Spencer v Commonwealth of Australia [2009] HCATrans 126 (5 June 2009)

Last Updated: 10 June 2009

[2009] HCATrans 126

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S87 of 2009

B e t w e e n -

PETER JAMES SPENCER

Applicant

and

COMMONWEALTH OF AUSTRALIA

Respondent

Application for special leave to appeal

FRENCH CJ
HEYDON J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 5 JUNE 2009, AT 2.33 PM

Copyright in the High Court of Australia

MR P.E. KING: If the Court pleases, I appear for the applicant with MR T.D. ANDERSON. (instructed by Christie Advocacy International)

MR A. ROBERTSON, SC: May it please the Court, I appear with my learned friend, MR C.L. LENEHAN, for the respondent. (instructed by Australian Government Solicitor)

FRENCH CJ: Yes, Mr King.

MR KING: Your Honour, can I hand to the Court an erratum at page 133 of the application book, one sentence at line 12?

FRENCH CJ: The amended application book?

MR KING: Yes, your Honour. If the Court pleases, it is submitted that special leave to appeal be granted in this matter on one of three bases; first, on the ground that the Full Court of the Federal Court has held that this matter is not relevantly distinguishable from the decision in the matter of the Court of Appeal in Arnold, in respect of which this honourable Court on 1 May granted special leave to appeal, second, on the ground that the matter involved the question of public importance independently of the importance of the water issues in Arnold and, thirdly, in the interests of the administration of justice generally or in the particular case.

As to the first basis, your Honours, the Full Court in dismissing the appeal from the learned primary judge made a number of clear findings that the applicant’s matter is not distinguishable from the decision of Arnold in the Court of Appeal. For example, at page 103, line 40 of the application book, the learned justice with whom the other judges agree:

Arnold is not distinguishable from the present case.

At page 101, in adopting the submissions of the Commonwealth at line 48, the last sentence on the page:

Comparison of the magnitude of the practical impact of reducing water entitlements and preventing the clearing of native vegetation is irrelevant.

Then over the page at page 102, line 22:

Contrary to Mr Spencer’s submissions, at the heart of the present case is an issue of the characterisation of the Commonwealth statutes. One of those statues (the Financial Assistance Act) has already been characterised by the Court of Appeal in Arnold as not being a law with respect to the acquisition of property. Moreover, the claims in Arnold are effectively indistinguishable from those in the present case and were rejected by the Court of Appeal.

Finally, at page 103, line 28:

The discussion at [7] in Smith v ANL about drafting devices circumventing the constitutional guarantee (referred to by Mr Spencer) concerns the distinction between the modification and the extinguishment of a right . . . In this case, by contrast, the difficulty confronting Mr Spencer is identifying a Commonwealth law which is a law with respect to the acquisition of property. Precisely the same issue confronted the unsuccessful applicants in Arnold.

Your Honours, in this Court, learned senior counsel for the Commonwealth at page 124, line 21 in the application book, puts a submission which disregards the complete success of his argument in the Full Court and submits contrary to the reasons for judgment of the Court that similarities between the matters of Arnold and Spencer :

are more “perceived” than “actual” –

There is, it is respectfully submitted, only one explanation for that change in position between the Full Court and this Court, namely, the grant of special leave in Arnold on 1 May.

FRENCH CJ: Are we concerned with the cosmetics of that as much as the substance of the points of distinction which are offered by the respondent at pages 126 and 127 and following?

MR KING: Yes. We respectfully adopt what your Honour says. We, of course, submit that like cases should be treated alike, but in substance and for the following additional reasons, the two matters are similar and raise similar issues. First, the subject matter of each is the same, namely, joint Commonwealth State projects in respect of natural resources, both of which are defined as such by the uniform definition of “natural resource management” adopted in the two statutes at issue in this matter; section 3 in the 1992 statute and section 17 in the 1997 statute. At page 116 of the application book that relevant section is set out at line 22.

Second, there exists in both matters a similar statutory framework. Indeed, it is submitted, your Honours, as the Full Court pointed out, precisely the same statute is applicable in both cases, namely, the Natural Resources Management Act 1992 and, with respect, the Natural Heritage Act, a very similar provision exists with the same definition as the touchstone of joint Commonwealth/State projects. Furthermore, the statutory infrastructure involving each case is the same, namely, the law of the Parliament which is an agreement-making provision as distinct from a regulation-making provision, the purported authorisation of the intergovernmental agreements under those laws and the subject matter of such agreements being the acquisition of property by State measures and then consequential State measures.

Thirdly, the same legal question arises in each case, namely, whether the form of the agreement-making law is crucial to its validity or not. At page 94 of the application book, line52, in addressing Pye v Renshaw the Full Court noted that the form of the law in Magennis was different to the form of the law in the present matter and, indeed, it referred to same in Arnold because the form of the law in Magennis was that it was scheduled to the Commonwealth Act. However, your Honours, in the same reasons of the learned Full Court, at page 103, line 32, the Full Court points out that in both Arnold and Spencer the law in form does not authorise or require a particular agreement, or prescribe a condition of acquisition, for which reason the Full Court and the primary judge held that they were not laws with respect to the acquisition of property.

FRENCH CJ: The critical provision is section 7 of the Natural Resources Management (Financial Assistance) Act 1992, is it not?

MR KING: Section 5 is the agreement making-provision, your Honour - - -

FRENCH CJ: Yes, but section 7 - - -

MR KING: Section 7, which is referred to by the learned primary judge, he refers to that at appeal book page 19.

FRENCH CJ: I notice that in your submissions at page 120, paragraph 45, you refer to section 7(3) of the NRM [FA] Act as providing:

that the agreement may contain “conditions subject to which payments under the agreement are to be made”.

The latest print I have, and even the earlier ones, do not have subsection (3) for section 7 but they have that requirement in section 7, paragraph (b), is that correct?

MR KING: That is correct, your Honour.

FRENCH CJ: A mistake?

MR KING: That is an error, and it is set out in the learned judge’s judgment at page 19 where he refers to the same provision.

FRENCH CJ: You accept the finding that there is nothing in the Commonwealth Act that, in terms, authorises or requires any agreement to contain provisions for the acquisition of property?

MR KING: It is best to adopt the words of the learned primary judge at page 19, at the bottom of the page:

there is no requirement for an agreement to provide for the acquisition of any property or the imposition of restrictions on land use or the clearing of native vegetation . . . there is not express provision preventing an agreement from providing for the acquisition of property other than on just terms.

Yes, your Honour, in those terms, yes, but that is the very point at issue in Arnold. Indeed, section 24 of the National Water Commission Act is even less obvious than the provisions in this particular case. The primary issue as to form, which cases such as Smith v ANL we say address, and I will deal with briefly in a moment, indicate that when it comes to addressing or characterising a law which impairs the constitutional guarantee in relation to acquisition of property other than on just terms, the courts do not look to the form of the law as they might do in characterising the law as to whether or not it is valid but, rather, they look to the consequences as an important consideration in determining whether or not it infringes the guarantee.

So, yes, your Honour, it is true that in these cases the law does not expressly schedule the intergovernmental agreement to the statute and does not expressly say that there is power to acquire property other than on just terms, but it is our case that, nonetheless, the law which authorises an agreement which has that consequence is a law with respect to the acquisition of property. I suppose at the end of the day those words “with respect to” in section 51(xxxi) raise that question and that is a common question in both cases.

Your Honours, the further point as to similarity is this. Your Honour the Chief Justice at the directions hearing in this matter on 1 May asked counsel for the parties to address the issue as to the form of the special leave question and, in our respectful submission, the form of the special leave question has not been debated or disputed by my learned friend and the form of the special leave question, the primary question, is, it seems to be accepted, the same special leave question as raised in Arnold. That being so, we say that adds a further strong ground for a grant of special leave.

Apart from the ratio of the Full Court based on the binding authority of Arnold in the Court of Appeal, in the application book at page 94 Justice Jagot and the other judges who agreed with her Honour’s decision referred to two other fundamental problems identified with the applicant’s case which we address for the sake of completeness, although it is respectfully submitted that at bottom both are bound up with the first point addressed in and by Arnold. The first of these is what is said to be the binding authority of this Court in Pye v Renshaw that precluded the appeal to the Full Court. That question, however, in our respectful submission, is not relevantly different to the first question because critical to the reasoning in Arnold was the reasoning in Pye adopted by the learned primary judge in Spencer in this case.

However, there is one aspect of the Full Court’s reasoning which, in our respectful submission, independently of Arnold, warrants closer consideration because it adopts, if anything, a more radical and wider statement of the rule in Pye than that adopted by the Chief Justice in the Court of Appeal in Arnold and one contrary to express authority in this Court. At page 96, lines 27 to 43 the Full Court indicates it is prepared to proceed on the basis that assuming the applicant had suffered a detriment and the Commonwealth itself received a benefit from the restrictions induced or imposed by the State measures conditioned by the partnership agreement with the Commonwealth under its law yet, nonetheless, in agreement with the wider submissions of the Commonwealth – see line 23 – the Full Court held that the law was still valid as a funding law under section 96.

In our respectful submission, on this point the learned primary judge took a more correct position, a more strict or narrow approach, namely, that if a funding law either expressly or by necessary implication authorised either expressly or by necessary implication an agreement conditioned on the introduction of an acquisition measure by the State such as a restriction on reasonable user, then the law is invalid. See the observations of the primary judge at page 47, line 29 and also at page 48, lines 11 to 12. As his Honour pointed out at page 46, lines 42 to 45 and again at page 47, line 30, the validity of such a law is brought into question by this Court’s decision in Magennis.

The third problem described by the Full Court which I mentioned at page 94, taken up by the respondent in its submissions is that no claim is made against the State in this particular matter. However, your Honour, that position relevantly with respect to Arnold and in Magennis, whilst the State was not a party to the proceeding and although the claim was initially made in the pleading that the State law was invalid, Sir John Latham, the Chief Justice, held, as noted in the hand up that I handed to your Honours a short while ago, that the State law was not invalid but simply had no effect in that case.

What the argument misses, in our respectful submission, is that the challenge is not to a State law but to the Commonwealth law which, in the words of the UN Framework Convention, creates the framework for climate change measures but without just terms and not the State law which is merely the instrument of the Commonwealth conduct in the federal context.

HEYDON J: If the Commonwealth law went, would your client not still be bound by the State law unless it is declared to be - - -

MR KING: Yes, but that does not mean we do not have an action against the Commonwealth, in our respectful submission.

HEYDON J: For what, though? I mean, you are getting a Commonwealth Act – perhaps not a standing question but it is a futility question.

MR KING: In our respectful submission, it is the same situation in Arnold and, indeed, for the reasons I have mentioned, in Magennis. If the action against the Commonwealth for either return of property or for compensation for using or dealing in my client’s property, in this case his carbon sequestration rights in the former profit a prendre, as evidenced by its conduct, is valid, then the answer to the Commonwealth’s contention that the Commonwealth law is complete justification for its use and possession of the rights or property is that that law is invalid.

Professor Craig, in the text I referred to in the submissions in reply, in his latest edition explains how a collateral attack in that sort of case is justified and raises exactly the same question as if it were a direct judicial review of a decision or in relation to the law.

FRENCH CJ: What is the ultimate relief you are seeking in the Federal Court?

MR KING: We are seeking either compensatory or restitutionary relief.

FRENCH CJ: Against?

MR KING: The Commonwealth – in addition to the declarations that the law, insofar as it purports to effect or take the rights or acquire the rights, is invalid, as his Honour held had occurred.

FRENCH CJ: There is, of course, no legal vesting of any rights in the Commonwealth. You are saying the Commonwealth acquires a benefit from the restrictions imposed on your client’s use of the land by reference to its obligations under the Kyoto Protocol and so forth.

MR KING: It is probably more than that, your Honour. It is interesting. The learned primary judge, firstly at paragraph 136, line 22, at page 51 of the application book where his Honour described the carbon sequestration rights and the trading opportunity that was lost is counterbalanced as against the benefit to the Commonwealth seen as against its international obligations at page 55 of the application book, especially at line 22 “it derives a benefit”, does your Honour see those words?

FRENCH CJ: That is the point I was making to you, was it not?

MR KING: Yes. Then further down, “there was a benefit to be derived”. Your Honours, I was going to mention in this particular context that the learned Chief Justice in Smith v ANL made an observation that the usual classification of rights – in that particular case it was procedural or substantive in a limitation case – is not applicable when one is looking at the question of advantage/disadvantage in the context of section 51(xxxi). In our respectful submission, the use by the learned judge of public international law principles to suggest that although the Commonwealth achieved a very substantial financial and economic benefit at the expense of my client, it was not one that was able to be measured in some way relevant to section 51(xxxi). That, we respectfully submit, is out of sync with what Chief Justice Gleeson said in that case.

FRENCH CJ: Mr King, can I ask you, you are familiar with the grounds upon which special leave was granted in Arnold?

MR KING: Yes.

FRENCH CJ: And you know there was another ground, which is irrelevant for present purposes, which was where the special leave application was referred.

MR KING: A second ground, yes.

FRENCH CJ: But, if Arnold fails, can you succeed?

MR KING: We say yes, for this reason, that in this case there is a further question, namely, that just raised in relation to the receipt of a benefit by the Commonwealth, the advantage/disadvantage quotient that has just been referred to and what the learned judge said at paragraphs 148, 149.

FRENCH CJ: There is none of that in Arnold because it is an acquisition by the State of the relevant irrigation rights.

MR KING: The water entitlements, yes. But, of course, as was pointed out in Magennis, the mere fact that the Commonwealth itself did not obtain the benefit, that is no limitation upon the constitutional guarantee.

FRENCH CJ: Yes, thank you, Mr King. I think your time is up now.

MR KING: Thank you.

FRENCH CJ: Yes, Mr Robertson.

MR ROBERTSON: May it please the Court. There are three broad points that I seek to make in resisting the application. First of all, as your Honours have noted and as the trial judge noted and as the Full Court noted, the effect on the applicant’s land is by virtue of the State legislation and the discretions under State legislation which are not attacked by the applicant as either invalid or inoperative and, contrary to my learned friend’s submissions, that is a large distinguishing feature between - - -

FRENCH CJ: Arnold involves a judicial review of the discretion.

MR ROBERTSON: Exactly. So, although your Honours were handed an erratum in respect to paragraph 21 of the submissions at page 133, it begins to correct the errors but does not go very far, because there was and at the heart of Arnold is the attack on the exercise of the discretion by the State Minister.

FRENCH CJ: The relevant factor being overlooked being the invalidity of the statute.

MR ROBERTSON: That is, as it were, the heart of the case and in Magennis my learned friends say the State was not a party but, in fact, as one can see from page 386 of the report – I can hand up copies – the defendants were the State of New South Wales, Sheehan and the Attorney-General for New South Wales. They demurred to claims that the State legislation, as well as the Commonwealth legislation, was invalid and the effect of the decision was that a particular proviso of the State legislation had no operation by virtue of the reasoning of their Honours. So, in my submission, that is a crucial difference.

Secondly, there are findings, which I will come to in a moment, that there is nothing in the Commonwealth legislation or the agreements that are pleaded that effected or authorised the acquisition. In other words, there is a gap, as Justice Emmett found and the Full Court found, there is a gap between the effect of the State law, or the exercise of the discretion under State law, and the terms both of the Commonwealth statutes and the agreements that were pleaded. Then the last point is that the tort remedies, as referred to, do not arise for the reasons that we have advanced in the submissions.

Now, my learned friend said, well, no criticism is made of the special leave question, but, of course, the criticism of the special leave question, which has been adopted word for word from Arnold, is that it is divorced from the factual situation here both by virtue of the terms of the agreements – quite different – and, of course, by virtue of the fact that in Arnold there is the attack on the State discretions but there is not here.

Now, to illustrate the point, if I may, your Honours, by reference perhaps conveniently to what Justice Emmett said, if your Honours would turn to page 5 of the application book where in paragraph 4 Justice Emmett sets out the declarations that were sought, that is, in the two bullet points that the Commonwealth Acts and the agreements – agreement between the Commonwealth and New South Wales:

are invalid to the extent that they effected or authorised acquisitions of property –

So that is what his Honour was dealing with. Then if one turns to page 56 and one looks at the paragraphs where his Honour Justice Emmett goes through – and your Honours have not been taken to any different view of either the statutes or the agreements – if I could ask your Honours to look at paragraph 154, which is a point touched on between your Honour the Chief Justice and my learned friend, that is as to the statutes. Then further to that at paragraph 158 on page 57 - - -

FRENCH CJ: How precisely does the funding arrangement under the agreement relate to the imposition of restrictions on use?

MR ROBERTSON: It does not at all.

FRENCH CJ: There is nothing. I could not find any finding there.

MR ROBERTSON: No. If I can take your Honours in further answer to that question to page 62 at paragraph 171 where his Honour says:

there is no mention in either of the Commonwealth Statutes to any acquisition of property . . . Mr Spencer has not identified any provision of either of the Commonwealth Statutes that requires New South Wales either to enact the 1997 Vegetation Act or the 2003 Vegetation Act or to decline or refuse to grant development consent - - -

FRENCH CJ: That is all about the statutes.

MR ROBERTSON: That is the statutes.

FRENCH CJ: I was really going to the agreements.

MR ROBERTSON: Yes, and the agreements, I think, are referred to in paragraph 172:

no basis for concluding that the enactment of either of the State Statutes or the exercise of the discretion to refuse development consent under either of the New South Wales Statutes was either effected or authorised, or indeed directed or required, by either of the Commonwealth Statutes. Nor does 1997 Agreement –

which his Honour regarded as the high water mark agreement, as it were –

require or affect or authorise the exercise of any discretion under the State Statutes to refuse development consent for the clearing of native vegetation - - -

FRENCH CJ: What is the funding under the agreement for then?

MR ROBERTSON: If I can just answer that by first taking your Honours to 173, just to complete the answer to the terms of the agreement. Looking at the State statutes in paragraph 173, his Honour says:

not in any way dependent upon the validity of any of the Inter-
Governmental Agreements. They do not refer to any of the Inter-Governmental Agreements. Other than through the Inter-Governmental Agreements, there is no connection between the Commonwealth Statutes, on the one hand, and the detriment or harm that Mr Spencer claims to have suffered by reason of the restrictions imposed by the State Statutes –

And 177:

I do not consider that there is a reasonable basis on which Mr Spencer can establish that any alleged acquisition of his property by reason of the enactment of the State Statutes, coupled with the exercise of discretions by officers of New South Wales, was authorised or effected by either of the Commonwealth Statutes –

Paragraph 169, in answer to your Honour the Chief Justice, is as far as there is a finding about the funding, if I can put it that way:

the National Vegetation Initiative will provide $318 million over five years to fund two key areas of activity as follows:

• $64 million for the protection of remnant native vegetation . . .
  
• $254 million to expand revegetation activities - - -
  

FRENCH CJ: Is that as specific as it gets?

MR ROBERTSON: Yes.

FRENCH CJ: So, within that framework the State is able, under the 2003 Act, to get funding to support the enforcement of restrictions and the assessment of applications for clearing permits, or is that just speculation?

MR ROBERTSON: It is unconnected, that is, there is nothing that says - - -

FRENCH CJ: You have to do it for this particular purpose.

MR ROBERTSON: Yes, so there is funding and there is the exercise of – it is their discretion but, of course, to come back to my first point, there is no allegation or contention that there is an invalidity or, as it were, that the exercise of the discretion by the State Minister is related to either the terms of an agreement or the payment of any funds under an agreement.

FRENCH CJ: The way it works under the State Act is there is a blanket prohibition on the clearance of native vegetation, I think, under section 12 except in accordance with either a development consent or a property vegetation plan.

MR ROBERTSON: Which is the current Act.

FRENCH CJ: Yes, that is right.

MR ROBERTSON: That is why I have been talking about the discretion because it says “you shall not do it unless”. So, one would have thought that the beginning of the way to approach it would have been, as in Arnold, that is, that that discretion – in Arnold of course it is the Minister’s discretion to make the plan, but that discretion had legally miscarried because of the leak back through the specificity of the chain between the agreement and the terms of the Commonwealth statute and so on.

FRENCH CJ: Is there anything alleged in the statement – bearing in mind that this was a strikeout under section 31A, although it is not limited to pleadings issues, is there anything in the statement of claim which seeks to forge a link between the funding and the particular prohibition that is complained of?

MR ROBERTSON: Your Honours do not have the statement of claim. My - - -

FRENCH CJ: We had reference I think to the pleadings in the elements of the primary judgment, but again I do not think there was anything there that much helped us.

MR ROBERTSON: My recollection is, your Honour, that where his Honour Justice Jagot sets out at page 87 what is in the pleading - - -

FRENCH CJ: They also appear at page 5, I think, do they not?

MR ROBERTSON: That is the primary judge, at page 5, the Full Court is saying - - -

FRENCH CJ: Yes, the same thing.

MR ROBERTSON: All the same – that there is no connection between what is referred to on page 7 in (2.7), so that is about line 20 “By the State Statutes”, and in further answer to your Honour the Chief Justice’s question, what I would called the high watermark agreement is analysed by Justice Emmett at length at page 25 and following and no apparent complaint is made about that.

FRENCH CJ: The whole of the proceeding was dismissed. This was not simply a striking out of the statement of claim because the application was under section 31A.

MR ROBERTSON: Yes.

FRENCH CJ: So there was no exploration, I think, of whether the position was capable of remedy if repleaded.

MR ROBERTSON: Except to this extent your Honour, that this was about, I think, the sixth amended statement of claim and there was expressed discussion, if I could put it that way, between the trial judge and my learned friend on the topic that I have mentioned more than once, which is the non-attack on the State legislation or the State exercise of discretionary power, and in each case it was asserted that this was the case and such an attack was not - - -

FRENCH CJ: The questions that I have been putting, of course, do not necessarily go to the State legislation but rather to the link between the Commonwealth Act and agreement and the acquisitions complained of.

MR ROBERTSON: Yes. I certainly take your Honour’s point that a 31A application travels beyond the pleadings, but there has been no suggestion that in substance there is anything more to be said about that linkage that your Honour is drawing my attention to than has been said. So, your Honours, we would submit that the answer to your Honour’s question to my learned friend, if Arnold fails, can you succeed, we would submit that there is another question and answer which is, if Arnold succeeds, will Spencer succeed, and the answer is, no, Spencer will fail on its own circumstances.

FRENCH CJ: The Full Court placed some significant emphasis on Arnold in its decision and that raises a question and held it to be relevantly indistinguishable, and you have pointed to reasons why it is distinguishable.

MR ROBERTSON: Yes.

FRENCH CJ: I suppose one option might be for us to revisit the position in light of the outcome in Arnold and simply adjourn the application for special leave until after Arnold is heard and determined.

MR ROBERTSON: If your Honours were of the view that what I put most recently, that is, Spencer will not necessarily fail, then that is a course that your Honours would take. But could I just add this, that their Honours in the Federal Court were, of course, dealing with various subject matters, one of which was the headlong clash between the arguments being advanced then and now by the applicant and binding High Court authorities. So it is not surprising, we would respectfully say, that their Honours said that one of the problems with the case was this collision with Pye v Renshaw. But your Honours would have noticed at page 94 in paragraph 15, again the point that I have mentioned perhaps more than once, that there are three fundamental problems identified by their Honours. One is Pye v Renshaw and Arnold. No doubt those two are related, but (iii):

the consequences of Mr Spencer accepting the validity of the State statutes –

et cetera, which was the point that your Honour Justice Heydon was putting to my learned friend, so that fundamental problem will not go away whatever the result in Arnold.

KIEFEL J: The consequence of that for these proceedings is that there is no right being litigated.

MR ROBERTSON: That is so, and that is what the Full Court said, just to track through where that (iii) ended up, in paragraph 33 on page 104 your Honour. Now, my learned friend does complain in the reply about the use of the language – this is paragraph 22 – complains about the language of immediate right and the Full Court saying and speaking about immediate right, but of course the language of immediate right goes as far back at least as Re The Judiciary 1903-1920 and Re The Navigation Act. That is where that language comes from.

FRENCH CJ: The way the remedy is framed in the Federal Court, at least to the extent – I do not know if we actually have a statement of the relief claims, but paragraph (16) of the statement of claim as quoted at page 9 characterises it as, apart from the invalidity issue in relation to the Commonwealth Statutes, the ultimate relief seems to be tortious as against the Commonwealth.

MR ROBERTSON: Quite so.

FRENCH CJ: That is it, is it not?

MR ROBERTSON: That is it and I certainly accept what your Honour has put to me. That is why we have said in paragraph 26 on page 127, looking at that alleged tortious foundation for relief, either it is said to be a constitutional tort, which this Court has said is not part of our law if one is thinking of Bivens and that sort of idea from the United States, or if it is put in conversion, then we are not dealing with chattels and we have referred to Penfolds Wines. I would accept that the way in which the applicant seeks to avoid those consequences is to say, well, here is some tortious conduct but, we submit, that takes the applicant to a dead end as well. Those are the submissions from the respondent, if your Honours please.

FRENCH CJ: Thank you, Mr Robertson. Mr King.

MR KING: Just to address your Honour Chief Justice’s question, in the material we handed up in the last page, page 45, there is an example of a direct link between the funding and the restrictions. If your Honour goes to the third last paragraph:

In October 2003 the Australian Government announced $45 million to the National Action Plan for Salinity and Water Quality to help New South Wales end broad-scale land clearing and the clearing of protected regrowth vegetation.

Now, regrowth is defined as regrowth after 1990 which links into the Kyoto Protocol. The last paragraph:

Reversing the decline of Australia’s native vegetation will help conserve biodiversity and will make a significant contribution to reducing the net emissions –

Now, your Honour, can I just add that in the judgment of the learned primary judge - - -

FRENCH CJ: Sorry, just before you leave that, was this material in some way before the court below?

MR KING: This particular document was not, your Honour, but there was another document like it which the learned judge referred to.

FRENCH CJ: This is not part of the record really, is it? This is something - - -

MR KING: No, it is additional material, your Honour.

FRENCH CJ: I think we should just look at what was on the record before the court below.

MR KING: Perhaps if your Honours go to page 49 of the application book at line 32:

On 5 July 2007, the RA Authority –

that is New South Wales –

wrote to Mr Spencer in connection with his application for assistance . . . and said that it was satisfied the Mr Spencer’s farming enterprise “is not commercially viable”. The letter stated that that position was a result of “the inability to clear native vegetation under the [2003 Vegetation Act]”.

Then, furthermore, if your Honours go to the bundle that I have just handed up, there is an example of intergovernmental agreements that have that consequence which were in evidence and, of course, we did not have the benefit of discovery or other fact gathering procedures. This one was found on the internet. It is at page 26 of the bundle. This is the agreement between the Commonwealth and New South Wales.

FRENCH CJ: This was the 2002 agreement relating to water salinity?

MR KING: This was the 2002 agreement relating to water and vegetation. If your Honour goes to page 28, Clause 4.12 dealing with land:

The Parties recognise that the State has in place a legislative and regulatory framework under the Native Vegetation Conservation Act 1997 that meets the requirements of Clause 27 of the IGA.

the intergovernmental agreement. That is the earlier agreement. If your Honours go to page 35, the relevant clause in the earlier agreement is set out at the bottom of the page:

States and Territories agree to institute controls on land clearing by June 2002 or as otherwise agreed in Bilateral Agreements, which at minimum prohibit land clearing in the priority catchments/regions –

In this particular case, the catchment region was the Upper Murrumbidgee Catchment Management Authority. Your Honours, the situation is slightly different to what my friend put in relation to Arnold. Here there was a total prohibition on development of the land – I am using the words of Justice Deane in Tasmanian Dam Case – amounting to an acquisition.

FRENCH CJ: Conditional upon development consent, was it not?

MR KING: Yes, but that development consent was a mere discretion of the Minister and never granted in this particular case and there was a quota which each region had to meet. Your Honours, just finally, in our respectful submission, the right in the litigation that your Honour Justice Kiefel raised is the fact that my client’s farm, the commercial venture, has been destroyed by this prohibition placed across his land. The Commonwealth has conceded that it has the benefit of that prohibition, namely, the Carbon Sequestration Right, which is then using, in two ways, one, in the national carbon accounts, secondly, by the returns it is making to the UNFCCC Convention in Bonn.

Now, that is a very, very valuable right and as of yesterday when the National Emissions Bill was placed in the Parliament, it is going to be even more so. In our respectful submission, the use by the Commonwealth by its conduct of the rights that my client has had which the learned judge recognised arose from the Conveyancing Act and the circumstances of the case.

KIEFEL J: Put in that way it sounds rather more like an unjust enrichment claim.

MR KING: We do claim both restitutionally and compensatory relief, your Honour. If the Court pleases.

FRENCH CJ: Thank you. The Court will adjourn briefly to consider the application.

AT 3.18 PM SHORT ADJOURNMENT

UPON RESUMING AT 3.26 PM:

FRENCH CJ: On the basis of the case as pleaded and the submissions put to us today, the Court is not disposed to grant special leave. However, it may be that in light of the outcome of the appeal in Arnold the position can be revisited. We propose, therefore, to adjourn the application for special leave until after Arnold is heard and determined.

MR KING: If the Court pleases.

FRENCH CJ: We will reserve the costs of today. We will now adjourn again briefly to reconstitute for the next matter.

AT 3.27 PM THE MATTER WAS CONCLUDED