Protections from statutory encroachment

7.31       Property rights find protection in the Australian Constitution, through the principle of legality at common law, and, to some extent, in international law.

Australian Constitution

7.32       The Constitution protects property from one type of interference: acquisitions by the Commonwealth other than ‘on just terms’. Section 51(xxxi) of the Constitution provides that the Commonwealth Parliament may make laws with respect to:

the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws.

7.33       There is no broader constitutional prohibition on the making of laws that interfere with vested property rights. The language of s 51(xxxi) was adapted from the fifth amendment to the United States Constitution. However, the American provision is ‘formulated as a limitation on power’, while the Australian provision is ‘expressed as a grant of power’[47]—to acquire property. Nevertheless, this constitutional protection is significant and is regarded as a constitutional guarantee of property rights.[48] Barwick CJ described s 51(xxxi) as ‘a very great constitutional safeguard’.[49] Because of the potential of invalidity of legislation that may offend s 51(xxxi), express provisions for compensation have been included. In addition to a general statute—the Lands Acquisition Act 1989 (Cth)—a number of specific compensatory provisions have been included in many statutes.[50] There are also ‘fail safe’ provisions,[51] collectively described as ‘historic shipwrecks clauses’, that provide that if the legislation does acquire property other than on just terms, within the meaning of s 51(xxxi), the person from whom the property is acquired is entitled to compensation.[52]

7.34       In ascertaining whether the ‘just terms’ provision of s 51(xxxi) is engaged, four questions arise: is there property; has it been acquired by the Commonwealth; have ‘just terms’ been provided; and is the particular law outside s 51(xxxi) because the notion of fair compensation is ‘irrelevant or incongruous’ and incompatible with the very nature of the exaction.[53]

7.35       The High Court has taken a wide view of the concept of ‘property’ in interpreting s 51(xxxi) of the Constitution, reading it as ‘a general term’: ‘[i]t means any tangible or intangible thing which the law protects under the name of property’.[54] For example, a statute extinguishing a vested cause of action or right to sue the Commonwealth at common law for workplace injuries was treated as an acquisition of property in Georgiadis v AOTC.[55] However, claimants seeking to argue the invalidity of laws under s 51(xxxi) may fail because there was no property right.[56]

7.36       The second question concerns whether there has been an ‘acquisition’ of property in circumstances where a Commonwealth law has an adverse effect on valuable legal rights.

7.37       In JT International SA v Commonwealth, French CJ expanded on the meaning of ‘acquisition’:

Taking involves deprivation of property seen from the perspective of its owner.  Acquisition involves receipt of something seen from the perspective of the acquirer.  Acquisition is therefore not made out by mere extinguishment of rights.[57]

7.38       As Deane and Gaudron JJ said in Mutual Pools & Staff Pty Ltd v Commonwealth:

s 51(xxxi) is directed to ‘acquisition’ as distinct from ‘deprivation’. For there to be an ‘acquisition of property’, there must be an obtaining of at least some identifiable benefit or advantage relating to the ownership or use of property.[58]

7.39       Particular difficulty with the phrase ‘acquisition of property’ has arisen where federal law affects rights and interests which exist not at common law but under other federal law. By s 31 of the Northern Territory National Emergency Response Act 2007 (Cth) (NTNER Act), ‘leases’ to the Commonwealth of land held by Aboriginal peoples under the Aboriginal Land Rights Act 1976 (Cth) were ‘granted’ for five years.[59] In Wurridjal v Commonwealth (Wurridjal) the High Court, by majority, held that the creation of a lease under this section was an ‘acquisition’ of property by the Commonwealth.[60]

7.40       The effect of the High Court authorities was explained by Crennan J:

It can be significant that rights which are diminished by subsequent legislation are statutory entitlements. Where a right which has no existence apart from statute is one that, of its nature, is susceptible to modification, legislation which effects a modification of that right is not necessarily legislation with respect to an acquisition of property within the meaning of s 51(xxxi). It does not follow, however, that all rights which owe their existence to statute are ones which, of their nature, are susceptible to modification, as the contingency of subsequent legislative modification or extinguishment does not automatically remove a statutory right from the scope of s 51(xxxi).

Putting to one side statutory rights which replace existing general law rights, the extent to which a right created by statute may be modified by subsequent legislation without amounting to an acquisition of property under s 51(xxxi) must depend upon the nature of the right created by statute. It may be evident in the express terms of the statute that the right is subject to subsequent statutory variation. It may be clear from the scope of the rights conferred by the statute that what appears to be a new impingement on the rights was in fact always a limitation inherent in those rights. The statutory right may also be a part of a scheme of statutory entitlements which will inevitably require modification over time.[61]

7.41       The third question is about ‘just terms’. In contrasting the provision in the United States Constitution, Blackshield and Williams explains that:

The Fifth Amendment to the United States Constitution requires ‘just compensation’, whereas s 51(xxxi) requires ‘just terms’. While ‘just compensation’ may import equivalence of market value, it is not clear that the phrase ‘just terms’ imports the same requirement. In cases decided in the immediate aftermath of World War II, the Court said that the arrangements offered must be ‘fair’ or such that a legislature could reasonably regard them as ‘fair’ (Nelungaloo Pty Ltd v Commonwealth (1947) 75 CLR 495). Moreover, this judgment of fairness must take account of all the interests affected, not just those of the dispossessed owner.[62]

7.42       In Wurridjal, the NTNER Act excluded the payment of ‘rent’, but did include an ‘historic shipwrecks clause’. Section 60(2) provided that, in the event of there being ‘an acquisition of property to which paragraph 51(xxxi) of the Constitution applies from a person otherwise than on just terms’, the Commonwealth was liable to pay ‘a reasonable amount of compensation’. The provision prevented the potential invalidity of the legislation.

7.43       The fourth question concerns the characterisation of the law. Under this approach, ‘although a law may appear to be one with respect to the acquisition of property, it is properly or relevantly characterised as something else’.[63] As explained in Blackshield and Williams:

From time to time the Court has said that it would be ‘inconsistent’, ‘incongruous’ or ‘irrelevant’ to characterise a government exaction as one that attracts compensation. An obvious example is taxation, which involves the compulsory taking for Commonwealth purposes of a form of property. Because this taking is the very essence of taxation, the express power with respect to taxation in s 51(ii) must obviously extend to this kind of taking; and it follows that such a taking will not be characterised as an ‘acquisition of property’ within the meaning of s 51(xxxi).[64]

7.44       An example of a law that does not attract the just terms provision is that of forfeiture of prohibited goods under Customs Act 1901 (Cth). In Burton v Honan, the High Court held that such a forfeiture was not an acquisition. Dixon CJ said that

[i]t is nothing but forfeiture imposed on all persons in derogation of any rights such persons might otherwise have in relation to the goods, a forfeiture imposed as part of the incidental power for the purpose of vindicating the Customs laws. It has no more to do with the acquisition of property for a purpose in respect of which the Parliament has power to make laws within s 51(xxxi) than has the imposition of taxation itself, or the forfeiture of goods in the hands of the actual offender.[65]

7.45       Stakeholders in this Inquiry put forward arguments concerning s 51(xxxi) in the context of copyright and water rights. Copyright is considered below; water rights in Chapter 8. Contemporary arguments often focus on whether a particular action is a ‘taking’ (‘acquisition’) or a ‘regulation’: the former being amenable to compensation, the latter within the ‘allowance of laws’ acknowledged as the province of government.

Principle of legality

7.46       The principle of legality provides some protection for vested property rights.[66] When interpreting a statute, courts will presume that Parliament did not intend to interfere with vested property rights, unless this intention was made unambiguously clear. As early as 1904, Griffith CJ in Clissold v Perry referred to the rule of construction that statutes ‘are not to be construed as interfering with vested interests unless that intention is manifest’.[67]

7.47       More narrowly, legislation is presumed not to take vested property rights away without compensation. The narrower presumption is useful despite the existence of the constitutional protection because, it is ‘usually appropriate (and often necessary) to consider any arguments of construction of legislation before embarking on challenges to constitutional validity’.[68]

7.48       The general presumption in this context is longstanding and case law suggests that the principle of legality is particularly strong in relation to property rights.[69] The presumption is also described as even stronger as it applies to delegated legislation.[70] The wording of a statute may of course be clear enough to rebut the presumption.[71]

International law

7.49       Article 17 of the UNDHR provides:

(1)     Everyone has the right to own property alone as well as in association with others.

(2)     No one shall be arbitrarily deprived of his property.

7.50       Article 17 is reflected in art 5(d)(v) of the Convention on the Elimination of All Forms of Racial Discrimination (CERD),[72] which guarantees ‘the right of everyone, without distinction as to race, colour, or national or ethnic origin, to equality before the law’ in the exercise of a range of rights, including the ‘right to own property alone as well as in association with others’.

7.51       International instruments cannot be used to ‘override clear and valid provisions of Australian national law’.[73] However, where a statute is ambiguous, courts will generally favour a construction that accords with Australia’s international obligations.[74]

7.52       In Maloney v The Queen the High Court had occasion to consider the effect of art 5(d)(v) of the CERD. The High Court decided that laws that prohibit an Indigenous person from owning alcohol engage the human right to own property, citing the effect of art 5(d)(v) as implemented by the Racial Discrimination Act 1975 (Cth).[75] In that case, the High Court found that s 168B of the Liquor Act 1992 (Qld) was inconsistent with s 10 of the Racial Discrimination Act, which protects equal treatment under the law. However, the High Court upheld the prohibition on alcohol possession as a ‘special measure’ under s 8 of the Racial Discrimination Act and art 1(4) of the CERD designed to protect the residents of Palm Island from the effects of alcoholism.

7.53       The protection of property stated in the UNDHR is a limited one. As Professor Simon Evans has noted ‘the prohibition on arbitrary deprivation is rather more limited than a guarantee of compensation for all deprivations of property’ and the ‘extent of protection afforded by the Universal Declaration in relation to private property ownership is vague at best’.[76]

7.54       Environmental Justice Australia submitted that

Unlike other protected human rights which have a fundamental foundation in the integrity and dignity inherent in every person, particular rights to certain property as they exist at a particular point in time, as opposed to the principle right to ownership of property and against the arbitrary deprivation of that property, enjoy no such status.[77]

7.55       There is no guarantee of property rights in either the International Covenant on Civil or Political Rights (ICCPR) or the International Covenant on Economic, Social and Cultural Rights. Evans has concluded, therefore, that:

At the very least it can be said that a property rights guarantee (of compensation for government action that acquires property rights or deprives a person of property rights) does not reflect a human right recognised under general international law.[78]

Bills of rights

7.56       In some jurisdictions, bills of rights or human rights statutes provide some protection to certain rights and freedoms. Constitutional and ordinary legislation prohibits interference with vested property rights in some jurisdictions, for example the United States,[79] New Zealand[80] and the state of Victoria.[81]

7.57       The European Convention for the Protection of Human Rights and Fundamental Freedoms (European Convention) expressly added a recognition of property interests in Protocol 1, art 1.[82] Headed, ‘Protection of property’, art 1 states:

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.[83]

[47]         Anthony Blackshield and George Williams, Australian Constitutional Law and Theory (Federation Press, 4th ed, 2006) 1274.

[48]         Bank of NSW v Commonwealth (Bank Nationalisation Case) (1948) 76 CLR 1, 349. Dixon J. The provision reflects the ideal enunciated by Blackstone in the 1700s that, where the legislature deprives a person of their property, fair payment should be made: it is to be treated like a purchase of the property at the market value. This provision does not apply to acquisitions by a state: Durham Holdings Pty Ltd v New South Wales (2001) 205 CLR 399. See Ch 8.

[49]         Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397, 403.

[50]         See, eg, Aboriginal Land Rights (Northern Territory) Act 1976 (Cth) ss 12AD, 44A; Australian Capital Territory (Self-Government) Act 1988 (Cth) s 23(1)(a); Copyright Act 1968 (Cth) s 116AAA; Corporations Act 2001 (Cth) s 1350; Designs Act 2003 (Cth) s 106; Lands Acquisition Act 1989 (Cth) s 97; Life Insurance Act 1995 (Cth) s 251; Native Title Act 1993 (Cth) ss 20, 23J; Northern Territory (Self-Government) Act 1978 (Cth) s 50; Patents Act 1990 (Cth) s 171.

[51]         A description by Kirby J in Wurridjal v Commonwealth (2009) 237 CLR 309, 424.

[52]         Historic Shipwrecks Act 1976 (Cth) s 21. This was the first of such clauses, hence the generic description of them by reference to this Act.

[53]         Airservices Australia v Canadian Airlines International (1999) 202 CLR 133, [340]–[341] (McHugh J).

[54]         Minister of State for the Army v Dalziel (1944) 68 CLR 261, 295 (McTiernan J). In the Bank Nationalisation Case, Dixon J said s 51(xxxi) ‘extends to innominate and anomalous interests and includes the assumption and indefinite continuance of exclusive possession and control for the purposes of the Commonwealth of any subject of property’: Bank of NSW v Commonwealth (Bank Nationalisation Case) (1948) 76 CLR 1, 349.

[55]         Georgiadis v AOTC (1994) 179 CLR 297. This was upheld in Commonwealth v Mewett (1997) 191 CLR 471; Smith v ANL Ltd (2000) 204 CLR 493. A majority in Georgiadis v AOTC—Mason CJ, Deane and Gaudron JJ, with Brennan J concurring—held that the Commonwealth acquired a direct benefit or financial gain in the form of a release from liability for damages: see further, Blackshield and Williams, above n 47, 1280. 

[56]         For example, ‘[a] right to receive a benefit to be paid by a statutory authority in discharge of a statutory duty is not susceptible of any form of repetitive or continuing enjoyment and cannot be exchanged or converted into any kind of property ... That is not a right of a proprietary nature’: Health Insurance Commission v Peverill (1994) 179 CLR 226, 243–4 (Brennan J).

[57]         JT International SA v Commonwealth (2012) 250 CLR 1, [42]. In relation to the impact on land see Ch 8.

[58]         Mutual Pools & Staff Pty Ltd v Commonwealth (1993) 179 CLR 155, 184–5.

[59]         Northern Territory National Emergency Response Act 2007 (Cth) s 31(1).

[60]         Wurridjal v Commonwealth (2009) 237 CLR 309, (French CJ, Gummow, Hayne, Kirby and Kiefel JJ, Crennan J dissenting and Heydon J not deciding). The High Court found that adequate compensation for acquisition of property under the NTNER Act was paid to those who had pre-existing rights, title or interests in this land. The High Court also found that Families, Community Services and Indigenous Affairs and Other Legislation Amendment (Northern Territory National Emergency Response and Other Measures) Act 2007 (Cth), which provided that permits for entry onto Aboriginal land and townships were no longer required, provided reasonable compensation for the acquisition of property.

[61]         Ibid [363]–[364]. References omitted.

[62]         George Williams, Sean Brennan and Andrew Lynch, Blackshield and Williams Australian Constitutional Law and Theory (Federation Press, 6th ed, 2014) [27.130].

[63]         Ibid [27.90].

[64]         Ibid [27.92].

[65]         Burton v Honan (1994) 86 CLR 169, 181. Other illustrations are Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270; Theophanous v The Herald and Weekly Times Ltd (1994) 182 CLR 104. See discussion in Williams, Brennan and Lynch, above n 62, 1232–58.

[66]         The principle of statutory interpretation now known as the ‘principle of legality’ is discussed more generally in Ch 1.

[67]         Clissold v Perry (1904) 1 CLR 363, 373.

[68]         Durham Holdings Pty Ltd v New South Wales (2001) 205 CLR 399, [27] (Kirby J). See also Dennis Pearce and Robert Geddes, Statutory Interpretation in Australia (LexisNexis Butterworths, 8th ed, 2014) [5.21]–[5.22].

[69]         ‘This rule certainly applies to the principles of the common law governing the creation and disposition of rights of property. Indeed, there is some ground for thinking that the general rule has added force in its application to common law principles respecting property rights’: American Dairy Queen (Qld) Pty Ltd v Blue Rio Pty Ltd (1981) 147 CLR 677, 683 (Mason J). See also Marshall v Director-General, Department of Transport (2001) 205 CLR 603, [37] (Gaudron J).

[70]         CJ Burland Pty Ltd v Metropolitan Meat Industry Board (1986) 120 CLR 400, 406 (Kitto J). Kitto J was citing Newcastle Breweries Ltd v The King [1920] 1 KB 854. See also UWA v Gray [2008] FCA 498 [87] (French J).

[71]         ASIC v DB Management Pty Ltd (2000) 199 CLR 321, [43].

[72]         International Convention on the Elimination of All Forms of Racial Discrimination, opened for signature 21 December 1965, 660 UNTS 195 (entered into force 4 January 1969).

[73]         Minister for Immigration v B (2004) 219 CLR 365, [171] (Kirby J).

[74]         Minister for Immigration and Ethnic Affairs v Teoh (1995) 183 CLR 273, 287 (Mason CJ and Deane J). The relevance of international law is discussed more generally in Ch 1.

[75]         Maloney v The Queen (2013) 252 CLR 168.

[76]         Simon Evans, ‘Should Australian Bills of Rights Protect Property Rights’ (2006) 31 Alternative  Law Journal 19, 20. Quoting Jonathan Shirley, ‘The Role of International Human Rights and the Law of Diplomatic Protection in Resolving Zimbabwe’s Land Crisis’ (2004) 27 Boston College International & Comparative Law Review 161, 166.

[77]         Environmental Justice Australia, Submission 65.

[78]         Evans, above n 76, 20.

[79]         United States Constitution amend V, the ‘due process’ provision.

[80]         New Zealand Bill of Rights Act 1990 (NZ) s 21.

[81]         Charter of Human Rights and Responsibilities Act 2006 (Vic) s 20.

[82]         European Convention for the Protection of Human Rights and Fundamental Freedoms, opened for signature 4 November 1950, 213 UNTS 221 (entered into force 3 September 1953).

[83]         Emphasis added.