Opinion Number. 1812

Subject

POSSIBLE ALTERATION OF THE CONSTITUTIONSCOPE OF POSSIBLE PLACITUM IN s 51 OF CONSTITUTION WORDED AS ‘PRICES (INCLUDING RENTS)’: MEANING OF ‘PRICES’: MEANING OF ‘RENTS’: WHETHER WORD ‘PRICES’ INCLUDES REMUNERATION FOR SUPPLY OF SERVICES, PROFESSIONAL FEES, REMUNERATION UNDER CONTRACTS OF SERVICE, SHARE PRICES, INTEREST ON LOANS: WHETHER WAGES MAY BE CONTROLLED AS INCIDENTAL TO PRICE CONTROL: WHETHER EVICTIONS MAY BE CONTROLLED AS INCIDENTAL TO RENT CONTROL: WHETHER s 99 OF CONSTITUTION WOULD APPLY TO LAWS MADE UNDER A COMMONWEALTH POWER WITH RESPECT TO PRICES: FREEDOM OF INTERSTATE TRADE AND COMMERCE: APPROPRIATION POWER: INCIDENTAL POWER

Key Legislation

CONSTITUTION ss 81, 92, 99: NATIONAL SECURITY (ECONOMIC ORGANIZATION) REGULATIONS: NATIONAL SECURITY (LANDLORD AND TENANT) REGULATIONS: NATIONAL SECURITY (PRICES) REGULATIONS: MONOPOLIES ACT 1923 (NSW): PROFITEERING PREVENTION ACT 1920 (Qld): GOODS AND SERVICES (PRICE CONTROL) ACT 1941 (UK) ss 2, 20

Date

The following observations are offered as to the probable scope of a placitum in section 51 of the Constitution worded ‘Prices (including rents)’.

 

SCOPE OF WORD ‘PRICES’.

1. General.

There do not appear to be any judicial definitions of the word ‘prices’ which are of any real assistance. Assistance may, however, be gained by considering the legal contexts in which the word is customarily used. It is submitted, however, that neither the word ‘price’ nor the word ‘prices’ is a legal ‘term of art’. They are not defined in the standard law dictionaries. The Oxford English Dictionary includes the following as meanings of the word ‘price’:

 

Money, or the like, paid for something. The money (or other equivalent) for which anything is bought or sold (or a thing or person ransomed or redeemed); the rate at which this is done or proposed; also, less usually, money paid as the equivalent of labour, wages; rate of wages.

In considering the scope which the word would have in the Constitution it is necessary to have in mind the principle stated by O’Connor, J., in the Jumbunna Case1 and adopted by Isaacs and Rich, JJ. in the Tramway Employees’ Case (17 C.L.R. at 701):2

Where it becomes a question of construing words used in conferring a power of that kind on the Commonwealth Parliament, it must always be remembered that we are interpreting a Constitution broad and general in its terms, intended to apply to the varying conditions which the development of our community must involve. For that reason, where the question is whether the Constitution has used an expression in the wider or in the narrower sense, the Court should, in my opinion, always lean to the broader interpretation unless there is something in the context or in the rest of the Constitution to indicate that the narrower interpretation will best carry out its object and purpose.

The word ‘price’ occurs conspicuously, of course, in the Sale of Goods legislation of the States, the definition of ‘sale’ including a reference to ‘a money consideration called the price’. It is, of course, clear that the word ‘price’ is not confined to transactions in goods—thus it applies to sale of land. It is unnecessary, it is submitted, to consider whether there can be a ‘price’ other than a money price, because a law with respect to such ‘prices’ would clearly be incidental to a law with respect to money prices.

The main difficulty as regards the meaning of ‘prices’ seems to be the question whether it covers the remuneration for the rendering or supply of services. (This difficulty would hardly arise if the power included ‘profiteering’ as well as ‘prices’).

2. Services.

Four classes of ‘services’ (using that expression in a very wide sense) appear to call for consideration:

(1)  Services, such as the provision of transport or the carrying on of an employment bureau or a picture theatre, which do not involve a contract of service, a contract for work and labour or a supply of goods. The provision of lodging (without board) might be considered under this category.

(2)  The ‘supply’ of goods (as distinct from the sale of goods), usually accompanied by incidental services, e.g. the services supplied by a restaurant, hotel bar or boarding-house.

(3)  Services rendered under contracts for work and labour (with or without the supply of materials).

(4)  Services rendered under contracts of service.

It is submitted that, generally speaking, ‘prices’ would include the charges or remuneration for ‘services’ of the first three categories.

The dictionary definitions of ‘price’ appear to be wide enough, although the common usage of the word is not so wide. It would not, however, seem to do violence to the ordinary use of language to speak of the ‘price’ charged for a train ride, the ‘price’ charged by an employment office for obtaining a position or a servant, the ‘price’ of admission to a picture theatre, the ‘price’ of a meal or of a week’s board or lodging, the ‘price’ for the cutting of a ton of wood or the ‘price’ charged by a contractor for building a house and supplying the materials.  It must, however, be admitted, that ‘price’ is not the word which would most naturally be used in some of these contexts. A dry cleaner would publish a list of ‘charges’ rather than ‘prices’; a transport undertaking would also refer to ‘charges’ or ‘fares’ rather than prices.

In some cases within these categories the word ‘prices’ could not be naturally applied and it is submitted that these cases would be beyond the scope of the power, for example, the professional fees of doctors, dentists, lawyers, architects, etc.

All these three classes of services appear to be within the scope of the National Security (Prices) Regulations. It is true, however, that those Regulations provide for the fixing of maximum prices for the sale of goods and maximum rates for the supply or carrying on of services. (It may be noted, however, that the word ‘Prices’ is considered a sufficient general description of the contents of the Regulations in their title.) A similar distinction is drawn in the Goods and Services (Price Control) Act, 1941 of the United Kingdom, which provides for the fixing of a maximum charge for certain services (Sec. 2). On the other hand section 20 defines the expression ‘performance of a price-controlled service’.

 The Profiteering Prevention Act of 1920 of Queensland defines ‘commodity’ as including freights and transport charges, and services rendered to the people, and provides for the fixing of maximum prices for commodities. However the Act expressly defines ‘price’ as including every valuable consideration, and any charge, rate or consideration in respect of any service rendered to the people.

The Monopolies Act, 1923 of New South Wales speaks of the price of any commodity or ‘service’. The Act does not define ‘service’. South Australia has a Fair Prices Act, but it deals only with commodities and not with services. Hudson on Building Contracts has a Chapter on ‘Price and Damages’ which refers constantly to ‘price’ in relation to building contacts.

Turning to the fourth category—services rendered under contract of service—there is a clear distinction in law between such contracts and contracts of work and labour.

Where one party employs another to do work, the contract may be one of service, or one for work and labour. If the employer, during the progress of the work, not only directs the other as to the work to be done, but also controls him as to the manner of doing it, the contract is one of service. If the person doing the work exercises his employment independently of the person employing him, the contract is one for work and labour.

(Halsbury, Vol. 34, p 454.)

It is submitted that the word ‘prices’ would not apply directly to the remuneration under a contract of service. It may be that economists speak of wages as the ‘price’ of labour, but this is neither an ordinary nor a legal sense of the word.

It might be argued that labour costs are a vital factor in the price of goods, and that therefore a law with respect to wages would be incidental to the execution of a power to make laws with respect to prices.

This argument would seem to have its greatest force as applying to a law to limit wages, i.e. to fix maximum, rather than minimum, wages. It is submitted that the High Court would be most unlikely to accept this argument.

It seems unnecessary to consider whether, consistently with Barger’s Case,3 maximum prices chargeable by a manufacturer could be made to depend on the observance of certain conditions of employment in factories. Such a law would be useless because the manufacturer who did not observe the standards could undercut the manufacturer who did, and make it impossible for the latter to obtain the fixed maximum price on the market. There is no doubt, of course, that the maximum prices could be fixed by reference to costs of production (including labour) of the particular manufacturer.

3. Other possible kinds of ‘prices’.

Prices of shares etc of companies would be subject to the power, but semble not the issue of shares etc. by companies (capital issues).

Semble interest rates on loans of money are not the ‘price’ (or rent) of money or loans so as to come within the power.

 

KINDS OF LAWS IN RESPECT OF PRICES.

The principal kinds of laws would be laws fixing prices, maximum prices or minimum prices.

Such prices could be based on any criterion subject to the principle of Barger’s Case. Different maximum prices could be permitted for sale of the same product by different individuals—for example with the object of limiting profits. (Cf. Miss Daveney’s Sweets Case).4

It would seem that only in an extreme case would the principle of Barger’s Case apply. Thus it is considered that particular industries could be prevented from developing by fixing non-payable prices, or competition by private enterprise with Government undertakings could be prevented by a similar means.

An example of a law which would probably be bad on the principle of Barger’s Case would be a law fixing, in the case of employers not observing certain specified conditions in the employment of their employees, minimum prices so high that they would not be able to sell their products.

Semble laws under this power would not be laws of ‘trade, commerce or revenue’ within the meaning of section 99, which prohibits preferences to States or parts of States (Morgan’s Case).5

It seems reasonably clear that section 92 would not be a bar to application of laws regulating prices to inter-State transactions along with other transactions.  In James’ Case (1936 A.C. at p. 620) the Privy Council said that the decision in McArthur’s Case ‘deprived Queensland of its sovereign right to regulate its internal prices’.

The power would also cover laws which did not fix prices but gave an authority power to approve or disapprove the price in particular transactions. (The National Security (Economic Organization) Regulations relating to land sales control are an example of such a law.)

The power to prescribe minimum prices could be used for ensuring a payable home consumption price in primary industries.

The appropriation of moneys for the purpose of paying subsidies with the object of keeping down prices would probably be for a ‘purpose of the Commonwealth’. This may not be important in view of the existing power to give bounties on the production of goods, but—

(1)  semble the subsidies (unlike bounties) would not have to be uniform throughout the Commonwealth; and

(2)  services might be subsidized as well as production of goods.

There appears to be no reason why the prices power could not be applied to goods (and services) supplied by or to State Governments or State authorities. (The decision in the Banking Case, now before the High Court, may possibly make it necessary to consider this question further.)6

What has been said about the question of control of wages as incidental to price control applies also to control of other matters which affect prices. It is submitted, therefore, that the power over prices would not cover laws in respect of such matters as rationing or the rationalizing of production or distribution of goods. Probably, however, laws could be made preventing trusts, combines and monopolies designed to increase or keep up prices.

RENTS.

This expression would, of course, cover all payments or other considerations in respect of the tenancy of land or buildings.

It is doubtful whether ‘rent’ includes payment for mere lodging. The question does not seem important, however, because—

(1)  it is submitted that control of charges for lodging would be incidental to control of rents; and

(2)  charges for lodging, or for board and lodging, are probably covered by ‘prices’.

‘Rents’ is a legal term of art and as such appears to be limited to rents arising from tenure of land. However, in ordinary usage, and even in common legal usage, it has become applicable to the consideration in respect of the letting or hiring of goods. It is commonly used to describe the payments under hire purchase agreements. (Of course such payments would be within the ‘prices’ power). There seems to be little doubt that payments in respect of the hire of goods (including ships) would be within the word ‘prices’ either standing alone or at any rate as amplified by the word ‘rents’.

A more important question is to what extent a law to restrict the eviction of tenants would be incidental to a law fixing or controlling rents. It is obvious that the threat or fear of eviction can be a powerful deterrent to a tenant who contemplates applying to a prescribed court or authority for a reduction in rent, or resisting a demand for an illegal rent, and that the existence of an unlimited power of eviction in the landlord may therefore make a full control of rents impracticable—at any rate during a housing shortage. It seems to follow that, under a power to make laws with respect to rents, a rent-fixing law could validly require a landlord to satisfy a court, before getting an eviction order, that the eviction order was not motivated by an application or possible application by the tenant under the law or by the desire of the landlord to obtain an illegal rent from the tenant or from a new tenant.

But it is submitted that there would be no power to continue the restrictions on eviction as at present contained in the National Security (Landlord and Tenant) Regulations. It would not be possible, it is submitted, to prevent the landlord from choosing his own tenant from time to time, or from requiring the premises for his own occupation regardless of the hardship on the tenant.

It might be possible to discourage evictions by indirect means, e.g. by providing that a tenant evicted in certain circumstances should have a right to recover from the Landlord a specified amount of the rent already paid.

The ‘rents’ power would authorize the Commonwealth to subsidise rents.

[Vol. 37, p. 616]

1Jumbunna Coal Mine NL v Victorian Coal Miners’ Association (No. 2) [1908] HCA 95;(1908) 6 CLR 309.

2Australian Tramway Employees Association v Prahran & Malvern Tramway Trust [1913] HCA 53; (1913) 17 CLR 680.

3R v Barger [1908] HCA 43; (1908) 6 CLR 41.

4R v Bromhead; Ex parte Miss Daveney Pty Ltd [1946] HCA 57; (1946) 73 CLR 237.

5Morgan v Commonwealth [1947] HCA 6; (1947) 74 CLR 421.

6Melbourne v Commonwealth [1947] HCA 26; (1947) 74 CLR 31.