New South Wales v Commonwealth (1915)

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New South Wales v Commonwealth
Coat of Arms of Australia.svg
Court High Court of Australia
Decided 23 March 1915
Citation(s) [1915] HCA 17, (1915) 20 CLR 54
Case history
Prior action(s) Commonwealth v NSW (Inter-State Commission 22 February 1915)
Case opinions

(4:2) The Constitution separated the legislative, executive and judicial functions of Government. The Inter-State Commission was part of the executive function and could not exercise judicial power.
(per Griffith CJ, Isaacs, Powers & Rich JJ)
(Barton & Gavan Duffy JJ dissenting)

Contents

(6:0) Freedom of interstate trade is not infringed if there is no differentiation arising by reason of interstate trade.
(per Griffith CJ, Barton, Isaacs, Gavan Duffy, Powers & Rich JJ)
Court membership
Judge(s) sitting Griffith CJ, Barton, Isaacs, Gavan Duffy, Powers and Rich JJ

New South Wales v Commonwealth, [1] commonly known as the Wheat case, [2] or more recently as the Inter-State Commission case, [3] is a landmark Australian judgment of the High Court made in 1915 regarding judicial separation of power. It was also a leading case on the freedom of interstate trade and commerce that is guaranteed by section 92 of the Constitution. [4]

In law, a judgment is a decision of a court regarding the rights and liabilities of parties in a legal action or proceeding. Judgments also generally provide the court's explanation of why it has chosen to make a particular court order.

High Court of Australia supreme court

The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the states, and the ability to interpret the Constitution of Australia and thereby shape the development of federalism in Australia.

Section 92 of the Constitution of Australia, as far as is still relevant today is:

Background

In 1914 there were rising prices in Australia for various commodities, including wheat, caused by a drought in Australia from 1911 to 1916 and the outbreak of World War I in July 1914. [5] The initial response of the Parliament of NSW was to fix the price of wheat at 4s 2d (4 shillings and 2 pence) per bushel while the then market price was 5 p higher at 4s 7d. [6] Farmers and merchants refused to sell their wheat at that price and resulted in the Government seizure of wheat stored at railway yards. [7] By December 1914 the market price in Victoria had risen to 5s 6d. [5] The NSW Parliament passed the Wheat Acquisition Act 1914 to compulsorily acquire wheat in NSW and for varying or cancelling contracts for the sale and delivery of wheat, [8] paying a price of 5s per bushel of wheat acquired. [5] The acquisition necessarily prevented the performance of any existing contracts for the sale of wheat in NSW to be exported to another State.

Commodity marketable item produced to satisfy wants or needs

In economics, a commodity is an economic good or service that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. Most commodities are raw materials, basic resources, agricultural, or mining products, such as iron ore, sugar, or grains like rice and wheat. Commodities can also be mass-produced unspecialized products such as chemicals and computer memory.

Drought in Australia

Drought in Australia is defined by the Australian Bureau of Meteorology as rainfall over a three-month period being in the lowest decile of what has been recorded for that region in the past. This definition takes into account that drought is a relative term and rainfall deficiencies need to be compared to typical rainfall patterns including seasonal variations. Specifically, drought in Australia is defined in relation to a rainfall deficiency of pastoral leases and is determined by decile analysis applied to a certain area. Note that this definition uses rainfall only because long-term records are widely available across most of Australia. However, it does not take into account other variables that might be important for establishing surface water balance, such as evaporation and condensation.

The 1911–16 Australian drought consisted of a series of droughts that affected various regions of Australia between the years of 1911 and 1916. Most of the dry spells during this period can be related to three El Niño events in 1911, 1913 and 1914, though rainfall deficiencies actually began in northern Australia before the first of these El Niños set in and did not ease in coastal districts of New South Wales until well after the last El Niño had firmly dissipated and trends toward very heavy rainfall developed in other areas of the continent.

In January 1915, the Commonwealth applied to the Inter-State Commission for an order to prohibit the NSW Government and the NSW Inspector-General of Police from preventing the exportation of wheat to other States on the basis that this acquisition infringed the Constitution's guarantee of freedom of interstate trade and commerce. The commission consisted of a chief commissioner, Albert Piddington, who had been briefly appointed to the High Court but resigned before hearing a case, [9] and two laypersons, George Swinburne and Nicholas Lockyer (Comptroller-General of Customs). The Inter-State Commission found that the NSW Wheat Acquisition was invalid and made the order sought by the Commonwealth, with Swinburne and Lockyer finding that NSW had contravened section 92 of the Constitution [4] by compulsorily acquiring wheat which was the subject of contracts for interstate sale and was in the course of interstate transport. Piddington disagreed, holding that the Act was a valid exercise of the power of a State to compulsorily acquire food for the civilian population. [5]

The Inter-State Commission, or Interstate Commission, is a defunct constitutional body under Australian law. The envisaged chief functions of the Inter-State Commission were to administer and adjudicate matters relating to interstate trade. The Commission was established in 1912, became dormant in 1920, was abolished in 1950, re-established in 1983, and absorbed into the Industry Commission in 1989.

New South Wales Police Force primary law enforcement agency of New South Wales, Australia

The New South Wales Police Force is the primary law enforcement agency of the state of New South Wales, Australia. It is a servant of the Crown, independent of Government, although a minister of the Crown has administration. Divided into Police Area Commands (PACs), for metropolitan areas of NSW and Police Districts (PDs), for regional and country areas of NSW, the NSW Police Force consists of more than 500 local police stations and covers an area of 801,600 square kilometres in a state of some seven million people.

Albert Piddington Australian judge, reformer and politician

Albert Bathurst Piddington KC was an Australian lawyer, politician and judge. He served on the High Court of Australia for one month in 1913, making him the shortest-serving judge in the court's history.

NSW appealed to the High Court, challenging the decision not only on the basis that NSW contended that it had not infringed the freedom of interstate commerce, but challenged the very foundation of the Inter-State Commission. The argument was that the Inter-State Commission Act 1912, [10] was contrary to the separation of powers that was implicit in the Constitution. The argument had its foundation in the structure of the Constitution, where chapter 1 dealt with the Parliament, chapter 2 with the Executive Government and chapter 3 with the Judicature. The Inter-State Commission is not within any of these chapters, instead it is within chapter 4 which deals with finance and trade.

In Australian constitutional law, Chapter III Courts are courts of law which are a part of the Australian federal judiciary and thus are able to discharge Commonwealth judicial power. They are so named because the prescribed features of these courts are contained in Chapter III of the Australian Constitution.

The idea that the executive is unable to exercise judicial power has its origins in the 1607 decision in the Case of Prohibitions which held that the King had no right to personally sit as a judge and interpret the law. [11] The more immediate precursor was the separation of powers under the United States Constitution including the power of the Supreme Court to review whether a law passed by Congress was unconstitutional.

<i>Case of Prohibitions</i>

Case of Prohibitions [1607] EWHC J23 (KB) is a UK constitutional law case decided by Sir Edward Coke. Before the Glorious Revolution of 1688, when the sovereignty of Parliament was confirmed, this case wrested supremacy from the King in favour of the courts.

Separation of powers under the United States Constitution

Separation of powers is a political doctrine originating in the writings of Charles de Secondat, Baron de Montesquieu in The Spirit of the Laws, in which he argued for a constitutional government with three separate branches, each of which would have defined abilities to check the powers of the others. This philosophy heavily influenced the writing of the United States Constitution, according to which the Legislative, Executive, and Judicial branches of the United States government are kept distinct in order to prevent abuse of power. This United States form of separation of powers is associated with a system of checks and balances.

Supreme Court of the United States Highest court in the United States

The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. Established pursuant to Article III of the U.S. Constitution in 1789, it has original jurisdiction over a narrow range of cases, including suits between two or more states and those involving ambassadors. It also has ultimate appellate jurisdiction over all federal court and state court cases that involve a point of federal constitutional or statutory law. The Court has the power of judicial review, the ability to invalidate a statute for violating a provision of the Constitution or an executive act for being unlawful. However, it may act only within the context of a case in an area of law over which it has jurisdiction. The court may decide cases having political overtones, but it has ruled that it does not have power to decide nonjusticiable political questions.

Decision

The High Court upheld the appeal by NSW on both grounds, the majority deciding that the strict insulation of judicial power was a fundamental principle of the Constitution. All judges held that the compulsory acquisition of all wheat, even though it included wheat that was the subject of interstate trade, did not contravene the freedom of interstate trade that was guaranteed by section 92 of the Constitution. [4]

Judicial power under the Constitution

The High Court held that only a court established under Chapter III of the constitution can exercise the judicial power of the Commonwealth. The Inter-State Commission created by the Inter-State Commission Act 1912 [10] could not exercise judicial power despite the words of section 101 of the Constitution, [12] because it was set up by the executive and violated the conditions for being a Chapter III court.

Griffith CJ noted that under the Constitution a judge of a federal court was appointed for life, while a member of the Inter-State Commission was appointed for a seven-year term and that s73 identified the Inter-State Commission as separate and distinct from a federal court. His Honour held

the functions of the Inter-State Commission contemplated by the Constitution are executive or administrative, and the powers of adjudication intended are such powers of determining questions of fact as may be necessary for the performance of its executive or administrative functions. [13]

Isaacs J considered the use of the word adjudication in section 101 of the Constitution [12] and the related reference in section 73 to "judgments, decrees, orders, and sentences" of, inter alia, the Inter-State Commission. His Honour found that the separation of powers was a fundamental principle of the Constitution. [14]

Rich J held that "The Constitution draws a clear distinction – well known in all British communities – between the legislative, executive and judicial functions of Government of the Commonwealth." and that the Inter-State Commission fitted within the executive function, holding that "I see no reason why powers of adjudication and administration which may be conferred by Parliament on the Inter-State Commission ... should be any wider in scope than the power conferred upon the Executive by sec. 61. Indeed, one would expect that they might well be something less." [15]

Powers J agreed with Griffith CJ and Isaacs J. [16]

Barton & Gavan Duffy JJ disagreed. Barton J held that the Constitution gave the Parliament an absolute discretion as to what adjudicatory or administrative powers it deemed necessary for the Inter-State Commission. [17]

Freedom of interstate trade and commerce

Griffith CJ held that the power of a State to power to expropriate private property was a power inherent in sovereignty, provided the property was within the territorial limits of the State.

Barton J similarly held that a State had the power to expropriate property. While the Act changed the ownership of wheat, it did not prevent the State as the new owner from participating in interstate trade. [18]

Isaacs J held that because all wheat in NSW was treated alike, with no differentiation arising by reason of inter-State trade, there was no interference with interstate trade.

... while neither States nor Commonwealth can detract from the absolute freedom of trade and commerce between Australian citizens in the property they possess, there is nothing to prevent either States or Commonwealth, for their own lawful purposes, from becoming themselves owners of that property and applying it, according to law, to the common welfare [19]

Gavan Duffy J. said:—

It is to be observed that sec. 51 (I.) of the Constitution enables Parliament to make laws for the peace, order, and good government of the Commonwealth with respect to Trade and commerce with other countries, and among the States. The words absolutely free in sec. 92 must, therefore, be subject to some limitation so as to give them a meaning which is consistent with the existence of this legislative power, and the meaning when ascertained must be the same always and in all conceivable circumstances; it must apply equally when we are considering the right of the Commonwealth to legislate under sec. 51 (i.), and of the States to legislate under sec. 107. [20]

Significance

The Wheat case sounded the death knell, not only to the Inter-State Commission, but also to the combined function approach to administrative adjudication in Australia. [21] The decision continues to have ramifications for both federal courts and non-judicial tribunals and has been followed in numerous High Court decisions, including

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References

  1. ↑ New South Wales v Commonwealth (Wheat case) [1915] HCA 17 , (1915) 20 CLR 54.
  2. ↑ Duncan v Queensland [1916] HCA 67 , (1916) 22 CLR 556 at 581.
  3. ↑ Williams v Commonwealth [2012] HCA 23 , (2012) 248 CLR 156 at [55].
  4. 1 2 3 Commonwealth of Australia Constitution, section 92.
  5. 1 2 3 4 "Official History of Australia in the War of 1914–1918" (PDF). Commonwealth of Australia. 1941. pp. 648–653 – via Australian War Memorial.
  6. ↑ "Proclaimed prices". The Sydney Morning Herald . 17 September 1914. p. 9 – via National Library of Australia..
  7. ↑ "Commandeered. Stocks of Wheat". The Sydney Morning Herald . 18 September 1914. p. 6 – via National Library of Australia..
  8. ↑ "Wheat Acquisition Act 1914" (PDF). Parliament of NSW. 11 December 1914.
  9. ↑ Fricke, Graham (1986). Judges of the High Court. Melbourne: Century Hutchison Australia. ISBN   0-09-157150-2. p82.
  10. 1 2 "Inter-State Commission Act 1912". Commonwealth of Australia. 24 December 1912..
  11. ↑ Case of Prohibitions [1607] EWHC J23 , 77 ER 1342, 12 Coke Reports 64, 4 Inst 41.
  12. 1 2 Commonwealth of Australia Constitution, section 101.
  13. ↑ Wheat case (1915) 20 CLR 54 at p. 64 per Griffith CJ.
  14. ↑ Wheat case (1915) 20 CLR 54 at p. 88 per Isaacs J.
  15. ↑ Wheat case (1915) 20 CLR 54 at 108–9 per Rich J.
  16. ↑ Wheat case (1915) 20 CLR 54 at p. 106 per Powers J.
  17. ↑ Wheat case (1915) 20 CLR 54 at 70 per Barton J.
  18. ↑ Wheat case (1915) 20 CLR 54 at 77–80 per Barton J.
  19. ↑ Wheat case (1915) 20 CLR 54 at 101 per Isaacs J.
  20. ↑ Wheat case (1915) 20 CLR 54 at 104–5 per Gavan Duffy J.
  21. ↑ Asimow, Michael; Lubbers, Jeffrey S. "The Merits of 'Merits Review'" (PDF). 2011 67 Australian Institute of Administrative Law Forum 58.
  22. ↑ Waterside Workers' Federation of Australia v J W Alexander Ltd [1918] HCA 56 , (1918) 25 CLR 434.
  23. ↑ British Imperial Oil Co Ltd v Federal Commissioner of Taxation [1925] HCA 4 , (1925) 35 CLR 422.
  24. ↑ Silk Bros Pty Ltd v State Electricity Commission (Vict) [1943] HCA 2 , (1943) 37 CLR 1.
  25. ↑ R v Davison [1954] HCA 46 , (1954) 90  CLR  353.
  26. ↑ R v Kirby; Ex parte Boilermakers' Society of Australia (Boilermakers' case) [1956] HCA 10 , (1956) 94 CLR 254.
  27. ↑ Re Wakim; Ex parte McNally [1999] HCA 27 , (1999) 27 CLR 511.
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