Opinion Number. 1438


Coasting Trade

Key Legislation

NAVIGATION ACT 1912 ss 2(2), 7, 39, 288: CONSTITUTION covering cl 5, ss 51(i), (xxxix), 98

The Comptroller-General, Department of Trade and Customs

The Comptroller-General of Customs has forwarded me the following memorandum for advice:

The ‘Narrabeen’, a small steamer, has been employed for some years in the carriage of cargo between coastal ports in New South Wales. She held a sea-going Certificate issued by the Department of Navigation NSW.

The Deputy Director NSW was recently approached in connection with a proposal to bring the vessel from Sydney to Westernport, Vic., in ballast for the purpose of engaging in local trade at the latter place.

The question arose as to whether, in respect of the interstate voyage involved, the vessel would be subject to the provisions of the Navigation Act as to survey, licensing, manning, compass adjustment etc. The prospective buyer contended that the vessel was exempt from these requirements. The Deputy Director, on the other hand, held that the provisions of the Act in the matters mentioned had application.

The papers were referred to the Secretary, Marine Branch, for instructions. As the matter was one of urgency and there was no time to refer to the Attorney-General’s Department for advice, the Secretary instructed the Deputy Director in the following terms:

With reference to his memorandum NN.28/1543 of 5.7.28 relative to the above, the Deputy Director is informed that it has been a matter of considerable difficulty to determine just what powers the Department has in the matter.

Whilst, on their face value, certain provisions of the Navigation Act might be taken to apply, it must be kept in mind that section 2(2) of the Act provides that it shall be ‘read and construed subject to the Constitution and so as not to exceed the legislative power of the Commonwealth’. The High Court has decided, for example, in the case of the Newcastle and Hunter River Company v The Commonwealth,(1) that the fact that a vessel is on the high seas or in waters used by interstate or foreign-going ships is not in itself sufficient to bring her within the scope of the provisions of the Navigation Act in regard to manning, accommodation and licensing, unless she is at the time engaged in an act of interstate or foreign trade.

The power of the Commonwealth Parliament in regard to ships and shipping is limited by the Constitution to the making of laws ‘for the peace, order and good government of the Commonwealth with respect to’–‘trade and commerce with other countries or among the States’ (s. 51(i)).

Other provisions of the Constitution having a bearing on the subject are–

  1. section 51(xxxix), which gives power to the Commonwealth Parliament to legislate as regards ‘matters incidental to the execution of any power vested by the Constitution in the Parliament’ etc.;
  2. section 98, which provides that ‘the power of the Parliament to make laws with respect to trade and commerce extends to Navigation and Shipping, and to Railways the property of any State’; and
  3. clause 5 of the Covering Act to the Constitution, which provides that ‘the laws of the Commonwealth shall be in force on any British ships, the Queen’s Ships of War excepted, whose first port of clearance and whose port of destination are in the Commonwealth.’

Although it was at one time thought that these additional provisions had the effect of conferring on the Commonwealth Parliament practically plenary powers of legislation in regard to shipping and navigation, it has since been definitely decided by the Courts that such is not the case. The matters covered by section 51(xxxix) for instance, are such only as have a ‘direct, substantial and proximate effect’ upon interstate or foreign trade and commerce. Section 98, again, does not in any way extend the power of the Parliament, but it is merely interpretative of placitum (i) of section 51, and the ‘laws of the Commonwealth’ which, under covering clause 5, have application on certain British ships, are such only as are valid laws of the Commonwealth under the Constitution considered independently of clause 5.

As it is not proposed that the ‘Narrabeen’ shall carry any passengers or cargo on the voyage from Sydney to Melbourne, she cannot, during that voyage, be regarded as engaged, directly or indirectly, in trade or commerce with other countries or among the States. The fact that the vessel has been in the past a regular trader in the carriage of goods between ports in NSW does not in any way affect the position. The character of a vessel about to embark on a voyage must be determined wholly on her employment during that voyage.

Some little time ago the question arose as to whether a vessel licensed to engage in the coasting trade carried with her, whilst temporarily diverted to the intrastate trade, the obligations contained in the conditions of the licence, viz. to pay Australian rates of wages, provide accommodation according to prescribed standard etc. In this connection the Solicitor-General advised that

whenever Commonwealth legislative power in regard to a ship depends on whether she is or is not engaged in intra or external trade, the question whether the vessel is one to which the Act applies should primarily be determined by ascertaining whether the passengers or cargo are being carried on a voyage extending beyond the limits of a State … Where a ship holds a licence to engage in the coasting trade the obligation to comply with the conditions attaching to the issue of the licence operates only during the time during which the ship is engaged in Australian trade beyond the limits of any State. Should she cease to engage in coasting trade to which section 288 validly applies, the necessity of compliance with the conditions of any unexpired licence, or of the renewal thereof if expired, revives upon her again becoming so engaged.

As the ‘Narrabeen’ will not be engaged in the interstate trade, the only direction in which the Commonwealth control can be exercised is in relation to such matters incidental to her voyage as have a direct, substantial and proximate incidence upon other vessels engaged in the interstate or foreign trade, i.e. in regard to such matters as are necessary to ensure that she shall not endanger or interfere with any such vessel.

In the case of a vessel proposing to navigate in narrow and shallow waters used as fairways by interstate and overseas ships, it might be possible to require that she should first be surveyed to ensure that she shall not, by foundering in the fairway, become an obstruction to other vessels. But this will not apply as regards a voyage from Sydney to Melbourne. We cannot therefore apply the powers of section 51(xxxix) of the Constitution to the matter of the survey of the ‘Narrabeen’.

The danger of collision with a vessel improperly navigated and controlled is, however, a serious and ever present one, whether within the limits of a harbour or on the high seas. The ‘Narrabeen’, if in charge of an unqualified and incompetent master or engineer, would undoubtedly be highly dangerous to other ships, including interstate and overseas traders, and as the danger would be direct and substantial we may, therefore, under the Navigation Act, very properly require that the deck and engineer officers necessary for the voyage shall be properly qualified men. We cannot, however, go to the length of prescribing the length of watch to be taken. Consequently the most that we can ask is, I think, that the master, one mate and at least two engineers shall hold the certificates necessary under the Navigation Act for the ships on voyages between Sydney and Melbourne. Also that the necessary deck and stokehold ratings shall be qualified according to the standard laid down in section 39 of the Navigation Act.

As the vessel is not ‘engaged in the coastal trade’ there is no power to require the taking out of a licence, and as defective compasses would imperil only the vessel herself and no other, we cannot require that the compasses shall be adjusted before the voyage is undertaken.

The matter appears to involve an interesting point of constitutional law and one moreover of considerable importance. If the position is as set out by the Secretary, Marine Branch, it would appear that neither the Commonwealth nor any State has the power of supervision as regards survey etc. over ships about to engage in a voyage from one State to another, or even to an overseas country, but which do not engage in any act of interstate or foreign trade; and that consequently there would be no power to detain such a ship even if in a manifestly unseaworthy condition. In this latter connection it may be mentioned that a great many of our coasting vessels, when they become obsolete and practically worn out, are sold to Chinese and Japanese buyers. The Department has hitherto required that the vessels, whether or not they carry passengers or cargo from Australia, shall be surveyed and if necessary strengthened and repaired, before leaving the Commonwealth.

In order that Deputy Directors may be suitably instructed as to the action to be taken in future cases that may arise, I shall be glad if the Solicitor-General will be good enough to advise me as early as possible on the points of law involved.

If he concurs in the views expressed by the Secretary Marine Branch, it is further suggested that in connection with the enquiry by the Royal Commission on the Constitution, consideration be given to the necessity for an amendment of the Constitution giving to the Parliament of the Commonwealth legislative powers in respect of all interstate and foreign-going shipping, irrespective of any relation to trade and commerce.

The questions requiring consideration are:

  1. Is the vessel engaged in interstate trade or commerce; and
  2. If not, is the vessel while on the voyage in question, subject to any, and if so what, provisions of the Navigation Act.
  1. The ‘Narrabeen’ has been engaged in intrastate commerce in New South Wales, and apparently in consequence of sale, is voyaging from Sydney to Westernport, Victoria, in ballast, for the purposes of engaging in local trade there.
  2. A ship may be a subject of trade and commerce in two ways: as a vehicle for transport of goods, passengers, and crew; and as being itself an article of commerce. Commerce, moreover, includes not only trade, but intercourse.

    The ‘Narrabeen’ is making an interstate voyage, which involves interstate intercourse, and is in my opinion subject to the interstate commerce power of the Federal Parliament.

    Moreover, she is an article of commerce, transferred interstate, and apparently so transferred in consequence of an interstate contract of sale. In this aspect, too, I think she is, in respect of the voyage, subject to the interstate power.

  3. The ‘Narrabeen’ does not, on the voyage, come within the scope of section 7 of the Navigation Act as a ship ‘deemed to be engaged in the coasting trade’. Whether that fact is conclusive that, on this voyage, she is not ‘engaged in the coasting trade’ within
    the meaning of section 288 of the Act is not clear. It may be that section 7 is not an exhaustive definition.

It may be, for instance, that a ship plying between ports in different States would be ‘engaged in the coasting trade’ even if, for the time being, no passengers or cargo were on board.

But in any case, I am inclined to think that, on the facts of this case, the ship was not engaged in the coasting trade within the meaning of the Act.

[Vol. 23, p. 813]

(1) (1921) 29 CLR 357.