Property Acquisition & Just Terms

Acquisition of Property on Just Terms

• Section 51(xxxi) of the Australian Constitution empowers the Parliament to make laws for the peace, order, and good government of the Commonwealth
• This power extends to the acquisition of property on just terms from any State or person
• The acquisition must be for purposes that the Parliament has the power to legislate on
• Commonwealth's power is limited to making laws regarding the acquisition of property
• Laws must be on just terms, and only for purposes the Parliament can legislate for

Common Law and Property Rights

• The Magna Carta (1215) states that it is against the law to seize a man's land
• Common law has regard for private property, and avoids violation of it
• The legislature cannot strip someone of their property in an arbitrary manner
• Should a person be indemnified fully for any injuries sustained to personal property

Interstate Trade

• Section 51 of the Constitution also gives the Parliament power over trade and commerce with other countries and among the States
• Section 92 declares trade, commerce, and intercourse among the States shall be absolutely free, ensuring free movement across state borders

Juridical Categories

• Liberty ("right") refers to:
  • Freedom in relation to a particular action or thing (X)
  • Absence of duty
• Duty is:
  • Obligation in relation to X
  • Absence of liberty
• Power ("right") involves:
  • Capacity in relation to duties and liberties
  • Absence of immunity
• Immunity ("right") features:
  • Lack of capacity in relation to duties and liberties
  • Absence of power

'Acquisition of Property on Just Terms' - Compound vs. Dual Provision

• Acquisition-of-property-on-just-terms includes legislation must be 'with respect to' full conception
• The High Court case Grace Bros Pty Ltd v Commonwealth (1946) at 290 (Dixon J) ruled on this
• Dual provision includes:
  • Power to acquire property
  • Right to just terms

Nature of the Right

• Acquisition of property must be on just terms
• Acquisition includes a right against the acquisition of property
• Bank of NSW v Cth (1948) relates to this
• "A constitutional guarantee of just terms" needs to be construed liberally
• Clunies-Ross v Cth (1984), at 201-2 relates to this

Consequences of Invalidity

• If an acquisition is invalid, it is unauthorized by law
• Unauthorized acquisition may involve trespass to land or conversion of personal property
• Damages may be awarded, in the form of compensation
• Dalziel (1944), at 290-291 per Starke J relates to this
• Damages can be recovered before the High Court in its original jurisdiction per Constitution, s 75(iii)

Acquisition by Agreement

• Section 51(xxxi) does not apply when property is acquired by agreement
• Property owner can set the price
• Just terms are not required in the event of compulsory acquisition of property
• Trade Practices Commission v Tooth (1979) at 417-18 (Stephen J) and Cooke v Cth (1924) at 282 relate to this

Acquisition Under Other Heads of Power

• An incidental power to acquire property without just terms may exist under Section 51
• Taxation imposed on income or property
• Penalty for breach of a legal duty
• Confiscation of prohibited goods or enemy property
• Sequestration of property of a bankrupt person

Acquisition Under State and Territory Legislation

• The states have legislative powers and hold plenary and unlimited power to acquire property
• Durham Holdings Pty Ltd v New South Wales (2001) applies here
• States apply State legislation
• Acquisition of Land Act 1967 (Qld) applies here
• Territory have legislative powers under s 122
• Teori Tau v Cth (1969) 119 CLR 564, Newcrest Mining (WA) Ltd v Cth (1997) 190 CLR 513, Wurridjal v Commonwealth (2009) 237 CLR 309 and Commonwealth v Yunupingu (Gumatj Clan) [2025] HCA 6 apply here
• Grants to states is regulated by Cth legislation (ss 96 and51(xxxvi))
• ICM Agriculture Pty Ltd v Commonwealth (2009) applies here

Four Elements of the Acquisition Power

• 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

'Acquisition of Property' Defined

• Acquisition includes permanent, temporary, or indefinite transfers
• Acquisition includes transfer of title, exclusive possession, or effective control
• Acquisition includes compulsory purchase
• Property includes interests in land, personal property and choses in action recognized at law or equity
• Property includes innominate and anomalous interests

Minister of State for the Army v Dalziel (1944) Case

• National Security Act gives Cth possession up to six months after the end of the war
• National Security Regulations, rr 54, 60H, authorized Cth 'exclusive possession'
• Compensation Board was to asess compensation but exclude loss of profits
• Bank of NSW owned vacant land in Sydney, run a car park, leased weekly to Dalziel
• Cth took indefinite exclusive possession, compensation included payment of rent, no loss of profits

Dalziel (1944) Reasoning and Result

• Cth's exclusive possession was deemed an 'acquisition of property' under r 54
• Rule 60H failed to provide 'just terms', providing arbitrary executive discretion to amount of compensation, to be paid
• Rich J quoted 'sovereignty' and 'eminent domain', and the need to protect citizens

Bank Nationalization (1948) Case

• Banking Act 1947 (Cth) was decreed
• Existing bank directors gave up work and new directors appointed to manage bank
• Australian shares of banks vested in the Commonwealth Bank via Gazettal notice, where Cth Bank was ordered to pay fair and reasonable compensation
• Assets of banks transferred to the Cth Bank
• Compensation for shares, assets, and transfers were assessed by a Court of Claims with exclusive jurisdiction

Arguments in the Bank Nationalization (1948) Case

• The Act was not related to 'banking' under s 51(viii), due to it completely eliminating banking
• Act was contrary to s 92
• Act amounted to acquisition of property by only just terms
• A 'circuitous device' was how property was acquired
• Jurisdiction of claims was ousting high court via constitution

Effect of the Bank Nationalization (1948) Legislation

• The appointment of new directors allowed Cth control and full disposal of assets
• Shareholders retained shares but lost control
• A 'circuitous device acquired a proprietary interest
• Exclusive jurisdiction of the Court of Claims ousts that of the HCA
• No valid compensation shares or assets was decreed

Forms of 'Property' - Relevant Cases

• Confidential information (yes) - Smith Kline (1990)
• Social security rights (no) - Peverill (1994)
• Choses in action (yes) - Georgiadis (1994)
• Mining tenements/rights (yes) - Newcrest (1997)
• Aboriginal land conferred under statute (yes) - Wurridjal (2009)
• Native title recognised by common law (yes) - Yunupingu (2025)

'Acquisition' and 'Taking'

• U.S. Fifth Amendment - Private property shall not be taken, for public use, and without just compensation
• There are regulatory takings
• Section 51(xxxi) deals with 'acquisition of property', in which property must be taken from the owner and acquired by someone else
• Acquisition of some 'proprietary' interest
• Requires a direct and measurable benefit
• Not a 'mere extinguishment' of rights

Mere Extinguishment - Relevant Cases

• Prohibition on the exportation of cultural heritage - Waterhouse (1993)
• Requisition of a ship under charter party - Aust United Steam (1945)
• Reduction of broadcast advertising time - ACTV v Cth (1992)
• Extinguishing copyright - Aust Tape Man. (1993)

Tasmanian Dam (1983) Case

• Federal law prevented the Tasmanian Hydro-electric Commission from constructing buildings and clearing trees
• Mason, Murphy & Brennan JJ ruled that mere extinguishment of rights is not acquisition
• Deane J suggested extinguishment of rights which also confers a 'measurable and identifiable benefit’ to someone else
• ...this is akin to a restrictive covenant

Georgiadis (1994) Case

• G sought legal action against Telecom and the Cth for back injuries sustained as an employee
• Compensation (Cth Employees) Act 1977 (Cth) enabled G to claim workers' compensation or seek common law damages
• Commonwealth Employee's Rehabilitation and Compensation Act 1988 (Cth)
• Section 44 extinguished G's common law cause of action

Georgiadis (1994) Reasoning

• s 51(xxxi) "cannot do indirectly" what is forbidden to do directly
• Extinguishment of a vested cause of action will be an 'acquisition'
• Cause of action arises through general law
• There is a direct benefit and financial gain
• The Act extinguished a cause of action at common law, conferring benefit to Cth

Health Insurance Commission v Peverill (1994) Case

• Assigned to medical practitioners: Medicare Scheme, which enables them to be paid by the government for medical services
• Amendment to the Scheme (1991): retrospectively reduced benefits payable for certain pathology services provided by Dr Peverill

Peverill (1994) Reasoning and Result

• Rights in question were (a) statutory in origin and (b) in the nature of welfare benefits
• They were inherently susceptible to variation
• Brennan J suggests there were not 'proprietary'
• Rights were not conducive to repetitive enjoyment, and could not be exchanged or converted to property

Newcrest Mining (1997) Case Facts

• Mining leases at Coronation Hill near Kakadu National Park were owned by Newcrest
• National Parks and Wildlife Conservation Act of 1975 and amending act of 1987
• Prohibits mining in the national park, while excluding the payment of compensation
• Cth extended boundaries of park into areas where Newcrest held leases, in 1989
• Compensation was not provided

Newcrest Mining (1997) Result

• Reciprocal liability between Cth and its land being mined is extinguished, through extension of the Act
• The Commonwealth now had advantage for land, as liability to have minerals extracted from its land no longer existed
• It becomes an acquisition of property

WMC Resources (1998) Case Facts

• WMC held part of a joint venture with a 6 year permit for petroleum in the Timor Gap
• Australian-Indonesian dispute divided the area into three zones, in which zone A rights were to be shared
• Cth Act of 1990 decreed that Zone A was to be excised
• WMC lost its rights but wouldn't have to relinquish half of its blocks
• If WMC could seek compensation in fair terms

WMC Resources (1998) Reasoning

• Rights were conceded to be property in nature, and could be assigned (Cth)
• Brennan CJ and Gaudron J determined Extinguishment of statutory rights
  • Existed because they were proprietary in nature
  • May be an acquisition of property
• Legislative capacity doesn't imply property rights
• Cth had proprietary interest and no reciprocal liability, hence no acquisition

McHugh and Gummon Reasoning - WMC Resources (1998)

• McHugh J decreed rights granted may be altered
• External affairs power must exist here
• Act deems inherent exploration to be modified via 'Congenital infirmity'
• The High Court could not determine existence of acquisition of property
• Toohey and Kirby JJ dissented

JT International SA v Commonwealth (2012)

• Tobacco Plain Packaging Act 2011 legislated use of tobacco products
• All tobacco packaging must be drab dark brown
• Cannot contain trademark
• Must include graphic health warning
• A court case arose, challenging, questioning if this qualified acquisition of property

JT International (2012) Reasoning and Result

• Hayne and Bell JJ: rights had been 'taken', no proprietary interest had been 'acquired'
• No ‘control' over packaging had taken place
• Certain packaging and labelling requirements existed because they were decreed by law
• Heydon J (dissenting) suggest the injustice arises from being uncompensated

Yunupingu (2015) Case

• Gumatj Clan claimed entitlement to compensation under Native Title Act 1993 (Cth) for ‘past acts’
• There were Grants of pastoral leases under Northern Territory (Administration) Act 1910 (Cth)
• Issues arose - Did the just terms requirement in s 51(xxxi) apply to acquisitions of property under s 122?
• Does the commencement of the Native Title Act constitute an acquisition of property
• The grant of a pastoral lease in 1903 did not extinguish native title rights to minerals in the land

Yunupingu Reasoning

• Gordon J stated that native title rights are enduring
• Native title has no analogy between native title and statutory rights
• Native title character is defined by traditional laws and customs
• Statutory rights exist because legislation enables those

Aspects of "Just Terms"

• Just terms includes fair compensation, and natural justice, in the assessment of compensation
• The key cases regarding Just Terms include:
  • Andrews v Howell (1941)
  • Apple and Pear Board v Tonking (1942)
  • Minister of State for the Army v Dalziel (1944)
  • Grace Bros v Cth (1946)
  • Nelungaloo v Cth (1948)

Elements of Natural Justice

• Impartial tribunal
• Opportunity to be heard
• Opportunity to present and answer your own case and defense

Fair Compensation

• US Constitution, Fifth Amendment implies compensation or market value
• Australian Constitution, s 51(xxxi) implies fairness to all people involved (owner and community)

Calculating Compensation

• Market value is the usual starting point (Nelungaloo (1948), at 506, 547)
• Willing buyer and seller can posit compensation when there is no market (Nelungaloo (1948), at 507)
• General statute provides reasonable rules even if unfairness results (Grace Bros (1946))

Purposes

• Acquisition must be for a purpose of which commonwealth laws are enabled
• Relevant purpose cases include:
  • Marketing pools; Andrews v Howell (1941); Tonking (1942)
  • Acquisition merely to deprive the owner of the use of property; Clunies-Ross v Cth (1984)
• The Governor-General conclusively decides purpose with acquisitions
• Blackeley & Co v Cth (1953) concerns acquisitions