The Commonwealth's capacity to acquire property otherwise than on 'just
terms':
Newcrest Mining (WA) Ltd v Commonwealth
Max Spry
Law and Bills Digest Group
September 1997
In recent weeks the High Court has handed down a number of important
judgments, some of which reconsider and overturn earlier decisions of
the Court. Ha and Hammond v NSW, in relation to the proper approach to
section 90 of the Constitution (the customs and excise power) is one such
example. Another is the Court's decision on 14 August 1997 in Newcrest
Mining (WA) Ltd v Commonwealth, a decision that may have far reaching
consequences, including in relation to compensation for the extinguishment
of native title rights.
Newcrest Mining (WA) Ltd v Commonwealth is a 4:3 decision. Each
of the judges handed down a separate judgment. This Research Note briefy
examines each judgment.
The Facts
Newcrest Mining held a number of mining leases over land, including Coronation
Hill, in the Northern Territory. The fee simple in the land covered by
the leases was, since 1978, held by the Commonwealth (that is, the Commonwealth
owned the land), subject to those leases. On 13 November 1989 and on 21
June 1991, pursuant to the National Parks and Wildlife Conservation
Act 1975 (Cth), the Governor-General by Proclamation included the
land covered by Newcrest's leases in Kakadu National Park. The National
Parks and Wildlife Conservation Act 1975 (Cth) prohibits mining in
Kakadu National Park.
The leases held by Newcrest may be divided into two classes. First, those
leases that, for reasons which need not be discussed, were held by the
Court to be invalid. The second class of leases included those that, as
at the date of Proclamation, the Court held, to be valid.
Although at least some of Newcrest's leases were valid, the effect of
the Proclamation was to deny Newcrest its capacity to exploit its rights
under those leases. As Brennan CJ said, the Proclamation 'sterilised the
benefits which Newcrest might otherwise have derived from possession of
those leases'.
The issue for the High Court was then, whether this sterilisation amounted
to an acquisition of property, and if so, did that acquisition comply
with section 51(xxxi) of the Constitution. Section 51(xxxi) provides that
the Commonwealth may make laws for:
'the acquisition of property on just terms from any State or person
for any purpose in respect of which the Parliament has power to make
laws'.
Further, given that the leases covered land situated in the Northern
Territory the Court had to consider the relationship between section 51(xxxi)
and section 122 (the Territories power) of the Constitution.
The Decision
The Court, by a narrow majority, held that there had been an acquisition
of property otherwise than on just terms. In other words the Commonwealth
had infringed section 51(xxxi). The majority rejected the Commonwealth's
argument that, since section 122 is a plenary power (that is, without
limit as to subject matter), section 51(xxxi) does not apply to it. When
acquiring property in a Territory or in a State, the Commonwealth must
do so on 'just terms'.
The Minority
Brennan CJ, Dawson and McHugh JJ delivered dissenting judgments. In separate
judgments their Honours agreed that section 51(xxxi) did not limit section
122 of the Constitution. Brennan CJ stated that, given there was a 'sufficient
nexus between the law and the territory', the provisions prohibiting mining
in Kakadu National Park in the National Parks and Wildlife Conservation
Act 1975 (Cth) were supported by section 122. Section 122, his Honour
continued, is not qualified by the legislative powers listed in section
51, including section 51(xxxi).
Brennan CJ refused to reconsider the High Court's earlier decision in
Teori Tau v Commonwealth [(1969) 119 CLR 564], which held that
section 122 was not qualified by section 51(xxxi). To overturn that decision,
his Honour said, may have very serious consequences:
Since the Commonwealth first assumed administration of territories,
it has been understood that the power of compulsory acquisition of property
within the territory is derived from s 122. During that time numerous
property transactions have taken place in the course of the Territories'
development. If the s 122 power does not support compulsory acquisitions,
any grant or transfer of property that involved a compulsory acquisition
is exposed to uncertainty if not invalidity. No validation of such a
transaction could be effected by a retrospective payment of compensation;
the legal consequences of any invalidity would simply be that the grant
or transfer must be taken never to have occurred.
McHugh J also voiced his concerns about the possible impact of overturning
Teori Tau:
[I]t is at least arguable that to overturn that decision would result
in grants of freehold or leasehold in the Territory being invalid. This
is because freehold grants and perhaps many leasehold grants of land
in the Territory have extinguished native title rights and conferred
a commensurate and identifiable and measurable benefit on the grantees
resulting in an acquisition of property of the native title owners.
The Majority
Toohey, Gaudron, Gummow and Kirby JJ made up the majority, with the leading
judgment given by Gummow J.
Gummow J held that section 122 'is not immunised from the operation of
the constitutional guarantee' contained in section 51(xxxi). His Honour
noted that 'each provision of the Constitution, including s 122, is to
be read with other provisions in the same instrument. ... Section 122
is not to be torn from the constitutional fabric.'
As to the acquisition of property, Gummow J stated that there was an
'effective sterilisation' of Newcrest's rights. The operation of the National
Parks and Wildlife Conservation Act 1975 (Cth) 'had the effect, as
a legal and practical matter, of denying Newcrest the exercise of its
rights under the mining tenements.'
While agreeing with Gummow J, Gaudron J stated there were other reasons
why section 51(xxxi) applied to this case. The National Parks and Wildlife
Conservation Act 1975 (Cth) relies in part for its validity on section
51(xxix) of the Constitution (the external affairs power), and the Commonwealth's
use of that power is clearly fettered by section 51(xxxi). And as, Kirby
J observed, the Commonwealth's 'additional reliance upon s 122 of the
Constitution cannot release that fetter'.
Kirby J's judgment is also important in its use of international law.
His Honour surveys various Constitutions and international agreements
noting the importance placed on the payment of suitable compensation whenever
property is acquired.
As to the implications for native title noted above, Toohey J stated
that he was not persuaded that the impact of the Court's decision would
'potentially invalidate every grant of freehold or leasehold title granted
by the Commonwealth in the Northern Territory since 1911, to the extent
to which any such grant may be inconsistent with the continued existence
of native title recognised at common law'. Gummow J also stated that 'such
apprehensions are not well founded'.
Conclusion
The implications of Newcrest Mining are yet to be worked though.
The comments by Brennan CJ and McHugh J in relation to the validity of
leasehold and freehold property in the territories, notwithstanding the
comments by Gummow and Toohey JJ, are of some considerable concern.
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