Wurridjal & Ors v Commonwealth of Australia & Anor

[2008] HCATrans 348

[2008] HCATrans 348

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M122 of 2007

B e t w e e n -

REGGIE WURRIDJAL

First Plaintiff

JOY GARLBIN

Second Plaintiff

BAWINANGA ABORIGINAL CORPORATION

Third Plaintiff

and

THE COMMONWEALTH OF AUSTRALIA

First Defendant

ARNHEM LAND ABORIGINAL LAND TRUST

Second Defendant

FRENCH CJ
GUMMOW J
KIRBY J
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 2 OCTOBER 2008, AT 10.18 AM

Copyright in the High Court of Australia

__________________

MR R. MERKEL, QC:   If the Court pleases, I appear with my learned friends, MR R.M. NIALL, MS K.L. WALKER and MR A.M. DINELLI for the plaintiffs.  (instructed by Carmen Currie)

MR H.C. BURMESTER, QC:   If it please the Court, I appear with my learned friends, MR S.B. LLOYD and MS A.M. MITCHELMORE for the first defendant.  (instructed by Australian Government Solicitor)

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR S.A. GLACKEN for the second defendant.  (instructed by Northern Land Council)

MR M.P. GRANT, QC, Solicitor‑General for the Northern Territory:   Yes, may it please the Court, I appear with MS S.L. BROWNHILL for the Attorney-General for the Northern Territory intervening in the matter.  (instructed by Solicitor for the Northern Territory)

MS K. RUBENSTEIN:   May it please the Court, I appear with MR E. WILLHEIM, seeking leave to make written submissions as amici curiae in this matter.

Your Honours, this application has not been opposed by any of the parties, which we submit is significant in the Court’s exercise of its discretion. It is our submission that our written submissions will assist the Court in the resolution of an important issue in dispute between the parties, namely, whether the rights claimed by the plaintiffs constitute property for the purposes of section 51(xxxi) of the Constitution. We do not seek to make oral arguments in support of our substantive provisions, but I am available to speak to our arguments in support of this application for leave to make these written submissions if the Court so desires.

FRENCH CJ:   Thank you, Professor Rubenstein.

In relation to the summons by Professor Rubenstein and Mr Willheim, a majority of the Court is of the opinion that this is not a case in which the submissions and material offered to the Court by those who would intervene as friends of the Court are likely to be of any assistance.

The Court may be assisted where a prospective amicus curiae can present arguments on aspects of a matter before the Court which are otherwise unlikely to receive full or adequate treatment by the parties because, (a) it is not in the interests of the parties to present argument on those aspects, or (b) one of other of the parties lacks the resources to present full argument to the Court on them.

In some cases it may be in the interests of the administration of justice that the Court have the benefit of a larger view of the matter before it than the parties are able or willing to offer. In the present case, the Court has received a large volume of material said to support the proposition that the rights claimed by the plaintiffs constitute property for the purposes of section 51(xxxi) of the Constitution. The material consists of what are said to be relevant international law instruments and international jurisprudence. The submissions do not travel significantly beyond that contention and some general statements about the wide meaning to be given to the word “property” in section 51(xxxi). They do not show how, having regard to the particular statutory framework in which the plaintiff’s property rights arise and the operation of the impugned laws, the material is of any relevance.

Before the Court will accept the offer of assistance of an amicus curiae it must be satisfied that it will be assisted.  The tender of a large amount of material, supported by what is little more than an assertion about its utility, is not sufficient to give to the tenderer a voice in these proceedings.  The summons will therefore be dismissed.

MS RUBENSTEIN:   If the Court so pleases.

KIRBY J:   The practice of this Court in recent years has moved in the direction of widening the circumstances in which amici curiae will be heard, or at least permitted to tender written submissions and materials.  See, eg, Attorney-General (Cth) v Alinta Ltd (2008) 82 ALJR 382 at 390-391 [28]-[33] per Kirby J, 396-397 [63]-[68] per Hayne J, 405 [104] per Heydon J; 242 ALR 1 at 9, 10; [2008] HCA 2. In taking this course, the Court has simply, if somewhat belatedly, followed the practice of other final national courts in common law countries. It has done so out of recognition of the special role played by such courts, including this Court, in expressing the law, especially in constitutional cases, in a way that necessarily goes beyond the interests and submissions of the particular parties to litigation. The present is a case involving such issues. Whether the Court would be assisted by the submissions of the proposed amici is difficult, or impossible, to decide at this stage before the Court has heard any argument.

I agree with the other members of the Court that some of the materials proffered by the proposed amici appear somewhat undigested and lacking in demonstrated application to the issues in the proceedings.  Nevertheless, the actual submission of the proposed amici is quite brief, being but 20 pages in length.  It refers to new materials that are not referred to in the submissions of the parties and, in particular, materials on international law and the practice and decisions of foreign and international courts and bodies relevant to the treatment of indigenous peoples.  Such materials may be relevant to this Court’s deliberations as the arguments develop.  Therefore, I would be inclined at this stage to receive the amici’s written submissions and simply to use those materials, with discretion, as they prove to be relevant as the argument advances.

Alternatively, I would reserve the question of whether the amici should be heard or should be permitted to place their written materials before the Court for decision later in the proceedings.  I would note that most of the written materials that were tendered with, and to support, the written submission are publicly available in any event.  We are now on notice of them.  Most of them could be used by the Court as background or contextual materials in any case.

The formal order that I would propose is that the reception of the submissions of the amici should be reserved by the Court until later in the hearing.  I note that the parties to the proceedings have no objection to the Court’s receiving the written submissions of the amici.  Nor, at this stage, should this Court. 

CRENNAN J:   I agree with Justice Kirby.

FRENCH CJ:   The order of the Court will be as I have proposed representing the majority view of the Court.  Thank you.

MS RUBENSTEIN:  Thank you, your Honour.  May I seek leave for my learned friend and I to be excused from the Bar table?

FRENCH CJ:   Yes, thank you.  Mr Merkel, can you address the question of order of address?

MR MERKEL:   Yes, your Honour.  I think the parties had assumed on the basis of previous or more recent practice that the party challenging the laws would go first and that was the way in which the matter had proceeded.  After receiving the letter there were discussions between counsel and the view was formed the Court would be assisted if that order were taken in the present case.

FRENCH CJ:   All right, so you will proceed first and be followed by?

MR MERKEL:   We would be followed by the second defendant who would be supporting our case, then the intervener for the Northern Territory and then the Commonwealth would be responding.  That is my understanding.

FRENCH CJ:   All right, thank you.

MR MERKEL:   If the Court pleases, the demurrer, which is at page 65 of the demurrer book, raises three issues. If I can state them shortly in different order to those raised in the demurrer. The first is, does section 51(xxxi) of the Constitution apply to the impugned provisions in the emergency response and the FaCSIA Emergency Response Acts? The second is, do the impugned provisions affect an acquisition of property of the Land Trust and of the individual plaintiffs?

GUMMOW J:   When you say the individual plaintiffs, that excludes the third plaintiff, does it not?

MR MERKEL:   Yes, that is correct, your Honour.  I am sorry.

GUMMOW J:   The third plaintiff is there for standing, I suppose.

MR MERKEL:   Yes, your Honour.

GUMMOW J:   I just wanted to make sure that is right.

MR MERKEL:   Yes.  There are only the two individual plaintiffs, not the third plaintiff who are claiming any property rights.  The third question is, is the acquisition property other than on just terms and the plaintiffs seek an affirmative answer to each question.  If I could go straight to the relevant legislation because each of the questions does involve consideration of the legislation.  We have prepared two volumes.  The first volume at tab 2 contains the Land Rights Act in the form it was in immediately prior to the emergency response legislation.  That is at tab 2.  I am conscious that in the Blue Mud Bay Case your Honours did consider this legislation in some detail.  I will only go to the provisions that bear on the issues that we say arise in the present case.

The first set of provisions relate to the grant of the fee simple estate to the Land Trust.  They are section 4(1) at page 11 and section 10, subsections (1) and (2) at pages 16 and 17.  The land in question is at page 175 in Schedule 1, the Arnhem Land mainland.  The deed of grant that followed those provisions is at the demurrer book at page 46.  That was dated 30 May 1980.  The certificate of title in respect of the fee simple estate that was registered appears at page 50 and that was registered pursuant to the provisions of the Land Title Act (NT). Both the deed of grant and the certificate of title were subject to existing estates and interests and any preservation of rights and interest provisions of the Land Rights Act.

FRENCH CJ:   The two plaintiffs, the first and second plaintiff, bring the action primarily in their capacity as traditional Aboriginal owners within the meaning of the Act.

MR MERKEL:    Yes, your Honour.

FRENCH CJ:   There seem to be a variety of ways, for example, the land trusts are set up to hold land for the benefit of Aboriginals entitled by Aboriginal traditions for the use or occupation of the land concerned, whereas the definition of “traditional Aboriginal owners” talks in terms of local dissent groups and rights of forage and so forth.  Is there any tension between those two?

MR MERKEL:    Not as far as I am aware in relation to the issues.  The first two plaintiffs are traditional owners.  They are also Aboriginal persons entitled under section 71 to a right of use.  It is the 71 rights that they claim as property rights.  There have been official interests and rights in respect of what the Land Trust does, but we treat that as part of the Land Trust property.  Our submissions have strayed a little but our learned friend, Mr Burmester, has reminded us that we must not stray and in our submissions we do define the fee simple estate rights in terms of the rights of the Trust, but it is of some significance that they are held for the benefit of the traditional owners and the emergency response legislation effectively severs that tie, and I will come to that in a moment.

The Land Title Act is in volume 2 at tab 9.  The relevant provisions are at page 66.  That effectively creates the indefeasibility of a Torrens title at sections 184, 185 and 188.  That is, of course, subject to registered interests which are the interests that are effectively preserved when the deed of grant was executed pursuant to the provisions of the Land Rights Act.

KIRBY J:   When was this Act enacted?  One of the defects of the Northern Territory’s new practice of dropping the year of statutes is that you get no clue as to when it was enacted.  I really do not know why they have done that.  No other jurisdiction in the Commonwealth has done it and it is really not a helpful development, in my respectful opinion.

MR MERKEL:    I will have to come back to your Honour on that.

KIRBY J:   I hope the Solicitor heard what I said there.

MR MERKEL:    We have assumed that those original provisions were the indefeasibility provisions at the date of registration, but we need to check that assumption, your Honour.  Your Honours considered the nature of the fee simple estate in the Blue Mud Bay Case.  I do not need to take your Honours to the passage, but in paragraph [50] of the majority judgment their Honours stated:

that “for almost all practical purposes, [are] the equivalent of full ownership –

and, importantly, for issues in the present case the grant of rights was described as including:

the right to exclude others from entering the area identified in the grant. 

Your Honour Justice Kirby, at page 69, agreed with the approach to the Land Rights Act taken in the majority judgment.  The second aspect of the Land Rights Act we would seek to address is the notion that the fee simple estate is held effectively on a statutory trust for the benefit of the traditional owners.  The definition appears at page 7 of the Act and the first two plaintiffs – if I can refer to them as the individual plaintiffs – are traditional owners and also persons entitled to the benefit of the rights conferred under section 71.

The provisions that we rely on to demonstrate what I can call loosely the “statutory Trust” we have described is section 4(1) which has the Trust holding title for the benefit of the Aboriginals entitled by Aboriginal tradition to the use and occupation of the land concerned.  Then one goes to section 5(1) where in subsections (a) and (b) – particularly (b) – the Trust has a function of exercising its powers as owner “for the benefit of the Aboriginals concerned”.  Then at sections 23(1)(a), (b), (ba) and (c) - at page 68 one sees the functions of the Land Council are:

(a)to ascertain and express the wishes and opinion of Aboriginals living in the area of the Land Council as to the management of Aboriginal land in that area and as to appropriate legislation concerning that land;

(b)to protect the interests of traditional Aboriginal owners of, and other Aboriginals interested in, Aboriginal land in the area of the Land Council;

(ba)to assist Aboriginals in the taking of measures likely to assist in the protection of sacred sites on land (whether or not Aboriginal land) in the area of the Land Council;

(c)to consult with traditional Aboriginal owners . . . with respect to any proposal relating to the use of that land -

I should indicate that when I come to the emergency response legislation we say that on the proper construction of the legislation the entirety of this association between the owner of the land and the traditional Aboriginals entitled to enjoy its benefits is effectively severed for the duration of the lease.

The third aspect is the financial benefits that flow to the traditional owners from the ownership of the fee simple estate of the Trust.  Section 6 at pages 14 and 15 says:

A Land Trust is not empowered to accept moneys due and owing to it or to give a valid discharge for such moneys, but such moneys may be paid to the Land Council for the area in which the Land Trust holds –

Then one goes to sections 15 and 16 at page 42 and there is an obligation in respect of Crown occupation to pay rent for the occupation and use of the land.  That is after the deed of grant.  In 16:

The Crown shall pay to a Land Council amounts equal to the amounts of rents and other prescribed payments paid to the Crown in respect of an interest (including a mining interest) –

Then one goes to section 35(4) at page 93.

CRENNAN J:   What is the significance of the Minister fixing the rate under section 15, if any?

MR MERKEL:   Probably retaining a last vestige of Crown ownership at that time, prescribing whatever rate the Crown may fix, but otherwise we do not say, other than dealing with what I might call transitional arrangements, it would have any further significance.  I am not sure that these provisions have much of a role left 30 years or so later, but, as we understand, it is effectively, together with a number of other provisions, transitional arrangements for that changeover and continuing Crown occupancy that it was in existence at that date.  But the Crown were not in a position ‑ ‑ ‑

KIRBY J:   Which Crown are we talking about here?

MR MERKEL:   Commonwealth Crown.

KIRBY J:   I repeat what I have said in many cases, the use of the Crown in these circumstances is, in my respectful view, quite erroneous.  We should talk of the constitutional entities that are created in Australia, either the Commonwealth or the Territory.  It is just confusing to use the Crown and, in my view, legally inaccurate. However, it is in the statute, so we have to make the most of what we can of it.

MR MERKEL: I have no quarrel with your Honour. For all intents and purposes, for the present case, we treat it as the Commonwealth. The important provision for present purposes is section 35(4), that is at page 93. Before I go to that I should take your Honours to sections 19 and 20, but particularly section 19 because it is, as I just indicated to your Honour Justice Crennan, 15 and 16 were effectively transitional arrangements.

Section 19 dealt with the creation of new interests in the land pursuant to which rent would no doubt, or other consideration, be payable. There is a prohibition in subsection (1) of the Land Trust dealing with or disposing of an interest in the land except as provided by section 19. Then there are certain provisions about “the consent, in writing, of the Minister,” subsection (2), being required for particular estates and interests. The same in subsection (4A). Subsection (5) provides that:

A Land Council shall not give a direction under this section for the grant, transfer or surrender of an estate or interest in land unless the Land Council is satisfied that:

(a)the traditional Aboriginal owners (if any) of that land understand the nature and purpose of the proposed grant, transfer or surrender and, as a group, consent to it;

(b)any Aboriginal community or group that may be affected by the proposed grant, transfer or surrender has been consulted and has had adequate opportunity to express its view to the Land Council –

So consent of the traditional Aboriginal owners has gone.  That is another provision which is, in effect, severed from the land during the period of the emergency response legislation; that is the land leased.  Importantly, subsection (7) only requires the consent of the Minister for the grants of estates and interests the term of which does not exceed – sorry, it is not required if the estate or interest is for a term less than 40 years.  So, effectively, for anything less than 40 years it is the Land Council acting with the consent of the traditional owners without the Minister’s consent.  Then in subsection (11):

A reference in this section to an estate or interest in land includes:

(a)      a reference to a licence –

So that, effectively, the Land Council with the consent of the traditional owners is given a right to deal with the land and receive income from those dealings.  Then, if I could take your Honours to section 35(4) at page 93:

Where a Land Council receives a payment in respect of Aboriginal land, including a payment under section 15 or 16 or under a lease or licence under section 19 or 20 but not including a payment under section 64 –

which is a special Aboriginal benefit account which is not relevant for present purposes –

the Land Council shall, within 6 months after that payment is received, pay an amount equal to that payment to or for the benefit of the traditional Aboriginal owners of the land.

So it is through that process that the financial benefits of the fee simple estate devolve down to the traditional Aboriginal owners. I should mention briefly section 19A which is at page 50. That is a recent amendment enabling, in effect, the inalienability of the Aboriginal land to be bypassed for 99‑year leases over townships. That had been introduced recently and had not been taken up. I think only one had been taken up. But one of the purposes, it would appear from the emergency response legislation, is to give some inducement to these leases because one of the very few exceptions from the operation of the emergency response legislation is a township lease under section 19A. So if such a lease is granted, it is a way of taking that township outside of the emergency response scheme. I just mention that so that that will help explain why section 19A leases occupy a special position in the response legislation.

KIRBY J:   When was 19A added to the Act?

MR MERKEL:   In 2006, your Honour.  I think the historical background is that only one community had taken up that lease by the emergency response and the idea of getting alienability into Aboriginal township lands, which would be the equivalent of individual ownership, had not succeeded.  Part of the policy behind the response legislation was to seek to induce that kind of alienability.

The next set of rights are those that go to the traditional rights of the Aboriginals concerned with the land, but, in particular, the traditional owners.  Section 69 at page 163 deals with sacred sites.  Your Honours considered these provisions in the Blue Mud Bay Case, so I will travel quickly through them.  The sacred site protection is:

(1)A person shall not enter or remain on land in the Northern Territory that is a sacred site . . . 

(2)Subsection (1) does not prevent an Aboriginal from entering or remaining on a sacred site in accordance with Aboriginal tradition.

(2A)In the proceedings for an offence against subsection (1), it is a defence if the person enters or remains on the land in performing functions under this Act or otherwise in accordance with this Act or a law of the Northern Territory.

I will come to this when I come to the response legislation, but we say the exclusive possession given to the Commonwealth under the response legislation applies to sacred sites.  Not surprisingly, one of the early controversies in the life of the intervention was a toilet block being built, no doubt unwittingly, on a sacred site as part of the intervention.  But we do make the point that there is no protection, as far as we are able to discern it, in the response legislation for sacred sites from the exclusive possession of the Commonwealth.  It is not, as such, a preserved interest.

GUMMOW J:   But is there any amendment of the penal provision of 69?  Section 69 is a penal provision.

MR MERKEL:   Yes, your Honour.

GUMMOW J:   Is that amended in any way specifically by the recent legislation?

MR MERKEL:   I will have to check that.  I did not think so, your Honour, but it may be.

GUMMOW J:   I thought not.

MR MERKEL:   I will have to check that.

FRENCH CJ:   That is a public law prohibition.  Are you saying it creates a property right?

MR MERKEL:   No, your Honour.  The sacred site aspect – the property right we rely on is in section 71, and that gives a right ‑ ‑ ‑

FRENCH CJ:   I am sorry.  I misunderstood what you were saying.

MR MERKEL:   It fits into section 69, but when we come to the detail in operation of the response legislation, the giving of exclusive possession has quite substantial consequences.  I only point out the sacred site issue so I do not have to go back to it, your Honours.  Section 70 deals with entry on Aboriginal land which your Honours considered in some detail.  Section 70(2A) says it is a defence if the person is performing functions or is there in accordance with the law of the Northern Territory.

Then section 71(1) is the one which we say gives the traditional owners a statutory licence in respect of the use and occupation of the land.  It says:

Subject to this section, an Aboriginal or a group of Aboriginals is entitled to enter upon Aboriginal land and use or occupy that land to the extent that that entry, occupation or use is in accordance with Aboriginal tradition governing the rights of that Aboriginal or group of Aboriginals with respect to that land, whether or not those rights are qualified as to place, time, circumstances, purpose, permission or any other factor.

We say that even though the Act does differentiate between traditional Aboriginal owners and persons acting in accordance with Aboriginal tradition, the linkage of Aboriginal tradition with respect to the land probably means that the differences between the two groups may be marginal not substantial.  Subsection (2) says:

Subsection (1) does not authorize an entry, use or occupation that would interfere with the use or enjoyment of an estate or interest in the land held by a person not being a Land Trust ‑

There is some debate between the parties which will emerge later as to whether the Commonwealth lease makes section 71(1) subject to subsection (2) and therefore dispossesses the Aboriginals concerned with the rights under section 71(1), although our primary position is that the 71(1) rights are preserved under the lease.  But subsection (2) does emerge as a point of difference in the parties’ submissions.  Then section 73(1)(a) and (b) provides for the Northern Territory Assembly to have power to make laws in relation to sacred sites and also regulating entry.

Pursuant to that power, at volume 2, tab 7, is the Aboriginal Land Act, which effectively established the permit system that was before your Honours in the Blue Mud Bay Case, and in that Act, sections 4, 5, 5A, 6 and 8 set up a permit system which put primary responsibility for granting of permits in the hands of the relevant council for the traditional owners, or a person entitled by Aboriginal tradition to grant a permit, and there are provisions for revocation by those persons.

That was effectively the permit system which your Honours had described in the majority judgment in Blue Mud Bay as empowering in substance a right to exclude others from the land, and it being effectively community land.  That is a right that has attached to Aboriginal land.  The same kind of right attached to the land the subject of Gerhardy v Brown in the South Australian Pitjantjatjara legislation.  I will take your Honours to that in due course.

FRENCH CJ:   Just going back.  I want to align 71 with your statement of claim.  At page 19 of the demurrer book, I think it is paragraph 9, the second further amended statement of claim, is it right you are really pleading ‑ ‑ ‑

MR MERKEL:   I am sorry, what page was that, your Honour?

FRENCH CJ:   Page 19 of the demurrer book - pleading that the first and second plaintiffs - you are pleading facts about them in terms designed to bring them within section 71.  That does not depend upon them falling within the category of traditional Aboriginal owner.

MR MERKEL:   That is correct, your Honour.  They are traditional Aboriginal owners.

FRENCH CJ:   You are saying this as well.

MR MERKEL:   Yes, your Honour.

FRENCH CJ:   There are additional factual elements here.

MR MERKEL:   Yes.  The property right – I do not think it is disputed for the purposes of the demurrer ‑ ‑ ‑

FRENCH CJ:   No, I understand that.

MR MERKEL:   ‑ ‑ ‑ that they would have the benefit of section 71 rights.  They are in fact ‑ ‑ ‑

FRENCH CJ:   But by reason of these matters in 9.

MR MERKEL:   Yes, your Honour.  The traditional owners’ rights will give them effectively the standing in respect of the action that the Land Council had not brought.

FRENCH CJ:   That gets them in under the Trust benefits and so forth.

MR MERKEL:   Yes, but we have relied on the Trust’s rights as the primary right rather than relying on the traditional owners’ rights as, in effect, doubling up.  That is the legislative scheme in existence at the time of the emergency response legislation.  Can I now take your Honours to that legislation.  It is in volume 2, tab 4.  Can I just indicate to your Honours that the original legislation was amended and, for the purposes of the case, we have treated the relevant legislation as the amended legislation, so what is set out at tab 4 is the Act in its form after amendment, Act No 67 of 2008.  I do not think the amendments affect any matters of substance, but we are content for the matter to proceed on the basis of that amended Act.

GUMMOW J:   Act No 67?

MR MERKEL:   Yes, your Honour.

GUMMOW J:   Of 2008?

MR MERKEL:   Yes, and this incorporates those amendments.  Could I take your Honours to page 1 in our submissions.  I think we had erroneously given the impression that there was in fact a five‑year lease of the Maningrida land.  What in fact happened is that the lease started from 17 February and operates from five years from the commencement of the Act, so the lease will finish by 18 August 2012.  So for Maningrida it is effectively a four‑and‑a‑half‑year lease.

FRENCH CJ:   Just as a general question, the term “lease” is used in the Act, but if one were to take that term out and simply rely upon the legal consequences of it which are set out in the various provisions relating to the term and exclusive possession and rent and so forth and rights of variation, is there anything added by the use of the word “lease” that we do not otherwise find in the Act in terms of the rights that the Commonwealth acquires or creates?

MR MERKEL:   Your Honour, we will be coming to this in our submissions about the consequences of this Act, but it is a unique vehicle.  It does create a lease traditionally so‑called with provisions for rent, exclusive possession, subject to certain exception, so it is in substance a lease. 

FRENCH CJ:   You can perhaps label it a lease.  All I am asking is whether the use of that term in the Act adds anything to the terms and conditions which are specified?

MR MERKEL:   It is a difficult question to answer, your Honour, because it does so much more than a lease that it is hard to describe it.  We say it grants a lease plus powers for the tenant which are equivalent to being the landlord.  Probably not in the sense of – the statutory word does not add anything to describe what is in fact conferred, but it does give exclusive possession and has provision for rent.

FRENCH CJ:   It says that in the Act.

MR MERKEL:   It says it in the Act and we say as a matter of substance that is what it does.  For example, there are unusual provisions about where the Commonwealth stands as if all rights and interests in the land were granted by it, so it stands in its shoes as the Commonwealth and in that way it severs the chord between the Land Trust and the traditional owners.  So it does not receive its benefits, in effect, as the lessee encumbered by the statutory obligations in respect of rent and in respect of the land that the Land Trust has.  So it is a most unusual creation but I am not sure whether I have taken the matter any further than that which your Honour has asked.  It is a very hard thing to describe what they have in fact created.

“Relevant owner” is defined at page 6 and for present purposes it is the Land Trust, the Arnhem Land Aboriginal Land Trust in respect of the Maningrida land.  Section 5 describes “The object of this Act is to improve the well‑being of certain communities”.  There is a sunset provision in section 6.

GUMMOW J:   Is that word “community” given any further definition?

MR MERKEL:   I do not think so, your Honour.

GUMMOW J:   Connecting it to Aboriginal persons?

MR MERKEL:   It is not, your Honour, but the ‑ ‑ ‑

FRENCH CJ:   You link it to the race power, do you not?

MR MERKEL:   Yes, it plainly gets into the race power because it only affects Aboriginal persons and it is an amendment to the Aboriginal Land Rights Act which itself is an Act that would be sustained under the race power.

FRENCH CJ:   But you will not get that out of the object standing by itself.

MR MERKEL:   No, your Honour.

CRENNAN J:   Are you saying there would not be non‑Aboriginal persons who are part of the communities that are covered by 5?

MR MERKEL:   Theoretically speaking, there may well be non‑Aboriginal persons affected in some ways, but it is hard to identify any provision that would be directed at any persons other than Aboriginal persons, although it may incidentally affect non‑Aboriginal persons.  Only Aboriginal persons would be able to have the benefits of the Land Rights Act, the traditional owners or persons by Aboriginal tradition to use and occupy the land. 

Now, there may be some margins in terms of what is an Aboriginal person and incorporation into a community by adoption, but I do not think we travel there.  It is effectively a law with respect to the Aboriginal persons as a race.  I do not think the Commonwealth really put it that it is not.  Ultimately, their argument is that because it relates to the Territory it should be looked in a paramount way as being a Territory law, not a law under the race power. 

HAYNE J:   Part 2 of Schedule 1, which is, I think, not reproduced in the legislation book, dealt with what was entitled “Community living areas”.

GUMMOW J:   Yes, that is right, which is important for section 70A through to 70F. 

HAYNE J:   It may be, or it may not be, that the expression of section 5 has to at least take some attributes from the way in which elsewhere in the Act we find reference to “community”.  I do not know what follows from it.

MR MERKEL:   Yes.

CRENNAN J:   One practical thought I had was that if you had a community health service set up, for argument’s sake, in one of the communities, one would assume it would be accessible to all members of the community.

MR MERKEL:   Yes, it clearly would, as would community stores, but, as we understand it, when it comes to the legislative amendments effected by the response legislation – but we have confined ourselves primarily to the land rights aspects, such as the quarantining of income – it is our understanding that all of those measures will only apply to persons of the Aboriginal race.  It is for that reason that the Race Discrimination Act has been abrogated.  These laws have been described as special measures for the purposes of the Convention, which would only make sense in terms of laws with respect to a race being the Aboriginal race.  That special measures provision I will come to shortly, but I do not think there is any issue raised, as far as we can understand, that these laws are effectively laws concerning the rights of the Aboriginal people as a race.  We accept that the laws can have other impacts, but probably not directly in terms of legal rights.

GUMMOW J:   Can I just ask you probably a too basic question?  The estate in fee simple that you took us to, is that co‑extensive in area with the Maningrida land?

MR MERKEL:   No.

GUMMOW J:   The Maningrida land is less than the whole of the area of the fee simple?

MR MERKEL:   Yes.  I will come to this in a moment, your Honour.  What in fact happened is that the Commonwealth took measurements, presumably from some space‑measuring basis, of 73 Aboriginal township areas, of which Maningrida is the largest, and then effectively defined those areas in Part 1 of this Act – Schedule 1, Part 1, as being the area the subject of the lease.  So that, for example, at paragraph 4 of our original submissions we have described what we call the Maningrida land.  It is Aboriginal land so it is the subject of the certificate of title and the fee simple.  But the areas leased comprise five areas which include the township area with its residential and commercial buildings and infrastructure, sacred sites, an outstation, a sand quarry pit, a billabong and a ceremonial site.

In effect, we understand that if from the sky you look down on Maningrida you would see everything that was looking like it was occupied as part of the township.  The billabong, which is about 10 kilometres out of Maningrida, probably got in because from wherever the measurement was taken it looked like it was an occupied area, but it was only a billabong in the middle of nowhere.  It happens to be a place where ceremonies are conducted.  That is my understanding of how the townships were actually categorised.  If I can take your Honours to page 137, what we have described as the Maningrida land ‑ ‑ ‑

HAYNE J:   Page 137 of?

MR MERKEL:   Of the Emergency Response Act, your Honour.  That is at tab 4, volume 2.  The Maningrida land is there described in clause 21, and it is the five separate areas, approximately 10,400 square kilometres.

GUMMOW J:   That is replicated in the FCSIA Act, Schedule 4, item 22, with the community areas.

MR MERKEL:   Yes.

GUMMOW J:   It looks as if it repeats it.

MR MERKEL:   It would be, your Honour, because the emergency response was directed at the 78 Aboriginal townships which are all on Aboriginal land under the fee simple estate.  The total response under the two response Acts were directed at different aspects of life in those townships.

GUMMOW J:   The total area seems to be 10.456 square kilometres.

MR MERKEL:   Yes.

GUMMOW J:   Whereas the total area of the fee simple is quite vast.

MR MERKEL:   Yes.  This legislation does not interfere with or touch upon, as far as the issues that we raise are concerned, with any areas outside what we call the Maningrida township, but there are the same provisions applying to the other 78 townships in Part 1.

GUMMOW J:   I see.  Thank you.

HAYNE J:   The Arnhem Land grant seems to be about 89,000 square kilometres.  If we go to the Gazette at page 40 of the demurrer book onshore is about 89,800 square kilometres, or am I misreading that?

MR MERKEL:   I do not know, your Honour, I thought it may be more, but I have not checked that in terms of ‑ ‑ ‑

HAYNE J:   Page 40, demurrer book, column 2, Schedule 3 Arnhem Land Aboriginal Land Trust, (Arnhem Land).  Is that what I should be looking at:

All that piece of land in the Northern Territory of Australia containing an area of 89872 square kilometres?

MR MERKEL:   Yes, your Honour, that is correct.  The one matter I have not checked is whether the other 78 areas are all necessarily in Arnhem Land.  I think they would travel in different parts of the Territory so they would be subject to different certificates of title, so that would be right.  So that seems correct, your Honour.

HAYNE J:   Yes.

MR MERKEL:   If I could just ask your Honours to note the sunset provision in section 6 would be 18 August 2012.  Can I go straight to section 31 which deals with the grant of the lease.  The draftsperson had no doubt this was an acquisition of rights, title and interest in land.  Section 31(1) says that:

A lease of the following land is, by force of this subsection, granted to the Commonwealth by the relevant owner of the land –

which is the Arnhem Land Trust, and –

(a)land referred to, in a clause, in Parts 1 to 3 of Schedule 1 –

and I have taken your Honour to the Maningrida land at page 137 which is in clause 21 of Part 1.  Then at subsection (2)(a) the commencement dates for other land in (1) is the date of the Act, but in (2) for the Maningrida Land in clause 21 is the time specified in section 32, and I will come to that in a moment, and (b) the lease ends five years after the date “at which this section commences” and it commenced on 18 August 2007.

Subsection (3) excludes from the area leased a registered lease.  So that would be a lease just registered in the normal course under the relevant Northern Territory legislation.  So that is excluded, although there is a power later to bring it back in.  Then at section 32, the commencement of the leases under the earlier subsection (2)(a), section 31(2) is 17 February 2008 where that section commences.  Then section 34 deals with preserved rights and:

(1)This section applies to any right, title or other interest in land if:

(a)the land is covered by a lease granted under section 31; and

(b)the right, title or interest exists immediately before the time that lease takes effect . . . 

(10)     A reference in this section to a right, title or interest includes a reference to a licence.

The argument that we are putting is that the section 71 rights fall within an interest or a licence and were in existence immediately before the time the lease takes effect and therefore are preserved rights. Subsection (2) excludes native title rights they are dealt with in section 51. Effectively, they are suspended for the duration of the lease, but this case does not raise an issue about native title rights.

FRENCH CJ:   It is in a way analogous to the non‑extinguishment principle, is it, under the Native Title Act?

MR MERKEL:   It is yes, your Honour.  I think the section might, in fact, apply that non‑extinguishment principle, but the effect of it is to suspend native title rights under the Act for the duration of the lease.  Subsection (3) preserves the right, title or interest in the land and subsection (4) says:

If the right, title or interest in the land was granted by the relevant owner of the land, the right, title or interest has effect, while the lease is in force, as if it were granted by the Commonwealth on the same terms and conditions as existed immediately before that time.

So, effectively that subsection severs the beneficial interests of the traditional owners with the land and the Commonwealth then stands as the lessee having effectively – I will come to in a moment – the rights of the owner, but without any of the obligations.  That subsection links with section 63(1)(d) which is an appropriation provision at page 53 which is premised on the basis that amounts that would have been payable to the Land Trust will be:

paid to the Commonwealth in respect of a right, title or interest in land that is taken to have been granted by the Commonwealth under subsection 34(4) –

There is a subsection authorising payment out of consolidated revenue, but I will come back to that.  But it is clear that the operation of subsection (4) is to, in effect, create an entirely new regime which departs entirely from the beneficial aspects of the Land Rights Act in respect of traditional Aboriginal owners or Aboriginal persons entitled by tradition to any benefits in respect of the land.  Then subsection (5) gives the Minister a ‑ ‑ ‑

FRENCH CJ:   Do you extend that to financial benefits accruing from that such a right, title and interest, do you not?

MR MERKEL:   I am sorry, your Honour?

FRENCH CJ:   Do you extend that to cover financial benefits deriving from such right, titles or interests?

MR MERKEL:   Yes, your Honour.  Anything that would have been payable in respect of the land will go to the Commonwealth, in effect, as if it were the owner.  That is how we understand it.

FRENCH CJ:   I am wondering, for example, suppose there is some existing right to a financial benefit deriving from some sort of contractual arrangement, which is not in itself a right, title or interest in the land, this would not affect that, would it?

MR MERKEL:   Well, if it were less than a licence, that is right because this applies to right, title and interest including licences.  It is not easy to picture what would be a benefit falling outside a licence, but plainly there might be some aspects that would not constitute a licence, but effectively puts the money stream in the direction of the Commonwealth, not the Land Trust and through the Land Trust to the traditional owners.

When we come to a proper analysis of the fairness or equity of this scheme, what we say is that it has extraordinary provisions which are primarily designed to stop a flow of income as much as one can through this scheme to traditional owners for as long as possible; in effect, until a court determines after the hearing of this constitutional case what compensation may be payable.  We say that when you come to the rent provisions we will come to in a moment there could be no other explanation for many of these provisions than to dry up an income stream and, indeed, that is stated – not quite in those words – in the second reading speech in support of this Act.  So that the most unusual provisions that one finds in this legislation ‑ ‑ ‑

GUMMOW J:   What is the constitutional characterisation of that that this is like the Bank Nationalisation Case, is it, that in substance the fee simple is being leached, because one of the points of having a fee simple is to turn it to account?

MR MERKEL:   Yes, there is an analogy, but not a direct one because, unlike the Bank Nationalisation Case, the indirect acquisition of the business of the banks was not compensated for by just terms at the time that it occurred as a matter of substance.  Here the compensation provisions are drawn very widely so that ultimately there is compensation payable as a result of the operation of this statutory scheme and what is done under it.  So it is different in that sense.  But when it comes to concepts of fair dealing and community standards that might accept what is just, what one sees here is an object which we would say would not be engaged in in respect of any other community in Australia, or has no precedent in respect of any other community in Australia which is deliberately designed to ensure there is no income flowing through for some considerable period of time without any replacement for it during the period.

So, for example, the idea of having rent as an option of the tenant is a most unusual provision.  That idea of if it even be elected for by the landlord it is of the unimproved value of the land, is itself a provision without precedent, but I will come to that in a moment.  But when you look at the totality of this scheme, it seeks to put the Commonwealth, in effect, in a position that matches its quarantining of income through social security legislation, which it has the right to do.  But we say the question here is whether it is fair and equitable that it approaches compensation in this way and, more precisely, whether these terms ultimately adjust.

GUMMOW J:   The Commonwealth says there is no acquisition in the first place.

MR MERKEL:   That is what it says and if that is right, then of course they can be as unfair or inequitable as they wish; it is the legislative prerogative.  But we say that if we lose on that, then this just becomes a protest, but we say that there are substantial grounds for this being plainly an acquisition and, indeed, the whole heading of this part is called “Acquisition”, but we will deal with that in due course. 

KIRBY J:   Could you give me some clue as to how the Minister endeavoured to justify the cutting off the income as relevant to a federal response to the so described national emergency?

MR MERKEL:   Your Honour, it was put in obscure language, not in those terms.  In the second reading speech, which I will come to in due course, it was put as we have to stop Aboriginal people getting access to grog and so forth, which is part of the whole emergency response environment.  So it is put in that way in the second reading speech of this Act.  But when you look at these provisions, the only justification one can really discern for them is an endeavour to, in effect, be supportive of the quarantining, because what is the point of quarantining social security benefits if the traditional owners are going to get this income stream for rent and other matters from the land?

KIRBY J:   Does that mean that if this enactment is valid under the Territory’s powers, similar provisions could be enacted by the Federal Parliament in respect of the income stream of, say, people in the Northern Territory who have a drinking problem, whatever their race?

MR MERKEL:   Yes, your Honour. 

KIRBY J:   Or some other problem or suggested problem.

MR MERKEL:   Of course, that is right, your Honour.  This could be an Act in respect of anyone in the Territory or the ACT, for that matter, if that argument be correct.  But the point I am seeking to address at this stage under section 34(4) is that, in a sense, by way of analogy with the Bank Nationalisation Case, not a direct analogy, these provisions were a device to try and dry up income from persons who were previously entitled to it as a matter of right in respect of the land and we say that when the Court ultimately is called upon to say that at the bottom of this barrel in some years hence when a court of competent jurisdiction finally gives reasonable compensation all will be made good, that is setting a standard that no other section of this community would accept in respect of its dealings with the government.  I am talking about the Australian community.

HAYNE J:   The premise is a premise founded in the proper construction of the Act, is it not?

MR MERKEL:   Yes, your Honour.

HAYNE J:   We have to grapple with the Act to see whether the premise from which this branch of your argument proceeds is accurate and, if it is accurate, to what extent it is accurate.

MR MERKEL:   That is the first step, your Honour, but it is not the final step.

HAYNE J:   I understand, but all I am saying to you is your argument has a premise which needs demonstration.  I invite you to demonstrate it.

MR MERKEL:   Yes, I will proceed to do that, your Honour.  That is section 34(4).  Can I move on.  I had indicated, under subsection (5) the Minister can determine that subsection (4) does not apply and subsection (8) regards subsection (4) ‑ ‑ ‑

FRENCH CJ:   Just going back for a moment, your premise on 34(4) is that its effect is to divert from the owners to the Commonwealth any financial benefits derived from the grant of the rights, titles or interests in land to which the section applies.

MR MERKEL:   Yes, your Honour.

HAYNE J:   That is present or future benefits, is it, Mr Merkel?

MR MERKEL:   Yes.

HAYNE J:   Which?

MR MERKEL:   Present and ‑ ‑ ‑

HAYNE J:   Present and future?

MR MERKEL:   Present and continuing for the duration of the lease.

HAYNE J:   But presently existing benefits is the proposition?  I just want to understand what your proposition is, Mr Merkel.  I am not challenging it.  I want to know what it is.

MR MERKEL:   Yes.  It is in a section dealing with preserved rights, so it must be present benefits, so it is in respect of preserved rights.  But in respect of future rights – sorry, it is in respect of present rights.  Your Honour is right.  Future rights are dealt with in section 35 which I am about to come to but that carries the same scheme through to the future that ‑ ‑ ‑

FRENCH CJ:   Just so I can understand how it operates.  Are you able to give an example of how 34(4) operates in respect of some particular right, title or interest to divert a financial stream from the owners to the Commonwealth?

MR MERKEL:   If the Land Trust had leased property to Bawinanga and it was not a registered lease – if it was a registered lease it is taken outside the Act, but if the lease was not registered then Bawinanga’s rent would be payable to the Commonwealth because it stands in the shoes in respect of that interest as if it were granted by the Commonwealth.  If there were doubt about that, the appropriation provision makes it clear that the Commonwealth expects amounts to be paid to it under section 34(4) and that ‑ ‑ ‑

FRENCH CJ:   That is to be found in 34(4) in the words, “has effect . . . as if it were granted by the Commonwealth”?

MR MERKEL:   Yes, your Honour.

GUMMOW J:   You put to one side registered leases.  Where do we see that put to one side?

MR MERKEL:   Registered leases, section 31(3), your Honour, excludes registered leases.

HAYNE J:   Where do I find most conveniently in the statement of claim the fact or facts which engage this argument?

MR MERKEL:   Can I come back to your Honour on that?  I will find that, your Honour.  But it comes under the definition of the way – the reason we say the terms are unjust.  I will come back and give your Honour an answer to that. 

HAYNE J:   Mr Merkel, let there be no doubt about this.  I asked my question because I cannot find it there.  Now that, no doubt, reflects very poorly on me, but I do need to know where it is.

MR MERKEL:   Yes, its relevance will be as to the reasons why the acquisition is unjust because the diminution in the owner’s rights caused by the legislation is the loss of the fee simple estate and rights for the period of the lease, but I will come back if I can and give your Honour the answer to that.  Can I go to section 35:

A lease of land granted under section 31 gives the Commonwealth exclusive possession and quiet enjoyment of the land while the lease is in force (subject to section 34 –

which is preserved interest subject to section 37(6) which deals with section 19A head leases and section 52 which deals with the Minister’s consent to section 19 leases, subject to sections 70C and G which are the removal of the permit system in the FaCSIA Act which I will come to shortly. So that they are the limited exceptions. I should indicate, I wanted to take your Honour to section 34(8) which said that:

Subsection (4) is to be disregarded for the purposes of subsection 19A(11) –

That is the township lease provisions which are taken out of this statutory scheme if and when they are granted.  Subsection (2) is:

The Commonwealth is not liable to pay to the relevant owner of land any rent in relation to a lease of that land granted under section 31, except in accordance with subsection 62(5).

Subsection 62(5), and I will come to that provision, in effect allows the Commonwealth to elect to pay rent on the unimproved value of the land that it has taken, and that goes through the Valuer‑General and if the Commonwealth exercises that election and that path is taken, then the rent is payable under section 62(5). 

HAYNE J:   Is that a subject to which you are returning?

MR MERKEL:   Yes, your Honour.  That probably goes more directly to the heart of the point about ensuring there is no income stream than 34(4), but we say there is a combination of factors in this scheme that are only explicable by this objective and are unprecedented in respect of any community, we would say, other than the Aboriginal communities, the subject of this legislation.

KIRBY J:   It is unprecedented for the Aboriginal community too, is it not?

MR MERKEL:   If I could say yes, but in respect of a modern era.  What may be precedent or unprecedented with Aboriginal communities in the past in Australia, I would not like to say, but in terms of land rights, nothing like this has ever been seen that I am aware of.

FRENCH CJ:   There was a power under the Land Rights Act, was there not – or still is, for the Minister to vary the boundaries of the land granted to a trust in certain circumstances?

MR MERKEL:   I will have to look at that.  We have seen the provisions the Commonwealth have relied upon.  They are mostly either transitional provisions or provisions that might relate to mineral rights, which ‑ ‑ ‑

FRENCH CJ:   I will not divert you on it now, but maybe later on we might come to it.

MR MERKEL:   We will have a look at that, your Honour. The kind of rights which the Commonwealth seemed to retain under the Land Rights Act usually relate to transitional interests or rights, or what I might call mining interests or rights, which always will stand in a special place. But our understanding is that the primary right in section 19 is a right of the trust with the consent of the traditional owners, and ministerial consent is only required in respect of the grant of interest for over 40 years.

FRENCH CJ:   It is section 4(2B), but perhaps you can come back to that later – of the Land Rights Act.  I have not tracked it through to all its connections.

MR MERKEL:   I will track that through if I can, your Honour.  In respect of rent at subsection (2) – I have taken your Honours to that.  There is no liability to pay rent.  Then subsection (4), the relevant ‑ ‑ ‑

HAYNE J:   That depends upon the proper construction of section 62, does it not?

MR MERKEL:   I will come to that in a moment, your Honour.  As we understand it, it gives the Commonwealth a right to elect to pay rent and if it exercises that right, it can become obliged to pay rent.

HAYNE J:   The point, Mr Merkel, is why would you read 62 like that when 62(5) is an obligation to pay rent?  True it is 62(1) speaks of from time to time requesting valuation – and that is an ambulatory provision about making requests from time to time.  Why do you read (1) as the dominant provision trumping (5), which is the obligation to pay rent, when you are speaking about a lease and you are speaking about the intersection between sections 35(2) and 62?

MR MERKEL:   When your Honour says “intersection”, we would say, on an ordinary reading of these provisions, it starts with 35(2), which is a term of the lease, and it says:

The Commonwealth is not liable to pay . . . any rent . . . except in accordance with subsection 62(5).

If one goes to 62(5) – and I will take your Honours to it now - 62(5) necessarily takes you back to the amount determined under subsection (1).  The amount determined under subsection (1) can only arise if the Commonwealth Minister exercises what we say is plainly a discretion, not an obligation, to request the determination of a reasonable amount of rent and we say that ‑ ‑ ‑

GUMMOW J:   It may be a Julius v Lord Bishop of Oxford – it may, may it not? Why would you not construe “may” as “must” in the light of the overhanging cloud of section 51(xxxi) of the Constitution?

MR MERKEL:   Your Honour, far from us wanting to deny such a beneficial construction, but we would say it is so inconsistent with the purpose which I will come to because the rent itself is the most mean‑spirited rent one can find because it is taking the unimproved value of township land.

HAYNE J:   That depends upon what township land is understood as when you take out of township land the improved land which is subject to registered leases.  You have to get down and very dirty in amongst the particular facts of the case – the intersection between the certificate of title with its various accepted provisions.  You have to understand what bits of dirt we are talking about.  These generalities, Mr Merkel, may be attractive but they have to tackle fact.

MR MERKEL:   Well, can I tackle the fact here, your Honour.  The primary provision is the term of the lease that says the Commonwealth is not liable to pay rent.  We would say that the primary meaning of that, together with section 62, makes it inconsistent with reading the clause as “The Commonwealth is liable to pay rent in the manner determined in section 62”.  We say if that was Parliament’s intent, it was a very strange way of expressing it by a negative.  That is the first thing.

When it comes to the way in which rent is required to be paid, the legislature has gone to subsection (5), not subsection (1).  It would be the most unusual way of drawing an obligation to pay rent to start off with saying there is no liability.  All that would need to be said is that the Commonwealth shall only be liable for rent payable in accordance with section 62.  We do not understand the Commonwealth to even be putting – and they changed that – we do not understand the Commonwealth to be even suggesting that there is anything other than a discretionary entitlement to elect to pay rent.

FRENCH CJ:   It may be that that subsection is simply designed to avoid any unintended side effects of the use of the word “lease” and take you into a mechanism set up under section 62(5).  That is on the assumption of course that that mechanism is not at the discretion of the Commonwealth but in fact imposes an obligation according to a particular procedure to pay a rent determined by the Valuer‑General.

CRENNAN J:   That would not be so unexceptional when you consider it is a statutory lease in any event.

GUMMOW J:   The question of construction is dealt with I think most recently by Chief Justice Gleeson in Bradley’s Case, which you may remember – (2004) 218 CLR 146 at 154, paragraph 7, where he says it is a matter of statutory construction and “interpretation to decide whether there is a duty as well as a power to exercise the authority”. That is the end of the debate, and he gives authorities.

MR MERKEL:   We will come back to that in the unjust terms aspect of our argument.  I do not want to delay your Honours at this stage.  But we do contend that the proper construction, having regard to the scheme as a whole, is not to have an obligation for the Commonwealth to pay rent.  I should say this – that, if section 62 is regarded as the method of payment of rent it is unfair in its process.  In other words, it picks up from the Valuation of Land Act the provisions that give the Valuer‑General a right to inspect but do not give any right on the party affected to be heard as to what the rent is to be. The objection provisions are not picked up and previous cases, when it comes to section 51(xxxi), have said that a rent determined by someone elected by one party without a right to be heard or to put a case against it is not a just term. I will come to the section, if I may, in the sequence in which I am going.

Subsection (4) says the owner cannot vary or terminate the section 31 lease.  Subsection (5) says:

The Commonwealth may not transfer a lease granted under section 31.  However, the Commonwealth may, at any time, sublease, license, part with possession of, or otherwise deal with, its interest in the lease.

CRENNAN J:   So they can be terminated early?

MR MERKEL:   Yes, they are virtually given the right to do as they please other than transfer the lease.  In subsection (6):

The Commonwealth may, at any time, vary a lease granted under section 31 by:

(a)      excluding land from the lease; or
(b)      including . . . land that was –

included under section 31(3) which is to bring in registered land.  They can terminate at any time under subsection (7).  If there is a variation under subsection (8) they must give notice to the relevant owner.  In (10) the “variation . . . takes effect, by force of this subsection”.  Section 36 gives the Minister power to determine additional terms.

At the demurrer book at pages 59 through to 64 there was a determination by the Minister to add additional terms.  The main relevant paragraph is 2 at page 63, which gives the Commonwealth entitlement, “to use, and permit the use of, the Land for any” purpose it considers “consistent with the fulfilment of the object of the Act”.

FRENCH CJ:   All this rather suggests that what we are looking at is a bundle of statutorily defined rights rather than a lease.  The bundle is given the classification lease.  I so far have not seen anything which adds anything from the use of that term.  I do not think it affects your argument one way or the other, just as long as it – just rather clarifying for myself that I direct my attention to the statutorily defined rights and there is not something else lurking in the other word.

MR MERKEL:   Yes, I do not have any difficulty with that, your Honour.

GUMMOW J:   Well, it may be important in a sense because one of the points the Commonwealth makes I think is that we are in a statutory universe and although the words “fee simple” were used because they were injected into this statutory structure it was something that had an inherent instability about it, and the Commonwealth refers to section 73, is it, that introduces the possibility of Northern Territory legislation?

MR MERKEL:   Yes, your Honour.

GUMMOW J:   I think the Commonwealth then says, well, this is just another example except it is the Commonwealth doing it, therefore there is no acquisition.  There cannot be an acquisition, because the property itself had this inherent instability around it.

MR MERKEL:   Your Honour, that is, of course, a fair summation of what the Commonwealth is putting, but the foundation for it, we say, is not easily found in the legislative scheme or its history, background and operation, because the fee simple was more than something that may have been injected into it, it was really the heart of the scheme.  It was a registered fee simple that had all the attributes of a fee simple, subject to statutory reservations and certain degrees of statutory control.

But what one finds missing in any of that background, any of the operation and any of the provisions, even looking at section 19 giving the Minister an extremely limited role, in fact not a role at all in anything under 40 years in terms of a lease, the idea of in effect appropriating that land for the purposes of a lease with these statutory rights is far beyond anything that might be called the regulation inherent in the scheme.

One looks in vain for anything that would be suggestive to the traditional owners that their title was as easily overcome as this legislative scheme would have it.  We would say it would be – the other thing that is of critical importance is that this is a scheme which since Mabo we now know gives effect to an antecedent legal relationship, not in identical form, but in a statutory form, so that ‑ ‑ ‑

GUMMOW J:   You are unsettling Mr Burmester.

MR MERKEL:   Your Honour, I am not saying that this is about native title rights, but the statutory form is to give effectively the benefit of what native title was found to be capable of being recognised in the common law and reflected in the Native Title Act. This is an earlier statutory scheme, the intent of which was to give those rights under this scheme at a time, true enough, it was thought those rights did not exist.  But we now know that those rights did exist.

FRENCH CJ:   In a broad sense it is in the same ballpark, but it runs off a definition of “traditional Aboriginal owner” which uses an anthropological term “local dissent group” and a much narrower base, really, than native title.

MR MERKEL:   Yes, and as it could do in the Territory where the situation concerning traditional lands and connection with lands in, say, Arnhem Land, with which we are concerned, is very different to something that might have to embrace the whole of Australia.  But the underlying legal relationship that this Act is giving effect to is one that is now recognised by the common law and we say that is an important distinction and it was certainly at the heart of the intent.  Your Honour Justice Kiefel analysed the background to the legislation and it is clear from that and from other cases that what was intended was to give in a statutory form effect to the relationship the Aboriginal people had with their land which we now know is a legal relationship.

Can I go to section 37, which says the Commonwealth may terminate at any time any preserved right, and that is relevant to our argument about the rights under section 71.  Under (b) a lease – that is, a registered lease; that is excluded.  Subsection (4):

The termination takes effect, by force of this subsection, at the time specified in the notice . . . 

Subsection (6):

Despite the grant of a lease of Aboriginal land under section 31, the Land Trust for the land may, in accordance with section 19A . . . grant a lease (the township lease) . . . 

So that is the special position given in this scheme to township leases.  Division 2, I do not need to trouble your Honours with.  It mirrors largely Division 1, but it relates to town camps.  Can I go next to section 50(1), which is that:

Division 1 . . . and section 52, have effect despite any other law of the Commonwealth or the Northern Territory –

The Native Title Act is dealt with in section 51. In section 52(1):

Despite the grant of a lease of Aboriginal land under section 31, the Land Trust for the land may grant another lease, in accordance with section 19 . . .

(2)The consent, in writing, of the Minister is required for the grant or variation of a lease under section 19 . . .

(3)If, in accordance with section 19 of the Aboriginal Land Rights (Northern Territory) Act 1976 and this section, the Land Trust grants a lease that covers part of the land, the lease granted under section 31 that covers that part is varied, by force of this subsection, to exclude that part.

So that the Minister retains a discretion to allow the Land Trust to grant limited rights under section 19 with the Minister’s consent and then have that taken out of the section 31 lease. In subsection (4A):

Despite the grant of a lease of Aboriginal land under section 31, the Land Trust for the land may, in accordance with section 19 . . . grant an interest (including a licence but not including a lease) of a kind prescribed by the regulations for the purposes of this section.

(5)To avoid doubt, subsections (1) and (4A) do not authorise a Land Trust to deal with an estate or interest in land covered by a lease granted under section 31, other than by granting a lease or an interest as referred to in those subsections.

Then section 59 provides for application of laws in the Northern Territory:

To the extent that a law of the Northern Territory is capable of operating concurrently with this Act, this Part does not affect the application of the law to:

(a)      land covered by a lease granted under section 31 –

There is a time limit on that provision in subsection (2).  Can I come next to the compensation provisions at Division 4.

KIRBY J:   Could you remind me what the rule under the Acts Interpretation Act is relating to the use of headings, because Part 4 is headed “Acquisition of rights, titles and interests in land”. 

MR MERKEL:   I will give your Honour the section.  I think they are not part of the Act, but they can be used for construction, your Honour.  I will give your Honour the section of that, if I may. 

In subsection (1), we find the aspect of this particular scheme that differs from the Shipwrecks Clause Case, which usually relates to whether or not there is an acquisition of property.  Subsection (2) of section 50 is declared not to apply in relation to any acquisition of property referred to in that subsection that occurs as a result of the operation of the Part or any act done in relation to the leased land.  We say that is important in this respect, and it differs from the shipwrecks clause in this respect. 

It is clear that what was intended by the Commonwealth was, in effect, this case; that before a right to compensation arose under this statutory scheme, the issues in this case relating to the constitutional obligation in respect of the Northern Territory to give just terms for an acquisition of property had to be fought, because if it was just a normal shipwrecks clause, which was about acquisition of property, then there was no need to abrogate section 50(2). We do say it is important because it is clear that the starting point of this scheme is the first step, which is the necessity for any claimant to have to establish there was a constitutional obligation to offer just terms and the necessary abrogation under subsection (1) was made.

FRENCH CJ:   Does section 50(2) go beyond a limitation on the legislative power of the Northern Territory, and can it?

MR MERKEL:   I had treated the two subsections as, in effect, mirror imaging the section 51(xxxi) clause in the Constitution.

FRENCH CJ:   I know, but it had to do with the powers of the Northern Territory Government.  It cannot fetter the Commonwealth. 

MR MERKEL:   It is at tab 10, your Honour, of volume 2.

FRENCH CJ:   Yes, that is right.

MR MERKEL:   I thought subsection (2), your Honour, picks up the ‑ ‑ ‑

KIRBY J:   Which section?

MR MERKEL:   Sorry, section 50(2) is the Northern Territory (Self‑Government) Act and ‑ ‑ ‑

GUMMOW J:   It is talking about the laws of the Territory, is it not?

FRENCH CJ:   Subsection (1) confines the power of the Legislative Assembly, and then subsection (2) says “the acquisition of any property in the Territory”, etcetera, “shall not be made”.  Who is that command addressed to?

MR MERKEL:   I thought, your Honour, that that clause was intended to be a mirror image ‑ ‑ ‑

FRENCH CJ:   In any event, the Commonwealth can simply pass a law inconsistent with it.

MR MERKEL:    Yes, as it did in, I think, Newcrest.

FRENCH CJ:   If it did apply to the Commonwealth on a proper construction.

GUMMOW J:   In the self‑government legislation about the Territory and the ACT provision of this sort was put in as a comfort to the citizens of those polities as to the power that their legislators would have over them.  That is how it has always been understood for 30 years anyway.

MR MERKEL:   The context seems to be, your Honour that ‑ ‑ ‑

GUMMOW J:   That is why you have got subsection (2), as the Chief Justice puts to you.

MR MERKEL:   Your Honour did deal with this in Newcrest. I mean, section 49 appears to be the section 92 guarantee and we say section 50(2) is the 51(xxxi) guarantee, but your Honour Justice Gummow dealt with this in Newcrest at page 628 when your Honour said:

Section 50(2) of the Self‑Government Act is addressed to the Commonwealth. It provides that the acquisition of any property in the Territory which, if the property were in a State, would be an acquisition to which s 51(xxxi) of the Constitution would apply, is not to be made otherwise than on just terms.

Then your Honour refers to “subject to s 70”.

FRENCH CJ:   That can only relate to administrative acts.

MR MERKEL:   Yes.  So that does not apply in this situation.  So we would understand that to be the constitutional guarantee relating to property in the Territory and but for the abrogation of that subsection – your Honour said it is addressed to the Commonwealth.  But for its abrogation the Commonwealth would be liable if there were an acquisition of property.

FRENCH CJ:   Unless these are otherwise inconsistent with it, in any event.

MR MERKEL:   Yes.

FRENCH CJ:   I mean, you do not need (1).

MR MERKEL:   Well, in Newcrest there was no liability, so that impliedly abrogated section 50(2), but here, had it not been abrogated subject to what might be the Shipwrecks Clause Case, whether there was an acquisition of property, there would be an obligation.

FRENCH CJ:   Anyway, what displaces it is substantively section 60(2).

MR MERKEL:   Yes, your Honour, but the point that we make in our submissions is that subsection (1) is there for the purpose of ensuring that this case was, in effect, going to – the first issue in this case was a necessary prelude for any right to compensation from the Commonwealth in respect of this acquisition.

KIRBY J:   Mr Merkel, I think it was in the Pilbara Case and other cases we have seen statutory provisions in federal legislation which say something like this, that in case just terms are required, they must be provided.  Do your submissions anywhere collect provisions of that kind because I recall sitting here seeing that type of provision in at least two cases in recent years?

MR MERKEL:   We have not drawn them together, but if we can have a look at that ‑ ‑ ‑

KIRBY J:   Well, it makes an interesting contrast to the provisions of this Act.

MR MERKEL:   Yes.

KIRBY J:   It is a sort of federal security clause to make sure that if under the Constitution just terms are provided they will be paid.

MR MERKEL:   Yes.  I mean, your Honours considered such a clause in the recent Telstra Case.

KIRBY J:   It might have been Telstra, it might have been one such case.

MR MERKEL:   Yes.  There is nothing unusual and we do not ‑ ‑ ‑

KIRBY J:   If there is a collection of such legislation.  I got the impression it was a sort of standard federal provision and, if it is, I would like to have reference to the statutes where it is provided.

MR MERKEL: Yes, if we can do that, your Honour. We will have a look at that, your Honour, if we may, but our short point is on section 60(1) if we are wrong on the construction of section 50(2). It is hard to see what Parliament was concerned about in subsection (1). There was no need for them to worry about that.

GUMMOW J:   The heading to Part 4 of the Emergency Response Act would be treated as part of an Act as a result of section 13 of the Acts Interpretation Act 1901.

MR MERKEL:   Yes.

GUMMOW J:   It is the marginal notes that do not get that status.

MR MERKEL:   Yes, thank you, your Honour.  Yes, thank you for that, your Honour.  Then subsection (2) is the standard shipwrecks clause and that gives rise to “a reasonable amount of compensation”.  Subsection (3) then provides for agreement and then recovery of the compensation from “a court of competent jurisdiction”.  Subsection (4) gives the “acquisition of property” and “just terms” their constitutional meaning. 

GUMMOW J:   Just before you leave section 60, does this phrase “reasonable amount” have any provenance in the cases on 51(xxxi) or in earlier legislative models, do you know?

KIRBY J:   There is a reference in the submissions to what Justice Dixon said about the difference between compensation and just terms.

MR MERKEL:   Yes, that is right, your Honour.  I will have to check that, your Honour.  It picked up “reasonable compensation” or “compensation”, but the term is “a reasonable amount of compensation”.  I have not noticed it appearing in the cases, but we can have a look at that.

GUMMOW J:   It fits in with reasonable amount of rent at 62(1), perhaps?

MR MERKEL:   I am told by my learned junior that a reasonable amount of compensation is in the legislation considered in Telstra and also in the legislation considered by your Honour in Minister of Primary Industry and Energy v Davey.

GUMMOW J:   It goes back that far at least.

MR MERKEL:   I will have to double check that if I may, your Honour.

KIRBY J:   What is the American Constitution’s takings clause?

MR MERKEL:   I think it is just compensation.

KIRBY J:   Just compensation.

MR MERKEL:   I think Justice Dixon considered that in the Bank Nationalisation Case.

KIRBY J:   I rather assumed that Justice Dixon in that passage quoted in the written submissions was talking by way of contrast to the United States provision and contrasting it to the advantage of the Australian provision.  But anyway you will have to take us to that in due course.

MR MERKEL:   Yes, we will come to that in due course.  That was considered in the context of interest which in the United States would be taken within the clause and here it seems to be it is not taken within the clause.  In other words compensation is not treated as including interest, but there is some debate about that and I think your Honour has indicated that you would take it as including interest.

Section 61 deals with the amounts payable for compensation and there is a reference to taking account of any rents “paid or payable”; “any amounts of compensation paid” which would be amounts that would reduce compensation.  There is considerable dispute about the role of (c):

any improvements to the land that are funded by the Commonwealth (whether before or after a lease is granted to, or all rights, titles or interests are vested in, the Commonwealth), including the construction of, or improvements to, any buildings or infrastructure on the land.

We do make some observation that that is a provision without any precedent in compensation legislation or in principle that, for example, if the Commonwealth funded infrastructure back in 1958 there would be a ‑ ‑ ‑

GUMMOW J:   Section 61(a) is the direct link to 62.

MR MERKEL:   Yes, your Honour, and we say that the improvements – it is an extraordinary provision and we have set out in the demurrer book at pages 17 and 18 the kind of improvements that that clause could relate to.  I am told, your Honour, that in Davey it does have a reasonable amount of compensation in the relevant statutory provision.  Then we get to section 62.  The first set of provisions enable agreement on an amount to be paid and that was added in the amending legislation.  In subsection (1) on Payment of rent -

The Commonwealth Minister may, from time to time, request the Valuer‑General . . . to determine a reasonable amount of rent to be paid by the Commonwealth to the relevant owner . . . of land that is covered by a lease granted ‑ ‑ ‑

FRENCH CJ:   You have taken us to these.

MR MERKEL:   I am sorry, your Honour?

GUMMOW J:   I thought we had been to 62?

MR MERKEL: Yes we have, your Honour. All I wanted to say is section 7, 41 and 42 are machinery provisions, but the right to object and the right of hearing provisions in that Act are not picked up. Appropriation provisions I have already taken your Honours to at section 63. Could I go next to section 132 which picks up the Racial Discrimination Act which says in subsection (1) that these are “special measures” and that the provisions of this Act and Acts under it are excluded from the operation of the Racial Discrimination Act.  I will not take your Honours there, but the extrinsic material at tab 1, page 77 explains the reason for the clause.  Then could I next go to the FaCSIA Emergency Response Act which removes the permit system, which is at tab 5.  The scheme of this Act ‑ ‑ ‑

FRENCH CJ:   I am sorry, just before you do that, on 132, the point of designating these matters as designating the provisions of this Act as special measures is presumably to protect administrative action under the Act from the application of the Racial Discrimination Act, is it?

MR MERKEL:   I do not think so, your Honour, because the Act does not apply in subsection (2) in terms that would cover anything done under this Act.

FRENCH CJ:   What is the point of designating the special measures?

MR MERKEL:   We understand, again it is not explained, that it is for the purpose of saying that this is not race discrimination for the purposes of the Convention.  In other words, the legislature is saying that ‑ ‑ ‑

FRENCH CJ:   Are you saying it is cosmetic?

MR MERKEL:   More than ‑ ‑ ‑

CRENNAN J:   No.  “Special measures” is a particular term, is it not?

MR MERKEL:   Yes, sorry ‑ ‑ ‑

FRENCH CJ:   I appreciate that, but what I am trying to work out is what is the statutory significance of saying that.

MR MERKEL:   Your Honour, under the Racial Discrimination Act, under the Convention – the Act takes you to the Convention.

FRENCH CJ:   The Convention is qualified by allowing State parties to introduce special measures.  I understand that.

MR MERKEL:   But there are obligations in respect of non‑discrimination – to enact laws and take steps to ensure there is no discrimination.  Then a special measure is not discrimination.  So that the purpose of this is to identify this as a special measure on the basis that it is consistent with Australia’s obligations in the Convention.

FRENCH CJ:   But is there any statutory consequence of that or any legal consequences?

MR MERKEL:   Not within an Australian hierarchy.  We say that if there be an issue about the race power this is an exercise, these measures, the entirety of them, are taken as special measures in respect of the Convention and therefore they fall within the external affairs powers because the Racial Discrimination Act itself was enacted under the external affairs power.

FRENCH CJ:   All right.

MR MERKEL:   That is the only relevance of it, your Honour.  Could I go to the FaCSIA Act, which has a similar provision – that is, at tab 5 – for the Racial Discrimination Act at section (4), at page 3.  The schedules are incorporated at page 5.  There are certain amendments, starting at Schedule 4 at pages 39 and 40.

KIRBY J:   Are there any provisions in the Race Convention or in the Racial Discrimination Act which define what special measures are to be or which limit the character of measures as special measures?

MR MERKEL:   Yes, your Honour.

KIRBY J:   Surely it cannot be just self-asserted.

MR MERKEL:   Tab 11, your Honour, sets out the Act, which is enacted pursuant to the external affairs power.  Section 8(1) of the Act provides that:

This Part does not apply to, or in relation to the application of, special measures to which paragraph 4 of Article 1 of the Convention applies –

Then at page 30, the Convention is then set out as the Schedule and special measures are defined in paragraph (4):

taken for the sole purpose of securing adequate advancement of certain racial or ethnic groups or individuals requiring such protection as may be necessary in order to ensure such groups or individuals ‑ ‑ ‑

GUMMOW J:   This expression “special measures” was considered in Gerhardy 159 CLR 70, was it not, in great detail?

MR MERKEL:   Yes, it was, your Honour, in respect of similar legislation. 

KIRBY J:   Would this Court not defer to the opinion of the Parliament and the government that the measures taken here were required for the purposes such as are mentioned in Article 1 of the Convention?

MR MERKEL:   There is no issue that that is the case, your Honour.  No one is challenging it on the grounds of invalidity.  That is correct, your Honour, it is for the purposes of the Convention.  Then can I take your Honours back to the FaCSIA Act at tab 5.  The key provisions are those relating to what we call the removal of the permit system which start at page 42, section 70A through to 70G, but the key provision is 70F, which is at page 51.  Subsection 70F(1) effectively enables a person to:

enter or remain on a common area –

which you can find later in the section –

that is within community land –

which Maningrida land is –

if the entry or remaining is not for a purpose that is unlawful. 

Subsection (20) defines a “common area” as meaning:

an area that is generally used by members of the community concerned, but does not include:

(a)      a building; or

(b)      a sacred site; or

(c)      an area prescribed -

The Maningrida land appears at page 96. At page 151 we have the same compensation provision as we have found in the Response Act as item 18 – again, the abrogation of section 50(2) and the compensation scheme.

HAYNE J:   Are common areas a smaller subset of the Maningrida land?

MR MERKEL:   Yes, your Honour.  Common areas would be the unimproved areas, essentially, the open areas – areas that the community would move around in.  Other provisions support access through airports and things like that, but it is that aspect that removes the right to exclude others.

There is an issue the Land Council raises that says – along the lines that because they have lost exclusive possession the removal of the permit system may not have affected their right, but we say that is too narrow a way of looking at it.  This effectively goes beyond the right of the lessee to allow entry onto its land for the purposes of the lease.  This basically removes the entirety of the right to exclude persons from Aboriginal land which was an incident of the fee simple estate for the duration of the lease.

Could I move now to the first issue raised on the demurrer, and that is is the power conferred by section 51(xxxi) abstracted out of section 122? Can I say at the outset that we, with respect, adopt what was said by your Honours Justice Gummow and Justice Kirby, and also Justice Gaudron in Newcrest as to why the section 51(xxxi) power is abstracted out of section 122 on both of the grounds in that case and upheld by your Honours and Justice Gaudron, and also that which was joined in by Justice Toohey that if there is a section 51 head of power it does not assist escaping the guarantee because the law is also enacted under section 122.

Can we really put our submissions briefly but give your Honours references to where some of the issues we raise were discussed by your Honours Justice Gummow and Justice Kirby in Newcrest. Our starting point, we say, is the text of section 51(xxxi) rather than as in Teori Tau the text of section 122. Section 51(xxxi) – and this is discussed by your Honour Justice Gummow at 597 of Newcrest and 602 to 603 and Justice Kirby at 652 - the short point we want to make about the text of 51(xxxi) is that it deals with “any purpose in respect of which the Parliament has power to make laws”, which is apt to include the purpose of “for government” under section 122.

It deals with all forms of property wherever situate, which means it is apt to include property in the Northern Territory or a territory, and it deals with “from any State or person” regardless of where the person may be. So again, there is nothing in the wording of section 51(xxxi) that would appear to exclude the Territory.

FRENCH CJ:   When one goes back to the Convention Debates there does not seem to be any talk of territories.  It is all States, is it not – the Melbourne Convention?

MR MERKEL:   At that stage there was – I think that is right.  Justice Gummow does refer to the Convention Debates, but as we understand it I am not sure that there was any legal entity as the Territory as opposed to a geographic entity.  The absence of a territory in that section is easily understood because there was no legal entity to which the section would be directed at that stage.

FRENCH CJ:   There is some weight put upon the sequence in which these provisions were introduced into the draft.

MR MERKEL:   Yes.  Your Honour, we will come to the structural and contextual aspects of them, but we say, given recent jurisprudence which in our view undermines – our submissions undermine the earlier disjoining of the Territory and powers concerning the Territory, it is very difficult to point to any contextual or structural aspect that would require the constitutional guarantee to not be applied in respect of the Northern Territory.

Just on the textual aspect, can I take your Honours very briefly to Justice Dixon in Attorney‑General v Schmidt 105 CLR 361. At pages 371 to 372 is the passage which has been cited often. There are two aspects of his Honour’s discussion first at the bottom of 371 that has been accepted by the Court in later jurisprudence. Starting five lines from the bottom of 371 his Honour makes the point:

It is hardly necessary to say that when you have, as you do in par.  (xxxi), an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular . . . interpretation to treat that as inconsistent with any construction of other powers conferred in the context which would mean that they included the same subject or produced the same effect and so authorized the same kind of legislation but without the safeguard, restriction or qualification.

That would apply subject to the question of context precisely to the section 122 issue. I will deal with context shortly.

His Honour then, at page 372, talks of the scope at point 5, second sentence in the middle paragraph:

The scope of s 51(xxxi) is limited. Prima facie it is pointed at the acquisition of property by the Commonwealth for use by it in the execution of the functions, administrative and the like, arising under its laws.

We would say that is a precise description of the emergency response legislation.  His Honour says:

It is perhaps not easy to express in a paraphrase the extent of the operation of s 51(xxxi) and thus to define its full scope and application but it is at least clear that before the restriction involved in the words “on just terms” applies, there must be a law with respect to the acquisition of property (of a State or person) for a purpose in respect of which the Parliament has power to make laws. The expression “for any purpose” is doubtless indefinite. But it refers to the use or application of the property in or towards carrying out or furthering a purpose comprised in some other legislative power. It covers laws with respect to the acquisition of real or personal property for the intended use of any department or officer of the Executive Government of the Commonwealth in the course of administering laws made by the Parliament in the exercise of its legislative power.

How much further it goes may not perhaps be settled –

But we say that passage captures precisely the legislation in the present case. The question then arises – and I should say that it is well established that the proper approach to section 51(xxxi) is that the Commonwealth’s power to acquire property on just terms is abstracted out of other heads of power, such as in section 51, which otherwise would include a power to acquire property with the consequence that the power resides only in section 51(xxxi). That was recently pronounced upon by the Court in Nintendo (1994) 101 CLR 134 at page 160. That, we say, is now the settled approach to section 51(xxxi).

HAYNE J:   What the metaphor of abstraction captures is the thought expressed by Chief Justice Dixon at 371 in Schmidt, which seems, as I read it at least, to be the thought that you may have a power to acquire land under a number of heads, but where one of the heads, namely 51(xxxi), is subject to limitation, you do not read the power conferred by other heads, for example, 122, as stripped of that limitation.

MR MERKEL:    Yes.

HAYNE J:   Whereas the argument in Teori Tau, if you go back and look at the transcript of argument in Teori Tau, reveals that a thought, perhaps the thought, that dominated argument was that the plaintiffs in Teori Tau could succeed if but only if they could show that 51(xxxi) was the sole source of the Commonwealth’s power to acquire land.  Now, the metaphor of abstraction tends to pitch you back into that same “either or” analysis, which Chief Justice Dixon seems not to accept, but to cast to like effect but by a different path, at 371 of Schmidt.

MR MERKEL:   I am indebted to your Honour for that because one of the issues that was seen to be put at the forefront in the judgment of the Court in Teori Tau was really the issue of whether on a proper construction of section 122 it includes the power to acquire property, which it plainly does, and that seemed to be a central step in the reasoning. But the abstraction comes from Nintendo because that is where the Court ‑ ‑ ‑

HAYNE J:   I understand that, yes.

MR MERKEL:   Yes. 

HAYNE J:   All I am saying is that the metaphor must not be carried to a point where it is obscuring what it is trying to convey.

MR MERKEL:   Yes.  Can I say this, that in fairness in the judgment at 160 there is a reference to the principle of “safeguard, restriction or qualification”, and then their Honours go on and say:

Where that is so, the other grant of legislative power manifests a contrary intention which precludes the abstraction from it of the legislative power –

So we come back to the point, is there a contrary intention found in the particular constitutional power that would be contrary to the safeguard in section 51(xxxi) applying to that power?

KIRBY J:   But was not the valued added of Schmidt that Chief Justice Dixon added to the thinking on this, that if you could use other heads of power, all of which potentially give a power to acquire property for the purpose designated to bypass 51(xxxi), then 51(xxxi) would have no bite in many cases, in most cases perhaps?

MR MERKEL: Yes, that is right, your Honour, but his Honour, in fairness, does talk of subject to context and therefore recognises, as his Honour goes on to point out, that there are some powers which are inapplicable to adjust compensation provisions, taxation powers the most obvious, penalties are another one. But what we say one of the problems that has beset much of the learning of this is the struggle with earlier authorities forming a platform which, in effect, disjoined the Territory in terms of its power or in terms of the operation of the Constitution to it in a way that led to earlier authorities which were difficult to rationalise in the light of later authority. But what we say is clear from the passage in Nintendo, is that ultimately the question is, is a contrary intention to be found in section 122, having regard to its structure, context and role in the Constitution? We say that there is ‑ ‑ ‑

KIRBY J:   It might have been in the minds of the judges deciding Teori Tau that it was manifestly absurd to consider that the Commonwealth would have to pay just terms to the native people of Papua or New Guinea.

MR MERKEL:   Yes.

KIRBY J:   I mean, after all, a lot of the complications we have got ourselves into in respect of the judicial power came from the notion that it would be manifestly absurd to have juries and magistrates in the offshore territories.

MR MERKEL: Yes, your Honour, and these observations have been made by your Honour and other judges about the context in which some of these earlier decisions arose, but we now have a very different context, both in terms of the Constitution and in terms of self‑government and in terms of citizenship. The concept ultimately which has been recognised even in the earlier cases of treating the territories, the Northern Territory – Capital Territory is disjoined in some way from the Commonwealth – is one that is no longer countenanced.

HAYNE J:   But the plaintiff in Teori Tau accepted that the task before them was to establish that the only source of the power to acquire land in the Territories was 51(xxxi).

MR MERKEL:   Yes.

HAYNE J:   That is at page 10 of the transcript of 9 December 1969 where Chief Justice Barwick said – I omit the preface of not following what you get out of what you are reading:

because the passage you were reading goes on to point out that although there may only be one Commonwealth, you must look to the nature of the power that is exercised, and your basic task is to say that 51(xxxi) is the only source of the power to acquire land in the territory.

Mr Young, who was then appearing as senior counsel for Teori Tau –

MR. YOUNG:   Yes, it is.

BARWICK, C.J.:   That is really what you are saying, bringing it right down to the ground.

MR. YOUNG:   Yes, it is.

and argument proceeded on that footing.  Now, so understood, it is either an example of or perhaps the reflex of a single characterisation view of law‑making power that law‑making power finds its route in one head of power, whether that by a process of distillation to the essential head of power or whatever, but it is this one head of power notion which appears to have been formed at least this aspect of argument in Teori Tau, I suspect, reading the transcript as a whole, suffused the whole of the way in which argument was presented.

MR MERKEL:   Your Honour, that is certainly picked up at page 570 in the judgment where the Court quotes:

it is said, in substance, that s.122 is subject to s.51 (xxxi.) and that s.51 (xxxi.) is the only source of power to make laws for the acquisition of property to operate in or in connexion with the government of any territory of the Commonwealth.

Then their Honours go on and say that is “insupportable” and then they approach the way on a basis of distribution of power which is an understandable way of then looking at 51 as a distribution between State and Commonwealth. Therefore, it is not a subject matter with which section 122 in territories would arise.

But we say a lot of water has passed under the bridge and we say that the starting point is the width of 51 (xxxi) and its application to the Territory and then we would say, ultimately looking at the way in which it was approached in Nintendo is any contrary intention to be found in the context or words or operation and role of section 122 in the Constitution. We make several points in response to that. We say first that it is now well established that section 122 is not to be read in isolation or as if the territories were somehow disjoined. Capital Duplicators at 272 and your Honour Justice Gummow at 597 to 598 and 656 Justice Kirby in Newcrest. 

We say textually section 122 plainly includes a power to acquire property, but that applies to many section 51 heads of power. The most important development which we say undermines the authority of Teori Tau – both before and since – is that the section 122 power can be and is limited or affected by other provisions in the Constitution. We say that also undermines the simplicity of the distribution of power approach that was adopted as part of the reasoning in Teori Tau.  For example, in Lamshed v Lake the applicability of section 109 to the Territory power necessarily raised issues about distribution of Commonwealth power that could affect the States as it did in that case.

In Teori Tau itself the Court accepted that section 116 bound the Territory’s power at section 122 and most recently there has been a long history of controversy about the extent to which section 122 may operate inconsistently with Chapter III. Most recently in Northern Australian Aboriginal Legal Aid Service v Bradley 218 CLR at 163 the Court made it clear that section 122 was limited by Chapter III in ways that are not capable of being comfortably reconciled with the early decisions, which led to this separation approach to the Territory. In paragraph 28 the first two steps of the judgment show the applicability of Chapter III:

The first is that a court of the Territory may exercise the judicial power of the Commonwealth pursuant to investment by laws made by the Parliament.  That proposition, to which there was no demurrer by the Territory or by the Attorney‑General of the Commonwealth who intervened in this Court, is supported by the citations of authority by Gaudron J in the above passage from Ebner.  It should be accepted.

The second step in the Legal Aid Service’s argument is that it is implicit in the terms of Ch III of the Constitution, and necessary for the preservation of that structure, that a court capable of exercising the judicial power of the Commonwealth be and appear to be an independent and impartial tribunal. That proposition, which again appears in the passage from Ebner, also should be accepted.

So, one of the fundamental requirements of Chapter III has now been incorporated into the Territory and Chapter III does apply in Lange which is – I will just give your Honour the page references, I do not need to take it to your Honours, but at page 564 of the judgment of the Court the acceptance was that:

The Constitution, the federal, State and territorial laws, and the common law in Australia together constitute the law of this country and form “one system of jurisprudence”.

That removes the idea that there may be some duality of judicial power.  Then at page 567 it was clear that the implied freedom extended to all laws, whether they be of the Commonwealth, State or Territory.  So that one finds the guarantees or protection of the individual liberties of the subject under Chapter III and the implied freedom in Lange have extended to the Territory power.

I want to take your Honours particularly to a passage in Capital Duplicators 177 CLR 248 when the customs and excise power was considered and was found to limit the power of the Territory legislature. At page 279, in the judgment of Justices Brennan, Deane and Toohey, at point 5 their Honours said:

It is not to the point that, if the Parliament could validly confer legislative power to impose duties of customs and excise and to grant bounties upon the Legislature of a self‑governing internal Territory, it might subsequently legislate to withdraw the power or to override its exercise. The exclusivity provision of s 90 was incorporated in the Constitution not for the protection of the Parliament but for the protection of the people of the Commonwealth, including those who resided in an area of a State which was subsequently to become an internal Territory. They, no less than the other people of the Commonwealth, were and remain entitled to the maintenance of the free trade area throughout the Commonwealth which, in the context of other provisions of the Constitution to which reference has been made, the exclusivity provision of s 90 of the Constitution was intended to ensure.

The point that we make is that if one follows the line from Lamshed v Lake with the supremacy of section 109, the general acceptance in Teori Tau, and this was discussed again in Kruger, the protection of section 116 binding the Territory power, although that has not been held by the Court, but in Kruger the discussion of case law on this subject appears at 218 CLR by Justice Toohey at 85 to 86, Justice Gaudron at 120, 122 and 123 and also at 162.  Contrary views have been expressed but the weight of authority would seem to suggest that 116 would apply.  You have got the implied freedom in Lange and then you have the protection of the free trade area for the people of the Commonwealth in Capital Duplicators. We say it is difficult to proffer any justification for a fundamental guarantee of the kind found in 51(xxxi) not to limit the power in section 122 in respect of the same citizens that their Honours regarded as entitled to the protection of the free trade area.

FRENCH CJ:   It is not so fundamental, of course, that it extends to protect people of the States against acquisitions on other than just terms by State governments.  There is an argument, is there not, that the relationship with the Commonwealth to Territory, given that we are looking at a range of situations from self‑governing to non‑self‑governing Territories, is more akin to that of a State government to its own Territory.

MR MERKEL: Your Honour, that is right, and it has been suggested on a number of occasions that the result is not surprising that that is so, but we say there are two errors in that, with respect, in that approach. We say the first is that the Constitution, section 51(xxxi) and section 122 are concerned with exercise of power by the Commonwealth not State Parliaments and therefore to approach what the State Parliament might have as its power is not looking at the role performed by either section or any of the relevant provisions and it is not intended, nor was it ever expected, section 51(xxxi) could operate on any terms wider than the protection given under federal law.

FRENCH CJ:   I was really directing my remark to the notion of a fundamental guarantee.  That suggests a kind of universal right.  It is really a matter of what was the limitation placed on the powers of the Commonwealth.

MR MERKEL:   Yes, although your Honour Justice Gummow in Newcrest called it protection of the individual rights.

HAYNE J:   No doubt it is, but the starting point, as Chief Justice Dixon points out in Lamshed v Lake, is the observation that we are concerned with legislative powers, legislative powers of what; legislative powers of the Parliament.  Those legislative powers include the 51 heads and 122.  All of the powers are to be read together as part of a single conferral of power in which a Territory is not, his Honour said, to be identified as if it was a quasi foreign country remote from and unconnected with Australia.

MR MERKEL:   Yes, your Honour.  That has been accepted as fundamental in the jurisprudence.  I accept what your Honour the Chief Justice puts to me about a fundamental guarantee, that it is as much a guarantee of the rights of individuals in respect of acquisition of property and, as such, it is similar to the kind of guarantees that are the subject of those cases.  But the main point is that there is also a second answer and that is the point picked up again in Newcrest that, of course, the same citizens in South Australia who were entitled to the protection of the power on Federation in 1910 lost that protection if section 122 is given this operation when that Territory was surrendered to the Commonwealth.

What we wanted to go to is, given that background, we say that the textual or structural features found in section 122, such as for government rather than peace, order and good government – it is in Chapter VI, not Chapter I, and it is not expressed to be subject to the Constitution for reasons given by Justice Gummow at 599 to 600 in Newcrest and 606 and your Honour Justice Kirby at 652 to 653 – are not factors that on any reasonable view require that section 122 be interpreted to be free of the guarantee imposed by section 51(xxxi).

GUMMOW J:   One of the matters that was troubling Justice Windeyer in argument in Teori Tau I think was this. He looked at section 122 and he saw that the Commonwealth can acquire territory by all sorts of routes in 122, and there is the umbrella phrase “otherwise acquired by the Commonwealth”. He asked himself, well, the Commonwealth may acquire territory with an anterior legal system quite alien to ours which has no notion of the rights of the Crown to take the property of subjects, and you may not be able to fit in concepts of acquisition on just terms to some foreign legal systems and therefore you have got to be careful about applying section 122. I am looking at the transcript of argument in Teori Tau.  He was very concerned, at pages 17 and 18, that there might not be a concept of eminent domain in some other legal system.  Do you see the problem?

MR MERKEL:   Yes, your Honour.

GUMMOW J:   That we might secure a beneficial peace treaty with some other country and take territory where the common law had never run and the concepts of the Crown and eminent domain were unknown, and should the Parliament then be subjected, through this reading of 51(xxxi) and 122, to a just terms requirement.  That certainly does not apply here.

MR MERKEL:    No.

GUMMOW J:   There is some disquiet about, I think, on his part, a holus bolus acceptance of the application of 51(xxxi) to all possible species of territory that we might get hold of at some future date.

HAYNE J:   As, for example, German parts of Papua New Guinea.  That was very much present to the mind of those who were in the Bougainville Copper case, Teori Tau.

MR MERKEL:   Your Honour, there is no doubt that is right and it has been said on a number of occasions that that may be an explanation for the decision in Bernasconi, excluding the protection of section 80 to offences in that case tried in New Guinea, but had that issue come before a court today ‑ ‑ ‑

GUMMOW J:   The words “otherwise acquired” in 122 could include a “lease”, to use that term again, analogous to what the British had in Hong Kong, for example. 

MR MERKEL:   We would with respect say ‑ ‑ ‑

GUMMOW J:   Or the Americans to this day and in Cuba.

FRENCH CJ:   We only held Papua New Guinea under a mandate, did we not?

KIRBY J:  That was originally mandate and then a trusteeship, but we asserted it was our territory under the Constitution and governed it in that way, I think. But we did have the Fiji Islands in our sights at one stage.

MR MERKEL:   I suppose there are a number of answers.  We say covering clauses 5 and 6 seem to accommodate that as nonetheless making them part of the Commonwealth and the concept of ‑ ‑ ‑

GUMMOW J:   I am not saying it is right or wrong here, but I can see it was a view that was troubling a fairly sophisticated mind.

MR MERKEL:   No, I understand that and we say even if it were a valid sentiment, ultimately we say it is a case of the tail wagging the dog.  The starting point is to look at the territories that one has and at that stage we had territories that were very much part of the Commonwealth, such as the Australian Capital Territory and the Northern Territory.  But going back to what your Honour Justice Hayne said about the way in which the case was put in Teori Tau, there is a problem about of course saying section 122 has no power to acquire property. That could mean that it had no power to impose penalties and that section 51 (xxxi) has been held not to be captured by certain types of acquisitions which are clearly outside the ambit of 51 (xxxi).

HAYNE J:   But the way in which Teori Tau was argued bears upon what attitude this Court should now take to the fact that there you have a unanimous decision of the Court.

MR MERKEL:   Yes, I understand that, your Honour.

KIRBY J:   It was a decision in which the Court did not call on the respondent or on one of the companies.  It did not have a full development of the argument.

MR MERKEL: Yes, your Honour, we accept that and we say that the way in which the law has evolved since then would have a very different approach to the power in section 122 which was not that put to the Court in Teori Tau. So we say that incongruous results come from section 122 not to be subject to the just terms requirement of the kind that we have outlined – that a law enacted under 122 that acquired property and estate would not be subject to the guarantee, but the same property acquired under section 51 would be. We have the anomaly of what happened in 1910 on its surrender. Your Honour Justice Kirby discussed that at 655 in Newcrest and your Honour Justice Gummow at 600 to 601.

We also say, particularly since Self-Government Acts, territorial representation and the amendment to section 128 of the Constitution, there can be no justification for treating citizens in the Australian Capital Territory or the Northern Territory as enjoying a lesser form of constitutional protection in respect of their individual rights.

FRENCH CJ:   How does the passage of the Self‑Government Act for the Northern Territory affect construction of the relationship between 51(xxxi) and 122?

MR MERKEL:   We say the validity of the representation was upheld, they became Members of Parliament.

FRENCH CJ:   That is a constitutional change, yes, but I am talking about the Self-Government Act.  You made reference to the Self‑Government Act, which is just another Commonwealth statute.

MR MERKEL:   They have been referred to in Newcrest, your Honour, as developments since that make it even more difficult to view the territories as somehow apart from the Commonwealth or is disjoined in some sense.

FRENCH CJ:   It depends whether you are talking about the Northern Territory or Heard Island or ‑ ‑ ‑

MR MERKEL:   Yes.  Well, I understand that, your Honour.

KIRBY J:   There was a theory at common law that no British settlement of settlers who were given self‑government could subsequently be recouped to the Crown for control by the Crown, but it is difficult in our constitutional context to apply that theory in the face of the plenary power that remains to the Federal Parliament under section 122, and I think this was discussed, or at least mentioned, in the Norfolk Island Case that we heard, because the Norfolk Islanders were asserting that they had a form of self‑government going back to pre‑Federation days and that it could not be taken away from them, but in the face of the text of the Constitution that argument was not upheld.

MR MERKEL:   Thank you for that, your Honour.

GUMMOW J:   This view of Sir Garfield Barwick’s expressed so forcefully in the argument in Teori Tau about characterisation that Justice Hayne took you to manifests his theory, I think, of single rather than multiple characterisation of a law.  You will remember that in the Payroll Tax Case, Victoria v The Commonwealth 122 CLR 353 he explained the Melbourne Corporation Case not on the basis of any federal implications.  He just said this was not a law with respect to banking.

MR MERKEL:   Yes, thank you, your Honour.

GUMMOW J:   I think that idea is running in the argument in Teori Tau as well – those sorts of ideas.

MR MERKEL:   We have referred to that in paragraph 2 of our reply submissions, your Honour.  The Commonwealth approached this case on the basis of this being a law with respect to the Northern Territory, it does not fall within the race power and we say that picks up the same point.

GUMMOW J:   Yes.  Thank you.  There is a detailed discussion of it in Professor Zines’ book too, I think, on characterisation.

MR MERKEL:   Thank you, your Honour.  Can I conclude on this point.  The passage in Newcrest where your Honour Justice Gummow referred to reopening Teori Tau, your Honour said at 613:

Where the question at issue relates to an important provision of the Constitution which deals with individual rights . . . the “Court has a responsibility to set the matter right”.

Again, as an aspect of the desirability of reopening it is no accident that of course in this case we find the property in question is that of Aboriginal citizens in the Northern Territory and of Aboriginal land in the Northern Territory.  The Aboriginal population in the Territory is in excess of 27.8 per cent, which is in the 2006 Census, and the Australian Government National Resource Management site lists Aboriginal freehold land as making up 44 per cent of Northern Territory land.

As was noted in the Roach Case, in that case the burden of the provision sought to be impugned as unconstitutional fell disproportionately on indigenous Australians.  Here we say the desirability of this being set right is even more important given the disproportionate burden that this law undoubtedly had, and we say in the present case has, if the constitutional connection is denied, to the Aboriginal population, a population whom it may be said should be most in need of the protection or most entitled to it in respect of their own property and respect of their Aboriginal land.

KIRBY J:   Can I ask – apart from my mention of this controversy in Griffiths 82 ALJR 899 at 914, has there been any other discussion of the Teori Tau, Newcrest issue since Newcrest was decided?

MR MERKEL:   I am not aware of it, your Honour, but we will have a look at it.

KIRBY J:   You might just do a little search to see if Teori Tau has come up in some reference during the last 10 years?

MR MERKEL:   Yes.  Can we have a look at that, your Honour, and come back to your Honour on that?

KIRBY J:   Yes.

GUMMOW J:   There is an article in (1998) 20 Adelaide Law Review 83 by Professor Zines, headed “The Nature of the Commonwealth” which deals with Kruger, Newcrest and residential tenancies.

MR MERKEL:   Thank you, your Honour.

GUMMOW J:   It is worth reading, I think.

FRENCH CJ:   Is that a convenient time, Mr Merkel?

MR MERKEL:   Yes, it is, your Honour.

FRENCH CJ:   The Court will adjourn until 2.15 pm.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

FRENCH CJ:   Yes, Mr Merkel.

MR MERKEL:   If I could just go to one or two matters raised this morning?  Your Honour the Chief Justice raised the question of the ambit of section 4(2B) of the Land Rights Act, which is at page 13 of the Act.  That gives the Minister certain powers, but when they are considered – each of the sections that that relates back to relates to transfers between land trusts and, in effect, filling gaps that might occur where an existing land trust has not taken title and there can be ways in which a land trust can lose some land and another gain land.  But none of the sections give the Minister a freestanding right to, in effect, create the defeasibility my learned friend would be contending for.

Even in respect of exploration leases, we looked at section 40 at page 102 – any power to actually create an interest that is opposed by the Land Council of the traditional owners can only be on grounds in section 43 after a proclamation that it is in the national interests to do so.  So there is nothing to be found in the Land Rights Act which would suggest the fee simple ownership subject to some modest regulation or control that is subject to the kind of defeasibility that has occurred in the present case.

Your Honour Justice Gummow asked if section 69, dealing with sacred sites, had been amended and it is our understanding it had not.  The way we understand the lease would work is that it gives exclusive possession and, under the terms, the Commonwealth can have access to the land for the purposes of the lease which are purposes it considers, in effect, appropriate.  We would understand that, by reason of section 50, which has the Response Act take effect despite any other Act, that would mean that the provisions of section 69 would have to give way to a lease under section 31 by reason of section 50 of the Emergency Response Act, because it is part of the land leased.  No special provision is made anywhere in the statutory scheme for any special consideration to be given to sacred sites, as far as we understand it.  So where it says in 69(1):

A person shall not enter or remain on land –

that must give way, by reason of section 50, to the right of entry granted under a Commonwealth lease which gives the Commonwealth terms to expand it, as it did in the additional terms and conditions I took your Honours to. 

Your Honour Justice Kirby asked about the Land Title Act. Your Honour, that was enacted in 2000 and the Act under which original registration occurred was the Real Property Act 1978. At page 78 of that Act under section 69, there was indefeasibility of the usual kind in a Torrens system title. Section 215 of the 2000 Land Title Act effectively gave the protection of that Act to a title registered under the Real Property Act.  So that would create the indefeasibility provisions for the fee simple through to the present statutory regime.  I think your Honour Justice Hayne asked if we had ‑ ‑ ‑

KIRBY J:   Did you find that common form federal provision that I referred to?

MR MERKEL:   No, we did not have time to have a look at that, but we will endeavour to pursue that.

KIRBY J:   I see.  If you would pursue that.  It may well have been in the Telstra Case.

MR MERKEL:   Yes.  We will have a look at that, your Honour.  I think your Honour Justice Hayne asked if we had pleaded the preserved interests under section 34(4) and we had not made any pleading of the preserved interests in relation to section 34(4). 

I had finished before on the adjournment on the Teori Tau overruling which we say ought to occur. The alternative case which we have addressed in our submissions is that, in any event, the present legislative regime is enacted under section 51(xxvi) which itself would fall within the alternative basis in Newcrest which was upheld by Justices Gummow, Gaudron, Toohey and Kirby, namely, that if a head of power under section 51 is attracted, then the constitutional guarantee applies notwithstanding that section 122 may also support the head of power.

So we say that, and again we do not understand the Commonwealth to contend the contrary, that the races power is attracted subject to the Commonwealth’s argument about giving paramountcy to the Act as a section 122 Act. We say there is no proper support for that in any of the cases and, indeed, the tests applied are the contrary. We have a fallback on the external affairs power but that does not arise unless the races power for some reason were not to apply. So that on the basis of Newcrest we say that section 51(xxxi) is engaged and just terms must be provided for the acquisition and no basis has been put forward to the Court as to why Newcrest should be overruled and, indeed, we would submit that it should not.

Can I now move on to the second set of submissions we would make on the question of whether there is an acquisition of property effected by the response legislation.  Your Honours recently considered these questions in Telstra [2008] HCA 7. I do not need to take your Honours to it, but at paragraphs [44] and [49] to [50] your Honours ‑ ‑ ‑

KIRBY J:   What proposition are you advancing?

MR MERKEL: It is the width of the definition of “property” for the purposes of section 51(xxxi), your Honour. At paragraph [44] there was discussion of property being a bundle of rights or a legally endorsed concentration of power over things. At [49] to [51] the breadth of the protection is discussed. Can we go first to the Land Trust property.

At paragraph [50] of the Blue Mud Bay decision the Court found that for all practical purposes it was a fee simple and with a right to exclude access, save in accordance with the statutory regime and it was the equivalent of full ownership.  Gerhardy v Brown 159 CLR 70 – and I will not take your Honours to it – but at 117 in respect of the Pitjantjatjara Land Rights Act Justice Brennan discussed the right of access as an adjunct of ownership being a right to exclude. At Yammirr 208 CLR 1 at page 49 the Court discussed the enforceability of such rights.

We would refer to Geordiadis179 CLR 297 at 305 to 306 where the concept of inherent defeasibility was considered. In the judgment of Chief Justice Mason and Justices Deane and Gaudron in their discussion of the concept of inherent defeasibility their Honours talked of the right in that case concerned a removal of limitation, composing a limitation right. But at the bottom of the page their Honours said:

The position may be different in a case involving the extinguishment or modification of a right that has no existence apart from statute.  That is because, prima facie at least and in the absence of a recognized legal relationship giving rise to some like right, a right which has no existence apart from statute is one that, of its nature, is susceptible of modification or extinguishment.

Now, in Telstra the Court said that just because it is created by statute does not mean that it is inherently defeasible, but we say that in the present case the Land Rights Act and the history as outlined by your Honour Justice Kiefel in the Telstra Case, makes it clear that it was intended to give effect to an antecedent relationship which now is known to be an antecedent legal relationship.

So we say that there is simply nothing in the case law about inherent defeasibility that would support the argument put by the Commonwealth that, in effect, the fee simple ownership rights can be appropriated by the Commonwealth under this statutory regime on the basis of inherent defeasibility or some inherent right to regulate or control.  We do not quarrel with the Act.  One only needs to look at it to see that there are aspects of it that vary and control and regulation can change in varying degrees.  But what is absent from this legislative regime is any intent that the fee simple should revert to the Crown either by a five‑year lease for a period or on any other basis without the consent of the traditional owners and without the request or involvement of the Land Council.

The Crown’s role is entirely, in respect to disposition of interests, a role where it can exercise a requirement of consent, but even there under section 19 it is in respect of 40‑year or more terms. So we say that the case law for suggesting the Land Trust’s fee simple right is defeasible is absent and, indeed, all of the discussion of the Land Rights Act starting from Meneling through to your Honour’s recent judgment would be to the contrary of the position put.

That there is an acquisition, we would submit, is clear.  Not only does the Act itself say so, but in Dalziel Justice Rich had talked of ownership, possession being the ultimate right, property right.  The possession of the Land Council is removed in its entirety because of the exclusive possession given to the Land Trust for the duration of the lease and for all intents and purposes the Land Trust loses all of the rights and benefits it has as owner of the fee simple for the duration of the lease.  So we say that there are real problems about the Commonwealth’s approach to there being no acquisition.

But we say also dispossessed, looking at this as a matter of substance, not just form, are the benefits that the property was meant to be incurring in favour of the traditional owners, and we say this is a very important point when it comes to just terms.  What is dispossessed is the rights of the traditional owners and other Aboriginal persons having interests in the land, traditional interests, to have the ownership and the fee simple exercised for their benefit and in accordance with their wishes.  That cord has been totally cut by the section 31 lease.

FRENCH CJ:   Well, they are the beneficial rights derived from the statute via the Trust and the section 71 rights.

MR MERKEL:   Well, the section 71 rights are put in a separate category.  They are the individual plaintiff’s rights.

FRENCH CJ:   Yes.

MR MERKEL:   But the statutory rights to have the powers, ownership and functions exercised for the benefit of the traditional owners and with their consent, the Commonwealth take the title unencumbered by any obligation in that regard, and we say that both at the fee simple level and at the underlying beneficial interest level there has been an acquisition of property.  At the beneficial level it may fall under the heading of an anomalous interest of the kind Justice Dixon referred to in the Bank Case.  It is not easy to define, but there is a statutory regime which has the fee simple estate to be exercised for the benefit of the Aboriginal owners and that has now been acquired by its extinguishment, in effect, but freeing the Commonwealth with the corresponding benefit of being able to exercise its rights as lessee of the land in the way it sees it as appropriate to fulfil its tasks.

FRENCH CJ:   The Trust acts in everything it does at the direction of the Council, is that right?

MR MERKEL:   Yes, and the Council can only act in a substantive sense in accordance with the wishes of the traditional owners, so that line has been totally cut.

HAYNE J:   Does the submission you have just made represent any amplification of what appears in paragraphs 65 and 66 of your submissions?  Or does 65 and 66 of your principal submissions encompass all of what you are saying in this respect?

MR MERKEL:   Did your Honour say 65?

HAYNE J:   Yes, 65, 66 which is, I take it, what you have been addressing now, is it not?

MR MERKEL:   I was trying to go further, your Honour, but I think what we had done in the submissions is at paragraph ‑ ‑ ‑

HAYNE J:   Well, if you are trying to go further I want to know how much further and what the next step is.

MR MERKEL:   The next step, your Honour, is at paragraph 68.  We have set out the traditional owners’ rights in respect of the land.  The Commonwealth correctly points out that we had not pleaded those rights as the property of Mr Wurridjal and Ms Garlbin and we accept that that is correct.  What we say is that part of the fee simple estate were the rights set out in paragraph 68 and 69 and that is part of the loss of the fee simple estate that occurs as a result of the section 31 lease.  Those submissions should be related to the acquisition of the Land Trust property and it is that property that I would put under the heading of the innominate or anomalous interests that are acquired as a result of the section 31 lease.

CRENNAN J:   Is there a question about whether those beneficial rights are personal rights as distinct from proprietary rights?

MR MERKEL:   Your Honour, we would say they are proprietary rights because they arise under statute, would be enforceable by action under statute and I used the description earlier of a “statutory trust”, but the statutory trust consists of rights by the traditional owners to have the moneys paid for their benefit, the powers exercised for their benefit and certain conduct of the Land Council only being engaged in after consultations and then only in accordance with the wishes of the traditional owners as a group.  We would say that the traditional owners would each have standing as beneficiaries of the statutory trust so created to enforce those rights in respect of the statute.  They are not personal rights in the sense of arising by contract or arising by reference to some individual right given to a particular person.

So we would say that that is part of and, indeed, at the heart of the fee simple estate that is intended to be created. It is not one for the benefit of the Land Trust or the Land Council, it is one that they hold on trust for the beneficiaries. In the same way as beneficiaries under a trust would have a right which would be enforceable by action as a chose in action to have the trust executed in accordance with its terms, we would say the traditional owners would have that right and that would be a right of property. But it is a right within the ambit of the Land Trust and the Land Trust fee simple estate, looked at as a matter of substance as the jurisprudence in section 51 (xxxi.) would have it. Could I just give your Honours a reference ‑ ‑ ‑

HAYNE J:   Just before you do that, staying with this, the ambit of your argument, if the facts sufficient to support 68 and 69 are not pleaded, how do they arise then in connection with 65 and 66?  What aspect of the pleading is relied on as making it a live issue on the Commonwealth’s demurrer whether reading what is now said in 68 and 69 of the submission somehow back into is an issue raised on demurrer?

MR MERKEL:   Your Honour, we would say paragraph 4 and paragraph 4(a) and (c) and then we say it is raised in the property of the Land Trust in paragraph 8, so that the estate in fee simple is the estate that is described in paragraph 4, which is the estate arising pursuant to the Land Rights Act.

KIEFEL J:   You say these are statutory incidents of the, effectively, statutory estate in fee simple?

MR MERKEL:   Yes, your Honour.

HAYNE J:   Do you say that we should approach the demurrer in any fashion different from that established in South Australia v Commonwealth 108 CLR 130, particularly in what Chief Justice Dixon said at pages 141 to 142?

MR MERKEL:   Is that, your Honour, that there are no inferences to be drawn?

HAYNE J:   No inferences, material facts only, not evidentiary facts.  That is a short and imperfect summary.

MR MERKEL:   Your Honour, we would say, with respect, that that is precisely what we are doing by reference to paragraph 4(a), (c) and paragraph 8.

HAYNE J:   What I want to know is whether you invite us to depart from that?

MR MERKEL:   No, we do not.

HAYNE J:   You do not?

MR MERKEL:   No, we do not invite a departure, your Honour.  But we do say pursuant to the Land Rights Act picks up the nature of the estate referred to in paragraphs 4(a) and (b) and the Land Rights Act itself.

KIRBY J:   I thought you told us earlier that you are going to take us to a second reading speech.  Is that a modification of what you have just said?

MR MERKEL:   Yes, I will, your Honour, but that is the third element, the third argument, which goes to whether just terms have been have been provided.

KIRBY J:   Well, either we go outside it or we do not.

MR MERKEL:   Your Honour, can I just come to the last branch of the acquisition of property.

FRENCH CJ:   I am sorry.  Just before you do that, I have not got clear the responses to Justice Hayne’s questions.  The property the acquisition of which we are directed to on the pleading is that referred to in paragraph 17 picking up the definition in paragraph 8.  So paragraphs 8 and 17 are to be read together and 9 and 19?

MR MERKEL:   Yes, your Honour.

FRENCH CJ:   So it is the property of the Land Trust?

MR MERKEL:   Yes.

FRENCH CJ:   And then the section 71 rights of the two plaintiffs?

MR MERKEL:   Yes, your Honour.  Could I move to the rights claimed by the two plaintiffs which are the section 71 rights.  The argument we put there is that the section 71 rights are stable, enduring rights, protected by the Act and conferred by the Act.  They are plainly enforceable rights, enforceable by injunctive or other relief.  They are analogous to native title rights to use the land and extinguishment of such rights was said by Justices Deane and Gaudron in Mabo 175 CLR 111 to result in a section 51(xxxi) application.

There is a reference in Fejo at paragraph 47 to such rights in that context, but we do say that they are classically the kinds of rights that are regarded as recognised and enforceable under the common law and find their statutory form, which would be no less enforceable by the traditional owners.

FRENCH CJ:   But you rely upon, do you not, the statutory entitlement created using that word “entitled” by section 71(1)?

MR MERKEL:   Yes, your Honour.

FRENCH CJ:   Why do we need to look behind that?  What does it add to your argument to say that there are traditional rights underlying it which are analogous to native title rights?  Why can we simply not stop at the statutory right and say that is property?

MR MERKEL: You can, your Honour, it is just that the Commonwealth put forward an argument that these are not capable of being rights of property protectable under section 51(xxxi) and ‑ ‑ ‑

FRENCH CJ:   What, the statutory entitlement?

MR MERKEL:   The statutory rights.  They say this is not a property and it is not acquired, so we say that one can, if one needs to go that far, draw the analogy of similar rights being treated as rights of property.

FRENCH CJ:   What is the analogy between?  The analogy is drawn between the statutory entitlement and rights generated at common law by recognition of traditional title?

MR MERKEL:   Yes, but the same kind of rights.  The kind of rights that we have pleaded to forage to live ‑ ‑ ‑

FRENCH CJ:   They fall into the same taxonomical box, is that what you say?

MR MERKEL:   Yes, your Honour.  I do not want to take it any further than that.  It is just that this Court has recognised such rights and we say that when one looks at the way in which they have been recognised and also the Canadian jurisprudence, because they arise in a sui generis context, it does not make them any less enforceable and it does not make them inherently defeasible, which is in effect what has been put against us.  So when you look at the underlying rights we say they arise not just as a grant of statute but again like the fee simple estate in recognition of an underlying legal relationship which is for all intents and purposes very analogous to the native title rights found in Mabo and protected in the Native Title Act.

GUMMOW J:   Just before you go any further, this notion of a trust when used in the statutory regimes can distract attention from the need to look to the specific statutory regime and there is some reference to this in Wik (1996) 187 CLR 1197. It is easy to slip into the language of beneficial ownership and so on.

MR MERKEL:   I accept that, your Honour, and that is why I have at the outset defined what I said is a statutory trust by reference to the statutory provisions, but the context in which this arises is in 51(xxxi) context.  Of course, it requires definition of the property, but in the same way as his Honour Justice Dixon in the Bank Nationalisation Case did not try and define what it was that was acquired by control of the banks in terms of classification of property rights, and it was in that context his Honour referred to the innominate and anomalous interests. 

We say that there is an analogy, both in this acquisition scheme and in an attempt to define the underlying beneficial rights, which feed into the fee simple estate in ways that comfortably satisfy legal definition.  But what we do know as a matter of substance that the interest that is acquired by the Commonwealth is not just the physical land and exclusive possession of it, but it is a physical possession that gives it the right to disregard the interests that exist under this Act in favour of the beneficial owners to have that land used, employed in their interest and in accordance with their wishes.

We say that is something more than just the loss of the fee simple estate, but it is hard to precisely identify in terms of analysis of legal interests in the same way as it was probably impossible for his Honour to categorise the control of the Commonwealth over the banks had by reference to taking their controlling shareholding interest in respect of its assets.

So we use it in that sense, but the point that this comes down to is a narrow point, and that is that our first argument is that these are preserved as licences conferred by section 71, but what occurs is that under section 37(1) of the Emergency Response Act, they are terminable on notice, but on notice of termination. 

So what we say were stable and enduring rights are rights terminable at any time by the Commonwealth as a preserved interest under section 37(1)(a) and, on the analysis of Justice Brennan in Re Meneling, which I will come to in a moment, a right terminable at will is not a right that has the stability or permanence necessary to be a proprietary right.  Justice Brennan in the ACTV Case, and I will come to that in a moment too, had cited that principle in a section 51(xxxi) context. Your Honour Justice Gummow with Chief Justice Black in Minister for Primary Industry and Energy v Davey had cited the same passages in the context again of a section 51(xxxi) case.

So what we are saying, in substance, is that a stable and enduring right of some importance and significance to the traditional owners which was property lost the characterisation of property for the section 51(xxxi) protection by being terminable at will. Can I take your Honour to how ‑ ‑ ‑

CRENNAN J:   Can I just ask you a question about that, Mr Merkel?  It would not be possible, would it, to determine the rights other than in furtherance of the objects of the legislation?  That is to say, to speak of them being terminable at will is perhaps going too far because the power to determine them could not be exercised other than for the purposes of furthering the objects of the legislation.

MR MERKEL:    It could not ‑ ‑ ‑

CRENNAN J:   Could not be properly exercised.

MR MERKEL:   Any statutory right can be terminated at will under a statute.  Of course, some restriction is imposed because the statutory power has to be exercised bona fide and for the purpose for which it was conferred.  It may even be that the statute might make certain considerations necessary considerations to have regard to on the Peko-Wallsend principle.  But as a matter of reality, if you are actually asked what, short of dishonesty or mala fides, could give rise to a challenge to the termination of this right, one would find it very difficult to get an answer.  It is a bit like the powers given in the Bank Nationalisation Case.  They were statutory powers, but they were of such width, and the objects of the Act were of such width, that absent dishonesty they were virtually unreviewable in any practical sense. 

CRENNAN J:   Would there not be a technical lack of bona fides, not necessarily dishonesty, to exercise them in a way that was detrimental to the achievement of the objects of the legislation?

MR MERKEL:   This is the problem, your Honour.  The objects of the legislation we are talking about are no longer the Land Rights Act; they are the objects of the Emergency Response Act.  Once one looks at those objects, to say that any decision by the Commonwealth was beyond its statutory power would be very difficult outside the area of dishonesty, given the width and ambit of the objects of that Act. 

But, your Honour, when I say “terminable at will”, it has to be in accordance with the exercise of a statutory power.  But in Meneling, a statutory licence could be terminated in accordance with the statutory power.  To say that the power is not totally unfettered, as if you could terminate as if it were your private property, does not advance the topic because what the problem is, is the stability and enduring nature of the right is reduced to one that is no longer a proprietary right by being terminable in that way.

Can I take your Honour to Meneling 158 CLR 327 where Justice Mason sets out the relevant principles in that case. The relevant discussion is at page 342.

HAYNE J:   Was his Honour dissenting on this aspect of the matter?

MR MERKEL:   I did not think his Honour was dissenting.

HAYNE J:   The headnote records his Honour is dissenting. 

MR MERKEL:   I do not think it was on this aspect, your Honour.  Justice Brennan agreed with his Honour and this analysis has been cited in other instances, but I do not think it is in dissent.  The section in question is in the headnote at page 327:

Section 107(1) of the Crown Lands Act 1931 (NT) provides that “The Minister may, under and subject to the regulations, grant licences . . . which are not held under a lease or licence granted under this or any other Ordinance, or on any reserved or dedicated lands, for such period, not exceeding one year, as is prescribed.”

Then they also at the end of that paragraph said:

a licence might be cancelled on three months’ notice of the Minister.

It was the three months’ notice that his Honour was directing his Honour’s attention to at page 342 when Justice Mason cited National Provincial Bank Ltd. v Ainsworth, Lord Wilberforce:

Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability.

FRENCH CJ:   This was going to the question of whether it was an interest in land, was it not?

MR MERKEL:   Yes, your Honour.

FRENCH CJ:   Not whether it was property?

MR MERKEL: No, that is correct, your Honour, but it has been applied and used in section 51(xxxi.) context. Can I go down to halfway through that last paragraph. His Honour says:

But reg 71A represents a substantial obstacle to the applicants’ case.  That regulation enables the Minister to cancel a licence, the only pre‑condition being that he give three months’ notice in writing of his intention to do so.  No default on the part of the licensee is necessary.  The regulation suggests that the licensee has no interest in the land at all.  The future of his right to graze stock is, by virtue of the Minister’s power to cancel, absolutely in the hands of the Minister and beyond his own control.  A right terminable in the manner permitted by reg. 71A lacks that degree of permanence of which his Lordship spoke.

Then his Honour Justice Brennan agreed at page 364 and Chief Justice Gibbs at page 332 also agreed at point 8.  Now, of course, that is by reference to a state or interest.  Can I just give your Honours the citation because it is referred to by Justice Gummow and Chief Justice Black in Davey’s Case, but in Australian Capital Television Pty Limited and Others v The Commonwealth of Australia 177 CLR 165 Justice Brennan cites that passage from Justice Mason’s judgment in the context of a section 51(xxxi) discussion. But could I go then to Minister for Primary Industry v Davey (1993) 47 FCR 151. There is a discussion of this at page 165 at paragraph B:

It may be that a right conferred by statute is so slight or insubstantial that it may not constitute at general law what would be a proprietary interest at all.  This was the case in R v Toohey; Ex parte Meneling Station Pty Ltd . . . In that case, regulations enabled the Minister to cancel a grazing licence, the only precondition being that three months notice in writing be given.  Mason J considered that no proprietary interest had been granted by the grazing licence.  True it is that the regulations did not envisage the licence being assigned, still less there being a market in licences.  The judgment of Mason J was considered and applied by Brennan J in the ACTV case at 165-166, in considering the constitutional guarantee.

In the instant case, the units may be transferred, leased, and otherwise dealt with as articles of commerce.  Nevertheless, they confer only a defeasible interest, subject to valid amendments to the NPF Plan under which they are issued.  The making of such amendments is not a dealing with the property; it is the exercise of powers inherent at the time of its creation and integral to the property itself.

We would say that that is precisely what has occurred by a reduction of the traditional owners’ rights, which is one of the significant aspects, as far as traditional owners in the Northern Territory are concerned, but particularly the two plaintiffs.  Their rights were stable and enduring and have been such since 1980.  Suddenly they are terminable at will, terminable by the Minister in accordance with the statutory power, but that is always the case in respect of a statutory interest.

We say that that is an acquisition of some significance and, given the expressions in this Court of recognition of traditional rights in respect of land, similarly in the Canadian Supreme Court, we say that these rights should not be treated as they are property and we say their termination in that way is an acquisition of property because they no longer have property rights of the kind that section 51(xxxi) would protect. So the fact that the termination may not have occurred is not the question.

We say it can have far‑reaching consequences if a right can be terminable at will and that is not regarded as an acquisition.  It certainly would have deleterious effects on ownership if rights people had at one stage as fee simple holders or as lessees were suddenly able to be terminable at will and it were held that there was no acquisition until determination occurred.  So we say that that is an important aspect of the legislative scheme and indeed an intended aspect.

HAYNE J:   Would the consequence of acceptance of this branch of your arguments ultimately be, let us leave aside its consequence for the demurrer for the moment, would the consequence be that so much of the provisions as permitted termination was invalid?

MR MERKEL:   That would be right, your Honour, if they were severable, but that is the consequence as far as the individual plaintiffs are concerned.  What effect it has in respect of the rest of the statute is a different question.

HAYNE J:   There is no, at least as I read the demurrer, separate ground of demurrer that raises questions of prematurity or the like at this point but there would at a later trial be a question about the consequence.

MR MERKEL:   That is correct, your Honour.  There is an alternative argument that has come out in the submissions.  It is put in submissions by the Commonwealth and the Land Council that section 71(2) of the Land Rights Act has a role which overrides the preservation.

Section 71(2) makes the traditional rights subject to any “estate or interest”, so that where exercise of the traditional rights “would interfere with the use or enjoyment of an estate or interest in the land held by a person not being a Land Trust” the traditional rights give way.  Now, the way the argument is put is that the section 31 lease is a lease which falls within 71(2) and that when the Commonwealth would wish to exercise their right of use or enjoyment then the traditional right would have to give way to it.

We say it is not a correct interpretation of the statutory regime because the preserved interest is part of the estate or interest the Commonwealth acquire as lessee, so the argument in effect ignores the preserved interest.  We say that there is no inconsistency between the two sections on our first construction, but if the argument is correct that the estate or interest is one that overrides section 71(1) rights we say that that becomes all the more a case of acquisition because the 71 rights are taken by the exclusive possession.  In other words, the lease gives exclusive possession.  It is not a matter of exercising a right to take exclusive possession if and when you want to do so.

So we say if this argument is pursued then the alternative argument would mean that there is a loss of the 71(1) rights by reason of the grant of the lease, giving exclusive possession as it does, which leaves no room for any exercise of 71(1) rights.

GUMMOW J:   I think Mr Walker’s submission is that 71(1) is subject to this section, therefore it is subject to subsection (2) and, therefore, 71(1) always had within it what is then characterised as this ambulatory operation of 71(2) as to a future estate or interest.

MR MERKEL: That is right, your Honour, but as to the ambulatory, as I have identified to your Honours, that could only arise under a lease granted under section 19 which can only be granted with the consent of the traditional owners. So again it is another example of the severing of that benefit that comes about because of the section 31 lease regime. So that that really merely enables the traditional owners to agree, if one wants to put it that way, to non‑traditional uses under leases which may have to by their consent give way to their traditional usage.

But the argument goes that step further and says, not only that it is ambulatory but in fact the lease – the way it is put is when a Commonwealth employee wishes to go and exercise a right under the lease and the traditional owner turns up to use the land in accordance with the traditional use, the traditional owner has lost that right because it is interfering with the Commonwealth’s use and enjoyment of its estate.  We say that is wrong.  We say the giving of possession would be the interference, but we say it is a misconstruction of the nature of the estate or interest which is subject to the preserved interests.

The third issue goes to the question of just terms.  We have endeavoured to outline our case in detail at paragraphs 84 to 94 of our submissions and paragraph 14 of our reply submissions.  But can I take your Honours at the outset to Justice Dixon in Nelungaloo 75 CLR 495 and the relevant passage is at page 569. There is no doubt that the Commonwealth approached this legislative scheme on the basis that, at the bottom of the line, if we give reasonable compensation if you have to then that will be just terms.

Can I just read the discussion of Justice Dixon at 569 because we say it is very pertinent to what is occurring in the present case.  His Honour said:

The measure of the duties is therefore to be looked for rather in the nature of the restriction on power.  It rests on the somewhat general and indefinite conception of just terms, which appears to refer to what is fair and just between the community and the owner of the thing taken.  Importing this conception into the purposes of the Board’s powers, the result seems to me to be that the disposal of the wheat, whether for the uses of the Commonwealth or for domestic consumption, must be in return for a recompense to the pool which is honestly fixed or estimated as a fair and reasonable value.  The difficulties of such a judgment in war time are great and the criticisms which may be made at any time of such a test are only too manifest.  But the standards of duty supplied by the law as a result of general considerations can never be precise.  When the question is one of fairness in any community the standard must depend upon the life and experience of that community, rather than upon the changing fortunes of other countries and the exigencies which beset them.

This is a question of whether the matter should be determined by the Privy Council before the High Court:

Unlike “compensation,” which connotes full money equivalence, “just terms” are concerned with fairness.

In Newcrest at page 649 your Honour Justice Kirby cited Quick and Garran, referring to 51(xxxix) in terms of fair and equitable terms.  There is one other criterion.  The jurisprudence has always said that it is for Parliament to lay down the terms.  It is its obligation to lay down the terms and it must provide just terms.  In the Bank Nationalisation Case at page 279 Justices Rich and Williams had indicated this related to a dispute about interest, that it is the duty of the Parliament to lay down the terms clearly and not obscurely, leaving it ‑ ‑ ‑

FRENCH CJ:   Given the rather empty vessel that “reasonable” is, why should it not be read in this context, putting to one side your argument about non‑monetary compensation, as that which meets the requirement of just terms?

MR MERKEL:   Your Honour, reasonable compensation, subject to an argument about improvements, which we will come to later, will generally be for money equivalents. 

HAYNE J:   Is it necessary to take account of what Justice Dixon says in Nelungaloo, not only at 569 but also at 571?  At about point 5 of the page his Honour contrasts compensation and refers to compensation as, in effect, recompense for loss, that is, value to the person from whom the property is taken, whereas the just terms to which his Honour was referring at 569 seems to connote some reference to society rather than bare consideration of the position of the person from whom the property is acquired. 

MR MERKEL:   Your Honour, what we would say is that the point that his Honour makes at 569 is that you cannot substitute the word “compensation” for “just terms”.

HAYNE J:   The point his Honour makes at 569 is to be read in the light of the whole of his reasons, not as an isolated gobbet of text taken and construed like a piece of Latin.

MR MERKEL:   But, your Honour, those passages have been quoted and relied upon.  The passage was cited, I think, in Davey.  It was cited by Justice Deane in the Tasmanian Dam Case, and was cited by Justice Rich in one of the other Nelungaloo Cases, which I think we have referred to in our submissions.  The point we make, and the only point we make – and we accept that in the normal course prima facie reasonable compensation will be just terms when you are looking at monetary equivalents as all that you are required to provide in the sense of being just.  But we say that one has to look at the entirety of the terms, and what we would propose to do now is to say ‑ ‑ ‑

KIRBY J:   I may be wrong, and correct me if I have misunderstood what Justice Dixon is saying there, and I took Justice Hayne to be putting to you what I understood Justice Dixon to be saying, which is not against the proposition you are advancing, which is that when you talk of “just terms”, one of the terms may well be and would ordinarily be monetary compensation, but that is only one of the terms.  There will be other terms that are required in order to be just, having regard to the sort of property that is acquired, the way in which it is acquired and the way the statutory scheme provides for hearing and consideration, and compensation in terms of money is just one of the terms.

MR MERKEL:   Yes, your Honour, precisely.  That is very much borne out by the jurisprudence where the ‑ ‑ ‑

KIRBY J:   Is that how the cases have developed, what Justice Dixon said, or ‑ ‑ ‑

MR MERKEL:   Yes.  Well, the particular exposition of that was in Tasmanian Dam where Justice Deane was the only member of the court that dealt with it – and I will give your Honour the reference.  But what Justice Deane said picks up very much the point your Honour makes.

It is 158 CLR at 290. The passage starts halfway down page 290, where his Honour was looking at the statutory scheme for claims in excess of $5 million. His Honour made the point at the outset that:

The provisions of s. 17 do not confer any immediate right to be paid compensation upon the acquisition of property.  All they confer is a right to set a procedure in chain.  If the Minister contests that there has been an acquisition, the Commonwealth is under no obligation to pay compensation unless and until the claimant has instituted proceedings in the High Court and obtained a declaration that there has been an acquisition.  Inevitably, the obtaining of such a declaration will involve the passage of time.  If such a declaration is obtained and the amount claimed is in excess of $5,000,000, the claimant is still not entitled to enforce payment of any amount of compensation.  He is only entitled to have a Committee of Inquiry established.

Now, his Honour said about that over at page 291 at point 3:

There is not, of course, anything intrinsically unfair in the Parliament providing a procedure for determining the quantum of compensation outside the ordinary judicial process.  There is, however, something intrinsically unfair in a procedure which, in effect, ensures that, unless a claimant agrees to accept the terms which the Commonwealth is prepared to offer, he will be forced to wait years before he is allowed even access to a court, tribunal or other body which can authoritatively determine the amount of the compensation which the Commonwealth must pay.  In the case of s. 17 of the Act, this intrinsic unfairness is heightened by a failure to make any provision in respect of the payment of interest during the period between the time when the acquisition is made and the time when the person whose property is acquired can finally institute an effective claim for compensation.  In my view, the system established by s. 17 for ascertaining whether compensation is payable and, if it is, the amount which should be paid is quite unacceptable and unfair according to the ordinary standards of “fair dealing between the Australian nation and an Australian State or individual in relation to the acquisition of property for a purpose within the national legislative competence” ‑

His Honour then cites Nelungaloo, which is not Justice Dixon but it is I think Justice Rich who cites at page 600 the Justice Dixon passage that I have just taken your Honours to in the earlier Nelungaloo case.

KIRBY J:   You see, at least arguably, one of the features of this intervention, as it is of importance, relates to the denial to Aboriginal people of the full and private and secret access to spiritual property and to the ways of maintaining them.  Simply to give people money for that, compensation in money, would not, at least arguably, be just terms.  It would be like saying we will put an intervention and put a barrier around every Roman Catholic Church in a particular area, but we will give them money.  That will be their just terms.  That might be fair compensation but it may not be just terms.

MR MERKEL:   That is precisely so, your Honour, and there are cases which I will come to because the valuation procedure for rent attracts a number of the problems dealt with in other cases where there was a failure to have a right to put your case about what the compensation is.  That has been found to be a denial of natural justice and therefore, even though you were to get reasonable compensation the method of determination was unfair.  It did not comply with the rules of natural justice.  So what your Honour is putting to me is undoubtedly the jurisprudence that has been developed in this Court which does not equate compensation with just terms.  It has to be, if it is to be monetary, reasonable compensation on just terms – both requirements.  Reasonable compensation is an aspect of just terms but is not exhaustive of it.

Taking the point your Honour put to me, and we say this is of fundamental importance to this aspect of our case about the rights of the traditional owners, at the demurrer book in our pleading at page 31 we set out as one of the grounds of why there is a failure to take into account just terms ‑ ‑ ‑

GUMMOW J:   I think you have to grapple with the notion that what Sir Owen Dixon was talking about was that reasonable compensation may be more than just terms.

FRENCH CJ:   A balance between society and the individual.

GUMMOW J:   That is why the two passages have to be read together.  They are contrasting.

MR MERKEL:   Your Honour, that may be in that context, but what we do say is that what his Honour is saying is that just terms and compensation cannot be treated as synonymous.  Compensation usually will be sufficient, but if the compensation falls into a regime of the kind Justice Deane outlined in Tasmanian Dams, we say the question of unfairness arises.

HAYNE J:   But in Nelungaloo there was not compensation, there was pooling.  It was wartime.  And because it was pooling, the person whose property was acquired, the person whose wheat was acquired, was going to get less out of the pool arrangements than he or she would have got if he or she had been able, on a free open market, to treat Spencer’s Case style for the value of the wheat.  It is the inverse of the proposition for which you are contending.

MR MERKEL:   Your Honour, our contention is simply to say the word “just” involves notions of fairness.  In Grace Bros there is ‑ ‑ ‑

GUMMOW J:   Between whom?  That is what Sir Owen Dixon was directing his attention to.

MR MERKEL:   We say the way Justice Deane put it in Tasmanian Dam it is between the State and the person whose property is being acquired.

KIRBY J:   The interests that are at stake in this case, at least as I understand them at the moment, are not entirely monetary, like a wheat grower.  A wheat grower does not love his wheat.  He may love the money that comes from it and his toil and the sweat of his brow, but that is a different sort of interest to the one that is at stake in this case.

MR MERKEL:   Absolutely, your Honour.  That is why I was going to take your Honour to page 31 of the demurrer book.  We have tried to set out in paragraphs (m) and (n) the kind of problems that arise by reason of the special nature of the property being acquired as far as the traditional owners are concerned.

HAYNE J:   In treating that problem, do you not engage directly with what Justice Kitto was saying in the subsequent Nelungaloo Case 85 CLR 600 where his Honour said:

The standard of justice postulated by the expression “just terms” is one of fair dealing between the Australian nation and an Australian State or individual in relation to the acquisition of property for a purpose within the national legislative competence.

CRENNAN J:   Which is exactly what Justice Deane picks up in the Tasmanian Dam Case.

MR MERKEL:   I am not wishing to quarrel with any of that, your Honour.  But fair dealing, we say, embraces the terms on which the acquisition is to occur.  For example, the right to be heard, in respect of how the compensation is determined, was found in Johnston Fear which is 67 CLR 324.

KIRBY J:   I am losing you.  I am not hearing you, Mr Merkel.

MR MERKEL:   I am sorry.  The right to be heard as an unjust term, if denied ‑ ‑ ‑

KIRBY J:   Yes, I heard you say that, but you were then quoting a case.

MR MERKEL:    ‑ ‑ ‑was said in Johnston Fear 67 CLR 324, and in Australian Apple and Pear 60 CLR 109, to give rise to unjust terms because you did not have a right to be heard as to the compensation that you were bound by. We say that there is nothing unexceptional about that because it is unjust for you to have compensation foisted upon you under a formula of reasonable compensation without having a right to be heard in respect of its determination.

FRENCH CJ:   You were going to take us to page 31 of the demurrer book.

MR MERKEL:   Yes, your Honour.  There we try and capture as best we can the problem that we are addressing in paragraphs (m) and (n):

the sole criterion of payment of a reasonable amount of compensation does not take into account the non‑financial disadvantages and deprivations suffered by the traditional Aboriginal owners, including Wurridjal and Garlbin, by reason of the acquisition of Land Trust property –

and the section 71 property –

and therefore does not provide just terms.

And then, for example –

no obligation is imposed upon the Commonwealth or the Minister to:

(i)exercise their powers in relation to the Maningrida land under or in respect of the Commonwealth lease and the Emergency Response Act for the benefit of the traditional Aboriginal owners of the land;

(ii)to take into account, as a relevant consideration, whether the exercise of such power is for the benefit of the traditional Aboriginal owners –

That is not the community.  That is the traditional owners whose underlying interests are being acquired.

KIEFEL J:   That is what I was going to ask you, Mr Merkel.  Are you really saying that it is not an acquisition on just terms or it simply should not be acquired, or at least not acquired unless there is a statutory process for inquiry into effectively the policy reason as to whether it should be acquired, which is part of the same argument?

MR MERKEL:   Your Honour, we do not say that it should not be acquired.  That is not part of our argument.

KIEFEL J:   But are you saying that the legislation has not looked deeply enough into it, that there has been no assessment of the detriment to people?  Does that not come to the same thing?

MR MERKEL:   No, we are saying that the acquisition can occur, we do not have any quarrel with that, nor can we.  The question is the terms upon which it has occurred.  It does not require considerations of the interests of the persons whose property is being acquired to be taken into account, for example, before terminating the section 71 rights.  We say that, for example, there is no obligation to consult with or take into account or treat as a relevant consideration the views of the traditional Aboriginal owners in respect of the manner in which the Commonwealth will exercise the powers that they have, the discretionary powers they have in respect of the property acquired.

KIEFEL J:   But you are really saying, are you not, that they cannot be properly compensated, to use that term, and, therefore, it must follow it should not occur?

MR MERKEL:   No, your Honour, we do not and cannot put that.  It is not part of our argument to try and challenge the acquisition.  It has occurred, it has occurred for a community purpose as the Commonwealth has said.  But what they have acquired is this underlying interest of traditional owners who are not the community.

FRENCH CJ:   Well, you talk about this underlying interest.  We go back again to the pleadings, that is the Land Trust property and the Wurridjal and Garlbin properties.  Now, that is what we are talking about, is it not?

MR MERKEL:   Yes, your Honour.

FRENCH CJ:   I notice that all that appears on 31 and before as part of paragraph 21 are the matters by reason of which the acquisition is not on just terms.  That applies in a rolled up way to both classes of property.  So when you are talking of (m), are you speaking of the acquisition of the Land Trust property or are you speaking of the acquisition of the section 71 rights?

MR MERKEL:   I will come to where we have tried to enunciate this more precisely in our submissions, but what we are endeavouring to say is take the ability to vary the lease or act in a particular exercise, a statutory power which is part of the acquisition.  Part of the terms of the acquisition, we say, when it comes to section 71 rights or sacred site rights - sacred site rights are an example of the Trust property, not Wurridjal’s property.  When it comes to the sacred site rights that is probably the best example, it is unfair, not fair dealing for the Commonwealth to take exclusive possession or exercise its right of exclusive possession without considering the consequence of the interference of the sacred site rights of the Aboriginal people concerned.

So it is unjust as a term to be given unencumbered, unfettered right to exclusive possession without regard to the nature of the property you are acquiring.  We say that it is not the acquisition of the right to exclusive possession, but it is the unconditional right to exclusive possession, the exclusive possession, the absence of terms that had regard to the interests of the owners, of the kind that are in the Act already or something analogous.  We try and set it out more precisely at paragraph 90 of our written submissions, your Honour. 

HAYNE J:   I am sorry, which paragraph?

MR MERKEL:   Paragraph 90 at page 21.  We say the sui generis nature of traditional Aboriginal rights and interests in land, and in relation to sacred sites in particular, is such that the requirement of just terms may operate differently in relation to such rights and interests.  As Chief Justice Latham observed in Johnston Fear & Kingdom v The Commonwealth, the determination of just terms must take into account the particular value of the property to the former owner in circumstances where it cannot readily be replaced.

HAYNE J:   Stop there.  In what sense are you employing the word “value” when you give that citation?  Are you talking monetary value or are you talking value in some other larger and more generic sense?

MR MERKEL:   We are using it by analogy in value in a sense of fairness having regard to the nature of the property that you take – a sacred site to an Aboriginal person cannot be translated or transferred into monetary consideration.

HAYNE J:   That is a proposition I have no difficulty in understanding or, indeed, subject to what is later said, accepting.

MR MERKEL:   Yes, well, can I start from that point, your Honour.  The equivalence of special value that was in Johnson Fear is the special value that a sacred site has, we say, to give exclusive possession of that site without any consideration of the fact that it is a sacred site and it may be unnecessary for the Commonwealth’s purposes.  The toilet example is the one example I gave your Honours earlier.  A statutory regime that enables a portable toilet to be put on a sacred site under a statutory right given in section 31 to override section 69 of the Land Rights Act could not be just without some obligation on the Commonwealth to consider the consequences of what it is doing to the persons affected by it. 

We say it is that aspect that we take your Honour to in this discussion, that just terms, particularly in a sui generis property context, must require looking at what is fair dealing between the State and the individuals concerned.  We say the sacred site is probably the worst example, but the section 71 rights that we claim as property rights are likewise an example.  We read on, we say:

traditional Aboriginal rights and interests in land . . . cannot be readily replaced, nor readily compensated for by the payment of money.

That is a point made by the Canadian Supreme Court in Osoyoos.

KIRBY J:   I did hear the case.

MR MERKEL:   It is Osoyoos, your Honour.  We have referred to it in our written submissions.

GUMMOW J:   Footnote 138.

MR MERKEL:   Yes, thank you, your Honour.  It is at footnote 138, Osoyoos Indian Band v Oliver where it was a compulsory acquisition case but not in a constitutional sense, it was a construction sense, and their Honours made observation of the non‑replacability of Aboriginal land, for example.  It is not something like you can give someone compensation, they can go and buy the same land and replace it elsewhere.  But if I may read on.  They:

cannot be readily replaced, nor readily compensated for by the payment of money, and the special ‑ ‑ ‑

KIRBY J:   Which paragraph are you reading?

MR MERKEL:   Sorry, middle of paragraph 90, your Honour, at about line 36.

KIRBY J:   Yes.

MR MERKEL:

must be taken into account in any regime providing for compensation if such a regime is to satisfy the constitutional requirement of just terms.  The Plaintiffs submit that the unique nature of such interests is such as to warrant the extension of the just terms requirement to non‑monetary terms, where possible.  Monetary compensation for acquisition is not sufficient, at least in circumstances were the acquisition regime would admit of the traditional owners having continuing access to the land for traditional purposes.  Where such access could sit side-by-side with the acquisition in question, then the notion of just terms requires that such access be given.  This approach is supported by observations made in Canada about the sui generis nature of Aboriginal land and of the interest of Aboriginal persons in respect of that land are such that the rationale that underlies the process of compulsory takings in exchange for market value compensation may not apply.

FRENCH CJ:   That requires, does it not, some sort of reading into the “just terms” requirement in this context, some sort of carve out from the nature of the acquisition?

MR MERKEL:   I stopped short of putting that as a submission because we are not – “acquisition on just terms” is a compound expression, as was said ‑ ‑ ‑

FRENCH CJ:   There is “acquisition” and then there is “just terms”, is there not?

MR MERKEL:   Although in Telstra the Court said it must be looked at as the compound expression.  We accept that, but we say that helps us, not harms us.  We cannot say it is just an acquisition that should not occur.  We do not say that.  We do not say that the acquisition cannot be of exclusive possession. 

HEYDON J:   Does not your argument drive you to that, though?  If traditional Aboriginal rights and interests in land cannot be readily replaced or compensated for by the payment of money, does not that just mean you cannot acquire it if the condition of acquisition is that just terms be provided, that you cannot have just terms?

MR MERKEL:   No.  Well, your Honour, we obviously cannot and do not go that far.  That is why we have set out the kind of considerations at paragraph ‑ ‑ ‑

HEYDON J:   Why cannot you go that far?  You may not want to.

MR MERKEL:   Because we do not read 51(xxxi) as reading a prohibition against making an acquisition that someone says should not be made at all.

KIRBY J:   Justice Mason would have then said, if that had been proposed to him, as he did in Buck v Bavone, that you would then be reading section 51(xxxi) as other than Aboriginal property or other than Aboriginal land and it is not there, so you cannot do that. But, as I understand it, what you are suggesting is that there would be ways, by negotiation and respect for the Aboriginal culture and spiritual traditions, to acquire the interests in the land but still to respect the rights of the Aboriginal people in their sacred areas.

MR MERKEL:   Yes, your Honour.  We do not have to put it any higher than the absence of regarding the interests affected as a relevant consideration in relation to exercising the discretionary powers of termination of traditional rights or entry onto sacred sites make the terms unjust – is a failure to provide such terms.  You may have the right to take exclusive possession of a sacred site, but it is a right, if to be just, have just terms, should have regard to the fact that it is a sacred site and should require you, we say in our written submissions, as a last resort or as having some encumbrance on your discretion, of which there is really none effectively in this regime.

KIRBY J:   In effect, you are saying to us that your contention is that the mindset here is signalled by the provision of the only term that is referred to, namely, reasonable compensation?

MR MERKEL:   Yes, your Honour.

KIRBY J:   It is a monetary mindset; it is a mindset of dollars and cents.

MR MERKEL:   Yes. 

KIRBY J:   That is not what “just terms” under the Constitution require and, more particularly, it is not what “just terms” require when you are dealing with the sensitive issue of Aboriginal spiritual interests.

MR MERKEL:   I can think of no better example than the exercise of Commonwealth power to put a portable toilet on a sacred site in exercise of this statutory regime with nothing in it that it would encumber the exercise of the discretion under the Act to do that.

FRENCH CJ:   There must be a workable boundary around this concept of interests which cannot be compensated by money.  We are talking about this at the moment in the context of traditional Aboriginal interests, but why do we not extend your argument to the case of, say, the acquisition of a church which has a particular tradition, history and profound spiritual value to a congregation that, through some corporate agency, owns the church?  What is the ring fence around this concept?

MR MERKEL:   Only, your Honour, that where fairness would compel that the nature of the interest being affected have terms attached that have regard to that nature because it is special to the people concerned, and fairness by that standard is fairness in the constitutional sense, then terms should be imposed that are adequate to give appropriate protection to the interest.

HAYNE J:   But the premise for the argument and the premise for this whole branch of the argument is that that which cannot be traded or exchanged for money nonetheless falls within the portmanteau or composite expression “acquisition of property on just terms”.  That is the premise, is it not?

MR MERKEL:   Yes.

HAYNE J:   Now, if that is the premise that that which cannot be traded falls within this compound conception, what is it saying about the content of the notions of acquisition and property?  You have told us what you say it tells us about the concept of just terms, but is it your argument that the facts that the subject matter cannot be traded, cannot be converted into monetary terms says nothing about acquisition, says nothing about property?

MR MERKEL:   Your Honour, I do not need to go so far as to say it cannot be translated into monetary terms at all.  Some of the traditional rights may or may not be able to be.  What I am saying is that the special nature of these rights require special terms that have regard to their protection in a way that is not necessarily inconsistent with the acquisition.  So that, for example, before you enter upon ‑ ‑ ‑

HAYNE J:   I do not see that as answering my question, Mr Merkel, but it is up to you if you wish to answer, whether it says anything about acquisition or property. 

MR MERKEL:   Your Honour, we say that just terms cannot limit the power to acquire property.  We do not say that, but we just say that you can acquire the property irrespective of whether it is replaceable or translatable in monetary terms.  But what we say is that when you take it, it may be, if it has a special nature, mere monetary compensation may not be sufficient to make the terms just and that is how we put it.  We do not go so far as to say any more than that this regime pays no regard to those interests by requiring as special consideration the kind of matters we have set out in our argument or the kind of matters we have set out in our pleading the matters that one has to take into account.  We say it is that that makes the terms unjust in terms of these traditional rights. 

Can I now go to the point I was at this morning where I wanted to indicate to your Honours why we say that there is a scheme abroad here and can I take your Honours to the second reading speech.

KIRBY J:   This is in support of what part of your submission?

MR MERKEL:   That the only rational explanation for the totality of this scheme is to defer payment to traditional owners of any real money as a result of this lease until as late as possible down the path.  When I come to the rent regime I will explain why that is so.  But we say that the real object of the scheme in terms of money is to ensure traditional owners did not have money that we say could be spent by them and therefore there is a deferral under this scheme of any right to be paid any money until the reasonable compensation provisions bite.  If any money was to be paid earlier, it was to be but a shadow of what would be the entitlement.

MR MERKEL:   There are two bases for that argument.  The first is to be found in the second reading speech, which is at tab 2 of the Emergency Response Bill, and page 10, and the last sentence at the bottom paragraph ‑ ‑ ‑

FRENCH CJ:   This is 10.2 of the extrinsic materials?

MR MERKEL:   Yes, your Honour.  The second reading speech of the Minister ‑ ‑ ‑

KIRBY J:   Which page, I am sorry?

MR MERKEL:   Page 10.  It is tab 2, your Honour, in the extrinsic materials.  The last sentence at the bottom of column two:

We aim to limit the amount of cash available for alcohol, drugs and gambling during the emergency period and make a strong link between welfare payments and school attendance.

Then at the top paragraph of page 11, the second column:

We need to make sure money paid to parents and carers by the government for feeding children is not used for buying grog or for gambling.

Can I go now to how that was carried into effect, on our submissions, under this statutory scheme.  There are a number of steps, some of which I have already outlined and I will not repeat them, but the first step is, notwithstanding the decision of the majority in Newcrest and the undoubted reliance on the race power, the authority of this Court at the time this legislation was passed should have had the Commonwealth in a position where it regarded itself as under an obligation to pay just terms if there was an acquisition, subject to a shipwrecks clause, but it abrogated section 50(2) of the Self‑Government Act, which meant that this constitutional case was a prerequisite to any claim taking effect.

The second step is that when one looks at the most basic obligation in this statutory regime, that of paying rent for a lease, can I go to other aspects of section 62 which I did not explore this morning.  This is in the Emergency Response Act at tab 4 of the second volume.  The rent regime is at pages 51 to 52.  We put the construction argument, which I will not repeat again, that there is no obligation.  We say that is the proper construction.  But if there is an obligation to pay rent then what we say is that the statutory provisions have the consequence of the Commonwealth taking improved land but paying rent on its unimproved value and that is an extraordinary and unprecedented circumstance.

The way we go there is we start with the demurrer book at page 14, paragraph 5, where we define the Maningrida land as the land described in clause 21 of the Act.  Can I take your Honours to page 21 of the demurrer book at paragraph 14, by section 31:

a lease for a term of five years of the Maningrida land, extending to the low water mark, was granted -

and then can I go to pages 17 to 18 where the improvements on the Maningrida land are described, and paragraph 7:

The following improvements have been constructed on the Maningrida land since it was first established -

and we set out a list of all of the improvements and there is a map, Schedule 7, which shows the township with all of its improvements, and on the pleaded lease that is the property that the Commonwealth has taken over under the section 31 lease – houses, supermarkets, buildings, land works, airstrip, everything.  They are the improvements.

Then at paragraphs (b), (c) and (d), it is not as if these were funded by the Commonwealth, these are not paying rent in respect of improvements that people other than the Commonwealth have paid for:

(b)The improvements constructed by Bawinanga on the Maningrida land since its incorporation in 1979 include staff houses, office buildings, numerous sheds and workshops, plant nursery, fuel storage –

and so forth – these are all on the Maningrida land –

(c)The improvements referred to above were funded –

that is the improvements in paragraph (a) ‑ ‑ ‑

FRENCH CJ:   This is on the basis that we are to assess the fairness or justness, if you like, of the rent on the basis the Commonwealth has a right of exclusive possession of all these buildings and so forth?  That would not be the reality, of course, would it?

MR MERKEL:   No, the reality is, your Honour, not that they have the right – this is what the Commonwealth acquire under its lease.

FRENCH CJ:   Yes, I know that.

MR MERKEL:   It may be subject to a preserved interest, but this is what the Commonwealth acquire – I am not saying they can walk in and throw out every Aboriginal person living in the houses, but these houses are suddenly houses of which the Commonwealth has leased under section 31.  Excluded from the lease were areas the subject of registered leases, which is not relevant for present purposes.  So all of this property and all of these improvements – but I do not need to go into each particular one – but all of the improvements on the land are what the Commonwealth has leased under section 31.  That is why we say the definitions in the pleadings make this clear, but this reflects the reality as well, your Honour.

FRENCH CJ:   But, I mean, obviously we are not talking about a scenario where an Aboriginal family is to be moved out of a house.  One of the improvements to which you refer in 7(a)(i) and supplanted by Commonwealth officials.

MR MERKEL:   No.  Well, they could do that.  Assume there is someone there with a licence or a lease, the Commonwealth can terminate that, can terminate any interest.

CRENNAN J:   But what about the preservation of extant interests, though, Mr Merkel?  I mean, there are no ejectments that follow the leases.

MR MERKEL:   Your Honour, under this lease the Commonwealth can terminate any preserved interest.  So taking his Honour the Chief Justice’s example, if someone was living in a house and the Commonwealth decided they wanted it for its employees, they would just terminate that interest, and that is exactly what the termination is about.  But my point here is a different point.  They are agreeing on the hypothesis that there is an obligation to pay rent.  They are paying rent for this, but normally one would expect them to pay rent for the houses, and no doubt therefore the Land Trust is being compensated.

Remember, your Honours, they stand in the shoes of existing interests of the – of all these existing interests, they all stand in the shoes of the landlord, but I do not want to go back there.  All I am saying is on the pleaded case, which is as I understand it the reality, the leased land has these improvements, and the question is, this statutory regime in section 62 gives the Commonwealth the right to pay rent on unimproved land when it receives the improved land.  It is a point that is a very short one, and that is the statutory regime.

KIRBY J:   But what is the answer to - so what?  If you accept that there is a national emergency and it involves private conduct, then at least arguably taking possession of the houses is an effective way of dealing with that.

MR MERKEL:   Your Honour, this argument does not touch upon how it might exercise its powers.  The short point is that it is not fair dealing for a rent to be determined for improved land on its unimproved value.

CRENNAN J:   I was just suggesting to you that the rationale might be there are no ejectments.  I know you answer that by saying terminable at will, but in practice with no ejectment from the improvements there would at least be some rationale in relation to the rent being related to the unimproved value?

MR MERKEL:   Well, your Honour, with respect, then we go back to the other regime which is 34(4) and the 35 regime, which means the Commonwealth receives the income and they have to siphon it through to others.  But the point I am making here is that the benefit the Commonwealth gets under this lease is the right to be paid the moneys that are payable in respect of the land.  So that is why section 34(4), together with section 63(1)(d) provides for the income from preserved interest to go into the Commonwealth consolidated fund.

Section 35 has a similar right.  Section 35(5) allows creation of new interest and section 63(1)(e) provides for it to go into Commonwealth consolidated revenue because it is effectively taken over the fee simple rights as landlord as well as tenant for the five‑year period.  The Act anticipates that the moneys arising from the improvements and use of this land will go into the Commonwealth’s coffers.  Now, if they were paying a rent for that right then it would be fair.  But what we say is unprecedented in this context is to have a rent calculated on the basis of having all these benefits, but treating it as unimproved land.

KIEFEL J:   You rely upon the fee simple rights for an entitlement effectively to be compensated for the improvements?

MR MERKEL:   Well, your Honour, to be compensated you are entitled to be compensated for by rent, which is the payment during the term of the lease for the use and occupation of the land by a rent that reflects the value of what you have.  It is unprecedented to think of improved land being rented as unimproved land and the only rationale for that - I am putting forward and maybe my learned friend can offer another one – would be to say well this is a way of bypassing this quarantining scheme for the traditional owners to have quarantining of their income in social welfare, but then they get all this rent money from the Commonwealth.  It is undermining the totality of our scheme.  But that is not a permissible consideration when it comes to just terms and we say ‑ ‑ ‑

GUMMOW J:   Why not?

MR MERKEL:   Because, your Honour, it is not just to the traditional owners concerned who may have nothing whatsoever to do with this quarantining.  They may be not on social welfare or they may be very responsible citizens who are not drunk who are teetotallers and who are totally outside the so‑called quarantining program and its objects.  It just treats an Aboriginal traditional owner as if they all fall into this drunk, drugs, et cetera, problem, which is being addressed.  But that is not suggested, your Honour.  The Commonwealth may try and explain it, I cannot.  I cannot conceive of an instance where it can be fair to say you rent improved land at its unimproved value.  But the injustice of these clauses is worse than that.

KIEFEL J:   It might depend upon where the funding had come from to put the improvements on, but that is not a fact that we are given in this case.

MR MERKEL:   That is why I took your Honour to the pleadings, because part of the funding comes from Bawinanga.  So the Commonwealth are getting the benefit of Bawinanga’s supermarket, which it built, as improved land for its unimproved value.  I should say, this is an argument as to why you should not, in the first place, engage in a beneficial construction of section 62 of the kind that was being put before lunch because there is nothing beneficial or fair about section 62.  So that to say this is for the benefit of the traditional owners is not a correct way of looking at this statutory scheme at all. 

But section 62 goes on, because the process is that after the potential for agreement, the trigger is the Commonwealth requests the Valuer-General to make a valuation under the Valuation of Land Act.  The Valuer-General in subsection (2) must comply.  Then the selective provisions that are put in from the Valuation of Land Act – and if I can hand that Act up to your Honours – make sure that if someone does not even like the unimproved value that the Valuer-General determines, there is no right to be heard in respect of the process, no right of objection, no right to be heard.

KIRBY J:   What happens in cases of this kind where one finds a particular provision which strikes one as not being fair but there are others that are fair?  Is there some doctrine of severance or ‑ ‑ ‑

MR MERKEL:   There is, your Honour.  In many instances something may be severed, although Justice Rich and Justice Williams in the Bank Nationalisation Case said some of the clauses on their face are severable, but if you look at the totality of the scheme, the totality of the scheme sought to achieve this object and it is not for the court to try and save a scheme of a kind that is flawed.

KIRBY J:   I understand the general law of severance, but if you severed this provision, it would not solve the problem that you are complaining of, because it would leave the lack of even fair compensation or the reasonable compensation on your argument.

MR MERKEL:   No, your Honour, because the point I am addressing is the unfairness of trying the objective that is sought to be achieved here, which finds no foundation in section 51(xxxi) jurisprudence.

FRENCH CJ:   Both of those matters, that is, the want of reference to the improvements and the absence of an opportunity to have an input into the Valuer-General’s determination are covered by 21(a) and (b), is that right?

MR MERKEL:   Yes, your Honour.  The three sections, sections 7, 41 and 42, picked up of the Valuation of Land Act are merely machinery provisions.  The provisions that are not picked up is section 16, which gives notice of valuations, notice that therefore a chance to object, which is section 18, and an objection process which would apply to any other citizens other than these in respect of a valuation.

FRENCH CJ:   That is all under the rubric of 21(a)?  I am just tracking this through the pleading. 

MR MERKEL:    Yes, your Honour.  Sorry, I misunderstood your Honour’s question.  So that, just finishing on this point, what we say is that even worse than the valuation of the land is the no right to be heard even on the devalued land.  The two cases I have given, your Honours, where a right to be heard were refused in similar or analogous circumstances was found not to result in just terms were Johnston Fear 67 CLR 314 at 324 and Australian Apple and Pear 60 CLR 77 at 109.

FRENCH CJ:   Are we to regard all these matters set out in 21 as jointly contributing to the characterisation of the plead of acquisitions, because we have two classes of property, as unjust or are you relying on any subset that strikes us as unfair?

MR MERKEL:   No, your Honour.  We say individually and cumulatively that they are unjust.  We have endeavoured to expand on them in our written submissions, but they capture the thrust of what we say are unjust.

The scheme I have already taken your Honours to as to how the money goes to the Commonwealth and we say it goes into Commonwealth revenue and those appropriation provisions have a capacity for it to go out of Commonwealth revenue, but it is not clear as to where the obligation to on pay is.

Even if there were such an obligation and section 16 of the Land Rights Act imposes an obligation on the Crown to pay rent for leases, but that seems to be section 14 and 15 leases, we say where you are dealing with such an obvious topic, that if you are not going to pay rent and you are going to receive rent, you should have an obligation to pass it on.  We would adopt what Justices Rich and Williams said in Bank Nationalisation, that you need to do it in a clear and not an obscure way for it to be a just term.  In other words, these matters should not have to be contested through the courts to work out what on earth they mean.  It is incumbent on Parliament to specify the just terms, not have the Court try and interpret obscure provisions which could have been made quite clear.

The other aspect I wanted to briefly address is the problem of interest.  There is no provision for payment of interest.  The jurisprudence on interest is difficult.  In the Bank Nationalisation Case ‑ ‑ ‑

FRENCH CJ:   Now, are we talking about this in the context of compensation or rent?

MR MERKEL:   A term of acquisition requiring payment of interest for the period between which the acquisition takes place and when you are compensated.  There is a debate as to whether interest is part of compensation or interest on compensation, but what we say is the failure to award interest is a failure to give just terms ‑ ‑ ‑

FRENCH CJ:   This is 21(h), is that right?

MR MERKEL:   Yes, your Honour.  There has been some considerable dispute in this Court as to whether the failure to award interest is a failure to comply with the requirement of just terms.  If I can give your Honours the references in Bank Nationalisation.

FRENCH CJ:   I am sorry, Mr Merkel, this goes solely to the question of the reasonable compensation provision?

MR MERKEL:   Your Honour, no.  It goes ‑ ‑ ‑

FRENCH CJ:   I am looking at 21(h) because you are picking up interest as an element of compensation there.

MR MERKEL:   Yes.

FRENCH CJ:   There is nowhere else, is there, or have I missed something?

MR MERKEL:   I think that is correct, your Honour, but can I say this, there is a difference in the jurisprudence as to whether interest is compensation or interest on compensation is necessary for a just term.

KIRBY J:   Why have you expressed it in that way as distinct from saying that the lack of interest does not amount to just terms as distinct from reasonable compensation?  I thought you were denying the sufficiency of reasonable compensation.

MR MERKEL:   The way we would put it is the lack of express provision being made for payment of interest means that the acquisition is not on just terms.

KIRBY J:   It is not pleaded that way.

MR MERKEL:   No express provision is made for compensation is the way it is pleaded, your Honour.

FRENCH CJ:   You would not care whether it is called interest or anything else.

MR MERKEL:   Yes.  Had I read the Bank Nationalisation Case I would have expressed it slightly differently, your Honour, but in substance no express provision is made for interest or any compensation of that kind between the date of acquisition and the date of payment some years down the track.

KIRBY J:   And was that held to deprive that statutory arrangement of the quality of just terms?

MR MERKEL: No, but can I explain the division, your Honour. In the time available I cannot take it any further than try and explain what the division was about. Chief Justice Latham, at 228 – and if I can give your Honours the reference – found that interest was on compensation, therefore, the provision of compensation did not include interest but it was not unjust for section 51(xxxi) purposes not to provide for interest.

Justice Dixon, at 341 to 343 said that his preferred view was that interest, unless expressly provided for, was not implicit in the concept of compensation, but found that because it was not provided for it did not follow that section 51(xxxi) was not complied with. Justice McTiernan agreed with Chief Justice Latham at 397. Justices Rich and Williams, at 279, said the failure to make express provision for interest resulted in it being not just compensation.

Justice Starke raised the question at 300 to 301 and said, at 316 to 317, that the failure to provide for interest meant that the terms were not just.  Justice Deane used the absence of interest in the Dams Case as an absence of providing for interest for the period of delay inherent in the scheme prior to you being entitled to apply for compensation.

KIRBY J:   So the Court has spoken with great clarity on this issue.

MR MERKEL: Exactly, your Honour. But even Justice Dixon’s analysis would make it fairly clear that it would appear to be just to award interest, but his Honour said, when concluding, that he was not satisfied it was an inherent requirement of section 51(xxxi). We in this case do not need to depart from anything that their Honours said. What we say is in this statutory scheme, with this objective of ensuring that no more money was paid than was required and then only as late as required after this constitutional case, the absence of failure to make express provision for interest meant that if you are not going to pay proper rent, all the more you must pay interest to make up for it, but the authority of Bank Nationalisation would appear to be against incorporating the concept of interest in reasonable compensation.

Now, it is a difficult question.  Their Honours referred to earlier decisions of the Court, but the general tenor of authority is that a failure to provide for interest does not enable it to be included in the concept of compensation.

GUMMOW J:   Why not?  We are not bound by any of this.  Just tell us in the light of pure reason why it could not possibly be included.  What is the answer to paragraph 70 of the Commonwealth’s submissions?

MR MERKEL:    The answer, your Honour, is that just terms require – can I just have a look at the – did your Honour say paragraph 70?

GUMMOW J:   Yes.

HAYNE J:   I thought the courts had recognised that money has a time value a year or three ago, Mr Merkel?

MR MERKEL:    Your Honour, Bank Nationalisation seems to be ‑ ‑ ‑

GUMMOW J:   We are not bound by these.

MR MERKEL:    No, I understand that, your Honour, but ‑ ‑ ‑

GUMMOW J:   I am asking to just assume that is not there in the books, what would you say in support of the proposition?

MR MERKEL:    What I would say, your Honour, is ‑ ‑ ‑

GUMMOW J:   We sit here and blind our eyes and consider constitutional provisions of abundant sense of the law that time means money.

MR MERKEL:    What I am saying, your Honour, is that express provision should have been made in the Act for it, as it is in the Lands Acquisition Land and in other compulsory acquisition legislation.  It should not be a matter of contest before a court of competent jurisdiction, which

this Court may make no longer a matter of contest, but it should not be a matter contest as to whether Bank Nationalisation enables that result.

As was said by Justices Williams and Rich in Bank Nationalisation, the parliamentary draftsman should have presumed to have known this was a controversial topic.  There is no justification for it not being made an express provision.  That is how we put it as an answer.  But we say it is but part of the totality of the scheme which we say fails to afford the just terms that we say need to be provided to make this scheme valid.  So it is for those reasons we put to your Honours that the demurrer should be dismissed and that each of the issues we determined at the outset should be answered, yes.  If the Court pleases.

FRENCH CJ:   Thank you, Mr Merkel.  Yes, Mr Walker.

MR WALKER:   May it please the Court.  Your Honours, we wish to direct our address to issues upon which there are variations between our position and the position of the plaintiffs.  May I start in such a way as in fact on the documents to appear to increase that variation.  Could I take your Honours in our written ‑ ‑ ‑

GUMMOW J:   It would be interesting to know at the beginning, Mr Walker, in bullet point form, where you are at ad idem with Mr Merkel and where you are not.  I got the impression you were not fully at ad idem with him.

MR WALKER:   No, we are not, we are not.  In a nutshell, things are not as bad under this legislation as the plaintiffs fear.

HEYDON J:   Are these differences itemised in your written submission?

MR WALKER:   They are, yes, and in particular if I could take ‑ ‑ ‑

HEYDON J:   Tell us the paragraph numbers.  That will clarify things.

MR WALKER:   In paragraph 5 we introduce the effect of the provisions.  In paragraph 8 an important difference emerges.  We submit that sections 70E to F have not resulted in an acquisition.  In paragraph 9, very importantly, we put an opposite submission concerning section 71.  Those I think are the most important propositions.

HEYDON J:   Paragraph 10 is an important one presumably?

MR WALKER:   Yes, 10 is important.  We think we are not differing from the plaintiffs on that, may it please your Honour, though there are perhaps indications to the contrary.

HEYDON J:   You say a question they pose does not arise?

MR WALKER:   Yes, although the demurrer does not raise native title rights.  So, yes, 10 is extremely important, but by leaving apart a topic which might otherwise have been in contention.  There are also differences between us, for example, in relation to the nature of the so‑called preserved rights which we have argued and what I want to do ‑ ‑ ‑

GUMMOW J:   Where do we see that, Mr Walker?

MR WALKER:   Your Honour, in particular, can I take your Honours to paragraphs 46 to 52 of our written submission.  In order of importance I should first notice paragraphs 51 and 52 which is a very important difference between us.  We, contrary to the plaintiff’s position, do not accept that the effect of the legislation and, in particular, section 37 is to render the section 71 rights, if I can call them that for convenience, terminable.  That is obviously a very important matter, different between us.  The one I particularly wish to flag in relation to section 34, however ‑ ‑ ‑

FRENCH CJ:   That is the same point as picked up in 9, is it?

MR WALKER:   Yes, it is.  Paragraph 9 is by way of summary, your Honour, yes.  It emerges in argument today that there is also a difference between us concerning the effect of section 34 for the preserved rights such as may exist under leases or licences granted by the Land Trust before the amendments.  Although we cannot pick this up in the pleading and it therefore does not seem to be in the written submissions, it seems now to be clear that the plaintiffs maintain that the Commonwealth succeeds by reason of section 34 to rights to receive, for example, rent or payment.

We challenge that as a reading of section 34 and that has an effect, we think, on the last part of our learned friend’s argument just before he sat down.

FRENCH CJ:   Is that the point that I put to Mr Merkel in relation to the direction of the money stream and whether 34(4) covers that?

MR WALKER:   Yes, it is.  It is exactly that point and may I flag it ‑ ‑ ‑

GUMMOW J:   Can you just tell me now how you say 34(4) works?

MR WALKER:   Section 34(4) refers to something called a “right, title or interest” which had been “granted”.  So this is an effective legal dealing in the past which has taken effect.  Prospectively, after section 34(4) operates, the “right, title or interest” has effect and I stress the “effect”, to use the word of the statute is that of the “right, title or interest” as if it were granted by the Commonwealth.  The evident purpose, in our submission, is to prevent the Commonwealth from saying, “This is res inter alios acta.  I need not be concerned with your claims on another person.  I am free of your claims.”  That is its evident purpose, we submit.  Now, that may be tendentious and one obvious effect.

GUMMOW J:   You have the chapeau preserving.

MR WALKER:   Quite.  The next question is, is one to find implied in those provisions something in the nature of benefit and burden that with the benefit of the “right, title or interest” which has been “granted” there may be a burden, and I stress it may be that there is not a burden, at least in a continuing way, and the question arises, apparently assumed in the argument today, that if there is such a burden that is of a continuing or executory effect then these words have shifted or transferred or somehow made the Commonwealth the successor of the right to receive what the holder of the “right, title or interest” bears as a burden – a commensurate burden.

Well, in our submission, that is all interstitial and implied.  It is a very large interference with ownership.  It is not to be achieved by that strange interpretation.  Only the explicit words have had effect.  The right, title or interest has effect.  We know it means continues to have effect because they are by definition rights, titles or interests that had been granted previously.  It says nothing about now having to look to the Commonwealth in order to pay your money, et cetera, et cetera, et cetera.

GUMMOW J:   I think (4) may be the preliminary to (5).

MR WALKER:   Yes.

GUMMOW J:   In other words, that helps to explain to the reader why it is the Minister who can now bring it to an end.

MR WALKER:   Yes.  Now, we need as well to call up ‑ ‑ ‑

HAYNE J:   Just before you leave (4), how do you read the last words:

on the same terms and conditions as existed immediately before that time.

What is that time?

HEYDON J:   The time the lease took effect.

MR WALKER:   That time is the same as in subsection (3), which goes back to ‑ ‑ ‑

HAYNE J:   The time the lease takes effect in (1)(b), is it?

MR WALKER:   Yes:

any right, title or other interest in land if . . . 

(b)the right, title or interest exists immediately before the time that lease takes effect.

FRENCH CJ:   Mr Walker, we will be sitting through to 4.30.

MR WALKER:   Thank you, your Honour.  Now, your Honours, we should draw to attention what I think has not received a particular focus in this regard if we are talking about money streams.  In the appropriation provisions to which my learned friend went, section 63, your Honours may have noticed subsection (1)(d).

CRENNAN J:   I am sorry, where are we, Mr Walker?

MR WALKER:   Section 63(1)(d).  It is describing an amount which, by subsection (2), is appropriated and this is an amount that has a two‑part description.  Both need to be satisfied.  It is:

an amount:

(i)that is paid to the Commonwealth in respect of a right, title or interest in land that is taken to have been granted by the Commonwealth under subsection 34(4) –

If things had stopped there, that would have cast an adverse light on what we have just been arguing.  But the second thing is:

(ii)that is payable by the Commonwealth to the relevant owner of the land –

“The relevant owner of the land”, of course, is exactly the same expression as you find in subsection 34(4) as being the original grantor of the preserved right, title or other interest.  I apologise if we have missed something in our study of the Act, but ‑ ‑ ‑

GUMMOW J:   So how does 63(1)(d) read together with 34 then, as to the “money stream”?

MR WALKER:   We propose that that means there is no permanent or, in reality, any diversion of a money stream to the Commonwealth and that in relation to a preserved right, title or other interest, the Commonwealth is, if I may use the legal metaphor, estopped by subsection (4) from denying the right, title or interest.  There can be no derogation of grant, hence the language of “deemed grant”.  But there has not been a disturbance or abolition or novation by some statutory le jeux de mains so as to produce the loss which is argued by the plaintiffs by the relevant owner of the land.  We think, and we put this tentatively, that that is supported by what appears to be the notion of money being payable by the Commonwealth to the relevant owner of the land under subparagraph ‑ ‑ ‑

FRENCH CJ:   What is the source of that obligation?

MR WALKER:   I am sorry, your Honour?

FRENCH CJ:   What is the source of the obligation that (d)(ii) assumes?

MR WALKER:   I presently cannot find it.

HAYNE J:   It is the licensee who looks for an acquittal from the Commonwealth rather than someone else, is it not, who seeks to say, “Look, you the Commonwealth have come in here”.

MR WALKER:   That is what we think, but it seems a rather hard legal word, “payable by the Commonwealth”, that is words of legal obligation.  One would normally expect, particularly in an appropriations provision ‑ ‑ ‑

KIEFEL J:   It is not referrable to the rental provision?

MR WALKER:   No, because these are preserved interests.  It is not the rental provisions of the section 31 lease, and, indeed, to pick up what Justice Kiefel has just raised, this rather stands in stark contrast to the words of obligation about the section 31 lease to which I will be coming in just a moment.

HAYNE J:   Just to go back a bit, Mr Walker, and I may be creating a complete red herring “that is paid to the Commonwealth” in (d)(i), identifies the person who looks for acquittal by paying the Commonwealth?

MR WALKER:   We think, yes.

HAYNE J:   And “that is payable by” recognises perhaps a construction of 34(4) which recognises that the deeming that is taking place does not deny the consequence that the person to whom payment is ultimately due is the owner.

MR WALKER:   That would be in accordance, we submit, with an appropriate reading of such statutory disturbance of rights, that if the language permits you are reticent rather than extravagant in the effect that is created by way of disturbance to ‑ ‑ ‑

GUMMOW J:   There may be money had and received by the Commonwealth to the use of the relevant owner?

MR WALKER:   Yes.  I have been trying to avoid the word “restitution” but, yes, your Honour.

GUMMOW J:   ……it is common money ‑ ‑ ‑

MR WALKER:   Paid because someone - X and Y were in a relationship, be it contract or covenant does not matter, under which money was paid.  Z, the Commonwealth, comes along and is inserted, but only, we say, to the limited extent of subsection (4), if it receives money, then it receives money not in its own right, but as it were, as a conduit.

Now, the weakness of that argument obviously is that it leaves a fair bit by way of assumption or implication to explain the word “payable” in 63(1)(d)(ii).  Because we have not found anything else I cannot say our search is over, but our search has not found anything else.  Your Honours, I have spent the time I have on that because 34(4) does not seem to have been in terms of diversion of income stream either the subject of any complaint in the statement of claim concerning either the nature of what has been supposedly acquired or the lack, supposedly, of just terms for that acquisition.  So you will not find what I have just put in our written submissions, but our explanation is because we did not see that that was an issue.

HAYNE J:   I had understood Mr Merkel, after lunch, to accept that the facts relevant to this alleged diversion were not pleaded.

MR WALKER:   Yes, and that allows me to come to the next point.  This is more by way of a general comment of difference.  If one looks at sections 34(4) and (5) one sees – as, indeed, I think Justice Gummow has drawn to attention by way of recent emphasis – that a very important possibility exists under subsection (5), but the pleading does not, as we understand it, seek to make that possibility either factual or in any other way sufficiently concrete so as to constitute a matter fit to be pleaded and pleaded against and then ultimately to be the subject of argument on the demurrer.  So that like the native title matter, on the face of things, there are questions raised about the effect of this legislation, but they are not in justiciable controversy between the parties in this hearing, either as we apprehend the pleadings or of the nature of issues as they may be raised in this Court. 

Your Honours, I wanted to correct – that is withdraw and replace – paragraph 36 on page 13 of our written submission, because innocent of the argument about section 34(4), which we heard today and to which I have just responded, in paraphrasing the provision in relation to rent under the section 31 lease we have we think made a mistake.  We have paraphrased the provisions about “not liable” without adding to the paraphrase that which is critical, namely subsection 62(5) which we have noted, but not captured in the language.  For paragraph 36 we would respectfully seek to be excised and in its place simply that “The Commonwealth must pay rent as determined by the Valuer‑General”.  That is the simplest, and we submit, accurate effect much less dire than that feared by the plaintiffs of the provisions in question.

HEYDON J:   So it reads “the Commonwealth must pay rent to the Land Trust as determined by the Valuer‑General”, period, as they say?

MR WALKER:   Yes, period.

HEYDON J:   Cross out the rest.

MR WALKER:   Yes.  Now, let me start with the provision which we submit produces that result and I stress this is obviously a very important difference between us and the plaintiffs.  We start, I hope not oddly, at the end of the relevant provisions, namely, section 62(5).  That is an obligation to pay money.  If that which is feared by the plaintiffs be correct as the interpretation of the relevant provisions of this Act, then that language of obligation used with respect to the Commonwealth in relation to something which ought to be understood as rent turns out to be entirely deceptive as to its true nature, it is not obligation, it is purely voluntary.

HAYNE J:   Well, it is conditioned.  They say against you, it is conditional.  If the Valuer‑General determines a rent, the Commonwealth must pay that amount as rent is, I think, the construction urged against you.

MR WALKER:   It is indeed, but the point I am trying to make is, yes, but the condition happens to be their will.  So that where we have got language or obligation, it turns out that this is an obligation which disappears because it is conditional on the will of the person who would be the obligee, which is, with respect – the obligor, which would be absurd.  Now, that is not the end of the interpretative argument, but it is a beginning that suggests that there is something wrong with the proposition that there is nothing in the nature of obligation imposed on the Commonwealth. 

I should indicate to your Honours that one of the destinations of this argument will meet with the answer we give to the Chief Justice’s question to our learned friend this morning about what, if anything, does the word “lease” mean in the principal impugned provisions?  To put it shortly, we say it does have meaning and, in fact, it connects with the registration system to which we will come.

Now, we then, of course, come back to subsection (1) where, according to the argument against us, subject to what one finds from section 35, are to be found the legislative provisions that deny any obligation to pay rent.  The first thing we say about it is, it is surprising that one would find such an important attribute of a relationship between people who might be called lessor and lessee in a provision which, on its face and as to its substance, has to do with administrative arrangements between agencies or officers of the Commonwealth.

In our submission, contrast that with the language and, if you like, legal syntax of subsection (5) and obligation ought to be on balance what the language is imposing.  Now, in subsection (1) this administrative arrangement between the Commonwealth Minister and the Valuer‑General under which we know, see subsection (2), the Valuer‑General is required to do the work, what is described as the object of the Valuer‑General’s expertise is determination of a reasonable amount of rent to be paid by the Commonwealth to the relevant owner.

The substance of that description, namely, a reasonable amount of rent to be paid with respect to what is called in the statute, we say meaningfully, a lease, raises an expectation of the Commonwealth through its Parliament that this is again not intended to be a matter of whim, caprice or pure voluntariness on the part of the Commonwealth.  A reasonable amount of rent to be paid in return for that which a lessee derives under a lease is, in our submission, something which one would expect would flow, not by the unilateral will of the person from whom it should flow, but by reason of the command of the law.  In our submission, when one finds such a command in entirely familiar language in subsection (5), then the legislative scheme falls into place and it is not as bad as the plaintiffs fear, we submit.

HEYDON J:   Would you also say that leases are generally not gratuitous? 

MR WALKER:   Yes.

HEYDON J:    The idea of a lease imports the idea of some rent and subsection (1) tells you how you get the rent calculated. 

MR WALKER:   It does.  Because a lease is an estate carved out from a greater estate and because one assumes that all the estates have something in the nature of value and because there is a term that is a duration of a lease, then for all those reasons, coupled with the essence, which is the capacity to use and enjoy the land by way of the leasehold estate, one expects, as Justice Heydon has just put it, that it will not be gratuitous and particularly, we put this, when the lessee in question is the Commonwealth. 

Even more do we put this when the lessor in question is the Land Trust; even more when one sees the provisions, to which we will be coming back, about what actually a land trust is and the way in which the Commonwealth Parliament, without any alteration of a kind impugned by the plaintiffs, from the very inception of this statutory scheme, has required the land trusts to have as their principal function, and that is, of course, for the benefit of the Aboriginal owners and other Aboriginals to which I will be coming.

When one puts all of that together then, in our submission, the expectation that there is indeed an obligation as imposed by subsection (5) is one which, in our submission, is comfortably satisfied by the broader context supplied by the legislative text and also the evident purpose of the relations between the Commonwealth, the Land Trust and the Aboriginal owners.

GUMMOW J:   What do you say about subsection (4), though, the denial of improvement?

MR WALKER:   I do not wish to add anything.  I have no difference from ‑ ‑ ‑

GUMMOW J:   Do not answer it now if there is a hiccup involved.

MR WALKER:   Yes.  I was about to speak hastily and I should not.  May I more maturely consider that, your Honours.  I would simply flag this.  At the very least it is obviously relevant to a consideration of the just terms question, if that be arrived at.  Now, your Honours, can I continue while on this question of a lease and in particular addressing the matter raised by the Chief Justice by coming back to section 35?  In a sense, that is where my analysis should have started.  Under subsection (2), after all, there is the provision that says there is no liability to pay any rent but, in our submission, the closing words of section 35(2) ought to be seen as completing or clinching the argument we have put concerning the obligation imposed by section 62(5).

It would be odd, we submit, linguistically, and even odder in terms of the Commonwealth in relation to its own dealings with a land trust, for the exception from no liability, that being of course liability, to turn out on proper interpretation to be illusory because there is no obligation, and that is what the plaintiffs fear.  Were it true, the fear would be a cogent one.  In our submission, for the reasons we have put as a matter of proper interpretation, the exception from non‑liability in subsection (2) of section 35 is a real one, that is, there really is liability.

FRENCH CJ:   All that is is a way of saying that the rent regime is under section 62.

MR WALKER:   It is more than that because against us it could be said, well, but you only get a liability under 62(5) if the Commonwealth has requested the Valuer‑General ‑ ‑ ‑

FRENCH CJ:   Yes, well, that is the other argument for that.  Yes, but on your argument it is just another regime.

MR WALKER:   Yes, that is right.  Look to 62(5).

FRENCH CJ:   Definition of the regime rather.

MR WALKER:   Look to 62(5) and you find that it is 62(5) that is said.  It does not say 62(5) subject to 62(1) or (2).  It says 62(5), and those are the words of obligation.  Can I now take your Honours, please, to subsection (5) of section 35?  My point here is that there are words of art, technical, conveyancing, real property art employed, not coincidentally.  First, of course, there is the word “transfer”.  There is, of course, the word “lease” but I will leave that out because that is the word that we are looking at in order to answer the question, is it a term of art?  Does it really mean lease?

In the next sentence of subsection (5) there are then express powers, perhaps supererogatory, but nonetheless explicitly given and they start with a word which really does not lend itself to anything other surely than a technical conveyancing sense, “sublease”.  “License” perhaps need not be so technical, but “sublease” surely.  Then there are other words important in the law of property, “parting with possession” and then the general expressions “dealing with” and then finally something which is a legal term of art, an “interest in the lease”.

Now they, in our submission, all match entirely with the regime for registration which, in our submission, needs to be borne in mind.  This is where, if I could take your Honours immediately to section 55 of the Act, under the heading “Registration of dealings with land done by force of this Act” – an evocative heading, we submit – the very first item is that it applies to a section 31 lease.  Now, it is possible, of course, that the word “lease” may be so different from the way it is used in the registration statute, that it is in effect a procrustean exercise. 

GUMMOW J:   Section 55(3), is it not?

MR WALKER:   Yes, and in our submission that rather tends to indicate that although the, if you like, different or special statutory origin of a section 31 lease is recognised by section 55(3) to the extent that in the administration of the registration system it can be done, there is assimilation.

It is only pro tanto because there are in the Commonwealth enactment, this statute, matters which are plainly different from, inconsistent with that which would otherwise come from the Northern Territory regime.

HAYNE J:   But are there particular provisions of the Land Title Act (NT) to which we should have regard in considering this intersection? I say that because we have only got a few pages of the Land Title Act and if there are other provisions we should have reference to, you will need to give them to us.

MR WALKER:   Yes.  Could I flag that we will do that.  At the moment there is a further question of the same kind that Justice Hayne has just raised, namely, is there any room for reference to the Law of Property Act as well?  That is very significant, in our submission, because if there is, then, of course, there are obligations imposed, except where otherwise agreed, or except where Commonwealth legislation otherwise requires on lessees.  I will just flag that.  I think it is section 117 of the Law of Property Act that does that.  Now, that is not the registration system.  On the registration system I can certainly flag the definition of “lease” in section 4 includes explicitly sublease.  Is that a convenient time?

FRENCH CJ:   Yes.  We will adjourn and commence a little earlier tomorrow at 10 o’clock.  So the Court will adjourn to 10.00 am tomorrow.

AT 4.33 PM THE MATTER WAS ADJOURNED
UNTIL FRIDAY, 3 OCTOBER 2008