Shipowners' Liability for Accidents to Seamen.

The ship Burwah owned by the Australian Steamships Ltd., left Sydney on the 7th May 1913, on an inter-state voyage. The second mate, W. Malcolm, lost his life at sea on that date by an accident arising, it was conceded, out of and in the course of his employment. His widow brought an action in the District Court, Sydney, against his employers, under the Commonwealth Seamen's Compensation Act 1911, to recover compensation.

It appeared from the evidence that William Malcolm fell overboard from the Burwah at a spot which was outside the territorial limits of the Commonwealth, and was drowned. The only material defence was that the Seamen's Compensation Act 1911 was invalid as not being within the powers conferred upon the Federal Parliament under the Commonwealth Constitution. The District Court Judge having given judgment for the plaintiff for £500 the defendants now appeal to the High Court on the ground of the invalidity of the Seamen's Compensation Act 1911.

Extension of Commerce Power.

The validity of the Act giving compensation to seamen meeting with accidents arising out of and in the course of their employment, whilst engaged in inter-state or external commerce, was sustained by a majority of the High Court, ISAACS, GAVAN DUFFY, POWERS and RICH, JJ. (GRIFFITH, C.J. and BARTON, J. dissenting).

In delivering judgment, Mr. Justice ISAACS said: The trade and commerce power is expressly declared by section 98 to extend to navigation and shipping,' which are limited, of course, to inter-state or foreign operations. That in itself, is, in my opinion, an ample basis to support the legislation. As trade and commerce with other countries, and a greater part of mercantile inter-state trade, would in itself necessarily involve carriage by means of ships, it is difficult to see how the declaration of extension to navigation and shipping has any substantial meaning unless the subject matter of navigation and shipping, so far as concerns foreign and inter-state traffic, is to be included in the trade and commerce controllable by the Commonwealth. Continuing His Honor said:

The test of the contents of the words navigation' and ` shipping' is what they ordinarily meant in the systems of law in Australia at the time of Federation. The test has several times been applied by this Court, and has the concurrence of the Privy Council

in a similar case (In re Marriage Legislation in Canada). The English Merchant Shipping Acts which applied here and the local statute on navigation and shipping ranged over an area which, in principle, includes the matters said to be outside the ambit of power." His Honor referred to the 6th proposition in the Second Employers' Liability Cases, 223 U.S., at p. 47, which reads as follows: The duties of common carriers in respect of the safety of their employees, while both are engaged in commerce among the States, and the liability of the former for injuries sustained by the latter, while both are so engaged, have a real or substantial relation to such commerce, and therefore are within the range of this power."

"Now it is evident to me," said His Honor, "that to leave outside the sphere of control, with respect to inter-state and foreign trade and commerce, all but the mere act of supply of commodity or service would practically nullify the power. Limiting my observations to present purposes, the class of vehicle to be employed to appliances necessary for safety, the classes of individuals to be employed either in relation to race, language, age or sex, and perhaps to some extent the contractual rights and obligations of the carrier and the public, would all be outside the power. But if not, then it is not easy to see why any modification of common law or statute law affecting the relations of employer and employee, while engaged in co-operating in the trade and commerce, so as to conduce really or substantially to affect the service rendered to passengers or to shippers, is not part of the necessary control of the subject. If, for instance, a physical bar habitually stood on a ship between the sailors and the passengers so as to prevent timely aid in a moment of danger, no one would dispute the right of the Commonwealth Parliament to require its removal. And if the State law -whether common law or statute law-so restricted a sailor's right to compensation in case of accident as to morally but most effectively act upon human nature by deterring him from rendering prompt and ready aid, it would, as I conceive be no less an obstacle to the desired conduct of the trade and commerce placed under Federal control. And if a physical obstacle can be removed, an incorporeal obstacle operating at times even more effectually on human nature may also be removed, and facilities may with equal authority be created: 19 C.L.R.. at p. 331.

His Honor went on to say :

Of course, since the cases sustain concrete legislation which makes negligence the ground of

liability it could not be disputed that so much was within the power of Congress. But I can find no statement of principle that negligence is the limit of legislative power. The inference I would draw from such cases as Seaboard Air Line v. Horton, 233 U.S., 492, and Illinois Central Railroad Company v. Behrens, 233 U.S., 473, is to the contrary. The power of the Commonwealth Parliament is to regulate a subject and negligence is not that subject. Navigation and shipping in relation to inter-state and foreign commerce is part of the subject. If so, it is impossible to exclude the authority to legislate for compensation merely because it is irrespective of negligence. For negligence full damages are recoverable. accidental injury the damages are limited-that is, the losses shared. Whether this is prudential or advisable is a matter of Parliamentary discretion, but the root of the matter is now an accepted economic position, and is this: The relations of employers and employees in the actual conduct of inter-state and foreign commerce are the relations of essential, connected and closely related parts of the same mechanism." 19 C.L.R., at P. 332.

In concurring with the judgment of the majority of the Court, Mr. Justice POWERS said he did not think it necessary to decide in this case whether the opinion expressed by the High Court in the Railway Servants' Case that "general conditions of employment " are not of such a character as to be included within the power of the Commonwealth Parliament to regulate inter-state trade and commerce the effect of them upon that commerce not being direct, substantial and proximate-is sound or not.

Continuing, His Honor said :- It was contended on behalf of the appellants that the words ' extends to navigation and shipping were surplusage that the Imperial Parliament had used the words quite unnecessarily and that no additional power was intended to be given or was given to the Commonwealth Parliament by the use of the words. That contention I do not adopt. I agree with the contention put forward by Mr. Leverrier, counsel for the Commonwealth, namely, that the words navigation and shipping' were used in section 98 to enable the Commonwealth Parliament to do all that could be done by the grant of the power to deal with navigation and shipping in the widest sense, so far as it was part of or used in connection with inter-state commerce. Further I hold that the legislation in question comes within the sixth proposition laid down in Second Employers' Liability Cases quoted by my

learned colleagues :- The duties of common carriers in respect of the safety of their employees, while both are engaged in commerce among the States and the liability of the former for injuries sustained by the latter while both are so engaged, have a real or substantial relation to such commerce and are therefore within the range of this power. Per POWERS, J., 19 C.L.R., at pp. 337-340.

Commonwealth not to give preference.

99. The Commonwealth shall not, by any law or regulation of trade, commerce, or revenue, give preference 169 to one State or any part thereof over another State or any part thereof.

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§ 169. PREFERENCE TO ONE STATE."

Exemptions from Federal Excise Tax.

The proviso to section 2 of the Excise Tariff 1906 (No. 16). exempts from taxation goods which are manufactured by any person in any part of the Commonwealth under certain conditions as to the remuneration of labour. These conditions are divided into four categories:-(a), (b), (c), (d). From these conditions it appears that the legislature not only purported to authorize the prescribing of conditions reasonable according to the circumstances of locality, but intended, and indeed prescribed, that discrimination according to locality might be made. Any other rule would be manifestly unjust. Yet this is the thing which, so far as regards liability to taxation, is prohibited by the words under consideration. It was suggested that, though the Act thus authorizes discrimination between States and parts of States, it does not itself discriminate, since, it is said, the conditions actually prescribed by any or all of the specified authorities might in fact be identical throughout the Commonwealth. The legislature may in some cases delegate the power of fixing the incidence of taxation: Powell v. Apollo Candle Co., 10 App. Cas.. 282, but it would be a strange thing to hold that, while it cannot itself discriminate between localities, it can, by delegation, confer power to make such discrimination. If different rates had been fixed by the divers authorities, or by the same authority as to different localities, what would be the conditions to be observed by a manufacturer? Might he claim the benefit of the lowest rate of wages fixed for the time being in any part of the Commonwealth? If so, every authority would, in effect, have

power to over-rule the decisions of every other authority. It is not conceivable that such a result was intended. It is clear that Parliament cannot by delegation do that which it is forbidden to do directly. It follows that, if there were no other objection to the Act in question, it would be invalid as transgressing the provisions of section 51 (II.) and section 99 of the Constitution: High Court judgment in The King v. Barger, (1908) 6 C.L.R., at p. 80.

Different rates of pay in different States.

In the Federated Saw Mill Case, 8 C.L.R., 468, the schedule of wages submitted by the claimants to the employers, and rejected, contained an additional 15 per cent. claimed for the employees in Western Australia, in these words :-" West Australia-15 per cent. to be added on above rates for extra cost of living." The question submitted by the President for the opinion of the High Court was : -Has the Council and Arbitration Court power to make any enforceable award so far as regards the Western Australian employees? An attempt was made to show that the power of awarding, in settlement of the dispute, different rates of wages or other differing conditions of employment would be in violation of section 99 of the Constitution. But the argument was not seriously pressed. It is plain that a direction as to such wages or conditions in an award is not a law or regulation of trade" or "commerce giving preference to one State or any part thereof over another State or any part thereof," and cannot therefore be within the prohibition of that section. Per O'CONNOR. J. in the Federated Saw Mill &c. Employees of Australasia v. James Moore & Son Proprietary Limited, (1909) C.L.R., at p. 507.

Mr. Justice ISAACS said:- I should not omit to notice one further contention based on section 99 of the Constitution, viz., that the Act was a regulation of trade and commerce, which gives preference to one State over another. In my opinion it is not a regulation of trade and commerce: see United States v. E. C. Knight & Co., 156 U.S., 1: 8 C.L.R., at p. 539.

Nor abridge right to use water.

100. The Commonwealth shall not, by any law or regulation of trade or commerce, abridge the right of a State or of the residents therein to the reasonable use of the waters of rivers 170 for conservation or irrigation.