Spencer v Commonwealth of Australia

The case of *Spencer v Commonwealth of Australia* concerned an application by the Commonwealth to dismiss proceedings summarily under s 31A(2) of the *Federal Court of Australia Act 1976* (Cth). The applicant, Mr Spencer, alleged that New South Wales legislation, enacted pursuant to informal arrangements with the Commonwealth, effected an acquisition of property other than on just terms, contrary to s 51(xxxi) of the Constitution. Mr Spencer sought declarations that the intergovernmental agreements and the Commonwealth legislation authorising them were invalid.

The legal issues before the High Court of Australia included whether the Federal Court could be satisfied that Mr Spencer had no reasonable prospect of successfully prosecuting his proceeding, and the effect of the High Court's subsequent decision in *ICM Agriculture Pty Ltd v The Commonwealth* on the prospects of success. The primary judge and the Full Court of the Federal Court had both dismissed Mr Spencer's case, finding that he had no reasonable prospect of success. The Full Court identified three fundamental problems with Mr Spencer's case: the operation of s 51(xxxi) and s 96 of the Constitution as interpreted in *Pye v Renshaw*, the indistinguishable nature of the New South Wales Court of Appeal's decision in *Arnold v Minister Administering the Water Management Act 2000*, and Mr Spencer's acceptance of the validity of the State Acts, which meant the impugned prohibitions would continue even if the Commonwealth Acts were invalid.

The High Court considered the correct approach to the application of s 31A(2) of the *Federal Court Act*, noting that a proceeding need not be "hopeless" or "bound to fail" to have no reasonable prospect of success. However, the High Court allowed the appeal, setting aside the orders of the Full Court. The Court found that the lower courts had erred in their application of s 31A(2).

Special leave to appeal was granted, and the appeal was treated as instituted and heard instanter. The High Court allowed the appeal with costs, setting aside the orders of the Full Court of the Federal Court and ordering that the respondent's motion to dismiss the proceedings be dismissed, with the respondent to pay the applicant's costs of that motion.