I shall briefly discuss each of these questions in turn. First, to the meaning of the phrase, "Trade, Commerce and Intercourse among the States". To go to the words "among the States"; this description denotes a connection with two or more States of the Commonwealth. Another essential quality denoted by these words arises out of the use of the word "among". This word connotes mutuality. So, Trade, Commerce and Inter- course, cannot be described as "among the States" unless it brings one State into relationship with another. This mutual relationship it seems, can only be created by the movement of a thing from one State to another so, therefore, movement from one State to another State becomes an essential quality of the phenomenon on interstate Trade, Commerce and Intercourse. This concept of mutuality is brought out in the Hospital Provident Fund Case,'' where movement among the States was lacking. Interstate Trade, Com- merce and Intercourse includes the movement of both tangibles and intangibles. In the Bank Nationalisation Case, in the High Court," and the Privy Council,12 it was held that the movement of credit from one State to another was a form of interstate Trade, Commerce and Intercourse. A thing then, is not in the course of interstate Trade, Commerce and Intercourse unless it, itself, is moving from one State to another. Now, to the meaning of Trade, Commerce and Intercourse. The movement per se of things between States is not protected by Section 92, but if movement in the course of trade (in the widest sense) is to fulfil that description, the movement must have a purpose capable of giving the movement the complexion of Trade, Commerce and Intercourse. Purposeless (in the sense of non-trade purpose) movement of a thing into another State, as occurred in the case of Harris and Wagner," where sheep were moved from Queensland into New South Wales merely for the purpose of evading the State Transport Act of Queensland, will not constitute trade among the States. The movement must be for a purpose which can clearly be categorised as Trade, Commerce and Intercourse.

9. Ibid. 549. 10. 87 C.L.R. 1 at 14-15 in the judgment of Dixon C.J. 11. 76 C.L.R. 1. 12. 79 C.L.R. 497. 13. 103 C.L.R. 452. Constitutional Restraints on Trade and Commerce 191

So far then, Section 92 requires purposeful movement among the States. Now to move onto matter (b). Section 92 guarantees to the individual citizen liberty to engage in interstate Trade (using only Trade for more convenience, the other concepts, Commerce and Intercourse, perhaps, are mere derivatives for the whole concept of commercial trade movement). That this freedom is a personal one, was put beyond any doubt by the Privy Council in the Bank Nationalisation Case.14 The Privy Council purposely rejected the volume of trade theory, i.e. that the total trade activity in a country is not interfered with by a particular piece of Governmental regulation, although individual parties may be interfered with in their individual trading transactions, a theory, which, as will be seen later, has been accepted by Rand J, in Murphy v. The Canadian Pac$c Railways of Canada.15 Also, the Bank Nationalisation Case held that the freedom guaranteed to the citizen is freedom from governmental interference by either Commonwealth or State laws. This follows an earlier Privy Council decision in James v. The C~mmonwealth,'~that Section 92 binds the Commonwealth as well as the States. This has meant that matters within the protection of Section 92 are beyond the reach of all Australian Parliaments. Section 92 protects acts of interstate Trade and it is, therefore, important to identify what activities are acts of interstate Trade. It is clear that movement of goods from one State to another for a purpose which can be regarded as a trading one or a commercial one is protected, therefore a person who carries passengers or goods from one State to another cannot be made the subject of governmental regulation if, what is attacked by the regulation, is the very act of movement itself." Again, also, a person who procures movement from one State to another for the purpose of trade is said to engage in interstate Trade and is likewise protected by Section 92. So a contract of carriage or a contract of purchase whereunder the carrier or vendor undertakes to carry or send the articles interstate is an act of interstate Trade and hence cannot be made subject to State stamp duty taxes. See McArthur's Case mentioned above. I have used the term "Trade purpose" in this discussion when detailing what movement Section 92 will make absolutely free. This purpose is a question of fact to be determined by the Court. It is the subjective purpose of the person who claims Section 92 protection that the Court must determine. Of course, here, as in other branches of law, the court determines this purpose from the nature and type of acts done by the person. From above, it will be seen, in outline fashion, what things Section 92 protects, or at least, the principles as brought out by the Courts when applying the Section. The Courts have developed a doctrine whereby purposeful movement characterised as trade, comes within the constitutional protection from governmental interference. To go on and discuss matter (c). It will be seen that if a law strikes at the movement of things for a trade purpose, then the law will be declared ultra-vires the legislature which seeks to enforce it. Many examples of such instances can be given. State transport laws requiring drivers to hold permits from the State cannot cover interstate hauliers engaged in interstate trade.18 For here, the carriage of goods interstate is protected, and cannot be subject to State permits

14. Supra Note 12. 15. (1958) S.C.R. 626. 16. 55 C.L.R. 1. 17. Vide ANA v. The Commonwealth 71 C.L.R. 29. 18. Jackson v. Horne [I9661 A.L.R. 368. Barry v. Stewart [1966) 192 J. M.Herlihy charging for quantities of goods carried. Again, State or Commonwealth laws which set up Commodities Boards which seek to purchase all produce of a particular kind from producers, infringe the individual producer's right to engage in interstate Trade.19 Such examples could be multiplied but it is not my purpose to do that in this article. Rather, I hope I have given some idea of the principles which the Courts have spelled out of Section 92. The protection granted by Section 92 is a wide one. Many Commonwealth and State laws have suffered because of it, for the Courts strike them down not merely if they affect the actual movement of goods across the borders, but even if they affect earlier or later stages in a transaction which involves such movement. This is strikingly shown in the recent High Court Decision of Pilkington v. Frank Hammond Pty. Ltd.20where an intrastate carrier in Tasmania was given protection by Section 92 by allowing him to avail himself of the inter-state contractual arrangement between his employer (a company engaged in the container shipping trade from Tasmania to Melbourne thence on to London) and the agent for the consignor of the relevant goods (in this case beef) in Tasmania. The majority judgments of the High Court seemed to allow this protection because the journey overland in Tasmania was part of one continuous journey from the consignor's property to Melbourne. It appears that this decision extends the reasoning given in the Jackson v. Horne decision (supra). If any activity is regulated merely be virtue of its tendency to cause movement from one State to another, then the law will be ultra-vires the legislature which has passed it. The Courts, in effect, have to look at laws to determine their real intent and impact. If the law proposes to regulate a transaction in respects, other than interstate movement, then the Courts will see what is the legal impact of the law. If it is only movement of goods which is affected, then the law will be struck down in regard to interstate transactions. While, if some other policy is detected in the law, for example, Gun Control laws, Censorship laws or Health laws, the regulation will be upheld as not violating Section 92. An example may perhaps make this proposition clearer. If the Parliament of a State passed a law which forbade all drivers on State roads to drive their vehicles without Police permit, the award of which is in the discretion of the Police, this law, it will be seen, strikes merely at movement of vehicles. The policy of this law, it could not be said on any rational basis, is to protect citizens from accidents and damage caused by motor crashes (a purpose outside the prohibition), but is merely to prevent people from driving vehicles on the State's roads. Accordingly, such a law would be struck down as violating Section 92 of the Constitution. It is the tendency of the Australian Courts to find only trade movement being regulated in most cases. The regulations upheld on grounds that the policy of the act only incidentally affects movement of goods interstate are very few and far between. It is thus seen from this brief sur- vey of Section 92 Doctrine that the positive grants given to the Australian Parliaments to legislate with respect to trade matters are severely curtailed by this overriding prohibition. Now I propose to discuss the situation in Canada. To deal with the question of Freedom of Trade and Commerce within Canada, I shall go first to what can be shortly described as the Canadian equivalent to Section 92, namely Section 121 of the British North America Act. It states:-

19. Peanut Board v. Rockhampton Harbour Board 48 C.L.R. 266 20. Pilkington v. Frank Harnmond Pty. Ltd. 48 A.L.J.R. 61. Constitutional Restraints on Trade and Commerce 193

"All articles of the Growth, Produce, or Manufacture of any one of the Provinces, shall, from and after the Union be admitted free into each of the other Provinces." The first thing to notice about this Section is that it refers to articles of produce etc. These words curtail the Section to tangible goods produced in the provinces, contra Australian Bank Nationalisation Ca~e.~' How has this provision been interpreted in its operation in the constitutional field? The first decision to observe is the Gold Seal Case.22In this case the majority of the Supreme Court of Canada held that prohibition, by the Dominion Parliament, of the importation of intoxicating liquor manufactured in one province into another, did not infringe this Section. At page 79 Duff J. said:- "The phraseology adopted when the context is considered in which this Section is found shows, I think, that the real object of the clause is to prohibit the establishment of customs duties affecting interprovincial trade in the products of any province of the union." A similar view was expressed by Anglin and Mignault JJ's2' who added, to customs duties, other charges of a like nature. In Atlantic Smoke Shops Ltd. v. Conlin and the Attorney-General of Canada,24Viscount Simon for the Privy Council remarked, in part, on the Gold Seal judgment:- "The meaning of Section 121 cannot vary according as it is applied to Dominion or to provincial legislation and their Lordships agree with the interpretation put upon the Section in the Gold Seal case." The final decision to mention in this context is Murphy v. Canadian Pacific railway^.^^ In this case the Plaintiff attacked provisions of the Canadian Wheat Board Act on one ground which concerns us here-namely that certain charges which the Board deducts from sales, thereby equalising returns to producers, infringe Section 121 of the British North America Act. The majority of the Supreme Court merely reiterated the opinions expressed in the Gold Seal Case, as to the meaning to be given to Section 121, and held that the Wheat Board Act imposed no charges in the nature of customs duties on goods moving from one province to another. Rand J. discussed Section 121 at greater length. He analysed the differences in the federal structure between Australia and Canada and noted that Section 121 required to be look at differently to Section 92 of the Australian Constitution. At page 638 of the Report he says that:- "Section 121 does not extend to each producer in a province an individual right to ship freely regardless of his place in the Shipping Order set up under the Act. The ex- action must be looked at in the administration of a comprehensive extraprovincial marketing scheme. One must view the interstate element in these transactions not from the light of the individual producer of wheat but from the totality of trade movement within Canada of a product of many provinces." This interpretation of Section 121 is clearly contra the interpretation given to Section 92 of the Australian Constitution by the Privy Council in the Bank Nationalisation Case. At page 642 of the Report he says:- "I take Section 121 apart from customs duties to be aimed against trade regula-

21. 79 C.L.R. 497. 22. 62 D.L.R. 62. 23. Ibid. at 89. 24. [I9431 A.C. 550 at 569. 25. [I9581 S.C.R. 626. 194 J. M. Herlihy

tions which are designed to place fetters upon or raise impediments to, or otherwise restrict or limit the free flow of commerce across the Dominion as if provincial boundaries did not exist. What is forbidden is a trade regulation that in its essence and purposes is related to a provincial boundary." From these decisions one can see that a vastly different interpretation has been given to Section 121 to that given to Section 92 of the Australian Constitu- tion. Section 121 has been given a literal interpretation. It is narrow in scope. The incidents in the single transaction that are protected in Australia, are not so protected under Section 121 of the British North America Act. However it is not to Section 121 alone that one must look to find prohibitions on governmental regulation of trade in Canada. For, seeing that Section 121 does not provide the blanket prohibition that Section 92 does in Australia, it becomes more important in the case of Canada to analyse the positive grants of power possessed by the Dominion Parliament and provincial legislatures to legislate with regard to trade and commerce. As we do so, we will be looking to see if these powers have been restricted in their scope, so that, perhaps, what is achieved in Australia by interpreting Section 92 widely, may have been achieved in Canada by a reading down of governmental powers over the subject of trade. Firstly I shall discuss the Dominion grant of power. It finds itself in Section 91(2) of the British North America Prima Facie, it is wide in scope. One can quite easily see that if used by the Dominion in a wide and expansive sense it would render the existence of the federal structure a matter of Dominion suf- ferance, rather than constitutional right. Not surprisingly, therefore, the power has been given a restricted meaning consonant with its role in the federal arrangement of governmental powers in Canada. I shall only attempt to deal with notable decisions by the Courts in this process of interpretation. In Citizens In- surance Co. v. Parsons2' the Privy Council read the Head as conferring power on the Dominion Parliament over "political arrangements in regard to trade requiring the sanction of Parliament. Regulation of trade in matters of interprovincial concern and it may be that they would include general regulation of trade affecting the whole D~minion."~~ This decision shows that the Board was prepared to give the power a reasonably wide ambit within the governmental division of powers. The last phrase used by the Privy Council in the passage quoted above was ambiguous, and provided the Dominion with the hope that they could legislate on a wide variety of matters of national concern under this power. These hopes were decisively dashed to the ground by successive decisions of the Courts. Suffice it here to mention that in Toronto Electric Commissioners v. Snider29the Privy Council, through Viscount Haldane saw Section 91(2) as a secondary power which the Dominion could rely on to pass regulations, if it could establish a substantive law under some other Head of Section 91 of the British North America Act. This approach, even though departed from by a later decision of the Privy Council in Proprietary Articles Trade Association v. Attorney-General of Canada,30left its marks on doctrines surrounding the com-

26. Section 91 states:- ". . . the exclusive legislative authority of the Parliament of Canada extends to all matters com- ing within the classes of subjects next hereinafter enumerated; that is to say-(2) The Regula- tion of Trade and Commerce." 27. 7 App. Cas. 96. 28. Ibid. 113. 29. [I9251 A.C. 396. 30. [I9311 A.C. 310. Constitutional Restraints on Trade and Commerce 195 merce power, so that, under the last phrase in the passage from Parson's Case quoted above, only a national trade Marks Statute has been upheld as a valid exercise of Dominion power over matters of general concern." The Dominion's power to legislate with regard to interprovincial trade has fared more favourably. A series of cases show an ever-expanding scope given to this particular limb of Section 91(2) for here the Courts are faced with the problem of drawing a line between intra and interprovincial matters. The question posed, is how far can the Dominion go in legislating on matters occurring wholly within a province, but occurring in the trade movement of the nation? To show how the Supreme Court of Canada has faced that question, I propose to analyse briefly some of its recent decisions on the point. The Privy Council did not develop the process of drawing the boundaries between intraprovincial and interprovincial matters. It merely sufficed by mak- ing statements as to the scope of the The Supreme Court has had to attempt the delineation of the Dominion power in Section 91(2) when faced with actual situations in which its ambit has to be traced. In the case Re Farm Products Marketing Act,13 the Court made an attempt to distinguish between provincial matters and interprovincial matters by noting that trade involved movement and was a dynamic process. When once the article enters into the flow of inter-provincial or external trade, (this latter field was conceded to the Dominion in earlier cases),j4the subject matter and all its attendant circumstances ceased to be a matter of local concern.35 In the Farm Products Case one can detect the intent of the Court to give the Dominion power a wider ambit than previously, for one now can determine on the facts of each case, when the article moves into the flow of goods in the Na- tion, i.e, when the dynamic process of trade begins. This same approach has been adopted in later Canadian cases. The most important cases for our purposes being Murphy's Case'6 and Klassen's Case." In the former case, Domi- nion legislation regulating pooling of grain in the provinces was upheld as being an exercise of power over the export trade, for the process of exporting wheat begins at the production in the province. This latter approach was applied in Klassen's Case to allow the Dominion to legislate on provincial matters, provided they are merely ancillary to the movement of goods in the trade of the nation. The question is looked at widely, and the boundary line drawn very close to the production of the goods in question, if not right at the production level, if one can show a connection with export or interprovincial trade, and, that the subject matter is incapable of being split up wholly into provincial parts, not related to trade movement of an interprovincial nature, and parts related to such movement. Thus, it is seen, this interpretation, now not departed from in Canada, (see the Carnation Milk Case," where the Court could split the transaction up into intraprovincial elements before trade

31. Attorney-General of British Columbia v. Attorney-General of Canada [I9371 A.C. 377. 32. Viz. Shannon v. The Lower Mainland Dairy Products Board (19381 A.C. 708 at 719. 33. (1957) 2 D.L.R. (2d) 257. 34. Viz. Lawson v. Interior Tree Fruit and Vegetable Committee [I9311 S.C.R. 57 at 371 in the judgment of Duff J. 35. Ibid. Note 33 supra, at pp. 265 and 270 of the Report respectively. 36. Murphy v. Canadian Pacific Railways [I9581 S.C.R. 626. 37. Regina v. Klassen (1959) 2 W.R. 369. 38. Carnation C. Ltd. v. Quebec Agricultural Marketing Board & Others (1968) 67 D.L.R. (2d) 1. 196 J. M. Herlihy movement interstate began, and later elements in the transaction), has given a wide scope to the Dominion power. This interpretation compares favourably with the interpretation given Section 5 l(1) of the Australian Constitution. The similarities between the interpretation given in Murphy's Casej9 and in the Noarlunga Case4' in Australia are obvious. Corresponding to the field given to the Dominion Parliament over trade and commerce in Canada, the provinces can only legislate with regard to matters of provincial concern, before the dynamic of export or interprovincial trade has commenced. Earlier cases saw this as an exercise of the power under Head 13 of Section 92 of the British North America Act,4' for example, Parson's Case,42 but lately the Supreme Court has categorised this power more correctly under Section 92, Head 16 of the British North America Act.43 In the Carnation Case44the Supreme Court upheld provincial legislation ob- viously under this Head of power. The Act in question there, aimed only at the provincial elements in the transaction, and what came later in time was of no concern to the Statute. On the other hand in A.G. (Man) v. Manitoba Egg and Poultry it was held by the Supreme Court that a Provincial Plan (embodied in Orders in Council) which sought to regulate the sale, in Manitoba, of all eggs, wherever produced, even by prohibition of the import of eggs produced outside Manitoba if necessary, was ultra vires the Provincial Legislature in that it sought to regulate inter-provincial trade and so was an in- vasion by the Province of the exclusive legislative authority of the Parliament of Canada (s.91(2)) over the matter of the regulation of trade and commerce. Also, in Burns Foods Ltd. v. A.G. (Man./4" the Supreme Court invalidated a Provincial Regulation, which required that no processor of hogs in the Province shall slaughter hogs unless they were purchased from the relevant Marketing Board, on the grounds that it was an attempt to regulate inter-provincial trade in hogs, because hogs from outside the Province would have to pass through the Board before they could be bought and slaughtered in Manitoba. In both cases there was clearly a disadvantage aimed at produce outside the Province. The inter-provincial trading pattern had to be disrupted, therefore that was outside Provincial competence. Thus, the field of Trade and Commerce in Canada can be seen to be covered by both the Dominion Parliament and the Provincial Legislatures. The general Dominion power has been read down, but its power over inter-provincial trade has been extended, and meets the provincial power, which extends only to purely provincial or local matters. So, under the positive grants of power under the British North America Act, the two levels of Government are not curtailed in the regulations that they may pass to control the exercise of an individual's participation in trade activities. It is, perhaps, well to mention here that the Dominion, under Section 91(2) of the British North America Act cannot prohibit trade, but only regulate it,45but within the sphere of regulation, both Dominion and Provincial Parliaments are free, provided the regulations imposed to not infringe the Constitutional

39. Ibid. Note 25. 40. Ibid. Note 7. 41. The power over "Property and Civil Rights in the Province". 42. Ibid., Note 27. 43. The power over "Generally all matters of a merely local or private nature in the Province". 44. Ibid., Note 38. Also see Rand J. in Re Farm Products (1957) 2 D.L.R. (2d) 257 at 270. 44a. A.G. (Man.)v. Manitoba Egg and Poultry Association (1971) 19 D.L.R. (3d) 169 at 179. 44b. Burns Foods Lid. v. A.G. (Man.)(1974) 40 D.L.R. (3d) 731 at 737. 45. Vide The Local Prohibition Case [1896] A.C. 348. Constitutional Restraints on Trade and Commerce 197

Prohibition in Section 121, the interpretation of which has been discussed above, or the Taxing Prohibitions to be discussed now. We must investigate the distribution of Taxing Power under the British North America Act, for if either level of Government cannot levy taxes or charges, then its right to regulate trade activities may be rendered useless. The Government concerned would not be able to burden people engaging in trade, other than by purely regulatory measures, e.g. those of a hygiene nature, if they could not also levy taxes upon people engaged in trade and commerce. It could be said, that if this is the result of the interpretation given to the Taxing provisions in the British North America Act, then, trade and commercial activity is not burdened by any financial provisions to any degree. I shall very briefly outline the scope of the Taxing powers under the British North America Act in Canada. Under Section 91(3)46of the British North America Act the Federal Taxing Power is very wide in its scope. It is only curtailed by the general requirement that the Federal Parliament must, when it passes legislation under this Head of Power, be passing Taxation Legislation, i.e. the Statute must be able to be categorised as a Taxing Statute and not some other type of Statute passed under the guise of a Taxation Stat~te.~' To turn to the Provincial Taxing Power, this is found in Section 92(2) of the British North America The only real question at issue here, as seen from most of the authorities in this field, is the question whether a tax imposed by the Statute passed by the Provincial Legislature is a direct or an indirect tax. The principle taken from Mills' definition is amply expounded in Kingcome's Case49 and the Cairns Construction Ltd. The important question for our purpose, is the effect given to Section 121 as operating on the taxing powers of both Dominion and Province. In Atlantic Smoke Shops v. Conl~n,~'the Privy Council adopted a very literal interpretation of Section 121. See the discussion above. The Board in that case held that the Section was directed at preventing customs duties on interprovincial trade in the products of any Province. The provision in that case, a tax on persons buying tobacco for consumption in the Province, did not impose a customs duty. It was not a tax on a commodity as such, and was not imposed on every one on receiving the tobacco, but a person was taxed only if he was a prospective smoker. The same approach was followed by the Supreme Court of Canada in Murphy's Case.52 Rand J, in the case, exploring the Section more fully, came to the conclusion that what Section 121 forbids, is a regulation that in its essence andpurpose is related to a Provincial boundary. Thus, it is seen that the Courts have very narrowly construed Section 121 of the British North America Act. They have not given the Section any meaning which would free parties from taxing regulations in their trade dealings, except those few regulations that may attempt to seize upon the goods themselves, taxing the goods, as it were, as they crow the

46. Section 91(3) mentions laws extending to matters. "The raising of money by any mode or system of Taxation." 47. The general question of "characterisation" was discussed in Re The Insurance Act of Canada [I9321 A.C.4. 48. The subsection states:- "Direct Taxation within the Province In order to the raising of revenue for provincial purposes." 49. [I9341 A.C. 45. 50. [I9601 S.C.R. 419. 51. Supra Note 24. 52. Supra Note 25 especially the majority judgment of Locke J. 198 J. M. Herlihy border, i.e. customs duties. This interpretation leaves the Governments free to regulate trade activity by taxing provisions, provided they keep the provisions "personal" to the use of the goods when once they have crossed the border. This is in marked contrast to the expansive interpretation given to Section 92 of the Australian Constitution. Having discussed the main provisions dealing with the subject both in Canada and Australia, one can now draw some general conclusions. In summing up, one must notice first the different interpretations given by the respective Courts to Section 92 of the Australian Constitution and Section 121 of the British North America Act. These two sections are not comparable in their operation on persons engaged in trade activities within the respective Dominions. Again, Sec- tion 51(1) of the Australian Constitution has to be viewed in the light of Section 92 and the States powers over Trade and Commerce within State boundaries. Certainly the effect of Section 92 of the Australian Constitution on governmental regulation with regard to Trade and Commerce, would most certainly mean that cases such as Murphy's Cases3 and Klassen's Cases4 would have been decided the other way in Australia. Governmental marketing schemes as existed in those two cases would not be tolerated in Australia because of the expansive interpretation given to Section 92 of the Constitution. Finally, as a general statement it might be said that the freedom of Australians to engage in Trade and Commerce among the States is much wider than any comparable freedom possessed by citizens of Canada. Corresponding to that personal freedom, goes the constraint on Governmental powers in Australia, while in Canada, the restrictions on Governments are not wide in Constitutional terms, and depend on Governmental willingness or unwillingness to act.

53. Supra Note 25. 54. Supra Note 37.