Fitti v The Minister for Primary Industries and Energy & Anor; Davey & Anor v The Minister for Primary Industries and Energy

[1994] HCATrans 289

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IN THE HIGH COURT OF AUSTRALIA	•
Office of the Registry

Sydney No Sl93 of 1993

B e t w e e n -

BERARDINO FITTI

Applicant

and

THE MINISTER FOR PRIMARY

INDUSTRIES AND ENERGY AND,

AUSTRALIAN FISHERIES MANAGEMENT

AUTHORITY

Respondents

Office of the Registry

Sydney No S194 of 1993

B e t w e e n -

ALFRED BRUCE DAVEY, AND IAN

BRUCE DAVEY

Applicants

and

THE MINISTER FOR PRIMARY

INDUSTRIES AND ENERGY AND,

AUSTRALIAN FISHERIES MANAGEMENT

AUTHORITY

Respondents

Applications for special leave

to appeal

Fitti 1 22/4/94

MASON CJ DAWSON J

TOOHEY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 22 APRIL 1994, AT 12.44 PM

Copyright in the High Court of Australia

MR R.B.S. MacFARLAN, OC: If the Court pleases, I appear

for the applicant.	(instructed by Thomson Rich
O'Connor)

MR D.J. ROSE; OC:  If the Court pleases, I appear with my

learned friend, Mr P. ROBERTS, for the respondent.

(instructed by the Australian Government Solicitor)

MASON CJ:  Mr MacFarlan, you might direct your argument to

persuading us that if special leave is granted, you

have got sufficient prospects of succeeding.

MR MacFARLAN:  Yes. Yes, indeed. Your Honours, there is no

dispute now, as we perceive it, that the applicants

have or had proprietary interest. So much seems to

have been accepted by the Full Court and seems now

to have been accepted by the respondent.

TOOHEY J:  Do you mean, proprietary rights stemming from the

statute?

MR MacFARLAN:

TOOHEY J: And only that?	Indeed.
MR MacFARLAN:	They had an historical base but we would have

to attribute them solely to the statute, yes.

TOOHEY J: Thank you.

MR MacFARLAN:  They were valuable property rights which

constituted profits a prendre, or something

analogous to that, in respect of the Northern Prawn

Fishery. The central issue, as it became, was

whether the property that the applicants had was

acquired from them, and the Full Court held against

us on two grounds. One was that the property we

had was extinguished rather than acquired; the

other was that the property that we had was

Fitti 2 22/4/94

defeasible only and the Commonwealth had exercised

a right of defeasance, and I will deal with those

separately.

First, the matter of extinguishment. The

effect of the governmental action, Your Honours,

was to deprive the applicants of their profit a

prendre. We would submit that once one finds that

there has been a grant of something which becomes

proprietary, particularly when that right is

purchased, which we say it was in this case, then

its extinguishment by the Commonwealth is enough to

show that there was an acquisition by the

Commonwealth, bearing in mind that it is not

necessary to show a precise identity between what

is lost and what is acquired by the Commonwealth. What had happened, Your Honours, was that

there had been carved out of the Commonwealth's

rights - whether they simply be described as

sovereign rights, or whether they be described as
proprietary rights in respect of this resource -

whatever those rights were there were carved out of

them a proprietary right in favour of the

applicants, then that right was cancelled so as to

remove that proprietary encumbrance upon the

Commonwealth's sovereignty.

TOOHEY J:  I understand the notion, Mr MacFarlan, that

rights were created. Were they created in any

sense against the Commonwealth?

MR MacFARLAN:  We would say they were, yes.

TOOHEY J: In what sense?

MR MacFARLAN:	It fettered the Commonwealth's free use of the resource whilst those rights stood; just as the
Commonwealth might by legislation have created a
mining right, a prospecting right in respect of
certain property, or a lease.
DAWSON J:	So what you say is the property acquired by the

Commonwealth was the right to fish?

MR MacFARLAN: It restored the Commonwealth's full,

unfettered sovereignty and, arguably, proprietary

rights in respect of that resource.

DAWSON J: Sovereignty is not property, is it?

MR MacFARLAN:  Certainly in Harper the view was expressed by

Justice Brennan that sovereignty was something different from a proprietary right. But in the

Submerged Lands case there is support, we would

say, for the view that there is a proprietary

aspect to it. But whatever the rights and wrongs

Fitti 3 22/4/94

of that issue be, we say the position was that by the grant of proprietary rights to the applicants

there was an encumbrance created in a substantial

sense which restricted what the Commonwealth could

do whilst those encumbrances subsisted.

DAWSON J: It is like, you say, a landowner granting a right

of way. If the right of way is then extinguished,

the landowner requires the full measure of the

rights which were encumbered by the right of way.

MR MacFARLAN:  We say that, yes, Your Honour. But could I

draw an analogy to another statutory creature, a

patent. In the Patents Act 1990, as no doubt in

every other form of patent legislation, there is a

section which confers the exclusive right to

exploit the patent upon the patentee. Whilst the

patent is in existence, any right that the

Commonwealth might have in respect of exploitation

of the right in question is inhibited. If it sought to cancel a particular patent then the

sovereign rights would be restored and the

encumbrance removed.

TOOHEY J:	I am having some difficulty in the notion of acquiring, Mr MacFarlan, and particularly in the
light of what is said at the bottom of page 94 and
over the page to 95, about the likely result of
restructuring. What is said there suggests that, in effect, what will happen is that the larger
operators would buy out the smaller operators. In
other words, the market forces will simply dictate
what will happen.  How does that square with the
notion of acquisition by the Commonwealth?

MR MacFARLAN:  There are two aspects. One is that there was

an acquisition by the Commonwealth, and I have

referred to that, and the other is that there is an

acquisition by the remaining operators in the

industry, and perhaps to answer Your Honour's

question I should advert to that. What the

position was was that the applicant's units by the

legislative, or sub-legislative, action were

reduced below the number required to operate their

boats. Their evidence was that they were unable to

buy sufficient units, they were not in a financial

position to buy units to make up the number to

restore their right to operate.

The expressed intent of the Commonwealth by

this action had been to reduce the number of boats

operating in the industry. So this was not an

unexpected consequence. The effect of it was and

is to divide the cake up, so to speak, between a

smaller number of boats and operators. That is,

rights were granted in respect of the valuable

resource, which was the Northern Prawn Fishery.

Fitti 4 22/4/94

The reduction in the number of boats meant that

those remaining, of course, had a larger share of

that resource, and that was the intent of the

legislation in that it was contemplated that they

would be able to earn greater profits. So their

slice of the cake was increased. Their proprietary

interest in the resource was augmented because it

became more valuable because there were fewer boats

amongst whom the resource was to be divided.

So it is not market forces, in our submission,

Your Honour, but rather the direct effect of the legislation as it operates in respect of the applicants in that the consequence of the

legislation could be avoided, at least in a

theoretical sense, by the applicants going out of

the market-place and buying units if they were in a

financial position to do so. In that sense market

forces are relevant. But it is not an answer, we

would say, to a complaint of expropriation without

compensation to say that the person from whom the

property is taken could go out into the market-

place and buy some substitute property which would

put him back in the same position he had been in

before the action was taken.

We submit, Your Honours, that the argument we

proffer is consistent with the majority view in the

recent Georgiadis decision and that the Full Court

decision is inconsistent with that. Your Honours

may recall that in the joint judgment in

Georgiadis, and I am referring to the Australian

Law Report reference, 119 ALR 629, a passage

appears at 634 in the joint judgment at about

line 15, where it said:

Accordingly, "acquisition" in sSl(xxxi)

extends to the extinguishment of a vested

cause of action, at least where the

extinguishment results in a direct benefit or

financial gain (which, of course, includes

liability being brought to an end without

payment or other satisfaction) and the cause

of action is one that arises under the general

law.

We say there is an analogy to the extinguishment of the cause of action - - -

MASON CJ: But there is a problem, is there not, because the

next sentence says:

The position may be different in a case

involving the extinguishment or modification

of a right that has no existence apart from

statute.

Fitti 22/4/94

MR MacFARLAN: Indeed, indeed. That is something that

certainly arises in respect of this, particularly

the second ground upon which the Full Court held

against us.

MASON CJ:  The defeasibility ground.

MR MacFARLAN:  Yes, Your Honour. The notion we would rely

upon in this connection is the reference to

extinguishment resulting in a direct benefit or

financial gain, and we draw an analogy between the
extinguishment of a claim against the Commonwealth,

cause of action, and the position here where the

Commonwealth had fettered the position concerning

this resource. Justice Brennan at 638 said

something to like effect when he spoke, at about

line 26, in this way. He said:

I would hold that, if the plaintiff's rights

against the Commonwealth were proprietary in

nature, the extinguishment of those rights by

s44 would amount to an acquisition of

property.

We therefore say that we find support in that

judgment.

Mr Justice Ryan of the Federal Court found in

the various judgments that were recently published

by this Court support for a similar conclusion.

That was a case, and copies can be made available

if Your Honours wish, in which His Honour held that

a reduction in size of an exploration permit,

issued under the Commonwealth Petroleum (Submerged

Lands) Act, by means of a statutory amendment was

an acquisition within section 5l(xxxi) and it bears

a marked similarity to the present position. It

was a judgment of 14 April 1994. We would submit

that that is some evidence that there is a view,

well able to be held, that Your Honours' decisions

in those recent cases do support the sort of

conclusion for which we here contend.

MASON CJ:  Do you have a copy of that judgment?

MR MacFARLAN:  Yes, indeed. I will hand up four copies.

The relevant conclusions are really to be found,

Your Honours, at pages 56, 58 and 59. Perhaps I

should read a passage at the foot of page 58, new

paragraph:

Once rights in other persons have been

created, the full amplitude of the

Commonwealth's sovereign powers in the

relevant area can only be restored by

extinguishment of those rights. In this

sense, what occurs is more than what Deane J

Fitti 6 22/4/94

in passage quoted above from the Tasmanian Dam Case at 283 called "the mere extinguishment or

deprivation of rights in relation to

property".

There is a quotation from that. His Honour then

goes on to say:

A "mere extinguishment of rights" might

occur, for example, if a law of the

Commonwealth took away from a tenant a

leasehold interest in land but stipulated that

no rights of the reversioner should be

exercisable until the date on which the lease

would have expired. By contrast, the effect

of the Consequential Provisions Act has been

to enlarge or restore the powers of the subject matter to which WMC's rights, which I

have held to be property, attached.

That is, perhaps, the critical sentence in the

judgment and one which we would, with respect,

suggest is correct, that it is a restoration of the
powers of the Commonwealth to deal with the

subject-matter to which, in that case, Western

Mining's rights related.

MASON CJ: It is curious, it is not, because His Honour

comes to that conclusion without actually relying
on Georgiadis, which I would have thought, of the

recent cases, was more supportive of his

proposition than anything that is to be found in

Mutual Pools or Peverill?

MR MacFARLAN:  Yes, that is so, Your Honours, that is so.

He does not refer, either, to the Full Federal

Court d~cision in the matter under appeal. Turning

to the other ground found against us,

defeasibility - - -

MASON CJ: Mr MacFarlan, I think we might adjourn now and we

will resume at 2.00 pm.

AT 1.01 PM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 2.03 PM:

MASON CJ: Yes, Mr MacFarlan?

Fitti 22/4/94

MR MacFARLAN:  If Your Honours please. I was coming to the

point of defeasibility. The Full Court did not

seem to embrace the broad proposition that simply

because the rights in question were conferred by

legislation they could be taken away by

legislation. Rather, the Full Court seemed to

found its decision on the proposition that there

was something in this legislative material which

expressly reserved the right to later withdraw the

rights.

If I could just pause briefly on the broader proposition. That broader proposition, in our

submission, cannot be correct. For example, the

Commonwealth could not simply legislate to withdraw

patent rights, copyright rights, mining rights,

other rights which it had conferred by statute

which had, in one way or another, created
proprietary interests and were not simply
gratuitous statutory entitlements of the sort we

say were the subject of the Peverill decision.

Peverill, in our submission, was a very

different case because there were no property

rights there except such as may have been

_constituted by the chose in action itself. The

statute did not give rise, as it did here, to

property rights in a resource in other property.

Those property rights to which this statute gave rise were ones recognized by the general law and we would submit such as to attract what was said in

Peverill in the joint judgment at page 680, point 5

of the Australian Law Report publication, in the

joint judgment it said:

It is significant that the rights that have

been terminated or diminished are statutory

entitlements to receive payments from
consolidated revenue which were not based on

antecedent proprietary rights recognized by

the general law.

That is not on all fours with the present case

because I do not suggest that there were antecedent

proprietary rights in the sense of proprietary

rights created independently of the statute.

Nevertheless, there were proprietary rights, they

were recognized by the general law and they

subsisted in property over which the Commonwealth

had sovereignty, if not ownership.

TOOHEY J: You do have a hurdle, I think, Mr MacFarlan. If

you look at the top of page 97, and this is in

relation to your submission about regulation, that

the majority saw the units as existing in order to

regulate prawn trawling, and they said:

Fitti 22/4/94

They are a convenient measure of fishing

capacity. The demands of conservation and

economic efficiency ..... necessitate continual adjustments in the regulation of the fishery.

What do you answer to that proposition?

MR MacFARLAN:  One answer is that the present circumstance

has gone beyond regulation. It is the sort of

distinction adverted to by Justice Deane in the

Tasmanian Dams Case. There can be matters of

regulation which do not amount to an acquisition.

This is a wholesale expropriation of the relevant

property. But in any event, whilst we would have

to recognize that the Commonwealth could reserve to

itself the right to take back the property, unless

it does so in the clearest of words, we submit, it

cannot do so even in the name of regulation.	The
Full Court found in the legislation here some

attempt to reserve relevant rights. We say those attempts were wholly insufficient and the type of

principle expounded in the Burland decision in this

case is applicable.

Your Honours may recall that Justice Kitto

said in that case that it was a firmly established

rule of law that a statute will not be read as

authorizing expropriation of a subject's goods

without payment unless an intention to do so is

clearly expressed. The Full Court found in

section 7B of the Fisheries Act some indication of

the reservation of a right, but that was not a

reservation which complied with the requirement

that there be an express statement of a reservation

of a right to expropriate without compensation.

Really, what was relied upon in the

Full Court, in our submission, was a mere side-wind and embodied in, or underlying what, the Full Court

said was really some implicit acceptance of this

broader proposition which, in our submission, just

cannot be right.

There were two other issues. One was simply

this: the ultra vires point is an important one

but a simple one, as we put it, namely, that if the

other elements of section Sl(xxxi) are satisfied,

but it is found that there has been no acquisition

but simply an extinguishment, still one has to

consider the question of ultra vires and the

principle expounded in Burland, to which I have
referred, namely, that it will not readily be
inferred that a statute authorized expropriation

without compensation and, in particular, that will

not be inferred in the absence of express words,

there being no such words in this case.

Fitti 9 22/4/94

The other matter is the particular clause concerning compensation, and I need not add to what

is irt·our written submissions in connection with that. So for those reasons, in our submissions, Your Honours, a grant of special leave should be

made.

MASON CJ: Thank you, Mr MacFarlan. The Court need not

trouble you, Mr Rose.

In the view of the Court, the proposed appeals

do not enjoy sufficient prospects of success to

warrant the grant of special leave to appeal. The

applications are therefore refused.

MR ROSE: With costs?

MASON CJ:  You do not oppose costs, do you, Mr MacFarlan? The applications are refused with costs.

AT 2.11 PM THE MATTER WAS ADJOURNED SINE DIE

Fitti 10 22/4/94