Privy Councit. 1913. va (Lrp.) HIGH COURT {1913. from June 1873 to December 1909 may be stated as follows :— The subsidy has amounted to £183,409, of which £115,684 has been carried to profit and loss account and £67,725 to reserve account. The profit and loss account for the whole period shows a net loss of £321. In the period before the subsidy commenced there was a profit amounting to nearly £1,500. In the period during which the subsidy was discontinued there were losses amounting to £18,200 or thereabouts. In other years there has sometimes been a considerable profit in addition to the subsidy, and sometimes a heavy loss notwithstanding the subsidy. The Company has never paid a dividend even in the most prosperous years, it being feared that if they did so the continuance of the subsidy might be jeopardized. The reserve has been employed in extending the Company's business. The majority of the Company's shareholders are and have always been graziers who derive an indirect benefit from the Company's operations. There are, however, and apparently always have been, shareholders who are not graziers, and whose interest is that the Company should earn and pay dividends. The appellant in the present proceedings is one of such last- mentioned shareholders, and his case against the Company and its directors is that the business of the Company is not being carried on with a view to earning dividends for distribution among its shareholders, but with a view to keeping up the price of sheep for the benefit of such members of the Company as are graziers. He asks for a declaration that the Company and its directors are not entitled so to carry on the Company's business, and for an injunction on the footing of such declaration. The first question which their Lordships have to determine is, therefore, a question of fact. Has the business of the Company been carried on, and is it being carried on, not with a view to earning dividends for the shareholders generally but in order to benefit indirectly such of its shareholders as are graziers? Are the interests of the shareholders, as such, being sacrified for the indirect benefit of such of them as desire to keep up the price of stock ? The plaintiff relies chiefly on certain circulars and letters sent out by the Company to graziers and stock agents, and certain 17 C.L.B.] OF AUSTRALIA. advertisements published in the local papers. 'These circulars, letters, and advertisements state, either expressly or by implica- tion, that the primary object of this Company is not to earn profit for division among the shareholders in dividends, but to relieve the fat stock market in times of glut—in other words, to keep up the price of stock. Further, the directors, in their reports to the shareholders, frequently refer to the Company's operations as having contri- buted to the maintenance of the high values of stock or prevented a serious fall in prices. On the other hand, the defendants at the trial called Mr. Gee, their general manager, who was accepted by the trial Judge as a straightforward and reliable witness, and whose evidence was to the following effect. He has been manager of the Company for thirty-nine years, and for the whole period has had sole charge of its purchases. He is clear that without the subsidy the Company could not carry on business at a profit at all. In times of short- age he has always bought as cheaply as he could having regard to the bids of his competitors. In times of glut he buys by private contract, arranging the prices so as to secure a reasonable profit to the Company without being unfair to the graziers. He considers that, taking the subsidy into account, this method of buying is far more profitable to the Company than if he aban- doned the subsidy and bought on strictly competitive lines. Their Lordships see no reason to doubt the truth of Mr. Gee's evidence, which was accepted by the trial Judge, and if his evidence be accepted the plaintiff's case breaks down on the facts. There has been no sacrifice of the interests of the shareholders as such to the interests of such of them as are graziers. The busi- ness of the Company has throughout been carried on in the interests of the shareholders generally, and with a view to making profits which, when the Company thinks it prudent to do so, may be divided among them, and not in the interests only of the graziers or with a view only to keep up the price of stock. The statements to which reference has been made, in the Com- pany's circulars, letters and advertisements and in the directors' reports, can be explained by the importance attached to retaining the subsidy and the consequent desire of the directors to Privy CounciL, 1913. a Mires v SyDNEY Meat- PRESERVING Co. (Lrp.) —" 644 HIGH COURT (1913. Grae. emphasize the advantages which the graziers gained by its 1913. payment. ey Under these circumstances it is unnecessary to consider or Mites decide the questions of law raised and discussed in the Court Sypxey below. It must not, however, be understood that their Lordships ppilts® assent to the view that if the plaintiff had established the case he Co. (Ltp.) set out to prove he would not have been entitled to relief. With- " out expressing an opinion on this or any other question of law, Bishnood their Lordships are of opinion, and will humbly advise His woah (1954) her wet Majesty, that the appeal fails on the facts and should be dismissed Armalga- with costs. [PRIVY COUNCIL.] THE ATTORNEY-GENERAL FOR THE COMMONWEALTH OF AUSTRALIA APPELLANTS ; AND OTHERS . 'DEFENDANTS, AND THE COLONIAL SUGAR REFINING COMPANY LIMITED AND OTHERS PLAINTIFFS, } RESPONDENTS ; ON APPEAL FROM THE HIGH COURT OF AUSTRALIA. Privy — Constitutional law—Powers of Commonmealth- Compulsory inquiry—Incidental Councin.* power—Inquiry as to matters outside powers of Commonwealth Parliament— 1913, Royal Commission, powers of—Royal Commissions Act 1902-1912 (No. 12 of aes 1902—No. 4 of 1912) secs. 14, 2, 5, 6, 6A, 6B, 6D, 6D, 6E—The Constitution Deo. Vi. (63 & 64 Vict. c. 12) secs, 51, 107, 128, The Royal Commissions Act 1902-1912 is ultra vires the Commonwealth Parliament and void so far as it purports to enable a Royal Commission to * Present--Viseount Haldane L.C., Lord Dunedin, Lord Shaw and Lord Moulton, 17 C.L.R.} OF AUSTRALIA. compel answers generally to questions, or to order the production of docu- ments, or otherwise to enforce compliance by the members of the public with ita requisition, Privy CounciL. 1913. —- Decision of the High Court: Colonial Sugar Refining Co. Ltd. v. Attorney. AvroRNEY- General for the Commonwealth, 15 C.L.R., 182, varied. Apprat from the High Court. 'This was an appeal by the defendants to the Privy Council from the decision of the High Court: Colonial Sugar Refining Co. Lid v. Attorney-General for the Commonwealth (1). The judgment of their Lordships was delivered by Viscount Hatpanr L.C. The question raised by this appeal is one of much importance. It turns on the true interpretation of the Constitution of the Commonwealth of Australia. It is only in exceptional cases that a question of this nature is sub- mitted to the King in Council. See. 74 of the Constitution Act of 1900 provides that no appeal shall be permitted from a decision of the High Court of Australia upon any question, however arising, as to the limits inter se of the constitutional powers of the Commonwealth and any State or States, or as to the limits inter se of the constitutional powers of any two or more States, unless the High Court shall certify that the question is one which ought to be determined by the Sovereign in Council. In the "present case the High Court has taken the exceptional course of so certifying. The reason is that the four Judges of that Court. who heard the case were equally divided, and that under a statu- tory power relating to cases in which that Court is exercising original jurisdiction the decision was come to by the casting vote of the Chief Justice. 'Their Lordships have given anxious consideration to the ques- tion brought before them under these circumstances, and they have heard arguments of much ability and fulness from learned counsel of the Bars both of England and of Australia. The circumstances of the litigation may be stated compara- tively shortly. The Commonwealth Parliament passed Royal Commissions Acts in 1902 and 1912. These Acts are now consolidated into the Royal Commissions Act 1902-1912, and () 15 CLR, 182. GENERAL FOR THE Common- WEALTH v. CoLonIAL Sucar RErrINinc Co. Lrp. Privy Councin. 1913. ee ATTORNEY- GENERAL YOR THE ComMon- WEALTH v. COLONIAL HIGH COURT [1913. this contains the following among other provisions :—Sec. 1a. Without in any way prejudicing, limiting, or derogating from the power of the King, or of the Governor-General, to make or authorize any inquiry, or to issue any commission to make any inquiry, it is enacted that the Governor-General may, by Letters Patent in the name of the King, issue such commissions, directed ng or authoriz- to such person or persons as he thinks fit, requi ing him or them or any of them to make inquiry into and report upon any matter specified in the Letters Patent, and which relates to or is connected with the peace, order, and good government of the Commonwealth, or any publie purpose, or any power of the Commonwealth. See. 2. Whenever the Governor-General by Letters Patent under the Great Seal of the Commonwealth issues a commission to any persons to make any inquiry, the President or Chairman of the Commission, or the sole Commissioner, as the case may be, may by writing under his hand summon any person to attend the Commission at a time and place named in the summons, and then and there to give evidence and to produce any books, documents, or writings in his custody or control which he is required by the summons to produce. By sec. 3 the Com- - missioners are empowered to administer oaths to witnesses. By sec. 5, if any person summoned to attend fails without reasonable excuse to attend or to produce documents, or books, or writings which he is required by the summons to produce, he is guilty of an offence and liable to a penalty of £500. By sec. 6, if such person refuses to be sworn or make affirmation or to answer any relevant question, he is guilty of an offence and liable to the same penalty. By sec. 64 any witness who has been sum- moned is to appear and report himself from day to day until released from further attendance. By sec. 6B, if a person sum- moned as a witness fails to attend, the President or Chairman may issue a warrant for his apprehension, which the police may execute, with power to break and enter the defaulter's house. By sec. 6D nothing in the Act is to make it compulsory for a witness to disclose a secret process, and by sec. 6DD no answer is to be admissible in evidence in any civil or criminal proceed- ings in any Commonwealth or State Court. Sec. 68 estab- lishes wilful contempt of a Royal Commission as an offence 17 C.L.R:) OF AUSTRALIA. punishable by fine or imprisonment, and gives the President or Chairman certain of the powers of a Judge of the High Court in relation to contempt. In 1911 the Government of the Commonwealth appointed a Royal Commission to inquire into the sugar industry in Australia, and in 1912 a new appointment of this Royal Commission was made. One reason for the new appointment was that the amend- ment of the old Royal Commissions Act to which reference has been made had been passed, and it was desired to make use of the powers which the amending Act conferred. 'The other reason was that the scope of the inquiry might be somewhat extended. The duty of the Royal Commission under the new appointment was to inquire into and report upon the sugar industry in Aus- tralia, and more particularly in reference to— (a) Growers of sugar cane and beet ; *(b) Manufacturers of raw and refined sugar ; (c) Workers employed in the sugar industry ; (d) Purchasers and consumers of sugar ; (e) Costs, profits, wages and prices ; (f) The trade and commerce in sugar with other countries ; (g) The operation of the existing laws of the Commonwealth affecting the sugar industry ; and (h) Any Commonwealth legislation relating to the sugar industry which the Commonwealth thinks expedient. The appellants, other than the Attorney-General of the Com- monwealth and the appellant Brown, were the originally ap- pointed members of the Commission, the appellant Gordon having been the Chairman. Since the institution of these proceedings the latter has resigned the position of Chairman because of ill- health, and the appellant Brown has been appointed in his place. The respondent Company is a sugar refining company incor- porated under the law of the State of New South Wales, and carrying on an extensive business in Australia and elsewhere. The other respondents are the directors and general manager of the Company. Early in 1912 the secretary of the Royal Com- mission wrote to the respondents enclosing a list of questions which the Commission proposed to address to the respondent Company, and intimating that these questions were not designed Privy CounciL. 1913. oe ATTORNEY- GENERAL FOR THE Common- WEALTH v. CoLoNIAL Sucar G Co. Lap. Privy CounciL. 1913. es ATTORNEY- GENERAL FOR THE Common- WEALTH HIGH COURT [1913. in any way to limit the scope of the inquiry. He requested to be informed whether an ofticer of the Company would attend to answer the questions and give evidence and produce documents called for, and intimated that it might be necessary to issue a formal subpcena to the directors and officers or some of them. Correspondence took place between the secretary and the Com- pany's solicitors. 'The respondents objected to many of the ques- tions put, and declined to produce all of the documents called for. Summonses to compel attendance and to give evidence and produce documents were issued on behalf of the Commission, and these summonses having been heard in the Police Court at Sydney, fines were imposed. The respondents ultimately com- menced this action in the High Court against the Commissioners, the Attorney-General of the Commonwealth being subsequently added asa defendant. They claimed a declaration that the Royal Commissions Acts were ultra vires of the Commonwealth Parlia- ment, and that the respondents were consequently not bound to attend the meetings of the Commission or give evidence or produce documents ; and, alternatively, that they were not bound to answer any questions or produce any documents which related to a subject matter as to which the Commonwealth Parliament had no power to legislate, or which were not relevant to the terms of the Commission. Consequential relief in the form of an injunction was also asked for. Notice of motion for an inter- locutory injunction was then given. On 4th October 1912 the Court, consisting of the Chief Justice, and Barton, Isaacs and Higgins JJ., made an interim order the effect of which was that the respondents were not to be required to answer questions or produce documents relevant only to (1) the internal management of the affairs of the Company; (2) the opera- tions of the Company outside the Commonwealth, except so far as they related to the conditions of carrying on the sugar industry, irrespective of the persons by whom it was carried on; (3) matters relating to the value of particular parts of the property of the plaintiff Company, except such parts as were actually and directly employed in the production of sugar within the Commonwealth ; (4) details of salaries paid to officers 17 OLR] OF AUSTRALIA. of the plaintiff Company, except so far as they were relevant to the actual cost of such production and management. It is from this order, which gave effect to the conclusion come to by the Chief Justice and Barton J. that the present appeal is brought. heir Lordships agree with these learned Judges that if the respondents were entitled to succeed, it was, under the cireumstances of the case and for the reasons given in the judgment of the Chief Justice, right to grant an interim injunction. The real question in the case is whether the respon- dents were entitled to relief at all. It was held by the High Court that they were so entitled, not on the ground of the invalidity of the Royal Commission Acts, for the four learned Judges all took the view that these Acts were within the legisla- tive powers of the Commonwealth Parliament, but because, in the opinion of the Chief Justice and Barton J., an attempt was being made to exercise, under cover of these Acts, powers which were not and could not be conferred by them. It was held that the powers actually and validly so conferred did not extend to inquiry into the internal or domestic management of the affairs of a company created under State laws, and that it was only as to its operations in matters within the area of the Federal power that regulations could be validly made by the Commission. The two learned Judges whose opinion prevailed were of opinion that the power of the Commonwealth Government to hold an inquiry by commission exists only as incidental to powers presently vested in the Commonwealth by the Constitution, and that the mere fact that these powers might, by means of the machinery provided by the Constitution Act, be extended to other subjects such as some into which the Commission had pro- posed to inquire, did not authorize inquiry into such subjects. Isaacs J, and Higgins J., on the other hand, were of opinion that the Commonwealth Parliament possessed the right to legis- late for the purpose of obtaining information on existing matters which might form the subject of amendments to the Constitu- tion, They based this conclusion on the construction of the Constitution Act itself. They were further of opinion that since, as the rest of the Court agreed with them in holding, the Royal Commission Acts were not ultra vires, it was impos- 'VOL, XVII, 44 Privy CounciL. 1913. — ATTORNEY- GENERAL FOR THE ComMon- WEALTH v. COLONIAL Sucar REFINING Co. Lrp. Common- WEA Lon v. NIAL HIGH COURT (1913. sible to pronounce in advance that the questions sought to be put might not prove relevant to matters which were held by all the Judges to be proper subjects of inquiry. Their Lordships think that this last conclusion is entitled to weight. For even assuming that what can only be made rele- vant by an amendment of the Constitution is excluded from the class of subjects as to which the Commonwealth Government is entitled to insist on being furnished with information, it is hardly possible for a Court to pronounce in advance as to what may and what may not turn out to be relevant to other subjects of inquiry on which the Commonwealth Parliament is undoubtedly entitled to make laws. If in order to render the powers given by Royal Commissions Acts intra vires it is sufficient that they should be ancillary to possible subjects of present legislative capacity, as distinguished from being incidents in actual legislation about such subjects, it is not easy to say that the questions proposed in the present case to be put, and the documents sought to be obtained, are not relevant as throwing light on possible legis- lation. For sec. 51 of the Constitution Act, which defines the legislative capacity of the Commonwealth Parliament, extends to subjects such as trade and commerce with other countries and among the States, taxation, bounties on production or export, statistics, and trading corporations formed within the limits of the Commonwealth. When their Lordships turn to the deserip- tion of the information asked for as set out in the schedule to the summons which was served on the general manager of the Com- pany, they find that the scope of this description is indeed very wide, extending as it apparently does to the entire field of the Company's affairs, including its internal management. Its finan- cial history and details of its transactions are called for, including the mode of its appropriation of profits. Particulars are, for example, to be given of its replacement and depreciation funds; of its "sundry creditors and suspense accounts ;" of the cost price and present value of each of its refineries and mills; of the cost price and present value of its stocks and sugar; of the way in which its estimate of net profits has been arrived at; of the cost per ton of refining, taking by-products into account; of the quantity of sugar cane crushed and the extraction results 17 C.L.R.) OF AUSTRALIA. showing the percentage of loss in manufacture with the cost of manufacture in detail ; of the names of the growers of the cane, and the analyses of the cane in each case; of the average prices received from wholesale buyers, with the rebates and discounts allowed, and of the resolutions of the directors relative to the prices which should be paid for cane and raw sugar, and at which refined sugar should be sold. These are examples taken from a series of questions which obviously must disclose many details of the mode in which the Company carries on its business. To be compelled to answer them is a serious interference with liberty. But if there exists a right in the Government of the Common- wealth to put them, so far as relevant to a merely possible exer- cise of its actual legislative powers, the policy of doing so is something on which their Lordships are neither at liberty nor competent to express an opinion, and it seems to them impossible to say in advance which of these questions, if they can be insisted 'on at all, may not turn out in the course of a prolonged inquiry to be relevant or even necessary for the guidance of the legisla- ture in the possible exercise of its powers. But there remains the question which goes to the root of the controversy between the parties. Were the Royal Commissions Acts intra vires of the Commonwealth Parliament? This is a question which can only be answered by examining the scheme of the Act of 1900, which established the Commonwealth Con- stitution. About the fundamental principle of that Constitution there can be no doubt. It is federal in the strict sense of the term, as a reference to what was established on a different footing in Canada shows. The British North America Act of 1867 com- mences with the preamble that the then Provinces had expressed their desire to be federally united into one Dominion with a Con- stitution similar in principle to that of the United Kingdom. In a loose sense the word " federal" may be used, as it is there used, to describe any arrangement under which self-contained States agree to delegate their powers to a common Government with a view to entirely new Constitutions even of the States themselves. But the natural and literal interpretation of the word confines its application to cases in which these States, while agreeing on a measure of delegation, yet in the main continue to preserve their Privy CounciL. 1913. ATTORNEY- GENERAL FOR THE Common- WEALTH v CoLoNIAL Sucar REFINING Co. Lrp. Privy Councin. 1913. G AL FOR THE ComMon- WEALTH v Coronran Sucar ReFiIninG Co. Lrp. HIGH COURT [1913. original Constitutions. Now, as regards Canada, the second of the Resolutions, passed at Quebec in October 1864, on which the British North America Act was founded, shows that what was in the minds of those who agreed on the Resolutions was a general Government charged with matters of common interest, and new and merely local Governments for the Provinces. The Provinces were to have fresh and much restricted Constitutions, their Governments being entirely remodelled. This plan was carried out by the Imperial Statute of 1867. By the 91st section a general power was given to the new Parliament of Canada to make laws for the peace, order, and good government of Canada without restriction to specific subjects, and excepting only the subjects specifically and exclusively assigned to the Provincial Legislatures by sec. 92. There followed an enumeration of sub- jects which were to be dealt with by the Dominion Parliament, but this enumeration was not to restrict the generality of the power conferred on it. The Act, therefore, departs widely from the true federal model adopted in the Constitution of the United States, the tenth amendment to which declares that the powers not delegated to the United States by the Constitution, nor pro- hibited by it to the States, are reserved to the States respectively or to their people. Of the Canadian Constitution the true view appears, therefore, to be that, although it was founded on the Quebee Resolutions and so must be accepted as a treaty of union among the then Provinces, yet when once enacted by the Imperial Parliament it constituted a fresh departure, and established new Dominion and Provincial Governments with defined powers and duties both derived from the Act of the Imperial Parliament which was their legal source. In fashioning the Constitution of the Commonwealth of Aus- tralia the principle established by the United States was adopted in preference to that chosen by Canada. It is a matter of historical knowledge that in Australia the work of fashioning the future Constitution was one which occupied years of prepara- tion through the medium of conventions and conferences in which the most distinguished statesmen of Australia took part. Alternative systems were discussed and weighed against each other with minute care. The Act of 1900 must accordingly be 17 C.L.R.] OF AUSTRALIA. regarded as an instrument which was fashioned with great deliberation, and if there is at points obscurity in its language, this may be taken to be due not to any uncertainty as to the adoption of the stricter form of federal principle, but to that difficulty in obtaining ready agreement about phrases which attends the drafting of legislative measures by large assemblages. Their Lordships will now examine the Commonwealth of Aus- tralia Constitution Act in the light of these observations with a view to answering the question whether the Royal Commissions Acts of the Australian Parliaments were within the powers which by this instrument were transferred by the federating Colonies to the new Central Parliament. It is plain that excepting in so far as such powers were so transferred they remained exclusively vested in the States. his results not merely from the broad principle laid down in see. 51, to which reference will presently be made, but from see. 107, which enacts that "every power of the Par- liament of a Colony which has become or becomes a State, shall, unless it is by this Constitution exclusively vested in the Parliament of the Commonwealth or withdrawn from the Parlia- ment of the State, continue as at the establishment of the Commonwealth, or of the admission or establishment of the State, as the ease may be." At the time of federation the federating Colonies possessed full power', delegated to them by the Imperial Parliament, of legislating for the peace, order, and good government of their people. It is clear that the powers which the Royal Commissions Acts affect to exercise, of imposing, under penalties, new duties on the subjects or people residing within the individual States, were before federation vested in the legislatures of these States. If so, the burden rests on those who aflirm that the capacity to pass these Acts was put within the powers of the Commonwealth Parliament to show that this was done. In order to see whether this burden ean be discharged, it is necessary to look closely at the wording of sec.51. The section commences by declaring that the Parliament of the Common- wealth shall, subject to the new Constitution, have power to make laws for the peace, order, and good government of the Com- monwealth. But this power is not conferred in general terms. It is, unlike the corresponding power conferred by sec. 91 of the Privy CounctL. 1913. —~ ATToORNEY- GENERAL FOR THE Common- WEALTH v. CoLoNiaL Sucar Rerininc Co. Lrp. Privy Councrn. FOR THE Common- WEALTH e CoronrAL Sucar ReErininc Co, Lap. HIGH COURT (1913. Canadian Constitution Act of 1867, restricted by the words which immediately follow it. These words are " with respect to," and then follows a list of enumerated specific subjects. Their Lordships have already referred to the material heads in this list. None of them relate to that general control over the liberty of the subject which must be shown to be transferred if it is to be regarded as vested in the Commonwealth, It is of course true that under the section the Commonwealth Parliament may legis- late about certain forms of trade, about bounties and statistics, and trading corporations. Such legislation might possibly take the shape of Statutes requiring and compelling the giving of information about these subjects specifically. But this is not what the Royal Commissions Acts purport to do. Their scope is not restricted to any particular subject of legislation or inquiry, and no legislation has actually been passed dealing with specific subjects such as those to which their Lordships have referred as matters to which legislation might have been directed giving sanction to some of the inquiries which the Royal Commissioners are now making. And the field of the Royal Commissions Acts —which are to apply to any Royal Commission, whether issued under statutory authority or under the Common law powers of the Crown—goes far beyond any of the first thirty-six of the classes of subjects enumerated in the section. It was held by Isaacs J. and Higgins J. that the inquiries directed by the Commission might well be relevant to the question of the desir- ability of a change of the Constitution which might take place either under the express provisions of sec. 128 by special legislation passed under certain conditions and approved after a referendum in the States, or possibly under sub-head xxxviii. of see. 51, which enables the exercise by this Commonwealth, at the request or with the concurrence of the Parliaments of all the States directly concerned, of any power which could at the establishment of the Constitution be exercised only by the Parliament of the United Kingdom or the Federal Council of Australia. But their Lord- ships think that the answer to this argument given in the judgments of the Chief Justice and of Barton J. is conclusive. No such power of changing the Constitution, and thereby bringing new subjects within the legislative authority of the