Ryan v Crole¹

(1)  In this matter I am asked to advise upon the validity of Sections 286 and 288 of the Navigation Act, and also upon the Act and the proceedings in the abovementioned matter generally. It will be observed that in its literal form the request for opinion covers a very wide area. It will be convenient if I divide what I have to say hereafter into three parts dealing with related but separate subject matter. These are as follows:

Part I—The Navigation Act Part 6 and Section 92;

Part II—The proceedings in the matter mentioned above;

Part III—Proposals as to future policy.

(2)  Although I have been requested to consider two Sections only in Part 6 of the Navigation Act, it will I think be more convenient to approach the whole of this part considered as a law which may or may not be rendered invalid in part or in whole by Section 92 of the Constitution. I take this course because it may well ultimately be found that a portion of the part considered invalid may infect other provisions or regulations made under provisions so as to cause invalidity extending beyond the part originally affected and this notwithstanding that the original invalid part is in the ordinary sense severable from other portions of Part 6 of the Act as well as other portions of the Act outside of Part 6.

(3)  It will be convenient to summarise generally the substance of Part 6 before considering more detailed provisions. The Part applies to all ships whether British or foreign. It absolutely prohibits any ship engaging in the coasting trade which is receiving or in the immediate past has received a subsidy or bonus except a subsidy or bonus from a part of the British dominions. The Part also prohibits any ship engaging in the coasting trade unless licensed for the purpose. The combined effect of these two Sections is no doubt to exclude from possibility of licence a ship which is subsidised in the forbidden way. The licences to engage in the coasting trade are to be for periods not exceeding three years. More important than the term is the statutory condition in the licence that the seamen employed on the ship shall be paid wages ‘under the Act’. The manning both for officers and crew and the provisions as to accommodation indicated in the Statute and more specifically provided by regulations made under the Statute are to be observed. Security may be required for the observance of the licence. Breach of conditions of the licence is a contravention of the Act. The Australian rates of wages enforced by the licence are the current rates ruling in Australia for seamen employed in the relevant part of the coasting trade. Furthermore whenever a ship which has been engaged in the coasting trade proposes to depart upon a longer journey the Australian wages should be paid to the seamen before the ship leaves Australian waters or security given for the purpose of this obligation. Various machinery provisions are included in the Statute for the enforcement of the observance of the Australian rates of wages mentioned above. This complete system is qualified by substantial provisions for modifying or suspending the operation of the matters mentioned above. Thus the Governor General may by proclamation suspend the operation of any of the provisions of the Part as regards any ship or class of ships or conditionally or unconditionally and for a period determined in the proclamation. Moreover a general power is given to the Minister to issue permits to unlicensed vessels. Thus permits may be issued when the Minister is satisfied that it is desirable in the public interest and may be issued conditionally or unconditionally but may only be issued to British ships. The basic conditions necessary for the issue of the permit are that there is no licensed ship available for the service or that the service carried out by licensed ships is inadequate to the needs of the parts served. Permits may be either for a single voyage or by way of a continuing permit, but in the latter case six months notice from the Minister is necessary before termination. By way of completing the description of the general nature of this law it is to be noted that by specific provision (Section 7) the coasting trade is in effect described as carrying passengers or cargo from any port in the Commonwealth to any other port in the Commonwealth. The coasting trade is then a part of the trade carried out by a ship which comes within the statutory definition of an ‘Australian trade ship’. The Act further provides that it shall not apply in relation to any Australian trade ship unless the ship is engaged in trade or commerce with other countries or among the States or with or among the territories within the authority of the Commonwealth. In the result Part 6 applies to the coasting trade but so as to attach to any ship engaged in such trade only when the ship is engaged in interstate or foreign commence or commerce with or among the territories of the Commonwealth. It is to be observed that this lastmentioned qualification does not have the result of making Part 6 necessarily apply only to interstate voyages but to apply both to interstate voyages and also intrastate voyages if performed by a ship engaged in interstate commerce.

(4)  I am not concerned here with the question of whether the Statute (Part 6) would be valid insofar as it purports to extend to ships while proceeding on an intrastate voyage but being engaged in interstate commerce. I see no reason to suppose that the attempt to legislate by the Commonwealth Parliament for activity of this kind is ultra vires, though it is not entirely clear that the decision of the High Court in Newcastle and Hunter River Steamship Company v. Attorney-General (1929 C.L.R. 357) is a specific authority upholding the exercise of such legislative power. In any case the operation of Section 2(2) as interpreted in the Hunter River Case cit. sup. would merely result in the limitation of the operation of the Statute to interstate voyages. So far as I am concerned it is not necessary to give any further attention to this matter at this stage.

(5)  It is first advisable to consider the general question of the validity of Part 6 of the Navigation Act considered as a law of the kind I have indicated in the foregoing summary but without considering detailed provisions which may raise peculiar difficulties. In my opinion a law providing for the licensing of interstate shipping (using that expression generally to describe the subject matter purported to be covered by Part 6 of the Navigation Act in the way mentioned above) designed to ensure that such interstate shipping should pay Australian rates of wages and observe the manning scales provided by Federal law and the accommodation provisions provided by Federal law would not be obnoxious to Section 92 of the Constitution as this Section is currently to be interpreted.

(6)  For the purpose of reaching the conclusion reached in Paragraph 5 above, it does not appear to me to be necessary to embark on any elaborate examination of the doctrines laid down by the Privy Council in the Banking Case² or elaborate any decisions of the High Court such as those in Gratwick v. Johnson (70 C.L.R. 1) or the Airlines Case (71 C.L.R. 29) or to canvas the various and conflicting views of Justices in the series of cases known as the Transport Cases.³ In my opinion, on any of the recorded judicial views and in the light of any or all of the cases, the conclusion should be reached that a licensing system designed to preserve the coasting trade for ships which conform to Australian standards of wages manning and accommodation would be unobjectionable. Without attempting to define what is embraced in the concept of ‘regulation’ which it is permissible to apply to interstate trade without destroying its freedom, I should express confidently the conclusion that the statutory enforcement of standards in respect of the matters mentioned is clearly a field within the concept of regulation. It does not appear to me to be necessary to argue this conclusion in detail. It is to be noted however that the imposition of standards amounts to the imposition of minimum standards with regard to accommodation and manning and the enforcement of ‘current rates of wages’ with regard to remuneration. It is of course arguable that the imposition of standards of this kind conflicts with the laissez faire conceptions the protection of which is sometimes urged to be the real purpose of Section 92. It may well be that no decision has ever specifically determined that the prescription of minimum standards affecting health, the amenities of employment and the safety of the enterprise and reasonable competition among employers is not contrary to the freedom which Section 92 is said to guarantee. The issue is no doubt of first-rate importance. On the whole the elaborate statement of reasons for supposing that the enforcement of such standards with whatever limitation of competitive freedom may result is nevertheless permissible regulation within the constitutional sense would not really advance the matter further. I express my view that the substance of this enactment is within the constitutional power.

(7)  It is worth mentioning in passing that the conclusion referred to in Paragraph 5 above is somewhat reinforced by a consideration of the general practice of states with coastal trade. In modern times the severe regulation of coastal trade and the exclusion of participation in that trade by ships other than those of the state itself is very widely established. It is probable that more states today exclude from participation in their coastal trade foreign ships than promote it. In some cases the exclusion is absolute; in some cases the exclusion is, though conditional, nevertheless practically prohibitory of trade by foreign ships. The matter was the subject of a report to the League of Nations in 1931 and is contained in Series of League of Nations Publications VIII.Transit.1931.VIII.6. The modifications of law which have arisen since the date of this Report have certainly not been in favour of reducing the regulation of coasting trade where exclusive policies had prevailed, and it is probable that exclusion has been increased since 1931. It is of course obvious that the existence of a national practice on a wide international scale cannot throw any light directly upon the Constitutional power of the Commonwealth Parliament in respect of interstate trade and commerce and the fetters upon such power contained in Section 92. On the other hand the fact that a certain area of mercantile activity is the subject of severe regulatory legislative action by modern states lends some support to the view that the particular form of that activity to be found in the Commonwealth Navigation Act should be viewed not as an exceptional or irregular piece of statutory interference with commercial rights but as statutory policy very much of a piece with that found in many other modern communities. It is perhaps worth noting that the policy of exclusion and control is carried out in its extreme form in both the United States of America and the Dominion of Canada and on the other hand is not so carried out in the United Kingdom. It is probably true that the last-named state is almost the last of the modern states to leave the coasting trade entirely free of any exclusive legislative policy. At all events regulation of this trade by way of excluding participants is as much part of modern state policy as regulation of wages fixation of hours and prescription of conditions in modern industry. If therefore the implementing by Commonwealth law of the last-named policy objectives be admitted as permissible regulation in the sphere of industry notwithstanding Section 92, there is some ground for the contention that the same basic principle may be applied to the regulation of interstate sea navigation particularly when such regulation is directed to similar objectives and is not designed for the maintenance of an exclusive preserve for the national mercantile marine but merely for the adequate protection of industrial and safety standards established in that national service.

(8)  It is now necessary to turn to particular provisions of Part 6, viewing them in the light of the general principle which has been indicated above. It would be convenient to turn to one specific provision because of its immediate relation to the matter referred to in Paragraph 7 above. Section 287 of the Navigation Act excludes from the coasting trade any ship (British or foreign) which is in receipt of a subsidy from any government other than the government of any of the British dominions. The validity of this provision raises a very nice question which I think it is not necessary for me to consider in any final form. I was not asked to advise on the validity of this Section and of course Section 287 has nothing to do with the proceedings in connection with which this advice is immediately sought. However it is not possible to disregard this Section and its possible invalidity in working out the legal operation of Part 6 of the Act and the regulations made thereunder. It will be apparent that the validity of Section 287 cannot be made to depend upon precisely the same reasons as have been mentioned in Paragraph 6 above as justifying the general nature of Part 6 of the Act as a ‘regulation’ of interstate commerce. The Section is not aimed at maintaining Australian rates of wages or industrial amenities as embodied in accommodation regulations or safety precautions as embodied in manning regulations or the industrial standards involved in manning regulations. Indeed it might well be that the compliance by a shipowner with all the standards demanded of the establishment of higher standards by way of competition was directly due to the receipt of a government subsidy. The ship is excluded from the trade not because it does not ‘measure up’ to the regulatory standards for the protection of which Part 6 is chiefly designed but because its competitive power is thought to be unfairly increased through the receipt of foreign subsidy. I am not at all sure that this exclusion does not constitute a form of regulation which is precisely the kind not permissible under the contemporary view of the operation of Section 92. This may be an intrusion upon the field of ‘fair competition’ by way of policy intervention which results in an absence of freedom in interstate commerce of the very kind which the constitutional provision is designed to protect. The point is a very nice one. Indeed in the last resort it is precisely the kind of point which might be determined one way or another in the light of the Privy Council decision⁴ but in accordance with the prevailing economic doctrines (conscious or unconscious) of a majority of the Justices of the High Court or members of His Majesty’s Board. In one sense the question is entirely academic for the purposes of this opinion, and I therefore say nothing more than that I think it very arguable indeed. However it is possible that the whole complicated national and international practice with regard to cabotage, mention of which has been made in Paragraph 7 above might help to tip the scale in favour of the validity of this provision. It seems to me however that the arguments against this provision are strong enough to make it desirable to avoid any complications resulting from its possible invalidity. It will be found that in the regulations made for carrying Part 6 into effect the form of application for a licence requires the applicant to disclose that he has not been in receipt of a subsidy or is receiving a subsidy of the kind mentioned in Section 287. Moreover the licence itself contemplates the effective enforcement of Section 287. I would have little doubt that in this particular Statute Section 287 might if declared invalid be struck out of Part 6 without affecting the validity of the whole Part. I feel however rather more difficulty in asserting that the licensing system would not be affected so long as this provision remained an essential part of application and licence. At all events the provision is an embarrassing one. I refer hereafter to discussions with those concerned with the administration of the Statute and what they have to say about the practical nature of the subsidy provisions and have framed some advice in consequence of the opinions expressed in these paragraphs.

(9)  It is now necessary to return to a closer consideration of Part 6 of the Act. I have expressed the view that if Part 6 was a licensing system designed to secure observance of specific provisions (which I have indicated) it would be valid. On the other hand it is clear that a licensing system applied to interstate trade not based upon expressed criteria but involving an unlimited discretion in the licensing authority offends against Section 92. This seems to be the proper result of Gratwick v. Johnson (cit sup.) and more particularly of the decision on Regulation 79(3) of the Air Navigation Regulations as decided in the Airline Case (cit. sup.). Whether a licensing system which on its face contains no limitation upon the discretion of the authority but which nevertheless can be related to a genuine purpose of a regulatory nature arising out of the total legislative policy to be derived from an examination of the Act and the known social circumstances in which it operates is to be treated as valid or invalid is perhaps still a matter of considerable doubt. Until the decision in McCarter v. Brodie is pronounced by the High Court (and perhaps even after the long-delayed event) it is not possible to speak of this matter with any certainty^.5 It is sufficient at the present stage to say that though a licensing system with unlimited discretion might be bad, a licensing system where the discretion of the licensing authority is limited to criteria which are of a ‘regulatory nature’ clearly within the meaning of the decision of the Privy Council in the Banking Case would be good. It is therefore necessary to approach Part 6 of the Navigation Act for the purposes of determining into which of these two classes it should be allotted.

(10)  On the whole, though I think the matter is a borderline case involving an undetermined issue of much nicety, I think Part 6 of the Navigation Act should be treated as a licensing system not of the invalid character which resulted in the condemnation of the laws involved in Gratwick v. Johnson and the Air Navigation Regulations. I do not think this conclusion can be reached however in this case by finding any satisfactory limited criteria for the exercise of the discretion of the licensing authority, either expressly provided in the statutory licensing system or to be implied from a consideration of the nature and purpose of the statutory provisions. What appears to me to save the licensing system embodied in Part 6 is a curious and perhaps coincidental method of authorising the licensing authority. Section 288(2) provides that licenses to ships to engage in the coasting trade ‘may be granted as prescribed’. On the whole I think it reasonably clear that the licensing authority (who in fact is the Minister) is by this provision given a power but not a discretion. In short he is bound to grant a license if the regulations are complied with and circumstances arise under the regulations which require him to grant the application. It is not an unlimited discretion but a duty to act as is prescribed by regulations. Obviously of course it is impossible at this stage to determine whether discretion is absolute or conditional. Equally it is impossible to determine whether if the discretion is conditional it is based upon such criteria as to make the total licensing arrangement ‘regulatory’ within the meaning of the prevailing doctrine.

(11)  I do not at this stage pause to consider the authorities which throw light upon the interpretation of the expression contained in Section 288(2) ‘may be granted as prescribed’. The varying interpretations to be given to the word ‘may’ as contrasted with ‘shall’ or ‘must’ has caused trouble to courts of construction upon innumerable occasions. It is necessary to deal with this matter in more detail in another connection in this opinion and the authorities there referred to are equally useful in connection with this particular subject matter. I only find it necessary to say that I do not feel any real difficulty arises from the use of the word ‘shall’ in various parts of Section 288 and in other parts of Part 6, and I do not think that any genuine contrast results as against the use of the word ‘may’ in the phrase which has been set out. It does not appear to me to be possible to contend that it was the Parliamentary intention to authorise prescriptions regulating the granting of the licence and at the same time leave the Minister free to disregard any peremptory prescriptions which might be contained in regulations. In short the Ministerial power would be either administrative or discretionary as the regulations might prescribe.

(12)  If my interpretation of Section 288(2) as set out in Paragraph 10 above is correct it is obvious that a somewhat novel problem under Section 92 arises. I have stated above that a licensing system with an absolute discretion in the licensing authority when imposed upon interstate trade is (probably) unconstitutional. On the other hand a licensing system with a limited discretion in the licensing authority may be good if the basis of the discretion does not exceed the limits of true regulation. In this particular case the licensing system embodied in the Statute does not in truth fall within either of these discretions. It is a licensing system which is not complete on the face of the Statute. If no regulations are made implementing the Statute and it is sought to operate the Statute without any such regulations, probably the law then falls within the obnoxious form of unlimited licensing. If however regulations are made and the licensing authority’s power is thereby prescribed, it appears to me that the validity of the Statute and the regulations made under it must depend upon a proper examination of the whole law which embraces both Statute and Regulations. If in the result the Statute and Regulations create a licensing system of a discretionary nature with limited criteria characterising the discretion, then it appears to me that the whole (i.e. the Statute and Regulations) should be considered valid. This result appears to me to flow from the fact that Section 92 directs that trade commerce and intercourse shall be absolutely free. It is therefore not concerned with the form of any particular law or the interrelation of its parts or the possibility of a change in one part producing a different result. The constitutional provision is concerned with determining whether at the relevant point of time by reason of the total operation of all legal instruments trade is rendered unfree. I am not entirely sure that this unmistakable conclusion is entirely consistent with all that was said in James v. Cowan⁶ and perhaps all that was said by the Privy Council in the Banking Case. In the long run however it does not appear to me that any other logical basis can be found. At all events if regulations exist under an Act at the time a challenge arises and if, giving to the regulations the legal force which they would normally have, there is no consequential impairment of the constitutional freedom of interstate trade which Section 92 guarantees, it appears to me to be erroneous to condemn either the Statute or the Regulations or both on the ground that some other legal provisions (i.e. some different regulations) might have resulted in an unconstitutional impairment of interstate freedom. This matter appears to me to be a first-rate issue upon which the Commonwealth should certainly be prepared to fight to the last ditch. Otherwise a process of unlimited speculation appears to me to be imported in the examination of legal provisions designed to suggest hypothetical circumstances which might result in the invalid exercise of some legal power.

(13)  The same conclusions as set out in Paragraph 12 above may be reached along a different line of reasoning. If Section 288(2) contemplates the making of Regulations and if, in the absence of Regulations, the Section would be unconstitutional, it seems to me proper to construe Section 288(2) as requiring Regulations for its completion and thereby avoiding invalidity. It is also proper in my opinion to attribute to Parliament the legislative intention of implementing the scheme embodied in Section 288(2) by the passing of such Regulations as would limit the discretion of the licensing authority (the Minister) within the limits which the Constitution requires.

(14)  It is now necessary to consider the Regulations which have been prescribed in implementing the scheme contained in Section 288(2). These are to be found in Statutory Rules 1937, No. 104 Part 4—Coasting Trade. When these Regulations are examined I confess great difficulty is experienced in asserting with any confidence that they prescribe (i.e. definitively limit) the discretion of the Minister as a licensing authority so as to make his function truly ‘regulatory’ in the constitutional sense. The matter comes down to a fine point. Regulation 31 provides that upon receipt of an application in accordance with the prescribed form accompanied by the prescribed fee ‘the Minister may issue a licence … permitting the ship in respect of which application is made to engage in the coasting trade.’ If it could be contended that upon a true construction this Regulation required the Minister to issue a licence in respect of a valid and proper application then in the light of all that has gone before in this Opinion, it would in my opinion be clear that the licensing system would not be obnoxious to Section 92. On the whole I find it difficult to come to the conclusion that this is the true construction of Regulation 31.

(15)  I have referred before to the mass of authority relating to the construction of the word ‘may’ in Statutes and particularly in collocations somewhat similar to the one here under consideration. The locus classicus is of course the decision of the House of Lords in Julius v. The Bishop of Oxford (5 A.C. 214). The law there enunciated is not new but may be said to be a summation of what had been developing during the modern period of legislation. It is clear from what was said by some of the members of the House of Lords in that case that where a power is given to issue a licence permitting an individual to carry on his business even though the power is expressed by the use of the word ‘may’ there are strong reasons for supposing that the power cannot be withheld at the mere discretion of the donee. The matter has frequently been considered since. See, for instance, Rex v. The Metropolitan Police Commissioner Ex Parte Holloway (1911 2 K.B. 1131)—a case dealing with licences for stage carriages; The King v. Mitchell (1913 K.B. 561); Sheffield Corporation v. Luxford (1921, 2 K.B. 181) and the well-known passage in the judgment of Griffith, C.J. in Chanter v. Blackwood (1 C.L.R 39).

I have given very careful consideration to a large number of authorities of which the above are only a selection, but on the whole I cannot persuade myself that the principles of construction would permit of the interpretation of the expression in Regulation 31 mentioned above as merely creating a power in the Minister without any discretion in him as to its mode of exercise. It is true that the Regulation does not state that the Minister may issue a licence or may refuse to issue the same. This common form of drafting is conspicuous by its absence. Nevertheless the use of the word ‘shall’ in this set of Regulations is in marked contrast to the use of the word ‘may’ in relation to the issue of the licence. The contrast here is very different from that contained in Part 6 of the Act itself. Moreover the fact that the power is given in the Regulations to the Minister is itself of some significance, though this may well have been conditioned by the Statute itself. I appreciate that there are strong reasons which may be urged for the contrary conclusion including the contention that the contrary conclusion would produce validity and the construction now favoured results in invalidity. I should not feel absolute conviction on this matter and if no other course were available I think an attempt might be made to argue that there is no discretion in the Minister and that upon compliance with the application form which involves the undertaking to observe manning and accommodation provisions and the payment of Australian rates of wages the issue of a licence is automatic. Indeed I understand this is the actual administrative practice. If I did not feel a more practical course was available I would advise that the matter should be argued on this basis. However I indicate what I believe to be a more effective mode of procedure in the last Part of this Opinion.

Part II.

(16)  It seems to me advisable to give some consideration to the particular case which it is proposed to review in connection with this matter. Where the issue is so doubtful as it appears to me to be in this case, and where indeed the probabilities are, in my opinion, against the Commonwealth succeeding in upholding the validity of its legislation, it appears very unfortunate that the issue should be presented to the Court in connection with a matter where there seems to be little merit in the enforcement of the law. I appreciate that in this particular case it may be said that the Defendant deliberately elected to disregard the law merely because compliance would have involved some expense and trouble. In this sense it may be said that the merits were in favour of the prosecution. Nevertheless the activities of the Defendant were of a minimal character. The actual interstate voyages upon which he was engaged were really not different in their essential nature from long fishing voyages which he might pursue without intruding upon the regulated sphere of interstate commerce. The vessel was a small one and the primary purpose of the regulatory system could hardly be affected by the intrusion of the Defendant without a licence or indeed by the general intrusion of fishing vessels of the same size and engaged in voyages of the same extent in disregard of the licensing system. On the other hand the imposition of rigorous standards including expensive survey procedure appears to impose a burden on the Defendant altogether out of relation to the rights to which he was to be admitted if successful in his application.

(17)  None of the matters set out in Paragraph 16 above are strictly relevant to the question of constitutional validity. Nevertheless it seems to me unfortunate that so important and far-reaching a problem should come to be tested in a set of facts where I should anticipate the sympathies will be somewhat against the prosecution. There may be good reasons for a rigorous and unconditional enforcement of the legal system in cases such as the present and these reasons may be somewhat concealed from Counsel. It is probable also that they would be concealed from the Court. The natural inclination of those unequipped with the inside knowledge of the departmental authorities is to look upon this matter as a case of rather inelastic enforcement penalising a small trader in the course of carrying on fairly innocent and useful activities helpful to isolated producers and as exhibiting a control system operating with minimum social advantage and maximum individual prejudice.

(18)  It is unnecessary to debate the pros and cons of the conclusions indicated in the last two paragraphs. It is possible to contemplate arguments leading to different conclusions from those set out. The matter is no doubt one of speculation. On the whole I would have thought this case not an advantageous one to press to a conclusion if practical results can be achieved by some alternative method. A consideration of these matters along with the conclusion hostile to the validity of the legislation upon purely logical grounds early led me to consider the possibility of proceeding by some alternative method rather than litigation in the Full High Court. Considering that the order nisi will not be dealt with until October of this year the alternative exploration seemed to have more to support it than ever. The possibility of grave conflict of opinion in the High Court or even the delay in final decision pending some more distant appeal abroad pointed in the same direction. I therefore set out hereafter what appears to me to be a convenient course. I may say that I have had discussion with the officer concerned with the administration of Part 6 of the Navigation Act, and as I understand the matter the proposals hereinafter contained conform to departmental requirements and would not involve any modification of existing policy.

Part III.

(19)  My understanding based upon conference with those concerned is that at the present time a licence is issued to every applicant under Part 6 who fulfils the necessary requirements, that is to say, who pays Australian rates of wages, conforms with the manning and accommodation regulations. It is also probable, though I am not certain about this, that the licensing system is used as an ancillary means of enforcing other safety provisions bound up with the survey regulations. This is not so clear, however, because the survey regulations themselves provide a fairly elastic scheme under which the requirements of surveyors are either peremptorily enforced or gradually imposed as circumstances may require. My belief would be that the survey requirements with the important safety precautions involved therein really depend upon an independent administrative system and do not need to be linked up with the interstate licensing system and are not in practice to any extent related thereto. The primary purpose of the licensing system is to exclude competitors from the trade who do not observe Australian standards as to amenities, manning and remuneration. I can well understand the desire to maintain such a ‘regulation’ of the interstate shipping trade if this is possible under the Constitution.

(20)  If my understanding of the existing method of administration is accurate there would in fact be no practical consequences if Regulation 31 of Statutory Rules 1937 No. 104 was amended by substituting for the expression contained therein—‘The Minister may issue a licence …’—the expression ‘The Minister shall issue a licence …’. The result of this amendment would be that when an application was made on Form M.A.C.T. 6 the applicant would set out the manning scale of the vessel and undertake to pay Australian wages and to provide accommodation and manning in accordance with the Act. It would be clear from the form of application that the manning scale contained therein was the one required by law. Otherwise the undertaking would be contradicted by the scale. In the result, if a licence was issued in respect of every such application the purposes at present being sought in the administration would be achieved. In my opinion also the Statute and the Regulations together with the prescribed application form would be within Constitutional power.

(21)  I have mentioned above (in Paragraph 8) the difficulties which, in my opinion, arise because of the possible invalidity of Section 287. Form M.A.C.T. 6 includes, as at present drafted, a certificate by the applicant that the vessel in respect of which the application is made is not receiving and not under any arrangement to receive and during the past twelve months has not received either directly or indirectly any subsidy from any government other than that of any part of the British Dominions. The presence of this certificate in the application form is a minor embarrassment in devising a system which would be free from attack. If Section 287 amounts to an unconstitutional intrusion into the freedom of interstate commerce then of course the inclusion of the provision in the application form would import the same vice. The benefit of a non-discretionary licensing system (as is proposed in Paragraph 20 above) might be lost by the maintenance of this provision in the application form. Problems of severability would arise but they are not without their difficulty. In view of the fact that the certificate in the application form is imported from the provisions of Section 287 it might be argued that the whole application would be different if the certificate were excluded therefrom. It is to be noted that Section 287 is a specific statutory prohibition independent of the licensing system. The exclusion of the certificate from the application form would not authorise a subsidised vessel to engage in interstate shipping trade and would not relieve the master owner or agent from the penalty provided in Section 287(I) if that Section is valid. I am informed that the problem of administration enforcement of the anti-subsidy provisions is not of great practical substance. In these circumstances there appears to be much to be gained by disembarrassing the application form and licensing system from too close an alliance with Section 287.

(22)  If Regulation 31 were amended in the way proposed and the application form amended as suggested it might be advisable to give consideration to some regulation giving validity under the new regulations to all licences current and issued under the old regulations. The alteration in the regulations can no doubt be made without the intervention of Parliament and presumably without raising any important matter of public policy since the redrafting will only bring about what has already been achieved in actual fact.  Indeed if the proposals herein contained be acceptable it might well be desirable to explain that the purpose of the amendment is to avoid any possibility of attack under Section 92 thereby removing such evil as may result from the present adverse decision of the Police Magistrate in the case now under consideration. What steps should be taken to deal with such a case as the present one under the new regulations is obviously a matter of administrative discretion upon which I can express no opinion.

(23)  If the steps herein proposed be taken no doubt a question of validity of considerable importance would remain and might form the subject of attack hereafter. It is to be noted that the provisions of Part 6 have been considered of doubtful validity ever since the decision of the Privy Council in James v. The Commonwealth⁷as appears from a departmental memorandum placed before me which was formulated at the time by the then head of the Department. Nevertheless the issue has remained without any challenge and the licensing system has operated for many years and may continue to do so in the future. Moreover at the present time it is understood the demand for interstate shipping on the whole exceeds the supply provided by licensed shipping. Under those circumstances the amended licensing system together with the existing provision of permits would probably pass without serious attack. This no doubt is all to the advantage of the Administration. On the other hand the amended system would be of a kind which it appears to me of great importance to establish as valid in the interests of the Commonwealth if this can be done. If therefore an attack was made it would be well worth meeting. The attack might be made upon the ground that the provisions for licensing (manning accommodation and wages) did not constitute a regulatory system within the meaning of the Privy Council decision. This would certainly be a matter upon which the Commonwealth could not give way without argument. It is also a matter which in my opinion should be determined favourably to the Commonwealth. The other issue is more doubtful. I deal with it in the next paragraph.

(24)  In the form which the law would take upon the proposed amendment the Statute would provide for a licensing system with a power in the licensing authority which was neither specifically prescribed by Statute nor (in my opinion) left to an unlimited discretion, but circumscribed by reference to the provisions of the Regulations. It appears to me to be highly desirable to establish if possible, in the interests of the Commonwealth law-makers, that such a licensing system with respect to interstate trade does not infringe Section 92 if the prescription of the licensing discretion contained in the Regulations is not so wide as to amount to an invalid intrusion upon the protected constitutional freedom. This characteristic of the licensing arrangements cannot be overcome without legislative amendment which no doubt has many disadvantages. Apart from that however, if this system can be upheld it has obvious conveniences in the way of drafting and arranging legislative organisation of interstate trade. Thus it provides a positive advantage to the Commonwealth from both points of view if in fact any real challenge to the amended law develops.

[Vol. 42, p. 698]

¹ Unreported, High Court of Australia, 1950.  Order for review (of decision of Court of Petty Sessions on 1 May 1950 dismissing a charge under the Navigation Act that the respondent was the owner of a ship which engaged in the coasting trade without being licensed to do so) was granted by Latham CJ on 29 May 1950, but subsequent appeal was not proceeded with.

² Commonwealth v Bank of NSW [1949] UKPCHCA 1; (1949) 79 CLR 497 (PC).

³ The ‘Transport cases’ are considered in McCarter v Brodie [1950] HCA 18; (1950) 80 CLR 432 (8 June 1950).

⁴ This is probably a reference to Commonwealth v Bank of NSW (see footnote 2).

⁵ See footnote 3.

⁶ [1930] HCA 48; (1930) 43 CLR 386.

⁷ [1936] UKPCHCA 4; (1936) 55 CLR 1 (PC)