Waterhouse, D. v Minister for the Arts & Territories

DAVID WATERHOUSE v. MINISTER FOR THE ARTS AND TERRITORIES
No. NG302 of 1993
FED No. 820
Number of pages - 22
Constitutional Law
(1993) 119 ALR 89
(1993) 43 FCR 175

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
BLACK CJ(1), LOCKHART(2) AND GUMMOW(1) JJ

CATCHWORDS

Constitutional Law - acquisition of property on just terms - export of objects constituting Australian cultural heritage - refusal of export permit - whether refusal to grant permit constituted an acquisition for the purposes of para. 51 (xxxi) of the Constitution.

The Constitution

Protection of Movable Cultural Heritage Act 1986

Bank of New South Wales v The Commonwealth (1948) 76 CLR 1

The Commonwealth v Tasmania (1983) 158 CLR 1

Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 67 ALJR 315

HEARING

SYDNEY, 17 September 1993

#DATE 17:11:1993

Counsel and solicitors Mr P.K. Searle and
for the applicant: Mr R.M. Gordon

instructed by Whitfields.

Counsel and solicitors Mr D. Rose Q.C.
for the respondent: instructed by the

Australian Government Solicitor.

ORDER

The Court orders that:

1. The questions of law referred for decision by the Full Court be answered as follows:

1. Question

Does the Respondent's decision of 4 February 1992 to refuse to grant to the Applicant a permit to export the painting constitute an acquisition for the purposes of Constitution, s. 51 (xxxi)?

Answer: No.

2. Question

If so, is the acquisition otherwise than on just terms? Answer: This question does not arise, in view of the answer to question 1.

2. The applicant pay the costs of the Respondent of the proceeding in this Court.

Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.

JUDGE1

BLACK CJ AND GUMMOW J This proceeding is in the original jurisdiction of the Court. At the request of the applicant, the President of the Administrative Appeals Tribunal ("the A.A.T.") (O'Connor J) stated certain facts and referred various questions of law to the Court for decision pursuant to sub-s. 45 (1) of the Administrative Appeals Tribunal Act 1975 ("the A.A.T. Act").

On 4 March 1992, the applicant made to the A.A.T. an application under s. 48 of the Protection of Movable Cultural Heritage Act 1986 ("the Act") for review of a decision made by the respondent ("the Minister") on 4 February 1992. The decision was made under sub-s. 10 (5) of the Act. It was to refuse an application made by the applicant under sub-s. 10 (1) for a permit to export permanently the painting by John Glover "The Bath of Diana, Van Diemen's Land, 1837" ("the painting"). The dimensions of the painting are 76 x 114 cm. It is an object of fine art which is either an "Australian object" (if Glover be classified as "an Australian artist") or an "Australia-related object", having been made in Australia by a foreign artist who worked or resided in Australia. The expressions "Australian object" and "Australia-related object" are found in Part IX, headed "Objects of Fine Art", of the Schedule to the Protection of Movable Cultural Heritage Regulations ("the Regulations"). This Schedule was introduced by the Protection of Movable Cultural Heritage Regulations (Amendment) (SR 194 of 1988) which commenced on 1 August 1988. The objects included in Part IX are known as "Class B objects".
The Act commenced on 1 July 1987. Section 8 provides for the establishment by regulations made under the Act of the National Cultural Heritage Control List. This is to comprise categories of objects "that constitute the movable cultural heritage of Australia and are to be subject to export control". The Control List is to divide such subjects into two classes, Class A and Class B objects. In the legislation, the phrase "Australian protected object" means a Class A object or a Class B object (sub-s. 3 (1)). Class B objects may not be exported otherwise than in accordance with a permit in force under s. 11 or a certificate in force under s. 12. Section 12 is concerned with certificates sought by persons intending to import an Australian protected object for temporary purposes or in circumstances in which the person may wish subsequently to export the object; a certificate under the section authorises the export of the object. Section 12 has no bearing upon the present dispute. The decision in question was, as we have indicated, the refusal under s. 10 of a permit.
The phrase in s. 8 to "the movable cultural heritage of Australia" is a reference to objects that are of importance to this country or to a particular part of Australia for ethnological, archaeological, historical, literary, artistic, scientific or technological reasons, being objects falling within one or more of categories listed in sub-s. 7 (1). Category (f) is "objects of fine art". The effect of Part IX of the Schedule to the Regulations is that this category includes any Australian or Australia-related object, being a painting, with a current Australian market value of not less than $150,000.
The applicant purchased the painting, in Australia, from Sir Andrew and Lady Grimwade. They acknowledged receipt of the purchase price of $575,000 on 1 August 1985. As we have indicated, the Act came into operation on 1 July 1987 and Part IX of the Schedule to the Regulations commenced its operation on 1 August 1988. On 17 April 1989, Sotheby's Australia Pty Limited conducted an auction in this country. At the auction the applicant sold the painting for $1.76m to Mr Christopher Condon, an art dealer in Los Angeles, in the United States. The terms of that sale contract are not disclosed by the stated case; cf Kingdom of Spain v Christie Manson and Woods Ltd (1986) 3 All ER 28 at 31-33. On 11 July 1991, the applicant applied for a permit under s. 10 of the Act so as to enable the painting to be exported to the purchaser. In refusing the application on 4 February 1992 the Minister stated that the painting was of such importance to Australia that its loss to Australia by export would significantly diminish the cultural heritage of Australia.
A person who knowingly exported or attempted to export the painting otherwise than in accordance with the permit would be guilty of an offence punishable on conviction, in the case of a natural person, by a fine not exceeding $100,000 or imprisonment for a period not exceeding 5 years, or both (sub-s. 9 (3). Such an offence is an indictable offence (sub-s. 46 (1), (3)).
Further, sub-s. 9 (1) states:

"9 (1) Where a person exports an Australian protected object otherwise than in accordance with a permit or certificate, the object is forfeited."

An object shall be taken to be exported at a time when it has been placed on board a ship or aircraft at a particular place in Australia with the intention that it be taken outside of this country by that means and the departure of the ship or aircraft from that place "has commenced" (para. 9 (4) (a)). An object also shall be taken to be exported at the time when it has been delivered as a postal article into the control of the postal authorities at a particular place in Australia with the intention that it be sent out of this country by post "and the movement of the postal article from that place has commenced" (para. 9 (4) (b)).

Further, sub-s. 9 (2) states:

"9 (2) Where a person attempts to export an Australian protected object otherwise than in accordance with a permit or certificate, the object is liable to forfeiture."

Sub-sections (1) and (2) thus draw a distinction between protected objects which are forfeited and those which are liable to forfeiture. A person shall be taken to attempt to export an object if the person conveys, or has possession of, the object, with intent to export it or knowing that it is intended to be exported (sub-s. 9 (5)).

In Attorney-General of New Zealand v Ortiz (1984) AC 1, the House of Lords held that on the true construction of s. 12 of the Historic Articles Act 1962 (NZ) and the relevant provisions of the Customs Act 1966 (NZ), forfeiture under s. 12 took effect only when the historic article was seized by the New Zealand customs or police, and did not operate automatically immediately upon the export of the article. In that case, since no seizure had taken place, the result was that the Crown in right of New Zealand was neither the owner nor entitled to possession of the carving and thus lacked standing to sue for recovery in the English courts. Sub-section 12 (2) of the New Zealand statute provided:

"An historic article knowingly exported or attempted to be exported in breach of this Act shall be forfeited to Her Majesty and, subject to the provisions of this Act, the provisions of the Customs Act 1913 relating to forfeited goods shall apply to any such article in the same manner as they apply to goods forfeited under the Customs Act 1913."

In Australia, the provisions dealing with forfeiture in s. 9 of the Act do not condition forfeiture necessarily upon seizure. Export is sufficient and "export" is so defined that it may be deemed to have occurred whilst the article is still in Australia.

Section 38 of the Act deals further with the subject of forfeiture. It states:

Act -

(a) all title and interest in the object is vested in the Commonwealth without further proceedings;

(b) the object shall be dealt with and disposed of in accordance with the directions of the Minister; and

(c) any costs incurred by the Commonwealth in transporting or disposing of the object are a debt due to the Commonwealth by the person who was the owner of the object immediately before it was forfeited and may be recovered by the Commonwealth in a court of competent jurisdiction."

A protected object which has been seized on the grounds that it is forfeited by operation of sub-s. 9 (1) may be retained until a court orders the return of the object or the object is disposed of under s. 38 (para. 35 (1) (a)). The owner or the person who had the possession, custody or control of the object immediately before it was seized may bring an action against the Commonwealth in a court of competent jurisdiction for the recovery of the object on the ground that it is not forfeited and if, on a balance of probabilities, the court determines that the object is not forfeited by virtue of sub-s. 9 (1), it may order the return of the object (sub-ss. 37 (1) (3)). The court shall order that the object is forfeited when a person is convicted of attempting to export a protected object in contravention of sub-s. 9 (3) (sub-s. 37 (4)).
Where a protected object has been seized on the grounds that it is liable to forfeiture by reason of sub-s. 9 (2), s. 36 provides a complex procedure whereby the object will be forfeited unless within a specified period the owner or the person who had possession, custody or control of the object immediately before it was seized brings an action for recovery of the object. The court shall determine, on a balance of probabilities, whether the object is liable to forfeiture and, if so, shall order that the object is forfeited; otherwise it may order the return of the object (sub-s. 37 (3)).
One of the submissions made to us for the applicant appeared to be that the forfeiture provisions, to which his client would be subjected if he took any of the steps forbidden by s. 9, operated by force simply of the legislation and without the opportunity for the exercise in relation thereto of the judicial power of the Commonwealth. The submission reflected the terms of para. 11 of the stated case. This reads:

"If the Applicant exports the painting without an export permit, the painting is forfeited to the Commonwealth (s. 9 (1) of the Act) and all title and interest in the object is vested in the Commonwealth without further proceedings (s. 38 of the Act)."

It will be apparent from the framework of the Act, as we have indicated above, that para. 11 does not fully state its operation.
The questions of law referred for decision by the Court are as follows:

"1. Does the Respondent's decision of 4 February 1992 to refuse to grant to the Applicant a permit to export the painting constitute an acquisition for the purposes of Constitution, s. 51 (xxxi)?

2. If so, is the acquisition otherwise than on just terms?"

The applicant submits that, in relation to the painting, the Commonwealth has acquired "the right to ensure the painting remains in the Commonwealth" and "a contingent right to all title and interest in the painting in the event the applicant exports or attempts to export the painting". The applicant also contends that the Commonwealth has acquired, in relation to the painting, "the rights of enforcement pursuant to Part V of the Act".
Part V of the Act (ss. 27-46) include certain of the provisions to which we have already referred. It also provides that an inspector may seize a protected object which the inspector believes on reasonable grounds to be forfeited (s. 34), and may, without warrant, arrest any person if the inspector believes on reasonable grounds that the person is committing or has committed an offence against the Act and proceedings by summons would not be effective (s. 33). Powers of search and entry without court order or warrant also are conferred in cases of urgency and seriousness where the inspector believes on reasonable grounds that it is necessary to act to prevent, inter alia, the loss or destruction of anything forfeited or connected with an offence against the Act (s. 32). Provision for inspectors is made in s. 28.
The case for the applicant was that the acquisition of the painting, in infringement of the constitutional guarantee, had occurred with the decision of the Minister under s. 10 of the Act to refuse the grant of a permit. It was also submitted, as a secondary argument, not apparent on the face of the case stated, that the acquisition occurred with the commencement of the Schedule to the Regulations on 1 August 1988. But the case was presented on the footing that if the primary submission did not succeed, it was likely that the other submission would have the same fate.
It is no part of the applicant's case that he has contravened or has any intention of contravening any of the prohibitions in s. 9 of the Act. Hence, the submission by the applicant's counsel that the Commonwealth had acquired "a contingent right" to all title and interest in the painting if the applicant exported or attempted to export it. Nor was it suggested that the applicant had suffered the application of any of the enforcement provisions of Part V of the Act. We were told that by arrangement with the applicant the painting is on display to the public at a gallery in Newcastle. It is said that the immediate significance for the applicant of the decision of 4 February 1992 to refuse the permit, is that there has been an "acquisition", for the purposes of the constitutional guarantee, of "the right to ensure the painting remains in the Commonwealth". However, the decision itself may yet be set aside as a result of the review on the merits presently on foot in the A.A.T. It is the very statute the validity of which in certain respects the applicant complains that provides in s. 48 for a review of the decision of the Minister.
There is thus a significant degree of prematurity in the questions of law comprising the matter with which this Court is invested with jurisdiction by sub-s. 45 (2) of the A.A.T. Act.
However, counsel for the Minister did not object on that ground to the particular issue framed in the first question of law, namely whether the decision to refuse the grant of the permit itself constituted an acquisition for the purposes of para. 51 (xxxi) of the Constitution.
To that issue, we now turn.
Paragraphs 51 (i) and (xxxi) of s. 51 of the Constitution provide:

"51 The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:-

(i) Trade and commerce with other countries, and among the States:

. . .

(xxxi) The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws."

Paragraph 51 (xxxi) is to be treated both as abstracting from other heads of power (including the incidental power) all content which would otherwise have enabled the compulsory acquisition of property, and as subjecting the power with respect to the acquisition to an obligation to provide just terms; the paragraph thus ensures that whenever property is compulsorily acquired pursuant to a law of the Commonwealth just terms must be provided, because the totality of power of compulsory acquisition is embodied in the paragraph: Trade Practices Commission v Tooth and Co. Limited (1979) 142 CLR 397 at 445.

In the present case, no question arose as to the operation of para. (xxxi) upon the legislative power under s. 122 of the Constitution with respect to external territories and internal territories (these being brought into existence by separation from a State); see Teori Tau v The Commonwealth of Australia (1969) 119 CLR 564, Northern Land Council v The Commonwealth of Australia (1986) 161 CLR 1 at 6, and Capital Duplicators Pty Ltd v Australian Capital Territory (1992) 66 ALJR 794 at 800, 807-8. Further, it was common ground that the Act in its application to the painting was founded upon para. (i) of s. 51, as a law with respect to trade and commerce with other countries.
Counsel for the applicant rightly emphasised that the Act operates upon established common law concepts of ownership and possession of chattels. He said that this was not a case presenting a threshold issue which required characterisation of the rights and interests created by one statute which were then varied (to use a neutral term) by later legislation. By way of example, counsel referred to Australian Capital Television Pty Ltd v Commonwealth of Australia (No. 2) (1992) 108 ALR 577 at 615-616, 640-642, 678.
Nevertheless, it remains to consider the primary point made by counsel for the Minister that there is no "acquisition" of property within the meaning of para. (xxxi) unless the Commonwealth or some third party obtains some right of a proprietary nature, and that it is not enough that the law in question operates to diminish some property rights.
In particular, counsel for the Minister referred to Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 67 ALJR 315. Sub-section 135ZZM (1), which was introduced into the Copyright Act 1968 ("the Copyright Act") by s. 16 of the Copyright Amendment Act 1989, stated:

"135ZZM (1) Copyright subsisting in a published sound recording, or in any work included in a published sound recording, is not infringed by making on private premises a copy of the sound recording if the copy is made on or after the proclaimed day on a blank tape for the private and domestic use of the person who makes it."

With respect to any work included in a published sound recording, sub-para. 31 (1) (a) (i) of the Copyright Act gave to the copyright owner the exclusive right to reproduce the work in a material form. As to sound recordings, s. 85 of the Copyright Act specified the nature of such copyright as the exclusive right to do various acts, including the making of a copy of the recording. It was an infringement of copyright in a work, without the licence of the owner, to do in Australia or to authorise the doing in Australia, of any act comprised in the copyright (sub-s. 36 (1)). It was an infringement of copyright in a sound recording to make or authorise the making in Australia of a copy of the recording (sub-s. 101 (1)). There were various qualifications to these general propositions which were not immediately relevant.

The point in the Australian Tape Manufacturers case was that sub-s. 135ZZM (1) was characterised as providing that something which was formerly an infringement would not be an infringement, and to that extent it reduced the content of the exclusive rights conferred by the sections to which we have referred. This was so held by Mason CJ, Brennan, Deane and Gaudron JJ (at 318) and by Dawson and Toohey (at 335). In the latter passage, Dawson and Toohey JJ said:

"Whilst the word 'property' in s. 51 (xxxi) is to be construed liberally so that it extends to 'innominate and anomalous interests' (Bank of N.S.W. v The Commonwealth (1948) 76 CLR 1 at 349), for the paragraph to apply it must be possible to identify an acquisition of something of a proprietary nature. The mere extinction or diminution of a proprietary right residing in one person does not necessarily result in the acquisition of a proprietary right by another. See R. v Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation (1985) 159 CLR 636 at 653; The Commonwealth v Tasmania (the Tasmanian Dam Case)

(1983) 158 CLR 1 at 145, 181, 247, 283; Australian Capital Television Pty Ltd v The Commonwealth (No. 2) (1992) 66 ALJR 695 at 714, 728.

Section 135ZZM (1) confers nothing upon any person which may be described as being of a proprietary nature. If the immunity which the section confers can correctly be described as a right, it is a right which is applicable to all but arises only on the occasions upon which copying takes place. It is not a right which is of a permanent character or capable of being assigned to third parties, those being usual characteristics of a right of property. See National Provincial Bank Ltd v Ainsworth (1965) AC 1175 at 1247-1248; R. v Toohey; Ex parte Meneling Station Pty Ltd (1982) 158 CLR 327 at 342-343; Australian Capital Television Pty Ltd v The Commonwealth (No. 2) (1992) 66 ALJR, at 714-715, 729. It is not a right which can be described as being by way of copyright or of a licence under copyright since it entirely lacks exclusivity. It does not, in our view, amount to an interest in property. Section 135ZZM (1) is not, therefore, a law with respect to the acquisition of property."

In the other joint judgment (at 318-319) their Honours set out the following passage from the judgment of Mason J in the Tasmanian Dam Case (158 CLR at 145):

"To bring the constitutional provision into play it is not enough that legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be."

Counsel for the applicant invited the Court to infer from the disparity between the price paid by the applicant to an Australian seller in 1985 and the price obtained by him from a foreign buyer in 1989, that the practical effect of the operation of the legislation upon the painting was to diminish its market value by restricting what otherwise would have been his client's unimpeded right to sell it and export it for delivery to a foreign purchaser, or himself to take the painting outside Australia for sale by him.
However, counsel for the Minister invited attention to a passage in the judgment of Dixon J in Federal Council of the British Medical Association in Australia v The Commonwealth (1949) 79 CLR 201 at 270-271. There, para. 51 (xxxi) was relied upon to found an attack by pharmacists upon legislation which was said to provide for "unjust" prices for medicines. Dixon J said:

"There is here no compulsory acquisition by the customer of the drugs he obtains from the chemist when he presents a medical prescription. The chemist is legally free to supply them or not as he pleases. I do not think that the risk he may run of his approval being revoked if he refuses, or the business consequences of the revocation, can make the acquisition compulsory. Its legal character is a voluntary sale. The protection which s. 51 (xxxi) gives to the owner of property is wide. It cannot be broken down or avoided by indirect means. But it is a protection to property and not to the general commercial and economic position occupied by traders. The essence of a chemist's relation to the plan is that, as a trader, he must decide whether at the prices fixed by the Commonwealth he will or will not supply a commodity which he buys and sells, the law having brought about a situation in which it is likely that there will be little or no other trade for him in that commodity. If the prices are too low he may suffer in his trade, but that is not within the protection of s. 51 (xxxi). But it does not appear to me that it is a case of taking his property from him against his will without just compensation."

In the present case, accepting that it be a fact that the refusal of the export permit produces a commercial disadvantage to the applicant because he may be unable to obtain the same price for the painting from a purchaser who is content for it to remain in this country, it does not follow that thereby there has been an acquisition by the Commonwealth of an interest in the painting in the relevant sense. There has not been, for example, "the assumption and indefinite continuance of exclusive possession and control (of the painting) for the purposes of the Commonwealth . . ." to repeat the phrase used by Dixon J in Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 349.
Counsel for the applicant referred to the discussion by Dixon J, in the same passage, of the impermissible use of a "circuitous device" to acquire indirectly "the substance of a proprietary interest without at once providing the just terms guaranteed by s. 51 (xxxi) of the Constitution when that is done". That passage was applied in the Australian Tape Manufacturers Case supra at 324-325. In the Bank Nationalisation Case Dixon J went on to hold that the provisions of sub-s. 13 (1) and ss. 17, 18 and 19 of the Banking Act 1947 amounted to an indirect means of doing what para. (xxxi) did not allow. Sub-section 13 (1) empowered the Treasurer to declare that the shares in an Australian private bank were from a specified date vested in the Commonwealth Bank. Section 17 provided that upon that specified date the directors of the private bank should cease to hold office, and s. 18 empowered the Governor of the Commonwealth Bank to appoint directors of the private bank in their place. Those new directors were given by s. 19 full power to manage, direct and control the business and affairs of the private bank, and, in particular, to declare dividends and to dispose of the business in Australia of the private bank to the Commonwealth Bank. Dixon J said (76 CLR at 348-349):

"No doubt there is no interference with the ultimate right of the shareholders as contributories in a winding up to receive as a component of the distributable surplus so much profit as may have been earned under the regime of the nominees and as they have not chosen to distribute as dividend. But that and the legal conceptions involved in the continuance of the corporate existence of the banking company as the repository of the title to the undertaking is all that is left. In other words the undertaking is taken into the hands of agents of the Commonwealth so that it may be carried on, as it is conceived, in the public interest. The company and its shareholders are in a real sense, although not formally, stripped of the possession and control of the entire undertaking. The profits which may arise from it in the hands of the Commonwealth's agents are still to be accounted for and in some form they will be represented in what the shareholders receive. But the effective deprivation of the company and its shareholders of the reality of proprietorship is the same. It must be remembered that complete dispositive power accompanies the control of the assets which passes to the nominees."

It will be apparent from this passage that Dixon J was providing an analysis of the practical effect of the statutory means which brought about what undoubtedly was an "acquisition" of "the reality of proprietorship". There was a circuitous device, as his Honour found, but the device operated, as his Honour put it (at 349) "to acquire indirectly the substance of a proprietary interest . . .".
We accept the submission for the Minister that in the present case the Act could not be said to present any "circuitous device" of any description. The operation of the law is plain upon the face of the statute and the Regulations. There is a prohibition placed upon the export of the painting from Australia otherwise than in accordance with a permit, and sanctions attend the infringement of that prohibition. We also accept the submission that it cannot fairly be said that the operation of the legislation effects the indirect acquisition of an element of the proprietary interest of the applicant as owner of the painting.
Still less, in our view, does the existence of the enforcement provisions of Part V of the Act (which have not been invoked in respect of the applicant) mean that at the time of the refusal of the export permission (a crucial date in terms of the question posed in the stated case) there was an acquisition in some contingent sense of the substance of a proprietary interest in the painting. It is unnecessary for the purposes of the present dispute to express a concluded view upon the enforcement of these provisions against the applicant. However, there is much to be said for the view that they are to be characterised as an exercise of the incidental power for the purpose of vindicating the principal objects of the Act by means which are properly proportionate to that end; see Burton v Honan (1952) 86 CLR 169 at 179-181, Nationwide News Pty Ltd v Wills (1992) 108 ALR 681 at 689-691, 720-721, 734-737, 739-740, 748-749. See also Trade Practices Commission v Tooth and Co. Limited supra at 408, Minister for Resources v Dover Fisheries Pty Ltd (1993) 116 ALR 54 at 64-67, 72-75.
Counsel for the applicant also claimed support from the judgment of Deane J in the Tasmanian Dam Case supra at 283-287. In that case, Deane J (Mason, Murphy and Brennan JJ contra and Gibbs CJ, Wilson and Dawson JJ not deciding) held that certain prohibitions imposed by the World Heritage (Western Tasmania Wilderness) Regulations and the World Heritage Properties Conservation Act, s. 11, constituted an acquisition of property within the meaning of para. (xxxi). His Honour referred to the preclusion by the regulations of development of the land in question. Without the Minister's consent, no building or other substantial structure could be erected, no tree cut down or removed, no vehicular track be established and no works carried out, the result being effectively to exclude the owner from putting the land to any active use (158 CLR at 286). The purpose of the regulations was, in accordance with the international obligations of this country, to protect and conserve the subject land as part of the cultural or natural heritage. Deane J concluded (at 287):

"The range of the prohibited acts is such that the practical effect of the benefit obtained by the Commonwealth is that the Commonwealth can ensure, by proceedings for penalties and injunctive relief if necessary, that the land remains in the condition which the Commonwealth, for its own purposes, desires to have conserved. In these circumstances, the obtaining by the Commonwealth of the benefit acquired under the Regulations is properly to be seen as a purported acquisition of property for a purpose in respect of which the Parliament has power to make laws. The 'property' purportedly acquired consists of the benefit of the prohibition of the exercise of the rights of use and development of the land which would be involved in the doing of any of the specified acts."

As we have indicated, this conclusion was one not reached by the other members of the Court who considered the point. In any event, in the Tasmanian Dam Case the relevant regulations prohibited any activity on the subject land, effectively sterilising the exercise of rights which are bound up with ownership. In the present case the prohibition on export leaves the applicant free to retain and enjoy, display or otherwise make use of the painting and leaves him free to sell, mortgage, or otherwise turn it to advantage, subject to the requirement of an export permit if he or any other party desires to take it out of the country.
Finally, we should refer to Part IV of the Act (ss. 25, 26). This establishes the National Cultural Heritage Fund, a purpose of which is the facilitation of the acquisition of Australian protected objects. There is no obligation on the Fund to seek to acquire any such object from an owner who has been refused a permit under s. 10 to export the object. But that circumstance does not point to the conclusion that there has been an "acquisition" of the painting in the sense of that term in s. 51 (xxxix).
The questions of law referred for decision by this Court should be answered as follows:

1. Question - Does the Respondent's decision of 4 February 1992 to refuse to grant to the Applicant a permit to export the painting constitute an acquisition for the purposes of Constitution, s. 51

(xxxi)?

Answer: No.

2. Question - If so, is the acquisition otherwise than on just terms?

Answer: This question does not arise, in view of the answer to question 1.

The applicant should pay the costs of the respondent of the proceeding in this Court.

JUDGE2

LOCKHART J The Administrative Appeals Tribunal ("the Tribunal") referred to this Court questions of law which have arisen in a proceeding before it. The reference was made pursuant to s. 45(1) of the Administrative Appeals Tribunal Act 1975 and is in the form of a special case (O.50 r.1(1)). The Court sits as a Full Court in its original jurisdiction.

I shall summarize the matters referred to in the special case. David Waterhouse, the applicant, sold the painting "The Bath of Diana, Van Diemen's Land" 1837 by John Glover ("the painting") at an auction sale conducted by Sotheby's Australia Pty Ltd on 17 April 1989 to Mr Christopher Condon, an art dealer in Los Angeles, USA, for an amount of $1,760,000.
On 11 July 1991 the applicant applied to the Minister for the Arts and Territories, the respondent, under s. 10(1) of the Protection of Movable Cultural Heritage Act 1986 ("the Act") for a permit to export the painting to Mr Condon in the USA. The permit is required because the Act prevents the export of certain objects that are of such importance to Australia that their loss to this country would significantly diminish its cultural heritage.
The applicant's application of 11 July 1991 was dealt with in accordance with the provisions of the Act and refused by the respondent on 4 February 1992 under s. 10(5) of the Act. The decision was based primarily on the report and recommendation of the National Cultural Heritage Committee ("the Committee") established under the Act (s. 15) which concluded that the painting is unique and of the greatest importance to Australia's cultural heritage from an ethnological, historical and artistic viewpoint.
On 4 March 1992 the applicant applied to the Tribunal under s. 48 of the Act for a review of the respondent's decision refusing to grant an export permit. It was in the course of that review that the Tribunal referred the following questions of law to the Court:

Question 1

Does the respondent's decision of 4 February 1992 to refuse to grant the applicant a permit to export the painting, constitute an acquisition for the purposes of s. 51(xxxi) of the Constitution? Question 2

If so, is the acquisition otherwise than on just terms?

The central question in this case is whether the Commonwealth or anyone else acquired rights of a proprietary nature as a result of the refusal of the export permit to the applicant. The answer to this question turns on an analysis of the Act, which commenced on 1 July 1987.
The long title to the Act states that it is an Act:

"to protect Australia's heritage of movable cultural objects, to support the protection by foreign countries of their heritage of movable cultural objects, and for related purposes".

Section 7 of the Act gives objects that are of importance to Australia or to a particular part of Australia for ethnological, archeological, historical, literary, artistic, scientific or technological reasons, the broadest description. Such objects include objects of fine art, objects of decorative art, objects of scientific or technological interests, objects relating to members of the Aboriginal race and descendants of the indigenous inhabitants of the Torres Strait Islands and military objects (s. 7(1)).
Section 8(1) of the Act requires that the regulations made under the Act shall prescribe a list to be known as the "National Cultural Heritage Control List of Categories of Objects that Constitute the Movable Cultural Heritage of Australia" and that they are to be subject to export control. The Act divides the objects into two classes: Class A objects, being objects that are not to be exported otherwise than in accordance with a certificate; and Class B objects, being objects that are not to be exported otherwise than in accordance with a permit or certificate (s. 8(2)).
Section 9 provides that, where a person exports an Australian protected object otherwise than in accordance with a permit or certificate, the object is forfeited (s. 9(1)); and where a person attempts to export an Australian protected object otherwise than in accordance with a permit or certificate, the object is liable to forfeiture (s. 9(2)). It is an offence to export or attempt to export an Australian protected object otherwise than in accordance with a permit or certificate or to contravene or attempt to contravene a condition of a permit or certificate; punishable on conviction, in the case of a natural person by a fine not exceeding $100,000 or imprisonment for a term not exceeding five years or both (it is an indictable offence: s. 46(1), (3)); and in the case of a body corporate a fine not exceeding $200,000 (s. 9(3)).
Section 9(4) is a deeming provision which provides that for the purposes of s. 9 an object shall be taken to be exported at the time when (a) the object has been placed on board a ship or aircraft at a particular place in Australia with the intention that it be taken out of Australia by that ship or aircraft and the departure of the ship or aircraft from that place has commenced; or (b) the object has been delivered as a postal article under the control of the Australian Postal Commission at a particular place in Australia with the intention that it be sent out of Australia by post and the movement of the postal article from that place has commenced.
A person may apply to the Minister for a permit to export a Part B object (s. 10(1)). The Minister is required to refer the application to the Committee which is required to refer it to one or more expert examiners (s. 10(3)). The expert examiner then submits a written report to the Committee and the Committee forwards its report to the Minister together with its written recommendations, if any (s. 10(4)). The Minister is required to consider the report and recommendations, if any; and he may grant a permit conditionally or otherwise or refuse to grant it (s. 10(5)).

Section 12 provides for the issue of a certificate of exemption by the Minister in the case of a person who intends to import an Australian protected object for temporary purposes or in circumstances in which the person may wish subsequently to export the object.
As the long title to the Act suggests, it is an Act concerned, not only with the prevention of the export of cultural objects of importance to Australia's heritage, but also to support the protection by other countries of their heritage of objects of a similar kind. Division 2 of Part II of the Act (s. 14) is directed to this end, by rendering objects liable to forfeiture where they are protected objects of a foreign country that have been exported from that country and the export was prohibited by a law of that country relating to cultural property, and the object is imported into Australia.
Part IV of the Act provides for the establishment of a fund to be known as the National Cultural Heritage Fund, the purposes of which include the provision of financial assistance to facilitate the acquisition of Australian protected objects. Curiously, it appears that the fund is for all practical purposes non-existent.
Part V of the Act contains enforcement provisions; and it is to some of them I shall now turn. It is unnecessary to refer to powers of search that are vested in inspectors appointed under the Act, the issue of search warrants, searches in emergencies and powers of arrest.
An inspector may seize a protected object that the inspector believes on reasonable grounds to be forfeited (s. 30(4)). A thing seized under the Act may be retained, in the case of a protected object seized on the grounds that it is forfeited by virtue of s. 9(1) of the Act, until a court orders the return of the object or the object is disposed of under s. 38 (s. 35(1)(a)); and in the case of any other protected object, until a court orders the return of the object or the object is forfeited (s. 35(1)(b)). Action may be taken for the recovery of a protected object; but if the court which has jurisdiction to hear the action determines that the object is forfeited by virtue of s. 9(1) (which involves merely exporting from Australia a protected object otherwise than in accordance with a permit or certificate), the court is bound to reject the claim for recovery (s. 37(3)(a)).
Where a particular object is forfeited by or under the Act, all title and interest in the object is vested in the Commonwealth without further proceeding; the object shall be dealt with and disposed of in accordance with the directions of the Minister; and the costs incurred by the Commonwealth in transporting or disposing of the object are a debt due to the Commonwealth by the person who is the owner of the object immediately before it was forfeited and may be recovered by the Commonwealth in a court of competent jurisdiction (s. 38).
I mentioned earlier s. 48 which enables application to be made to the Tribunal for review of the Minister's decision refusing to grant a permit. The result of the refusal by the Minister of an export permit in respect of a cultural object is that it is unlawful to export the object. The person who exports it or attempts to do so is guilty of an indictable offence under the Act; and the object if it has been exported is thereupon forfeited. In practice this means that, if the object has been placed on board a ship or aircraft in Australia which has commenced departure or has been posted and the movement of the postal article has commenced, the Minister may intervene before the object had left Australia and prevent it from leaving this country. It is deemed nevertheless to be exported (s. 9(4)). In that event the Commonwealth owns the object and it may be dealt with and disposed of as the Minister directs. The effect of unlawful export (including deemed export) is to deprive the owner of the object from all right, title and interest therein, which is then vested in the Commonwealth.
Pursuant to the regulation making power (s. 49 of the Act) the Protection of Movable Cultural Heritage regulations were enacted by Statutory Rule No 149 of 1987 (the Regulations). The Regulations provide for the establishment of the National Cultural Heritage Fund, its administration and payments from it. The relevant Schedule to the Regulations has since been repealed and a new Schedule substituted by the Protection of Movable Cultural Heritage Regulations (Amendment), Statutory Rule No. 194 of 1988 which commenced on 1 August 1988. The Schedule sets out the list of categories that constitute movable cultural heritage of Australia subject to export control; and they include Part IX "Objects of Fine Art". Division A includes "Aboriginal and other Australian or Australia-related objects"; Item 2 is "Paintings" with an Australian market value of not less than "$150,000". The expressions "Australian objects" and "Australia-related objects" are defined in clause 2 of Part IX of the regulations, the former relating essentially to objects of fine art made by an Australian artist and the latter to objects of fine art made in Australia or related to Australia by foreign artists who at some time worked or resided in Australia. Nothing turns in this case on which of those two concepts accurately describes the painting.
The applicant contends that the decision of the respondent refusing to grant an export permit constitutes an acquisition without just terms contrary to s. 51(xxxi) of the Constitution; and that as a result of the respondent's decision refusing to grant an export permit to him, he has lost the benefit of the sale to Mr Condon.
The Commonwealth has not paid compensation to the applicant in respect of the respondent's refusal. If the applicant exports the painting without an export permit the painting shall be forfeited to the Commonwealth (s. 9(1) of the Act), and all title and interest in the painting shall be vested in the Commonwealth without further proceeding (s. 38 of the Act).
It was contended by counsel for the applicant that the respondent's refusal to grant the export permit was not a mere extinguishment of the applicant's right to export the painting; it also conferred on both the Commonwealth and the Australian people an identifiable and measurable benefit. The Commonwealth has acquired by that refusal, so it was argued, the right to ensure that the painting remains in this country together with a contingent right to all title and interest in the painting in the event that the applicant exports or attempts to export it. It was submitted that the Australian people have benefitted in that the continued presence of the painting in Australia significantly enhances the cultural heritage of this country. Counsel for the applicant likened the prohibition on the export of the painting to the benefit of a restrictive covenant which the Commonwealth may enforce against the applicant and which to the Commonwealth represents property acquired from the applicant; in this respect reliance was placed upon the judgment of Deane J in The Commonwealth v Tasmania (the "Tasmanian Dams Case") (1983) 158 CLR 1 at 268-7.
On the assumption that there had been an acquisition of property by the Commonwealth, it was argued on behalf of the applicant that it had not been acquired on just terms. Counsel for the applicant contended that the acquisition was made at the earliest when the Regulations were made and at the latest when the export permit was refused. It was not argued before us that there could be no acquisition of property by the Commonwealth until, by operation of ss. 9(1) and 38 of the Act, the painting is forfeited to the Commonwealth and all title and interest thereupon vests in the Commonwealth without further proceeding.
It was submitted by counsel for the applicant that the Act was invalid as it provides a legislative regime for acquisition of property and the payment of compensation in a form or in an amount which is left to the "mere discretion of the Minister" and is invalid as being incompatible with the provisions of s. 51(xxxi): reliance was placed upon Nelungaloo Pty Limited v The Commonwealth (1952) 85 CLR 545 per Dixon J at 566-569 and Australian Capital TV Pty Limited v The Commonwealth (No 2) (1992) 108 ALR 577 at 590-1.
It was argued, in the alternative, that the Act was invalid in that the restrictions which it imposes on the applicant are disproportionate to the legitimate public interest which the law is seeking to serve; reliance was placed upon Australian Capital TV.
Another ground relied on by the applicant in support of the alleged invalidity of the Act was raised in written submissions, but not pressed in oral argument before the Court, namely, that it is not an Act which gives effect to the United Nations Education Scientific and Cultural Organization Convention concerning the protection of the world cultural and natural heritage.
The primary argument of counsel for the respondent was that neither the Commonwealth nor anyone else attains rights of a proprietary nature as a result of the refusal by the respondent of an export permit, as neither the Commonwealth nor anyone else obtains by operation of the refusal any right to possession of the painting or to compel its public exhibition or any other kind of right in relation to it.
Reliance was placed upon decisions of the High Court supporting the proposition that it is not enough that property rights are extinguished or restricted for there to be acquisition of property by the Commonwealth under s. 51(xxxi), including the Tasmanian Dams Case per Mason CJ at 145, Murphy J at 181-2 and Brennan J at 247-8; Capital Television (1992) 108 ALR 577 per Brennan J at 615-6, Dawson J at 640-2 and McHugh J at 678; also Australian Tape Manufacturers Association Limited v The Commonwealth (the "Blank Tapes Case") (1993) 112 CLR 53 per Mason CJ, Brennan, Deane and Gaudron JJ at 58, Dawson and Toohey JJ at 79-80, McHugh J agreeing at 80.
The respondent contested the proposition by the applicant that there is an acquisition because the Commonwealth and the Australian people each obtains an identifiable and measurable benefit (to use the language of Deane J in the Tasmanian Dams Case at 283). It was argued on behalf of the respondent that, assuming the applicant's right to receive $1,760,000 from the purchase is a right of property, it is a right conditional upon the grant of an export permit. That conditional right has not been extinguished or restricted by the refusal of the permit.
It was also argued by counsel for the Commonwealth that, even if the Commonwealth's "contingent" right to the painting in the event of its forfeiture by the applicant if he engages in illegal conduct by exporting the painting without a permit, is a right of a proprietary nature, the obtaining of such a right is not an acquisition of a kind to which s. 51(xxxi) applies; and that the Commonwealth's right to prohibit the export of goods is not an acquisition of a proprietary right by the Commonwealth, by the people of Australia or anyone else.
Counsel for the respondent conceded that, if the Court finds there has been an acquisition of property in the circumstances of this case, it could not be contended by the Commonwealth that the acquisition had been on just terms.
Section 51(xxxi) of the Constitution empowers the Commonwealth to legislate with respect to the "acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws". Section 51(xxxi) is to be construed liberally as it is a constitutional guarantee of just terms: Minister of State for the Army v Dalzeil (1944) 68 CLR 261 at 276, 284-5; Clunies-Ross v The Commonwealth (1984) 155 CLR 193 at 201-2. The guarantee of just terms is not confined to an acquisition by the Commonwealth. It extends to an acquisition by the Commonwealth or anyone to ensure that no-one by virtue of a Commonwealth statutory provision may acquire a person's property except upon just terms: see Trade Practices Commission v Tooth and Co Limited (1979) 142 CLR 397 per Barwick CJ at 403.
For there to be an acquisition of property by the Commonwealth or another person for the purposes of s. 51(xxxi) of the Constitution there must be an acquisition of an interest in property "however slight or insubstantial it may be" (the Tasmanian Dams Case per Mason J at 145, Brennan J at 247-8 and Deane J at 282-3, and the Blank Tapes Case at 58). As Mason J observed in the Tasmanian Dams Case at 145:

"To bring the Constitutional provision into play it is not enough that legislation adversely affects or terminates a pre-existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be."

The word "property" in the context of s. 51(xxxi) is: "the most comprehensive term that can be used": Commonwealth v New South Wales (1923) 33 CLR 1 per Knox CJ and Starke J at 20-1. It extends "to every species of valuable right and interest including real and personal property, incorporeal hereditaments ... and choses in action": Dalzeil's Case per Starke J at 290. It extends to money and the right to receive a payment of money: the Blank Tapes Case at 65. As Dawson and Toohey JJ observed in that case at 79 (McHugh J agreeing at 80), the word "property" in this Constitutional provision is to be construed liberally and "it must be possible to identify an acquisition of something of a proprietary nature".
Merely to extinguish or diminish a proprietary right vested in a person does not necessarily result in the acquisition of that proprietary right by the Commonwealth or another. There must be something in addition of a proprietary nature that has been acquired. See the Tasmanian Dam Case per Mason CJ at 145, Murphy J at 181-2 and Brennan J at 247-8; Capital Television per Brennan J at 615-6, Dawson J at 640-2 and McHugh J at 678, and the Blank Tapes Case per Mason CJ, Brennan, Deane and Gaudron JJ at 58, Dawson and Toohey JJ at 79-80 and McHugh J at 80.
The refusal of a permit to export the painting merely operates to render it liable to forfeiture if it is exported or if its export is attempted. Neither the Commonwealth nor anyone else on the facts of the special case has acquired any right to possession of the painting or any right to direct or compel its use or public exhibition or any right to require anybody to do anything in relation to it. The applicant as the owner of the painting was in the same position before as he is after the refusal of the export permit. Before the refusal of the permit he could not export the painting without a permit because it is an Australian object or an Australian-related object within Part IX of the Regulations as an object of fine art. It is unlawful for him to export the painting or attempt to export it without an export permit; but subject to that prohibition he can do what he likes with it. He can keep it himself, he can sell it, lease it or give it to any person or public or private institution or otherwise divest himself of it.
Certainly, the effect of the Act and the Regulations (whether before or after the refusal of an export permit) is to restrict in a practical way the class of purchaser. It is unlikely that a person who wishes to export the painting will buy it unless an export permit has been granted with respect to it. But no proprietary interests of any kind has been acquired by the Commonwealth or any other person before or after the refusal of the export permit. Once the Act operates to render the object forfeited to the Commonwealth, there is indeed a change in the proprietary rights that attach to it.
However, whether objects that are forfeited under the relevant provisions of the Act as the consequence of acts done in contravention of the law, have been acquired by the Commonwealth within s. 51(xxxi) is not a matter which it is necessary to consider in this case. If the forfeiture is one imposed as part of the incidental power (s. 51(xxxix)) for the purpose of vindicating the laws of Australia with respect to the protection of objects of its cultural heritage, it may be that it is not an acquisition of property within the meaning of s. 51(xxxi) for any purpose in respect of which the Parliament is empowered to make laws: see Burton v Honan (1952) 86 CLR 169; Tooth's Case at 408.
I reject the argument on the part of the applicant that, upon the coming into effect of the Regulations (1 August 1988), the painting, which had been purchased by the applicant some three years earlier, became subject to the Regulations which then had the effect of an acquisition of property or that there was an acquisition when the Minister refused the permit. It is true that the effect of the Regulations and the absence of an export permit in respect of a protected object prevents the export of the object, with the consequence that it must remain here. In a broad sense the Australian heritage is enriched because the nation has within its boundaries a painting of great value to the national heritage. Of course, it may never be inspected by the public and remain simply within a private collection. But any benefit to the Australian people of the continued presence of a painting that enhances the cultural heritage and benefits the Commonwealth is not a matter that gives rise to rights or interests of a proprietary nature.
Counsel for the applicant relied on the following passage from the judgment of Deane J in the Tasmanian Dam Case at 283-4 where his Honour said:

"Where, however, the effect of prohibition or regulation is to confer upon the Commonwealth or another an identifiable and measurable advantage or is akin to applying the property, either totally or partially, for a purpose of the Commonwealth, it is possible that an acquisition for the purposes of s. 51(xxxi) is involved. The benefit of land can, in certain circumstances, be enjoyed without any active right in relation to the land being acquired or exercised: see, eg, Council of the City of Newcastle v Royal Newcastle Hospital (1957) 96 CLR 493, (1959) 100 CLR 1. Thus, if the Parliament were to make a law prohibiting any presence upon land within a radius of 1 kilometre of any point on the boundary of a particular defence establishment and thereby obtain the benefit of a buffer zone, there would, in my view, be an effective confiscation or acquisition of the benefit of use of the land in its unoccupied state notwithstanding that neither the owner nor the Commonwealth possessed any right to go upon or actively to use the land affected."

These observations of Deane J must be read in the light of the subsequent judgment of the High Court in the Blank Tapes Case (Deane J was a party to the judgment of the majority) at 58 which expressly adopted the statement of Mason J in the Tasmanian Dams Case at 145 (previously recited) which requires that to enliven s. 51(xxxi) there must be an acquisition of an interest in property "however slight or insubstantial it may be".

The facts of the present case are materially different from those of the Tasmanian Dams Case where the relevant statutory provisions prohibited activity being conducted on the particular land. In the present case, the applicant is free to keep the painting, enjoy it, display it, sell it, lease it or give it away. The only thing he cannot do is export it unless, of course, a permit is later granted to him. In every other respect his rights remain unimpaired. There has been no acquisition by the Commonwealth or another of any right in or to the painting of a proprietary nature.
It was argued on behalf of the applicant that the refusal of an export permit by the respondent under the Act was a "circuitous device" of the kind which Dixon J described in Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 349 as an impermissible use of the acquisition power because it constituted an indirect acquisition of the substance of a proprietary interest without providing just terms. Dixon J's observations were applied in the Blank Tapes Case at 324-5. Dixon J made those remarks when considering the practical effect of the statutory means provided by the Banking Act 1947 to achieve an "acquisition" in the nature of "the reality of proprietorship" which operated indirectly to acquire a proprietary interest. Plainly, the Act does not by its terms or operation, give rise to a "circuitous device" of this description. The Act and the Regulations do not indirectly produce any result of acquisition of an interest. They operate in law precisely according to their language, not by some indirect practical effect. The Act and the Regulations do not achieve an indirect acquisition of the applicant's proprietary interest in the painting.

The applicant argued that he had a contractual right to receive $1,760,000 from Mr Condon derived from the sale at auction on 17 April 1989 which had been acquired by the Commonwealth. This argument cannot be considered in this special case because few of the facts in relation to that sale are known. The only relevant statement of fact in the special case is that the sale was made on 17 April 1989 by Sotheby's at auction. We do not know what the terms of the auction sale were, whether reference was made to the painting as being within the protection of the Act or what Mr Condon's state of knowledge of this fact may have been. Even if it be right, however, to describe the applicant's entitlement to receive the money as a proprietary right, in my view the refusal of the export permit could not be described as the acquisition of this right of the applicant because the Commonwealth acquired nothing.
I would answer the questions referred to the Court by the Tribunal as follows:

Question 1

Does the respondent's decision of 4 February 1992 to refuse to grant the applicant a permit to export the painting, constitute an acquisition for the purposes of s. 51(xxxi) of the Constitution? Answer No.

Question 2

If so, is the acquisition otherwise than on just terms? Answer This question does not arise.

The applicant must pay the costs of the respondent of the special case.

[1993] FCA 820

17 NOVEMBER 1993