Marine Board of Launceston v Minister of State for the Navy

The Marine Board of Launceston (the applicant) sought compensation from the Minister of State for the Navy (the respondent) for the requisitioning of its tug, the *James Wallace*, under the National Security (General) Regulations. The applicant was dissatisfied with the compensation assessed by a Compensation Board and applied to the High Court for a review. During the review, the compensation was assessed at £24,000, with a progress payment of £8,000 already made. The applicant then claimed an order for interest on the remaining balance from the date of acquisition to the date of payment. A question of law was reserved for the Full Court: whether the Court had the authority or jurisdiction to order the payment of such interest.

The legal issues before the Court were whether the term "compensation" as used in the National Security (General) Regulations, particularly in the context of the constitutional requirement for "just terms" under section 51(xxxi) of the Constitution, encompassed an entitlement to interest on the assessed compensation from the date of acquisition to the date of payment. The Court was required to determine if the jurisdiction conferred by the Regulations to assess compensation extended to ordering the payment of interest, or if such an order was precluded by the specific wording of the Regulations or established legal principles.

A majority of the Court (Rich, Dixon, McTiernan, and Williams JJ.) held that the Court did have the authority to order the payment of interest. Their reasoning was that the constitutional requirement for "just terms" for the acquisition of property necessitated that the owner be placed in as good a position as if their property had not been taken. Where there was a delay in payment, the owner was deprived of both the use of their property and the use of the money that should have been paid. This deprivation, they reasoned, warranted the payment of interest as part of just compensation, drawing an analogy to equitable principles applicable to contracts for the sale of property, such as ships, which are subject to specific performance. The dissenting judges (Latham C.J. and Starke J.) concluded that the Regulations did not grant the Court jurisdiction to award interest, interpreting "compensation" strictly as the value of the property at the time of acquisition and noting that Regulation 60J provided for the Minister's discretion to authorise interest, not a judicial entitlement.

The Court ordered that interest be paid to the Marine Board of Launceston on the balance of compensation from the date of acquisition of the tug to the date of payment.