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 federa- tions, 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 in- terpreted. 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 in- trastate 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.