The Commonwealth v Huon Transport Pty Ltd

The High Court of Australia heard an appeal from the Supreme Court of Tasmania concerning the requisitioning of two steamers, the *Marana* and the *Mongana*, by the Commonwealth. Huon Transport Pty Ltd, the respondent, claimed that the compensation paid by the Commonwealth was insufficient and sought additional payment, including interest. The dispute arose from the Commonwealth's purported use of section 67 of the *Defence Act 1903-1939*, which allowed for the requisitioning of vessels for naval or military purposes, with recompense to be provided as prescribed. However, at the time of the requisitioning, no regulations had been enacted under this section.

The central legal issues before the High Court were twofold: first, the proper assessment of compensation for the period the steamers were in the Commonwealth's possession, and second, whether interest was payable on the outstanding compensation. The court had to determine whether the requisitioning was a compulsory taking under the *Defence Act* or an implied agreement to pay hire, and how compensation should be calculated in the absence of prescribed regulations. Furthermore, the court considered the constitutional requirement of "just terms" for the acquisition of property and whether this encompassed the payment of interest.

A majority of the Court, comprising Latham C.J., Starke, Dixon, and McTiernan JJ., held that the steamers were requisitioned on the basis of an implied promise to pay fair hire, as section 67 of the *Defence Act* was inoperative without the necessary regulations. They further held that the respondent was not entitled to interest on the unpaid compensation. Rich and Williams JJ. dissented on the issue of interest, finding that the *Defence Act*, read in light of section 51(xxxi) of the Constitution, permitted the allowance of interest to ensure adequate compensation. The majority reasoned that "just terms" under the Constitution did not necessarily include interest, and that in the absence of statutory or regulatory provision for interest, it was not payable, following *Swift and Co. v. Board of Trade*.

The High Court varied the decision of the Supreme Court of Tasmania. While the exact amount of compensation was subject to further calculation and disagreement among the judges, the majority found the trial judge's assessment of compensation to be excessive. Crucially, the majority ruled against the claim for interest, reducing the overall award significantly.