CONSTITUTIONAL LAW – appeal from a single judge of the Federal Court of Australia – whether the primary judge erred in holding that State laws restricting native vegetation clearance did not effect an acquisition of property within the meaning of s 51(xxxi) of the Constitution – whether the primary judge erred in holding that the appellant’s property had not been acquired by joint action of the Commonwealth and NSW State governments – whether the Commonwealth was unjustly enriched by any acquisition of the appellant’s property – whether the State of NSW had trespassed on the appellant’s property and was liable to him in an action on the case
PRACTICE AND PROCEDURE – application to adduce further evidence under s 27 of the Federal Court of Australia Act 1976 (Cth) in circumstances where the evidence was not adduced below – whether the respondents would suffer prejudice if the new material was admitted into evidence
Held: appeal dismissed – application to adduce further evidence dismissed
Convention of Biological Diversity. Opened for signature 4 June 1992, 1760 UNTS 79 (entered into force 29 December 1993)
Kyoto Protocol to the United Nations Framework Convention on Climate Change. Opened for signature 16 March 1998. 2303 UNTS 162 arts 3.3, 3.7, 5, 7. (entered into force 16 February 2005)
United Nations Framework Convention on Climate Change. Opened for signature 4 June 1992, 1771 UNTS 107 (entered into force 21 March 1994)
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Spencer v Commonwealth [2018] FCAFC 17
Case
[2018] FCAFC 17
Decision Date
CaseChat Overview and Summary
In the case of Spencer v Commonwealth, the appellant contested the legality of state laws restricting native vegetation clearance and the constitutionality of the Commonwealth's involvement. The dispute centred on whether these laws amounted to an acquisition of property under section 51(xxxi) of the Constitution, and whether the Commonwealth and the State of New South Wales had acted jointly to acquire the appellant's property. The court was also required to determine whether the Commonwealth was unjustly enriched by any acquisition of the appellant's property, and whether the State of New South Wales had trespassed on the appellant's property, making it liable in an action on the case. The primary judge held that the state laws did not effect an acquisition of property, and that the Commonwealth and the State had not acted jointly to acquire the appellant's property. The appellant appealed this decision, arguing that the Commonwealth's benefit from the carbon credits earned by Australia due to the vegetation laws amounted to a proprietary interest.
The court held that the primary judge's findings were correct. The court found that the appellant had failed to establish the existence of any informal arrangement or agreement between the Commonwealth and the State in 1997 and extended or continued in 2003, aimed at the Commonwealth meeting its Kyoto Protocol targets. The court also held that the benefit to the Commonwealth of the prohibitions on clearance of native vegetation was not of a proprietary character and, accordingly, could not constitute an acquisition. The court further held that the Commonwealth's benefit from the carbon credits earned by Australia due to the vegetation laws did not amount to a proprietary interest. The appeal was dismissed, and the application to adduce further evidence was also dismissed. The parties were required to agree on orders within 21 days, or file and serve written submissions if they could not reach an agreement. Final orders would then be determined on the papers and without a further oral hearing.
Orders
Orders of the court
1. The appeal be dismissed.
2. Within 21 days hereof, the parties should seek to agree orders which otherwise give effect to these reasons. If they are unable to reach agreement, including on costs and whether there should be lump sum costs orders, each should file and serve within that time an outline of written submissions not exceeding 10 pages in support of their respective proposed orders. Final orders will then be determined on the papers and without a further oral hearing.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
In Mr Spencer’s submission, the finding that the operation of the vegetation laws was “speculative” misconceived the way that the Kyoto Protocol operates and is inconsistent with admissions by the Commonwealth. In his submission, the finding wrongly assumed that, unless actual clearing of the land takes place, there can be no benefit conferred upon the Commonwealth. This was because, under the national carbon accounting system which was brought into effect by the National Greenhouse Response Strategy adopted in 1992, the benefits to the Commonwealth in carbon credits from banning land clearing counted as a credit to Australia under Art 3 of the Kyoto Protocol. Thus Mr Spencer submitted that the effect of Art 3.3 and Art 3.7 of the Kyoto Protocol with respect to land use or land use claims is that carbon credits are not conferred where land is cleared but rather where land is not cleared. The credit is, in other words, an abatement credit. Accordingly, a change in the use of land by reason of a prohibition upon clearing has the result that the Commonwealth earns carbon credits. But for those bans on lands, Australia would have been unable to meet its commitment. Thus Mr Spencer submitted that a very significant benefit of a proprietary nature accrued by reason of the vegetation laws banning land clearing, being the carbon credits earned by Australia which saved Australia many billions of dollars. (b) Mr Spencer’s application to adduce further evidence Counsel for the appellant focused upon the last sentence of this passage, submitting that: That wasn’t the case. That isn’t the case. It’s true that perhaps Mr Spencer got slightly emotional – who knows, I wasn’t there – but the case is not about an improper, inappropriate, unlawful collusion or a conspiracy. The case is about something quite different. It’s about what Latham CJ in Magennis said is joint action. That’s all you have to prove. Was there any joint action between the Commonwealth and the State for the purpose, which is admitted in our favour, for the Commonwealth has power to make laws, for the act which had the consequence of an acquisition of property? However, the appellant’s submission that the primary judge fell into error in posing a test of “unlawful, collusion or conspiracy” is based upon a misreading of the last sentence at [371] (as Griffiths and Rangiah JJ also hold at [209]). The primary judge was not in this passage articulating a principle or test, but rather was rejecting the case of “unlawful, collusion or conspiracy” put by Mr Spencer at trial. So much is apparent from her Honour’s reference to such conduct “of the kind Mr Spencer foreshadowed”. Secondly, for reasons previously given, the appellant’s submission that it is sufficient to establish “joint action” by the Commonwealth and the State resulting in the State acquiring property on other than just terms must be rejected: see above at [343] – [357]. Section 51(xxxi) will not be engaged unless the terms and conditions of the grant of financial assistance by the Commonwealth require the State to acquire property otherwise than on just terms. As such, her Honour correctly held that where the federal law or agreement leave a choice to the State as to the terms of its legislation, the federal law and intergovernmental agreement will not be invalid notwithstanding that the State may then enact laws acquiring property without just terms. That being so, there is no basis for holding that in the case of an informal agreement or arrangement, something less, whether joint action or some other test, could suffice to engage the constitutional guarantee.
Decision
Reasons for decision
The appellant’s submissions did not seek to address this difficulty in any meaningful way. As Mr Lancaster SC for the Commonwealth submitted, the chronological problems identified by her Honour provide a further and powerful reason as to why the contention as to the existence of the alleged informal arrangement could not succeed. Indeed, as her Honour observed at [603], it is this difficulty in the chronology, and the lack of prominence of matters relating to climate change in the four intergovernmental agreements, which appear to have prompted the appellant to rely on an alleged “informal” arrangement as the source of the alleged intended acquisition of his property in order to contribute to the Commonwealth meeting its Kyoto Protocol targets.3.5.3Conclusion on the alleged informal arrangement between the State and the Commonwealth For the reasons set out above, the primary judge correctly held at [604] that Mr Spencer had failed to establish the existence of any informal arrangement or agreement in 1997 and extended or continued in 2003 between the Commonwealth and NSW in order for the Commonwealth to meet its Kyoto Protocol targets. Rather, as the primary judge held, the evidence went no higher than demonstrating consideration at the federal and State levels of the problems arising from climate change and greenhouse emissions as far back as the early 1990’s and about which both governments were co-operating (at [603]; see also at [371]). This does not suffice to establish the alleged connection between an intended acquisition of Mr Spencer’s property in order to contribute to the Commonwealth’s compliance with its Kyoto Protocol targets, as the primary judge held. In this regard, I also accept that the State legislation after SEPP 46 and, in particular, the NV Act 2003, revealed a considerable shift in emphasis. I further agree that this was consistent with the objectives of the two Commonwealth laws and the intergovernmental agreements with respect to the increased prominence to be given to the clearing of native vegetation and negotiations as to the matters to be addressed legislatively by the State (Spencer below at [323]-[324]). That notwithstanding, the steps leading to the enactment of the NV Act 2003 demonstrate unequivocally that it was “a NSW process": see above at [286]-[319] and in particular at [301]-[306] and [310]-[316]. As the primary judge held: 324. … There was a joint federal and state determination, albeit arrived at through different and independent processes and inquiries, to halt native vegetation clearance and encourage revegetation. Effects on landholders were recognised, and the need to bring landholders on board with reforms formed part of the delivery of these reforms. The likelihood of adverse impacts on some farmers being sufficiently serious to warrant “structural adjustment”, or compensation by way of the State purchasing properties, was recognised expressly in the two Salinity Agreements and by the reports leading to the state legislative reforms. It seems an obvious inference to draw from the terms and context of the 1997 and 2003 NHT Agreements that the Commonwealth recognised the State may choose to put such structural adjustments programs in place.
Ratio Decidendi
Legal Principle Established
A carbon sequestration right is defined to mean: carbon sequestration right, in relation to land, means a right conferred on a person by agreement or otherwise to the legal, commercial or other benefit (whether present or future) of carbon sequestration by any existing or future tree or forest on the land after 1990. Thus, Mr King submitted that because the definition extends to rights “conferred by agreement or otherwise” (emphasis added), it included a right conferred by statute, being the right to enter and maintain a crop of trees on Mr Spencer’s land which, in turn, falls within the definition of a “forestry right” in s 87A, namely: forestry right, in relation to land, means: (a)an interest in the land pursuant to which a person having the benefit of the interest is entitled: (i)to enter the land and establish, maintain and harvest (or to maintain and harvest) a crop of trees on the land, or (ii)to enter the land and establish, maintain and harvest (or to maintain and harvest) a crop of trees on the land and to construct and use such buildings, works and facilities as may be necessary or convenient to enable the person to establish, maintain and harvest the crop, or (b) a carbon sequestration right in respect of the land, or (c) a combination of the interest and right referred to in paragraphs (a) and (b). Mr King in turn relied upon s 88AB of the Conveyancing Act which provided that:(1) A forestry right shall, for all purposes, be deemed to be a profit à prendre.(2)If a forestry right consists in whole or in part of a carbon sequestration right, the profit à prendre deemed to exist by subsection (1) in relation to the carbon sequestration right consists of the following: (a)the profit from the land is taken to be the legal, commercial or other benefit (whether present or future) of carbon sequestration by any existing or future tree or forest on the land that is the subject of the carbon sequestration right,(b)the right to take something from the land is taken to be the right to the benefit conferred by the carbon sequestration right. As such, Mr King submitted that the right was registrable under the Real Property Act 1900 (NSW). Furthermore, as the definition of “carbon sequestration right” refers to rights of carbon sequestration “by any existing or future tree or forest on the land after 1990” (emphasis added), Mr King submitted that the definition “links it straight to the UNFCCC and the Kyoto Protocol, all dating from 1 January 1990. So that’s how it all marries together. Native Vegetation Acts mention the same date”. Mr Spencer took issue with the primary judge’s findings at [580]-[581], where her Honour said the benefit to the Commonwealth of the prohibitions on clearance of native vegetation was not of a proprietary character and accordingly, on the current state of authority, could not constitute an acquisition. Mr King submitted that the finding of a benefit or advantage to the Commonwealth in terms of compliance with the Kyoto Protocol by reason of the vegetation clearing laws was sufficient for Mr Spencer to succeed on the ground that there was an acquisition. That benefit was said to be in substance a profit-à-prendre. It was not necessary, in his submission, for the international rights to be incorporated into domestic law because they have an economic and measurable advantage for the Commonwealth which suffices to establish that they constitute a proprietary interest.