Spencer v Commonwealth of Australia

[2010] HCATrans 55

[2010] HCATrans 055

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S87 of 2009

B e t w e e n -

PETER JAMES SPENCER

Applicant

and

COMMONWEALTH OF AUSTRALIA

Respondent

Application for special leave to appeal

GUMMOW J
HEYDON J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 MARCH 2010, AT 9.33 AM

Copyright in the High Court of Australia

MR P.E. KING:   If the Court pleases, I appear for the applicant.  (instructed by McKells)

MR A. ROBERTSON, SC:   If it please the Court, I appear with my learned friend, MR C.L. LENEHAN, for the respondent.  (instructed by Australian Government Solicitor)

GUMMOW J:   Yes, Mr King.

MR KING:   Thank you, your Honour.  Your Honours, in the matter of ICM Agriculture Pty Ltd v Commonwealth, decided on 9 December last year, and followed in Arnold v Minister Administering the Water Management Act, decided in February of this year, this Court invigorated the principles that are founded in Magennis v The Commonwealth.  Perhaps the most convenient reference to that principle and that decision can be found at paragraph [45] in the ICM judgment in the joint judgment of the Chief Justice and your Honour Justice Gummow ‑ ‑ ‑

GUMMOW J:   Not just - a bipartite judgment, was it?

MR KING:   ‑ ‑ ‑ paragraph [45] and Justice Crennan – [46].

GUMMOW J:   Yes.

MR KING:   In particular the three considerations that commence at paragraph [43] and following.  Justices Hayne, Kiefel and Bell at paragraph [104] adopted a similar view, although without going into quite the detailed reasoning, and Justice Heydon at paragraph [184] referred to the breadth of the principle.  Your Honours, on 6 May last year the Court stood over the decision in this matter – I beg your pardon, 5 June this year – I have a copy of the order that has been taken out – until after those two decisions are heard and determined.

GUMMOW J:   Yes, we understand how it has come back, Mr King.

MR KING:   Yes, thank you, your Honour.

GUMMOW J:   We have a draft further pleading that you would be seeking to file if you have all the necessary steps in your favour to achieve that.

MR KING:   Thank you.

GUMMOW J:   Can you just help us though?  At page 62 of the application book, which contains the reasons of Justice Emmett, paragraphs 171 and 172, what we want to ask you is, having regard to this further proposed pleading, would it answer the point, if it is a good point, made by Justice Emmett in those paragraphs, in particular, at about line 18:

More specifically, neither of the Commonwealth Statutes expressly requires, or refers to, the imposition of any prohibition . . . There is no apparent connection between the provision of funds . . . and the refusal by officers of New South Wales to grant development consent under –

et cetera.

MR KING:   Yes, there are three answers to that, your Honour.  Firstly, in ICM v Commonwealth where the intergovernmental agreement was authorised by the National Water Commission Act there was no express provision of the type there referred to either.  The effect of the decision in ICM and the determination of the Court was that a suite of laws, cash for laws really, whereby the Commonwealth by arrangements evidenced by the intergovernmental agreement pays the State to pass laws which it otherwise itself could not do except by paying just terms is brought within the constitutional guarantee.  So we respectfully submit that the first point is that the fact that the Commonwealth law itself does not expressly – that is, in terms – authorise an agreement which takes property, does not mean that the principle is not invoked, and there are two reasons for that.

Firstly, as Sir John Latham pointed out in Magennis’ Case, the fact that the Commonwealth invokes a suite of laws which has the purpose of evading the constitutional guarantee will itself be sufficient to invoke the principle.  Secondly, in this particular case there is evidence that the funding arrangements themselves had that purpose in mind.  The evidence for that, your Honour, can be found in his Honour’s own judgment.  If your Honour goes back to page 30 in the appeal book your Honours will see, and there are several provisions to this effect, that:

[4.3]   Measures to be undertaken to achieve the aims of 4.2 include:

(a)enactment of native vegetation conservation legislation which will repeal/rationalise existing native vegetation controls and provide for a coordinated State‑wide approach -

Then at paragraph 65:

Attachment B to the 1997 Agreement contains standard terms and conditions of financial agreements . . . for the purpose of financial assistance.

The pleading that we have provided to your Honours in paragraph 17 ‑ ‑ ‑

BELL J:   Does it start really at 14 and 15?

MR KING:   It does, your Honour, yes.  Now, can I also indicate to your Honours that since the Commonwealth strike‑out application ‑ ‑ ‑

GUMMOW J:   Sorry, Mr King, with reference to what Justice Bell was just asking you, paragraph 15:

expressly or impliedly agreed to make and adopt measures . . . in consideration of the payment of moneys –

Where do we see that in any of the documentation so far, that is to say, payment of moneys?

MR KING:   The payment of moneys?

GUMMOW J:   Yes.

MR KING:   Well, there are two answers to that.  Firstly, in the agreements that we have been able to obtain without the benefit of discovery, there is evidence of that firstly I think at the passages that I have mentioned at page 30 of the judgment, and secondly his Honour dealt with that in some greater detail at pages 57 – I beg your pardon ‑ ‑ ‑

HEYDON J:   Paragraph 157 on page 57?

MR KING:   Yes, your Honour, and his Honour referred to the evidence of the payment of certain moneys by the Commonwealth to the State; that appears I think at 169.  At 165 his Honour refers to:

One of the purpose of the Natural Heritage Account is the National Vegetation Initiative –

and that initiative is expressly mentioned in the 1997 Act.  So in other words the whole program of laws, or measures, if I use the framework convention term, was designed to ensure that the State had in place native vegetation laws or laws because the truth is whether it was native vegetation or not was not the crux of the point, but laws which had the consequence of conferring a benefit on the Commonwealth.

In ICM v Commonwealth the three learned Judges, apart from Justice Heydon, who would have found against ICM, did so only on the basis that there was no acquisition, and the reason for that was because there was no evidence or no pleading of any benefit, but in this particular

case that is not the position.  If your Honours go to paragraph 18 of the statement of claim:

Further, as a consequence or effect of the said measures the First Respondent has received a substantial benefit from the passage of the said measures being firstly, a profit a prendre in the land in respect of carbon sequestration and abatement rights –

and Justice Emmett deals with that in some considerable detail and explains why they are property, and that the Commonwealth retain that benefit; his Honour made an express finding about that.  Secondly, that there is an admission by the Commonwealth itself, unlike the situation in ICM, and recorded in the pleading at paragraph 19.

HEYDON J:   It should say “the First Respondent” should it?  It says “the First Applicant”, should it say “the First Respondent”, at line 1?

MR KING:   I apologise, your Honour, it should say that.  The pleading – we will record that amendment:

has formally admitted that it has obtained a financial benefit at the expense of the Plaintiff as a consequence of the measures, namely that if it did not have the ability to account for emissions . . . which are likely to involve expense to it.

So there is the direct financial benefit, a measurable and identifiable advantage, to use the words of Justices Bell and her colleagues.

GUMMOW J:   Well, Mr King, of course, all of this is in the framework of whether there should be a case tried.

MR KING:   That is right.

GUMMOW J:   At the moment we are minded to refer your application into an enlarged Full Court where it can receive fuller argument.  Do you have any objection to that course?

MR KING:   No.

GUMMOW J:   I would not have thought so.  We will see what Mr Robertson says.

MR ROBERTSON:   Your Honours, in my submission, what the case has now come down to – it apparently being common ground that the Commonwealth laws are not themselves within 51(xxxi) – what it has come down to is whether ‑ ‑ ‑

GUMMOW J:   I am not sure Mr King concedes that.

MR ROBERTSON:   Well, there is nothing more to – perhaps I can just state the proposition.  As Justice Emmett found, there is nothing whatever in the Commonwealth laws that say anything about acquisition of property by anyone.  Be that as it may, the question becomes, is there anything in the agreements or in what Justice Emmett regarded as the make or break agreement, the 1997 agreement, which has any quality such as that referred to in the recent judgments in ICM and Arnold.  If I could take your Honours to three passages where Justice Emmett considered those matters?

GUMMOW J:   You may be absolutely right about all this, Mr Robertson, but the question is whether you should be vindicated after fuller consideration in an enlarged Full Court hearing the leave application.

MR ROBERTSON:   There are only three paragraphs I want to take your Honours to, so it will only take two or three minutes.  If your Honours turn to page 60?  Of course, the main thrust of the present applicant’s submissions before Justice Emmett was the invalidity of the laws, that is why there is a lot of discussion of that.  Justice Emmett also dealt with the agreements.  The 1997 agreement he analysed over many pages, beginning at paragraph 55 on page 25, so I am taking your Honours just to, as it were, the conclusions.  On page 60, paragraph 166, about lines 30, 35, Justice Emmett says:

In essence, as I understand Mr Spencer’s contentions, if the 1997 Agreement does not provide a sufficient connection –

So his Honour is looking at a broad question of connection between the agreement sought to be impugned and the Commonwealth statutes and the contended for effect on the property, so that is the first proposition.  The second one is at paragraph 172, the second part of paragraph 172 on page 62, after having said at the beginning of paragraph 172 what the state of the State statutes was, and then his Honour says at the end of 172:

Nor does 1997 Agreement require or [e]ffect or authorise the exercise of any discretion under the State Statutes to refuse development consent for the clearing of native vegetation on any land.

Then the third reference, your Honours, is on page 64, paragraph 177, so his Honour is addressing the very question, nothing to do with Pye v Renshaw or any matter such as that:

I do not consider that there is a reasonable basis on which Mr Spencer can establish that any alleged acquisition of his property by reason of the enactment of the State Statutes, coupled with the exercise of discretions by officers of New South Wales, was authorised or effected by either of the Commonwealth Statutes or any of the Inter‑Governmental Agreements.

As I say, his Honour has set out the intergovernmental agreements, each of their clauses that could possibly provide the connection at great length.  The last matter that I wanted to draw your Honours’ attention to in light of the history of this, it being stood over to await the outcome of ICM and Arnold, is that nothing in ICM and Arnold assists the present applicant.  Indeed, the purpose proposition, the search for linkage, as it were, which was absent in the cases that followed Magennis – your Honours will recall Pye v Renshaw, Tunnock and the West Australia case, there was no linkage.  Your Honours in paragraph [36] of ICM Agriculture referred to that concept from Professor Saunders at decoupling, and said that:

The concept of improper purpose as a vitiating characteristic was rightly rejected.  . . . The constraints imposed by constitutional prohibitions or guarantees will be directed to the range of permissible terms and conditions –

and that is a reference obviously to section 96 of the Constitution – that is paragraph [36]. So there is nothing ‑ ‑ ‑

GUMMOW J:   We also referred to a letter Sir Robert Menzies later wrote, did we not?

MR ROBERTSON:   In Pye v Renshaw that was reproduced there, yes.

MR KING:   No, it was a later case.

GUMMOW J:   No, no, after Pye – we referred in ICM.

MR ROBERTSON:   In Tunnock’s Case, yes.

GUMMOW J:   That is right.

MR ROBERTSON:   Well, perhaps that brings me to my last point.  If your Honours turn to page ‑ ‑ ‑

GUMMOW J:   We left open the question of whether Sir Robert was right in his assumption as to how the Constitution operated.

MR ROBERTSON: Yes, but we would submit that what your Honours did reject was something as vague as purpose, and your Honours focused on the words of section 96, which is terms and conditions. The last point I want to make, your Honours, if your Honours turn to page 114 of the application book, that special leave question, inapposite as it always was, as I submitted on the last occasion in June, bears no relation to the proposed pleading that your Honours have looked at in paragraphs 14, 15, 16 or 17. In other words, the case was advanced as a requirement case. Do your Honours see page 114? That is the only place where one can see a special leave question:

1.Is it within the legislative power of the Commonwealth to authorise an agreement that requires a State –

Now, that is a, as it were ‑ ‑ ‑

GUMMOW J:   If we are going to refer this into the Full Court we would have to – I think it is in the interests of both parties that Mr King have leave, if he wants to use it, to revise his summary of argument.

MR ROBERTSON:   Well, he would need to revise his special leave question too, with respect.

GUMMOW J:   Well, that may be so.  He may need leave to amend his draft notice of appeal.

MR ROBERTSON:   That is so.  Well, all of those are reasons, in my respectful submission, why the application as framed for special leave should be refused rather than referred to a Court with a greater number of Justices.  If your Honours please.

GUMMOW J:   Well, the other side of the coin, Mr Robertson, is that this matter is within the original jurisdiction anyway, it is not – …..arising out of the Constitution.

MR ROBERTSON:   It could have been.  In form it is not, but ‑ ‑ ‑

GUMMOW J:   In form it is not.  Of course, I understand that.

MR ROBERTSON:   Yes, but what your Honours ‑ ‑ ‑

GUMMOW J:   If Mr King were to start again there would be an unseemly debate about res judicata, would there not, if you were minded to take those sort of points?

MR ROBERTSON:   In the High Court your Honour means, or anywhere?

GUMMOW J:   Yes, in the original jurisdiction of the High Court, if he were to start again you would be saying res judicata if you were being sufficiently mean minded.

MR ROBERTSON:   Well, that might be so - every step of the way, your Honour.  I cannot predict what that might be.  All I am saying, your Honour, on this point is that procedurally as it stands this is not a case that can be referred in terms to a Full Court.  If your Honours please.

GUMMOW J:   Thank you.  We will refer this application into an enlarged Full Court for argument as on appeal.  You have leave within 14 days, Mr King, to amend your summary of argument if you wish to do so, and then the consequential time periods for response and reply would be as indicated by the Rules.  The materials before the Full Court should include your draft proposed pleading.  Is 14 days sufficient?

MR KING:   Yes, if the Court pleases.

GUMMOW J:   The costs of today will be, obviously, costs of the special leave application itself.

MR ROBERTSON:   If the Court pleases.

GUMMOW J:   Yes, thank you, gentlemen.

AT 10.01 AM THE MATTER WAS CONCLUDED