R v. Connare; ex parte Wawn61 CLR 596
(Judgment by: Evatt J)
Ex parte: Wawn
Freedom of inter-State trade
Object of State lottery legislation
Constitution (Cth) - s 92
Lotteries and Art Unions Act 1901 (NSW) No 34 - s 21
Judgment date: 17 May 1939
Melbourne (heard in Sydney)
The present appellant was convicted for having at Sydney in the State of New South Wales offered for sale a ticket in a "foreign" lottery known as Tattersall's Consultation conducted in the State of Tasmania. The offence is created by s. 21 of the Lotteries and Art Unions Act 1901-1929, which is designed to suppress the business of inducing residents in New South Wales to "invest" money in all foreign lotteries, i.e., lotteries operated outside the State. The section provides: "Whosoever sells or offers for sale or accepts any money in respect of the purchase of any ticket or share in a foreign lottery shall be liable to a penalty not exceeding twenty pounds."
It is contended that as s. 21 applies, inter alia, to lotteries conducted in Tasmania and the other States of the Commonwealth, the sale in New South Wales of tickets and shares in such lotteries cannot lawfully be penalized by that State, being protected by s. 92 of the Constitution, which guarantees the freedom of inter-State marketing.
As a result of the decisions of this court in R. v Vizzard; Ex parte Hill, [F44] Gilpin's Case [F45] and James v The Commonwealth, [F46] and the final pronouncement of the Privy Council in James v The Commonwealth, [F47] any decision that the legislative power exerted by a State is inconsistent with s. 92 necessarily involves an analogous restriction of the legislative power of the Commonwealth in relation to inter-State trade and commerce. For instance, a decision in the present case that the State of New South Wales is incompetent to prevent its citizens from buying tickets in those lotteries conducted outside the State which happen to be conducted in Australia involves a ruling that the Commonwealth Parliament cannot legislate so as to prohibit inter-State dealings or communications in relation to the purchase of lottery shares.
In substance, therefore, the appellant asks us to declare that s. 92 has created an overriding constitutional right to traffic or invest in lotteries so long as the trafficker or investor can succeed in placing some State boundary or other between himself and the conductor of the lottery. In my opinion such a proposition cannot be supported in principle or by reference to authority. For it is obvious that the appellant's argument also involves the assertion of the constitutional right of a citizen, so long as he can rely upon, or if necessary artificially create, some inter-State connection in his business, to sell indecent and obscene publications, diseased cattle, impure foods, unbranded poisons, unstamped silver, ungraded fruit and so forth (Hartley v Walsh). [F48] I wish that such a proposition could be characterized in the language which first Sir Samuel Griffith and later Sir Frank Gavan Duffy would have employed. Ratiocination is good, but common sense is necessary. At times, as Mr. Justice Holmes pointed out, "the decision will depend on a judgment or intuition more subtle than any articulate major premise" (Lochner v New York). [F49]
In the interpretation of s. 92 it is permissible to accept some postulates or axioms demanded alike by the dictates of common sense and by some knowledge of what was being attempted by the founders of the Australian Commonwealth. I think that the method of approach adopted in the Privy Council's decision in James v The Commonwealth [F50] would suggest the immediate rejection of the constitutional right claimed by the present applicant.
For the purposes of the present appeal it is best to assume in the appellant's favour (a) that he is conducting his business of selling tickets by the method most likely to attract the operation of s. 92, and also (b) that the transaction by which an operator of lotteries in one State sells shares or tickets therein to purchasers in another State possesses a sufficient inter-State character to enable the Commonwealth Parliament to regulate such transactions by virtue of its legislative power under s. 51 (i) (controlled, of course, by s. 92). The second assumption was disputed in the powerful reasoning of the minority of the Supreme Court of the United States in the Lottery Case (Champion v Ames). [F51] But the opinion since accepted in the United States is that there may be a sufficient inter-State element in lottery transactions to attract the legislative power over inter-State commerce which in the United States is vested in Congress alone, but which in Australia is vested in the Commonwealth and State legislatures concurrently.
Making these assumptions and concessions I am of opinion that the guarantee contained in s. 92 has nothing whatever to say on the topic of "inter-State" lotteries and cannot be invoked to prevent either the suppression or the restriction in the public interest of the practice of gambling or "investing" in such lotteries.
I use the word "investment" advisedly, because here the New South Wales legislature might easily have framed its legislation so as to forbid the employment of money in a gambling syndicate, and so evidenced that its object is to discourage or suppress gaming. The fact that the legislature has chosen for penalty the seller of lottery tickets and the point of sale indicates only this, that the general legislative scheme is thought to be best forwarded by such method of enforcement.
The Lotteries and Art Unions Act is aimed not only at prohibiting "investment" by citizens of New South Wales in lotteries conducted outside the State whether in Australia or elsewhere; it also restricts the conduct of lotteries within New South Wales. Certain exceptions have been introduced, but very strict conditions are imposed upon those who are specially permitted to conduct lotteries within the State. Long after the year 1922, when the sections dealing with foreign lotteries were inserted, the State of New South Wales itself commenced to conduct a lottery, the profits from which go to swell the general revenues of the State. The prohibition of the sale of tickets in foreign lotteries is undoubtedly intended to suppress investment by New South Wales citizens in lotteries conducted outside that State under conditions which are beyond the control of its legislature and where "investors" might even be deprived of a fair chance of winning. The fact that in Queensland and Tasmania lotteries are conducted which are above suspicion is quite accidental and irrelevant. The New South Wales legislation has its analogue in that of almost every State of the Commonwealth.
Are the legislatures of the States precluded by s. 92 of the Constitution from giving full effect to a policy of suppressing and controlling lotteries? It is not for this court to lay down that such a legislative policy cannot be fully enforced once we perceive the ground and reason of the legislation. A sufficient reason or ground for the policy of lottery suppression was expressed in Douglas v Kentucky, [F52] where the Supreme Court of the United States said: -
"This court had occasion many years ago to say that the common forms of gambling were comparatively innocuous when placed in contrast with the widespread pestilence of lotteries; that the former were confined to a few persons and places, while the latter infested the whole community, entered every dwelling, reached every class, preyed upon the hard earnings of the poor, and plundered the ignorant and simple. Is a State forbidden by the supreme law of the land from protecting its people at all times from practices which it conceives to be attended by such ruinous results? Can the legislature of a State contract away its power to establish such regulations as are reasonably necessary from time to time to protect the public morals against the evils of lotteries?". [F53]
For New South Wales, counsel pointed out that s. 21 of the Act, under which the conviction was had, does not prohibit the very act of bringing lottery tickets into the State or sending money out of it. In form, therefore, the legislation is distinguishable from that considered by this court in Ex parte Nelson [No. 1], [F54] where a proclamation issued under the New South Wales Stock Act 1901 had forbidden not the sale in New South Wales of cattle introduced from an infected area situated in Queensland, but the actual introduction into New South Wales of such cattle unless the cattle had been dipped so as to prevent the spread of tick or Texas fever. However, if the Stock Act 1901 had been framed so as to prohibit the sale or offering for sale in New South Wales of cattle which had been introduced from an infected area outside the State without compliance with the dipping requirement, the effect upon the trade in cattle between the two States would not have been substantially different. Where a State directly prohibits the importation of diseased cattle, the business of an individual trader or importer may be interfered with no more than in the case where the State's regulation is applied after the act of importation.
In my opinion, the decision in Ex parte Nelson [No. 1], [F55] if considered solely in relation to the actual regulation imposed by the relevant New South Wales proclamation, was right. In substance the court considered that the requirement of dipping suspected cattle as a precaution against the spread of Texas fever or tick was a genuine and relevant health requirement, and so far from being an impediment to inter-State trade was rather an aid to its safe and proper conduct.
There is nothing in Tasmania v Victoria [F56] which runs counter to the decision in Ex parte Nelson [No. 1] [F57] as thus explained. The former decision was based upon the finding that although Victoria purported to restrict the importation of Tasmanian potatoes by reference to health regulations contained in its Vegetation and Vine Diseases Act 1928, it was established or admitted that the supposed health regulation was neither a genuine nor a relevant provision in relation to imported potatoes. The majority judgment [F58] carefully distinguished Ex parte Nelson [No. 1] [F59] and was based on the view that the absence of any nexus between potatoes from Tasmania and the spread of a particular plant disease in Victoria left the offending regulation standing as an almost undisguised prohibition of trade in potatoes.
Here it should be stressed that the judgment of Isaacs J. in Ex parte Nelson [No. 1] [F60] was based upon the principle that, as the New South Wales proclamation required the dipping of certain cattle arriving from Queensland, it was obviously a regulation of inter-State trade, but McArthur's Case [F61] excluded from State legislative control inter-State trade in all its aspects. In his judgment Isaacs J. emphasizes this point over and over again. Section 92, he says, "withdraws from the States what would otherwise have been a concurrent power". [F62] Having regard to s. 51 (i), conferring upon the Commonwealth Parliament the power to regulate inter-State trade and commerce, s. 92, in his opinion, had the effect of "making the Commonwealth power exclusive". [F63] It followed in Isaacs J.'s view that every attempt by a State to legislate in relation to inter-State commerce was null and void. [F64] Had the court been compelled to accept the principle that the State's power exists concurrently with that of the Commonwealth it is certain that the conclusion in Ex parte Nelson [No. 1] [F65] would have been acquiesced in by all members of this court.
An analogous opinion to that adopted by Isaacs J. in Nelson's Case [F66] was expressed by Dixon J. in his dissenting judgment in O. Gilpin Ltd v Commissioner for Road Transport and Tramways (N.S.W.), [F67] where he gives an illustration which seems to me to give point to the fundamental difference between the reasoning of Isaacs J. in Nelson's Case [F68] and that of the Privy Council in James v The Commonwealth. [F69] Dixon J. said:
"A deserting husband might be arrested under a law of a State notwithstanding that his destination lay over the border. But if the State law made his liability to arrest depend not on the fact of desertion but upon his attempting to leave the State, I should think that s. 92 would invalidate it. In the first case, his inter-State journey might be interrupted but only as a consequence produced by a law which had no reference to any aspect of trade, commerce and intercourse among the States. In the other case, the State boundary is adopted by the law as the limit of the deserting husband's movement; the inter-State character of his fight is made the reason for his detention". [F70]
In my opinion it is clear that notwithstanding s. 92 the legislation of a State can authorize the arrest of a wife deserter not merely where he has broken the State law by deserting his wife, but also where, leaving his wife still deserted and unprovided for, he is attempting to leave the jurisdiction. In such a case the State boundary is selected as creating a liability to arrest not because it marks the beginning of the territorial area of another State or of the high seas, or because the State is impeding inter-State trade, but because the State boundary also marks out the limit of the State's territorial jurisdiction. To take an analogous illustration, it may be noted that one of the essential requirements of the modern procedure for arrest on mesne process is that the defendant is about to remove himself from the territorial jurisdiction of the State: Cf. Arrest on Mesne Process Act 1902 (N.S.W.), s. 5 (c).
Since the decision of the Privy Council in James v The Commonwealth [F71] the foundation of the reasoning upon which the dissenting judgments in Nelson's Case [F72] were based has been destroyed. Section 51 (i) does not give the Commonwealth an exclusive power to regulate inter-State trade. Dealing with certain passages from R. v Vizzard; Ex parte Hill, [F73] the Privy Council said: "If this reasoning, which in Vizzard's Case [F74] was primarily applied to the States, is, as it seems to be, correct, then in principle it applies mutatis mutandis to the Commonwealth's powers under s. 51 (i) and shows that s. 51 (i) has a wider range than that covered by s. 92". [F75]
Having regard to the analysis of the prior decisions of this court which was made by the Privy Council in James v The Commonwealth, [F76] it should be taken that in Tasmania v Victoria [F77] this court was of opinion that there had been an interference with trade freedom as at the frontier, whereas in Nelson's Case [F78] the dipping restriction was in the circumstances rightly held not to be an interference with such freedom, which alone is guaranteed by s. 92. "In every case," said Lord Wright, "it must be a question of fact whether there is an interference with this freedom of passage". [F79] The facts in Tasmania v Victoria [F80] differed considerably from those in Nelson's Case. [F81]
Further, the correctness of Nelson's Case [F82] was not denied by the Privy Council in James v The Commonwealth. [F83] It was only said:"It is certainly difficult to read into the express words of s. 92 an implied limitation based on public policy ... But the question whether in proper cases the maxim, salus populi est suprema lex, could be taken to override s. 92 is one of great complexity". [F84]
Undoubtedly the fact that by a particular legislative provision the State is genuinely endeavouring to restrict the spread of disease (although at the same time it is directly regulating certain aspects of inter-State commerce) may in the circumstances tend to show that freedom of the frontier is not being impaired. In such cases, however, the reason is, not that provisions directed towards the prevention of disease are an exception carved out of s. 92, but that s. 92, properly construed and properly applied, does not prohibit the States from exercising a particular precautionary power creating no real barrier against inter-State trade. This distinction was adverted to by Lord Atkin in James v Cowan, [F85] where the State legislative power sought to be exercised was the power of acquisition. There an executive power created by statute was made expressly subject to s. 92.
said Lord Atkin,
"the real object of arming the Minister with the power of acquisition is to enable him to place restrictions on inter-State commerce, as opposed to a real object of taking preventive measures against famine or disease and the like, the legislation is as invalid as if the legislature itself had imposed the commercial restrictions. The Constitution is not to be mocked by substituting executive for legislative interference with freedom". [F86]
The above statement was the Privy Council's short and conclusive answer to the argument that in no case whatever can a State Act, which acquires property within its borders, constitute an infringement of s. 92. The answer is that the State's power of acquisition may be utilized in order to place restrictions upon inter-State commerce just as it may be utilized to prevent the spread of disease or the onset of famine. In each case the effect of the legislation on the inter-State flow of certain commodities may be noticeable or considerable. In the one case s. 92 is infringed, in the other there may be no infringement. And it is not material whether the legislature acts directly or through the executive.
"It may be conceded,"
said Lord Atkin,
"that, even with powers granted in this form, if the Minister exercised them for a primary object which was not directed to trade or commerce, but to such matters as defence against the enemy, prevention of famine, disease and the like, he would not be open to attack because incidentally inter-State trade was affected". [F87] In the case of State legislation in its ordinary form, analogous distinctions may be valuable; for "it is impossible to accept the theory that, in applying s. 92, one need not look past the mere operation of the State law upon the inter-State trader, traveller or carrier and that one should disregard the nature and character of the State law which is impugned". [F88]
It does not necessarily follow from the fact that the State legislature or executive is dealing to some extent with the subject of disease, that s. 92 is not being infringed. But the pursuit of such an object by a State is a circumstance of the utmost importance in determining the question-really one of fact-whether the trade freedom of the frontier has been interfered with. In some cases, such as Nelson's Case, [F89] it is clear that the "frontier" crossing is selected by the State as the discrimen of liability, not because it is the trade frontier, but because the health precaution must, if it is to be of any value, operate at the very first moment of time when the suspected goods come effectively within the State's territorial jurisdiction and can be dealt with so as to prevent the spread of disease. If in such cases the operation of the State law were postponed until the arrival of the goods at the market place, not only might disease be spread, but the owner of the goods might have to be exposed to the risk of complete forfeiture. In all cases the crucial question is: has there been interference with the trading or commercial freedom of the frontier?
Although the Constitution of the United States contains no express provision like s. 92, the decisions of the Supreme Court are often of value. Broadly speaking that court has deduced from the existence of a power in Congress to regulate inter-State commerce, the entire exclusion of the State legislatures from that field of law making, except in cases where the exercise of State legislative power may inferentially be permitted either by the action or the inaction of Congress. Notwithstanding the inferior position of State legislatures there as contrasted with their position here, the Supreme Court has frequently affirmed the power of State legislatures to prevent the spread of disease into their borders by regulations operating at the moment of entry. One can hardly deny to the States of Australia an authority at least as extensive, for here the States are bound by s. 92 only to the same degree as is the central legislature. In the United States, also, it has been held, conformably with the Privy Council's ruling in James v The Commonwealth, [F90] that questions of fact and degree are necessarily involved in determining very analogous constitutional issues. As Mr. Justice Cardozo said:
"The line of division between direct and indirect restraints of commerce involves in its making a reference to considerations of degree ... Subject to the paramount power of the Congress, a State may regulate the importation of unhealthy swine or cattle (Asbell v Kansas, [F91] at p. 781; Mintz v Baldwin); [F92] or decayed or noxious foods (Crossman v Lurman; [F93] Savage v Jones; [F94] Price v Illinois). [F95] Things such as these are not proper subjects of commerce, and there is no unreasonable interference when they are inspected and excluded. So a State may protect its inhabitants against the fraudulent substitution, by deceptive colouring or otherwise, of one article for another. ... None of these statutes-inspection laws, game laws, laws intended to curb fraud or exterminate disease-approaches in drastic quality the statute here in controversy which would neutralize the economic consequences of free trade among the States" (Baldwin v Seelig). [F96]
For the reasons I have given I am of opinion that even if the New South Wales legislation here impeached had assumed the form of prohibiting the introduction into the State of lottery tickets or the sending out of the State of money for the purchase of lottery tickets, s. 92 would have had nothing to say in denial of such an exercise of the State's power.
In James v The Commonwealth [F97] Lord Wright said:
"The true criterion seems to be that what is meant is freedom at the frontier or, to use the words of s. 112, in respect of `goods passing into or out of the State'".
As already pointed out, I am not concerned to dispute that inter-State transactions in respect of lottery tickets may be regarded as within the legislative power of the Commonwealth under s. 51 (i). It does not follow that lottery tickets can be regarded as goods or commodities which are entitled to the protection of s. 92. If they are goods or commodities they belong to a very special category, so special that in the interests of its citizens the State may legitimately exile them from the realm of trade, commerce or business. The indiscriminate sale of such tickets may be regarded as causing business disturbance and loss which, on general grounds of policy, the State is entitled to prevent or at least minimize.
How such legislation, merely because it discourages unrestrained investment in lotteries conducted in other States of the Commonwealth, can possibly be regarded as inconsistent with s. 92 I fail to understand. In order to assist the Royal Commission on the Constitution of the Commonwealth which reported in the year 1929, a committee of counsel of the Bar of Victoria made a useful reference to the High Court's interpretation of s. 92. This was before the upsetting of McArthur's Case ruling [F98] that the States had no legislative power at all in relation to inter-State trade. Inter alia it was said: -
"It seems incredible that the immunity given by s. 92 should operate to prevent the States from including in general prohibitions relating to transactions of trade and commerce, transactions which form part of inter-State trade. The suppression of lotteries, for instance, in a State, upon a logical application of the view that freedom means freedom from all legal restriction, could not extend to a lottery conducted by inter-State communications" (Report of the Royal Commission on the Constitution, (1929), p. 263).
If, notwithstanding McArthur's Case, [F99] it was "incredible" that the States could not suppress or regulate lotteries conducted by inter-State communications, the adjective to be selected today when the States have been restored to their constitutional status by James v The Commonwealth [F100] and are as much at liberty to regulate inter-State communications as the Commonwealth itself, should be even stronger. But "incredible" is strong enough. In relation to s. 92 it evidences one of the postulates or axioms which, I suggest, are demanded alike by common sense and by a sound knowledge of what was aimed at by the founders of the Australian Commonwealth.
The appeal should be dismissed with costs.