Government of the Russian Federation v Commonwealth of Australia [2023] HCATrans 93 (26 June 2023)

Last Updated: 27 June 2023

[2023] HCATrans 093

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Canberra No C9 of 2023

B e t w e e n -

GOVERNMENT OF THE RUSSIAN FEDERATION

Plaintiff

and

COMMONWEALTH OF AUSTRALIA

Defendant

JAGOT J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA BY VIDEO CONNECTION

ON MONDAY, 26 JUNE 2023, AT 9.37 AM

Copyright in the High Court of Australia

HER HONOUR: As the Court is sitting remotely, I will announce the appearances for the parties.

MR E.A.J. HYDE appears with MS M.F. CARISTO for the plaintiff. (instructed by Nelson & Hill Lawyers)

MR T.M. BEGBIE, KC appears with MS E.H.I. SMITH for the defendant. (instructed by Australian Government Solicitor)

HER HONOUR: Mr Hyde.

MR HYDE: Thank you, your Honour. As the Court is aware, there is a dispute between the plaintiff and the defendant as to whether the Home Affairs Act is valid. That Act came into effect at 4.26 pm on 15 June, about a week and a half ago. The purpose of the Act was to terminate a 99‑year lease held by my client over a block of land in the ACT, that land having been leased to my client by the plaintiff in 2008 so that my client could construct a new embassy complex on the land.

The plaintiff moves on the application which was filed on 23 June and seeks orders that the defendant be restrained from re‑entering the land and taking any steps to re‑lease the land pending the determination of its challenge to the Home Affairs Act, and in support of the application it reads two affidavits, both of which were affirmed and filed on 23 June 2023. The first is an affidavit of Dr Alexey Pavlovsky. Mr Pavlovsky is the Ambassador of the Russian Federation in Australia. The second affidavit is of Jonathan Warwick Fearn, a solicitor. That is the evidence that the plaintiff relies upon, your Honour.

HER HONOUR: Thank you. Any objection to that evidence being read on the interlocutory application, Mr Begbie?

MR BEGBIE: No, there is not, and if your Honour wishes to deal with all the evidence now, we rely on an affidavit of Niamh Lenagh‑Maguire, affirmed this morning, which I think your Honour will have now.

HER HONOUR: I do, let me just find that. Yes, that is Ms Lenagh‑Maguire, L‑e‑n‑a‑g‑h‑hyphen‑M‑a‑g‑u‑i‑r‑e for the transcript, affirmed today. Any objection to that affidavit coming into evidence, Mr Hyde?

MR HYDE: No, your Honour.

HER HONOUR: Okay. So, that is the totality of the evidence?

MR HYDE: That is correct, your Honour.

HER HONOUR: All right.

MR HYDE: Your Honour should have received a joint bundle of authorities. Has your Honour received a joint ‑ ‑ ‑

HER HONOUR: I do have it. Yes, I do have a joint bundle of authorities.

MR HYDE: Your Honour, my instructing solicitor has sent up a further case this morning, Wurridjal v Commonwealth.

HER HONOUR: I have that as well.

MR HYDE: May it please the Court.

HER HONOUR: Yes, Mr Hyde.

MR HYDE: Your Honour will find the Home Affairs Act at page 5 of the joint bundle.

HER HONOUR: I have the Act.

MR HYDE: As your Honour will see, section 4 on page 10 of the joint bundle defines “relevant lease” to mean:

any lease owned or held in respect of the land at the commencement of this Act.

Your Honour will also see that the Act defines “land” to mean:

Block 26, section 44 in the Division of Yarralumla, as delineated on –

A certain deposited plan.

HER HONOUR: Yes.

MR HYDE: It is no issue between the parties, that was the block of land that was leased to my client under a lease. Section 5 of the Act ‑ ‑ ‑

HER HONOUR: Yes. I should say – if it assists you, Mr Hyde, I have also read the two sets of written submissions.

MR HYDE: May it please the Court. Has your Honour had an opportunity to read the affidavit of the Ambassador, or not?

HER HONOUR: Yes, I have read all of the evidence as well.

MR HYDE: Your Honour, then can I turn to what seems to be the issue between the parties, and that is to who is to remain in possession of the land pending the determination of the challenge. The position of the Commonwealth is that it does not intend to re‑lease the land in the meantime. The ultimate question is, who should remain in possession of the land? For the reasons which are set out in those submissions, we say that my client should remain in possession, subject to the undertakings which are offered in the application.

There is a dispute between the parties as to what is the relevant legal test to be applied, and we do not challenge the proposition that in certain circumstances, as set out in Castlemaine Tooheys, the Court needs to be “astute” when granting an injunction so as to ensure that no public detriment is occasioned by the grant of the injunction. In the circumstances of this case, we say that no public detriment will be occasioned, because the only two parties which are affected by the operation of the Act is my client and the Commonwealth.

There is no greater impact on the public beyond that. The undertakings which are proffered are so as to ensure that the status quo is maintained. Your Honour, I am happy to take your Honour to the application which sets out the undertakings, but in effect, nothing is going to occur on that land if my client is to remain in possession other than the fact that the integrity of the land will not be affected by third parties, and that my client will be satisfied that no steps are taken to interfere with the consular building which has been constructed on the land to date.

The only matters which are put forward, as I understand it from my learned friend, is that somehow that there is some general security risk that has been associated with my client remaining in possession of the land. That security risk was described by the Prime Minister of Australia as “a bloke standing in the cold on a bit of grass is not a threat to our national security”. Your Honour, that was an extract from a press conference that the Prime Minister gave on Friday. That extract is contained in the exhibit to Mr Fearn’s affidavit.

So, the stated position of the Prime Minister is that the security personnel of my client, who is on the land in a building next to – when I say “building”, it is really a demountable office – which is at the entrance gate to the consular building is not a security risk, and as I understand the position of the Prime Minister, a security risk will only come into effect if the greater embassy complex is constructed, and that security risk is said to be the fact that it overlooks Parliament House.

What your Honour will have appreciated from the evidence is that the Commonwealth of Australia selected this block of land and offered it to my client by way of lease. It was offered to my client by way of lease so it could construct an embassy complex on the land. Furthermore, your Honour will have appreciated from the Act that it does not seek to change the status of the land as “National Land”, and as is clear from the communication between the parties, the Commonwealth intends to offer that land for re‑lease for embassy use at a time in the future. So, the mere fact that it is embassy land overlooking the Commonwealth Parliament House ‑ ‑ ‑

HER HONOUR: I just – sorry, Mr Hyde, I just missed – I can hear you perfectly well, but something just got muffled there, where you said it was still National Land and the Commonwealth intends to – the next bit just got muffled.

MR HYDE: Re‑lease the land. Sorry, your Honour.

HER HONOUR: Yes.

MR HYDE: As is clear from section 7(3) of the Act, the land remains National Land and will be available in the future, if the Commonwealth is successful, to be re‑leased to other nations for embassy purposes. So, the mere fact of the land overlooking Parliament House is not of itself a security risk, and there is no other evidence before the Court as to the so‑called national security issues that the Commonwealth wishes to raise.

But dealing with the application, which is concerned with maintaining possession of the land pending the hearing of the determination of the challenge, what is intended is for a security personnel to remain on the land so as to secure the embassy compound that no third parties interfere with the consular building which has been constructed to date. The evidence of the Ambassador is that if the Commonwealth has possession in the meantime and my client is ultimately returned to possession of the land, that the Government of the Russian Federation would wish to demolish that building because it could not be satisfied that the integrity of that land and that building had been protected.

It is in those circumstances we say that the Home Affairs Act can be distinguished from other considerations of this Court as to when an injunction should or should not be granted. It does not impact upon the public at large but is concerned with two rights: that of my client and that of the Commonwealth. We are not seeking to restrain the enactment or assent to the Act, but rather seeking to ensure that my client maintains possession pending the determination of the challenge.

Your Honour, as you may have appreciated from the evidence of the Ambassador, in August last year when there was a purported termination of the lease by the Commonwealth, the agreement that was reached between the parties was that my client remain in possession of the land, and that was in the same format which is proposed to occur but formalised by way of undertakings to the Court pending the determination of the termination. In those circumstances, we say that that there is no material change in position that has occurred between the purported termination in August last year and what we call the purported termination by the passing of the Act.

In the circumstances where there is no public detriment that can be pointed to, there is no evidence of any security interest or other interests of the public that will be impacted or challenged by my client maintaining possession, and the evidence of the Prime Minister, who dismissed the suggestion that the security guard posed any risk to national security, we say that the balance of convenience favours my client maintaining possession.

If I could then briefly address what we say are the serious questions to be tried. The first is that the Act of itself discloses no force of power. I know my learned friend’s submissions at paragraph 24 described the purpose of the Act:

is to advance Australia’s national security interests by preventing Russia, a foreign government, from occupying or using the land.

Now, that is not clear on the face of the Act. The face of the Act makes it clear that the sole purpose was to terminate the lease. The second proposition which is put forward in my learned friend’s submissions, that the power under section 122 of the Constitution is unconstrained or otherwise by operation of just terms provisions. We do not accept that, and the decision of this Court in Wurridjal makes it clear, in my respectful submission, that the operation of just terms does constrain a grant of power under 122 of the Constitution.

HER HONOUR: Sorry, when you say Wurridjal – which paragraph of Wurridjal, or paragraphs? That is 237 CLR 309, is it?

MR HYDE: Yes, your Honour. Just bear with me for one second. Your Honour will find it at the decision of the Chief Justice at paragraph 86, on page 359. Your Honour will see at the last two lines of paragraph 86 on page 359, that laws made pursuant to section 122:

must be on just terms –

Similar observations were made by Justices Gummow and Hayne at page 388 at paragraph 189; Justice Crennan at paragraphs 354 to 355 at page 437; Justice Kiefel, as her Honour then was, did not address the issue, nor did Justice Heydon. Your Honour, in my respectful submission, that decision makes it clear that section 51(xxxi) of the Constitution must have application with respect to a law which is being sought to be brought in by 122 of the Constitution.

HER HONOUR: Sure, but what do you say about section 6(1) of the Home Affairs Act?

MR HYDE: Your Honour, I accept that section 6(1) is in similar terms to what was considered in the Emergency Response Act. The first point we wish to make: section 6(1) does not accept on the terms that there has been an acquisition of property. Section 6(1) starts with the word “If”. The other propositions that we would wish to advance is that insofar as the Emergency Response Act held – or consideration by this Court held that there was just terms by reason of the wording of section 60(2) and (3) of that Act, that it has a limited precedential value because her Honour Justice Crennan abstained from determining the issue as to whether those provisions of that Act was an acquisition on just terms.

Justice Kirby was in dissent. I accept that Justices Gummow, Hayne and Kiefel endorsed the wording of section 60 as providing just terms. Chief Justice French said that the section was afforded just terms, but relied upon the reasons of Justice Heydon, and when one looks at the reasoning of Justice Heydon, his Honour’s consideration that those sections provided just terms was based upon a fact‑specific reasoning in relation to the circumstances of fact. But section 6(1) of the Home Affairs Act does not accept there has been an acquisition of property. That is clear on the words, that it says:

If the operation of this Act would result in an acquisition of property –

And that is why, as your Honour will see from our statement of claim, the alternate relief that we seek is a declaration that there has been an acquisition of property, if we are wrong about the source of power. I accept that my learned friend’s submissions proceed on the basis that there has been an acquisition of property, but the Act itself does not make it clear.

The next issue that we wish to raise for consideration by this Court is the extent of the powers of the Commonwealth to acquire property on just terms, and we have referred in our written submissions to the decision in Clunies‑Ross. I accept that the Court in that case did not set out a clear statement of principle as to the extent of those powers, but the Court certainly made it clear that questions will arise as to the breadth of the power which is conferred by section 51(xxxi) and whether the acquisition of the property must be related to a need for, or an intended use or application of a property by the Commonwealth.

In this circumstance, your Honour, the land is Commonwealth land at the point in time the Act was brought into existence; it remains Commonwealth land after the passing of the Act. Prior to the Act, the land was to be used for embassy purposes; after the passing of the Act the land remains to be used for embassy purposes. The sole purpose of this Act was to terminate the lease granted to my client. It was not being acquired so that the Commonwealth could use this land for some purpose beyond that which it already had the characteristics of.

It is those circumstances we say that the bringing into effect of this Act was beyond power which was granted to the Commonwealth under that head of power. There can be no dispute about what has occurred. The sole purpose, as expressed in section 5, is to terminate the lease. It has not been brought or acquired by the Commonwealth for a purpose that it already did not have, but rather it has been brought into existence, this Act, to solely terminate my client’s lease of the land and that is it. That is what we say are the serious questions that will arise in relation to whether this Act is valid or not.

As I have already referred your Honour, we seek in the alternative a declaration that the effect of the Act is to acquire property, and as such, my client would be then entitled to receive just compensation. As it is presently drafted, the Commonwealth does not accept, in subsection (1), that the Act has the operation of acquiring property of my client. It is all premised on an “if” rather than acceptance that is true. Then if I could turn to issues which concern damages being inadequate and the balance of convenience, your Honour. The evidence of the Ambassador is that a significant sum of money has been spent to date in building the consular building. The evidence of the Ambassador is ‑ ‑ ‑

HER HONOUR: Can I just – there is just one factual issue. The Ambassador’s affidavit refers, I think, to a consular building. I have some photographs, in which I can see some kind of structure. In the explanatory memorandum – or the second reading speech, one or the other – it says there is no embassy or consular building, so – I think it might be the second reading speech.

MR HYDE: Your Honour, can I deal with that by reference to the joint submissions that were prepared by the Commonwealth and my client in support of the ‑ ‑ ‑

HER HONOUR: Sure. But for the record, the sentence I am thinking of is at page 496 of the joint bundle, it is the second reading speech, which contains the sentence:

There are not currently any diplomatic or consular premises on the land.

Anyway – yes, where do you want to take me?

MR HYDE: If I could take your Honour to exhibit AP14 of the Ambassador’s affidavit, which is found at page 127.

HER HONOUR: Yes, I have that.

MR HYDE: Just to give your Honour some context, your Honour will have seen in the evidence that there was a challenge to the determination of the lease by the Commonwealth, which was before Justice Rares in the Federal Court.

HER HONOUR: Yes.

MR HYDE: This was a joint submission that was prepared by the Commonwealth and my client in support of the injunction and the declaration that the notice was invalid.

HER HONOUR: I can see paragraph 19, is that the one you are referring to?

MR HYDE: Yes, your Honour.

HER HONOUR:

By about June 2022, the GRF had constructed a consular building on the Land but had not completed the construction of the embassy complex –

Is that the one?

MR HYDE: That is correct.

HER HONOUR: Okay.

MR HYDE: And your Honour will see similar statements in the Ambassador’s affidavit ‑ ‑ ‑

HER HONOUR: I saw that in the affidavit, yes, that is why I was asking you. I saw that in the affidavit and the other sentence in the second reading speech.

MR HYDE: But your Honour would accept that, in light of the joint submission, which was prepared and signed by the Commonwealth, which includes the acceptance that the consular building had been constructed, there can be, with respect, no factual dispute between the parties in relation to that. Your Honour will not see a clear description or an image of the consular building in the photographs which are contained ‑ ‑ ‑

HER HONOUR: It is fine. That is resolved, it is fine. I have seen the photos – I could not tell.

MR HYDE: Then, returning to the notion that damages would be inadequate, that if my client was to demolish the building, it would lose the time under the lease spent reconstructing the building. Your Honour will see that in the joint submission, the construction work proper started in March 2020 – that is paragraph 18 on page 131 of the affidavit – and that by about June two years later, the consular building had been constructed. If it were required to demolish that building and re‑erect it, the two years of that time would be lost and could not be compensated to my client by way of damages or otherwise.

The other matter we point to is that my client is concerned to ensure that its proposed consular building is not interfered with by any third party. Your Honour will accept that there is a particularly unique circumstance in relation to the construction of an embassy and the rights which attach to an embassy complex once it has been consecrated under the Vienna Convention. My client has taken assiduous steps to ensure that it has supervised the construction of this building and that no third party has entered that building without its consent or approval. If the embassy or the consular building was to remain in the hands of the Commonwealth pending the hearing and determination of its challenge to the Act, my client could not have any satisfaction that the integrity of that building had not been interfered with, and that is a very chilling matter which weighs in the balance of convenience in favour of my client.

There is no prejudice which is occasioned to the defendant or the broader public if the embassy complex remains in the possession of my client. Not one matter is pointed to, with respect, in my friend’s submissions as to how it could be said that the Commonwealth is prejudiced by my client remaining in possession. And in circumstances where that was the position, that was resolved between the parties on the last occasion. It is difficult to understand the change in position that has now been adopted. Insofar as my friend refers to matters of national security, there is simply no
evidence before the Court from which the Court would have regard to or inform itself as to why the so‑called national security issue is of such importance, particularly in light of the statement of the Prime Minister on Friday.

Your Honour, those are the matters we rely upon in support of the application. I have instructions to give the undertakings which are set out in the application, and we urge the Court to grant the relief.

HER HONOUR: Thank you. Mr Begbie, I have read your written submissions, which seem to cover a lot of the ground, in any event. They do not cover, at least to my recollection, the proposition that if the Commonwealth takes possession of the consular building, the plaintiff could not be assured of the integrity of the building pending the outcome of the determination of the substantive application.

MR BEGBIE: No.

HER HONOUR: There may be other issues that you picked up that are not addressed in your written submissions, but I will hear you now.

MR BEGBIE: Thank you, your Honour. I will perhaps start with the point that came out a number of times about prejudice to the Commonwealth. I think your Honour will have detected from our material that we are not making what you might call a national security claim about what will happen tomorrow, or what has happened in the last five days, or anything of that kind. It rather misapprehends our position to convey this as a balance between that kind of claim, which is not made, and my learned friend’s client’s interests.

What we emphasise is something that we think is totally overlooked in what your Honour has just heard, which is this is not just a balancing of private interests as between two parties in a property dispute, and everything your Honour has heard is designed to brush aside Castlemaine Tooheys and the correct test that the Court is to apply, and what weighs in the balance here, and weighs powerfully, on the authorities, is the fact that we are not talking about a simple lease dispute in which a disgruntled lessee wants to retain their occupation pending challenge to a termination notice – it is just not a real‑world perspective on what has occurred here.

So, if your Honour would bear with me, I would start with the Home Affairs Act, because I need to frame what it is that your Honour is actually deciding here by reference not to that artificial non‑dispute that you have heard about, but by reference to this Act and what that means for the decision. That is at tab 1, your Honour. Your Honour will see that it does three significant things, for present purposes. First, at section 5, it terminates all of the interests that Russia holds in that block of land.

Your Honour, my screen is frozen, can your Honour hear me?

HER HONOUR: Yes, it is fine.

MR BEGBIE: Sorry, thank you, your Honour. Secondly, and I will just draw your Honour’s attention to these features now, so I do not have to come back to it, section 6 is plainly designed to ensure constitutional validity, when you look at the definitions, and section 7 is designed to give this Act primacy over any other Act. Your Honour appreciates this was introduced, enacted and given Royal Assent on a single day, and that the purposes of it as described under the EM and the second reading speech are to protect Australia’s Parliament and national security.

So, the real question is not, is there a balancing of two interests between two private parties fighting about a lease, the real question is, should this Court make orders that restrain Parliament’s choice, Parliament’s decision, of the kind that your Honour sees in this Act, so to speak, pending demonstration that the Act is valid, and what Castlemaine Tooheys and those principles make very clear is that is back‑to‑front. Could your Honour go to Castlemaine Tooheys, or would your Honour not be assisted by that?

HER HONOUR: No, I think – as I say, I have read the written submissions, I have read the extracts from the cases to which you refer, so I think I understand the proposition, unless there is something in particular you want to take me to.

MR BEGBIE: All right. No, your Honour, it is to just draw out how the Acting Chief Justice explained the principle, but the fact is that what is going on here is a rather remarkable assertion that this Act is invalid. You do not need, in those circumstances, to demonstrate a private, additional prejudice. That itself is what requires my learned friend to have to show what has been called, in many cases, compelling grounds for your Honour to make the kind of orders that is sought.

So, when your Honour starts with the conventional prima facie case, you start by saying, have they demonstrated anything that puts the constitutional validity of this Act in any serious question? And your Honour needs to go no further than the fact that my learned friend has not in any way sought to identify how the territories power is not ample, the plenary, wide, unconstrained legislative power subject only to something I will say about Wurridjal and section 6.

Once that is accepted, their whole argument is over. The rest of it comes down to fighting about the extent to which section 51(xxxi) might be an additional source of power. What Russia has done with that, though, is to just misconceive what happens in cases like Schmidt and Clunies‑Ross. They are cases which explain the possibility – and maybe this Court will find it important to decide it in this case – the possibility that (xxxi) is limited to acquisitions of a particular kind, namely, an acquisition of property for use by the Commonwealth.

Now, if our learned friend’s argument advanced of that kind is accepted, the consequence is not that the Act is beyond power, it is just that section 51(xxxi) is not the source of power. Section 122 will be, possibly the external affairs power will be. The only consequence of accepting that argument is that just terms will not be available at all, so the real rub for my learned friend is either section 51(xxxi) applies, in which case, section 6 deals with the just terms requirement; or section 51(xxxi) does not apply at all, in which case there is no just terms requirement.

That constitutional possibility, thrown up in a number of cases, from Teori Tau, most recently in Yunupingu, which your Honour knows is on special leave to the High Court, that possibility explains the “if” at the start of section 6, but if the just terms requirement applies, it is absolutely pellucid that the Commonwealth is liable for reasonable compensation. So, it is not just that they have not made a compelling case for constitutional invalidity on this application, they have made absolutely no case for it. The arguments they have raised, in a sense, are self‑defeating. They just proved that they will lose one way or they will lose the other way.

So, when your Honour then turns to the balance of convenience, you will see we are not in a universe where it is a case of, you know, might we do this or might we do that? The legal test has already determined the outcome, but let me address the balance of convenience, because what my learned friend says about that is, with respect, a little striking. If your Honour goes to Dr Pavlovsky’s affidavit at 26, you will see the only prejudice pointed to in paragraphs 26 through to 29. Now, that is in circumstances where, as your Honour appreciates, we have agreed not to destroy the subject of the proceedings by re‑leasing in the intervening periods. I do not criticise that topic not being addressed here. But it is strikingly silent as to what “the integrity of the embassy complex” means, or, in 28, the “integrity and security” of the complex means.

One might infer that there are things in there that they are worried someone – and Mr Hyde suggests the Commonwealth – will do things to, but your Honour has no evidence at all of what they are, or what the things might be, or how it would work to Russia’s prejudice. Your Honour has nothing that would cause you to properly act on the proposition that this building will have to be destroyed, should the Commonwealth have possession of the land. If there are things in there that they wanted to remove, they have already had well over a week to do that; if there are things that cannot be removed, how on Earth does that demonstrate that the entire building would have to be destroyed? I mean, these are extravagant propositions, and we resist the idea that Russia has to do that. If it wants to do that, that is a matter for Russia, but your Honour has no evidence that that is necessary in any way.

There is a very important latent principle here, your Honour, which is Mr Hyde’s submissions, and this evidence, in a tangential, perhaps somewhat nebulous way, we think advert to the possibility that what Russia is trying to protect here is its own national interests, its security interests, its intelligence interests, things of that kind. That is what “integrity and security” seem to mean in this affidavit, and seem to mean in Mr Hyde’s submissions. Certainly, no one is worried about the foundations being destabilised or windows being broken. You are not hearing about that.

So, we are talking about, at the highest level – and we are given no detail, but at the highest level, Russia’s national interests attached to this building. That is not an interest that your Honour can take into account. Your Honour may have seen the passages we have referred to in Heinemann Publishers. It is the clearest statement of high principle that it would be an error to try to take that into account, in Russia’s favour. To do that, particularly in the context of balancing that interest against the interest which Australia’s Parliament itself has determined already by this Act, it would be just unthinkable, with respect.

So, where that leaves your Honour is that there is absolutely nothing at all in the balance of convenience that cannot be readily compensated by the payment of damages and compensation of the kind that section 6 expressly contemplates, if that be payable. So, it is not even that Russia has come up with an inordinately weak constitutional argument but a very compelling balance of convenience. It has neither. So, where we say that leaves your Honour in terms of relief is this. Your Honour would be justified, frankly, in refusing all relief. We have made very constructive – was your Honour ‑ ‑ ‑

HER HONOUR: I was only – you mean, on the interlocutory application, we are talking about.

MR BEGBIE: Of course, your Honour.

HER HONOUR: Just dismiss the – simply dismiss the interlocutory application, yes.

MR BEGBIE: Yes, of course. And just to be very clear, what I am talking about, it seeks two things: one, an order that we not re‑enter, that is, an order to stop us having possession; and two, an order that we not re‑lease. Now, you will have seen through the correspondence we have sought to constructively, actually, frankly, prevent this rather – I will avoid the adjectives – this unnecessary application coming forward. In doing so, we have made offers to do things that will protect the integrity of the proceedings, and one of those is that we will not re‑lease, but frankly, if we had just come to Court and this is what your Honour had heard, we would have been entitled to say they get no relief at all because there is nothing that damages cannot compensate, including the re‑leasing.

So, our concern now is to actually make sure that the thing that they seek out of this application, namely, possession and the exclusion of the Commonwealth, is very clearly dealt with, and – has your Honour seen in the affidavit correspondence that was sent on Saturday, it is probably just as well if I take your Honour to it, it is in Ms Lenagh‑Maguire’s affidavit at NLM‑6. Your Honour will see summarised at paragraph 4 what it is the Commonwealth proposes to do, should your Honour refuse to make the order in 7(a) of the interim application.

We have invited Russia to confirm its position as set out in paragraph 5. We rather apprehend that must be its position, otherwise I wonder what they are doing here at all, but I invite your Honour to hear from Mr Hyde about that in reply, because if there is any doubt about that, if Russia is wanting to play games about that and reserve its position and all the rest of it, what we would invite your Honour to do is to make the order that we not re‑lease the land, if your Honour thinks an order is appropriate, but on the condition of an undertaking that they will not seek to maintain this position which, as your Honour has heard, is untenable.

So, if your Honour – can I put it in the baldest of terms – they need to leave the site, and your Honour’s orders should reflect that, and I am – if Mr Hyde will not give your Honour that assurance, then we are going to seek orders that are framed that will secure that, so that what is set out in paragraphs 4 and 5 is the result from today, not that we go away and then start a new skirmish and then come back before the Court with another application and another set of orders, and so on. We want to deal with this properly. All of that describes how we would like to deal with this if your Honour refuses the application.

If your Honour was minded to grant it and to allow Russia to continue in occupation and to exclude the Commonwealth from coming in and fencing and securing the site, from being in possession of the site, if your Honour was minded to do that, I would wish to be heard about some further parameters on that, but I will not address your Honour on that now unless your Honour needs to hear that.

HER HONOUR: No. The only issue I raise is that I am only seized of a single interlocutory application, which seeks to restrain the Commonwealth from re‑entering and re‑leasing. I do not have any other kind of application before me about timing, what is proposed to happen if the plaintiff’s application is dismissed. So, the conventional form would be I would either grant the whole or part of the relief the plaintiff seeks, or if I am not persuaded, I would refuse it. And if that then gives rise to some other speculated – I have no evidence one way or another about anything else, so I am not sure what basis you are saying – I am aware that on the 24th this letter was sent indicating that if orders were not made, then this is what the Commonwealth proposes, and I have no idea what the response is to that. And I am not sure that I am seized of it, either. So – I am just not sure what it is you are suggesting I could do today, meaningfully, with absolutely no evidence on the basis of some speculated further possible dispute in the future.

MR BEGBIE: Your Honour, the evidence that we rely upon is the evidence that someone has remained on site subsequent to the enactment of the Act, not just this letter, but the sequence of correspondence ‑ ‑ ‑

HER HONOUR: Sure.

MR BEGBIE: ‑ ‑ ‑ which makes very clear that Russia continues to insist upon that position. I do not criticise my learned friend for not having responded to this letter – Russia has had other things on its mind over the weekend, and I do not say there is a deficiency in the evidence for want of response. The reason I am raising ‑ ‑ ‑

HER HONOUR: There is a deficiency in the evidence that there is any issue that arises – I mean, the person on the land presumably is there pending the determination of the outcome of this application, would be the obvious inference. I have no idea what the position is after the outcome of this application, and I do not have an application one way or another, or evidence to do anything other than to decide the application as it stands, it seems to me. Now, if the consequence of that is that whatever – it is just in the realm of speculation, that is all.

MR BEGBIE: And just to be clear, I am not inviting your Honour to do something extravagant and wild here, and perhaps I did not articulate this clearly enough. All we seek is that that realm of speculation end by hearing from Mr Hyde about whether there is any debate about the things in 5. Because if there is, there is something your Honour can do today: your Honour can say, Mr Hyde, does your client give undertakings of the
kind sought – that would reflect what is sought in 5? If they do, I will make an order that the Commonwealth not re‑lease the land; if they will not do that then I will dismiss the application.

Now, I do not want to be cute about it. All we are trying to do is to avoid dragging things out. If there is to be a future dispute, there is a way of dealing with it now; if there is not, then I have, in a sense, taken five minutes of your Honour’s time unnecessarily. It is only to get your Honour’s response from Mr Hyde to this proposition that might help shape relief. That is all we say, your Honour.

HER HONOUR: I will hear from Mr Hyde on whatever it is he wants to say. He has heard what I have said, so – anyway. Any submissions in reply, Mr Hyde, including having regard to what has just been said?

MR HYDE: Your Honour, can I deal firstly with the letter that is referred to, which was sent on 24 June. What your Honour was not told is that it was received by my instructing solicitor, as I understand it, at 8.11 pm on Saturday night.

HER HONOUR: No, no, I understand that, that it was – you will not have had time to take instructions, necessarily.

MR HYDE: I have not taken instructions, because it was the weekend, and particularly Saturday night in Russia during the course of yesterday day. I have no instructions in relation to the matters set out in that letter, and as your Honour has pointed out to my learned friend, there is not an application that is before the Court in relation to the issues that are sought to be raised by that letter. I am not wishing to be cute or unhelpful, but that is the position, your Honour.

HER HONOUR: No, that is fine. Otherwise, reply?

MR HYDE: The only other point I would make in reply is that the Commonwealth has not explained its change in position in relation to the last termination, where my client was entitled to remain in possession by way of agreement, and the position that has now been adopted by the Commonwealth. The change in position is unexplained and it just demonstrates that what had been agreed previously, of the sensible means of ensuring that the status quo remain, and insofar as criticism is levelled as to the affidavit of the Ambassador, that is, with respect, misconceived.

The Ambassador has set out what his concerns are. We do not have to identify who, where . . . . . with integrity, but it remaining in possession ensures that the integrity of the consular building is maintained pending the ultimate resolution as to whether the termination is valid or not. That is all
we seek to do. The undertakings which have been proffered by my client are more than sufficient to protect the interests of the Commonwealth, and nothing we have put forward today is contrary to what is set out in the Castlemaine Tooheys decision and what was said by the Acting Chief Justice in relation to what is the appropriate test. There is no blanket way of approaching it. It needs to be looked at on a case‑by‑case example, and an Act‑by‑Act example, and this particular Act causes no detriment to the public, and it is on that basis why we say the balance of convenience favours my client.

But unless your Honour has any further questions, those are the submissions we wish to advance.

HER HONOUR: Thank you. On – this Act, Mr Begbie, commenced 15 June as well?

MR BEGBIE: Yes, it did.

HER HONOUR: At 4.26?

MR BEGBIE: At 4.26, your Honour.

HER HONOUR: Yes, thank you. On 15 June 2023 at 4.26 pm a statute, the Home Affairs Act 2023, commenced. That statute has three substantive provisions. The first, section 5, provides that:

A relevant lease, and any legal or equitable right, title, interest, trust, restriction, obligation, mortgage, encumbrance, contract, licence or charge, granted or arising under or pursuant to a relevant lease, or in dependence on a relevant lease, is terminated by force of this section on the commencement of this section.

A “relevant lease” is defined in section 4 of the Act to mean:

any lease owned or held in respect of the land at the commencement of this Act.

“Land” is defined to mean:

Block 26, Section 44 in the Division of Yarralumla, as delineated on Deposited Plan Number 10486 in the Office of the Registrar of Titles at Canberra in the Australian Capital Territory.

Section 6(1) of the Act provides that:

If the operation of this Act would result in an acquisition of property to which paragraph 51(xxxi) of the Constitution applies from a person otherwise than on just terms, the Commonwealth is liable to pay a reasonable amount of compensation to the person.

Section 6(2) provides a mechanism for the determination of that amount of compensation by proceedings in either the High Court of Australia or the Federal Court of Australia. Section 7(1) of the Act provides that:

Subject to subsection (3), this Act:

(a) has effect despite any other law of the Commonwealth or of a State or Territory (whether written or unwritten) –

And section 7(3) provides that:

Nothing in this Act affects the status of the land as National Land under section 27 of the Australian Capital Territory (Planning and Land Management) Act 1988.

By section 7(2), it is specified that:

Without limiting subsection (1), this Act has effect despite –

any provision of a series of other Acts and ordinances, including, relevantly:

(c) the Consular Privileges and Immunities Act 1972;

(d) the Diplomatic Privileges and Immunities Act 1967;

(e) the Foreign States Immunities Act 1985 –

On 23 June 2023, the Government of the Russian Federation, which I will refer to as the “GRF”, filed a summons, a notice of constitutional matter and an interlocutory application. In the summons, the substantive relief which is sought is for a declaration of constitutional invalidity of the Home Affairs Act. It is alleged that the Home Affairs Act is not supported by a head of legislative power and is contrary to section 51(xxxi) of the Constitution in relation to an alleged failure to provide for the acquisition of property only on just terms. Accordingly, the relief sought is a declaration that the Home Affairs Act is invalid or, alternatively, a declaration that the operation of the Act results in an acquisition of property, to which paragraph 51(xxxi) of the Constitution applies, from the plaintiff otherwise than on just terms, such that the Commonwealth is liable to pay a reasonable amount of compensation to the plaintiff.

The application seeks interlocutory relief pending the determination of the application for declarations as to the invalidity or otherwise in respect of the Home Affairs Act. The GRF, through its counsel, offers a series of undertakings, in effect:

(a) the usual undertaking as to damages;

(b) to pursue this proceeding in a timely manner for its expeditious resolution;

(c) to maintain and keep the Land in good condition and to bear full responsibility for any damage to the Land or improvements on it or for any injury or loss suffered by any entrants to the Land on or after 16 June 2023;

(d) that the GRF will indemnify the Commonwealth in relation to any claims against the Commonwealth for any such damage or injury or loss;

(e) that the GRF will not carry out any further work on the Land other than general maintenance without the Commonwealth’s prior written approval; and

(e) that it will not remove any items or chattels from the Land other than as required to maintain and keep the Land in good condition.

On the basis of those undertakings, the GRF seeks an interlocutory order that the Commonwealth, by its servants and agents, be restrained until further order of the Court, from:

(a) re‑entering the Land; and

(b) taking any steps to re‑lease the Land.

In various communications between the parties before the hearing this morning, the Commonwealth has stated to the GRF that in order to preserve the utility of any final orders that this Court may make, the Commonwealth will not re‑lease the land before the challenge is resolved or remove, damage or destroy any buildings on the land. It is apparent that this offer by the Commonwealth is not to the satisfaction of the GRF, who continues to press for the two interlocutory orders. It is obvious from this that the real dispute between the parties is that the GRF wishes to remain in possession of the land pending the determination of its challenge to the validity of the Act.

The GRF relies on two affidavits. The first affidavit is of Dr Alexey Pavlovsky, who is the Ambassador of the Russian Federation in Australia and has held this role since 20 May 2019. Dr Pavlovsky provides information about the lease of the land which was granted to the embassy of the Russian Federation in Australia in or about 2008. Dr Pavlovsky also deposes to the construction works which have been carried out on the land, in short, the first stage works have been completed, which includes the construction of the consular building and security checkpoint, as well as a new transformer substation and on‑site utilities and the completion of cladding of a perimeter fence and landscaping works. Stage two had not yet been constructed. Stage two would include the construction of the embassy building.

In 2022, there is evidence from Dr Pavlovsky’s affidavit that the National Capital Authority issued a purported termination of the lease. This led to proceedings in the Federal Court of Australia, by which the GRF challenged the termination of the lease. Those proceedings were resolved by consent, and pending the resolution of those proceedings, the GRF, by agreement, remained in possession of the land.

As I have indicated, the Home Affairs Act came into force on 15 June 2023. According to Dr Pavlovsky, the GRF has expended approximately US$5.5 million on construction works and has at all times had a presence on the land and closely supervised the construction works being undertaken on the land to ensure the integrity of the embassy complex once it is constructed. Dr Pavlovsky deposes to the fact that:

The GRF wishes to maintain possession of the Land pending the outcome of the High Court proceedings to ensure the integrity and security of the consular building and the embassy complex.

According to Dr Pavlovsky:

In the event that:

1. the Commonwealth were to retake possession of the Land pending the outcome of the proceedings before the High Court; and

2. the GRF is successful in the proceedings –

it would then be:

highly likely to demolish the improvements already constructed on the Land to protect its interests.

The other affidavit on which the GRF relies is from a solicitor for the GRF, who has attached a newspaper article published in the Sydney Morning Herald website at about 10.22 am, which contains a quote:

Prime Minister Anthony Albanese says, “a bloke standing on a bit of grass” on the site where government cancelled the lease of a second Russian embassy in Canberra does not represent a national security threat.

Before the Act was passed and commenced, there was an explanatory memorandum prepared for the Home Affairs Bill 2023. It contains a statement as follows:

The object of the Bill is to protect Australia’s national security interests with regard to land within the area adjacent to Parliament House.

The second reading speech for the Act records that the Bill establishes:

an Act for the termination of the lease held by the government of the Russian Federation on a parcel of land adjacent to Parliament House –

further, that:

This action is absolutely necessary to protect Australia’s national security interests, something that this parliament and our government will never shy away from.

The second reading speech also states:

This action does not preclude the Russian Federation from a diplomatic presence here in Canberra, which they maintain at their existing premises, in Griffith, Australian Capital Territory. The termination of the lease has no impact on their Griffith site. This legislation is consistent with Australia’s obligations under international law.

The submissions on behalf of the GRF are to the effect that the Act is not supported by a Commonwealth head of power because it is, in substance:

a law with respect –

only:

to the “relevant lease” and, more generally, a law with respect to property.

In circumstances where the Commonwealth does not have a constitutional head of power as to either the relevant lease or to property more generally. Further, that the termination of the relevant lease by the Act:

is not for a purpose in respect of which the Parliament has power to make laws.

Otherwise, the GRF submits that the Act is contrary to section 51(xxxi) of the Constitution because by terminating the lease it acquires property and therefore just terms must be provided if the Act is to be valid, and at present the Act does not provide for just terms because, according to the GRF, section 6(1) is conditional; it provides only that:

If the operation of this Act would result in an acquisition of property –

then:

the Commonwealth is liable to pay a reasonable amount of compensation –

The GRF also submits that this Court should grant it relief because the balance of convenience and interests of justice favour that grant. In this regard, the GRF relies on the affidavit of Dr Pavlovsky to the effect that if it does not remain in possession of the land, the GRF:

will necessarily incur great expense demolishing the improvements and undertaking replacement construction works.

Which will absorb further time under its lease. On the other hand, according to the GRF, the Commonwealth will suffer no prejudice because on the last occasion where the lease was purported to have been terminated, the GRF:

was allowed to remain in possession and there has been no change –

in circumstances. In submissions, the GRF emphasise that in truth this was a dispute between two parties, that there would be no public detriment occasioned by it remaining in possession pending the outcome of the dispute, that the undertakings it proffered ensured that the status quo would be maintained, that the Prime Minister had already stated that there was no security risk from a person remaining within the premises, and, as I have already mentioned, the GRF considers that it would have to demolish the buildings on the land if the Commonwealth were to take possession and the GRF were ultimately successful in its challenge to the validity of the Act.

The GRF also submitted that it was important in this regard that the land under the Act remained National Land, that is, available to be re‑leased for embassy purposes and that this, amongst other things, demonstrated that the Act did not relate to any public purpose which the Commonwealth wished to achieve, thereby supporting the GRF’s case that there was no support for the Act in any relevant head of Commonwealth power. It also submitted that no explanation had been proffered for the apparent change in the Commonwealth’s position from that in 2022 where, despite a purported termination of the lease, the Commonwealth was willing to enable the GRF to remain in possession of the land pending the determination of the proceedings, thereby preserving the status quo.

The difficulty for the GRF in relation to the current application is that there has been a material change in circumstances between 2022 and the present date. The material change in circumstances is the Home Affairs Act 2023 itself, which provides by legislation for termination of the lease.

The Commonwealth has provided detailed written submissions in support of its position that the interlocutory application should be refused both because the GRF has failed to establish a prima facie case or a serious question to be tried, and that there are no compelling circumstances that would support an interlocutory injunction to restrain the enforcement of a statute. As the Commonwealth has pointed out, in order to establish a prima facie case, the GRF must show that it has a sufficient likelihood of success to justify the preservation of the status quo pending the trial, and the required strength of that likelihood of success depends, at least in part, upon the nature of the rights that the GRF seeks to assert and the practical consequences likely to flow from the orders sought: ABC v O’Neill at 65.

Also in ABC v O’Neill at 66, there is a reference to the decision of Acting Chief Justice Mason in Castlemaine Tooheys Limited v South Australia in respect of interlocutory injunctions pending the determination of the validity of legislation. In Castlemaine Tooheys at 155 to 156, Acting Chief Justice Mason said, and I quote:

The decisions in this Court to which I have already referred demonstrate that there are a variety of situations in which the Court, on a proper balance of convenience, will restrain enforcement of a statute in aid of a plaintiff’s constitutional right. In arriving at a balance of convenience the Court will take into account the seriousness of the conduct enjoined by the statute and the damage to the public interest that may be caused by restraining its enforcement. And in some cases the balance of convenience may be affected by the Court’s perception or evaluation of the strength of the plaintiff’s case for invalidity. But, subject to these qualifications there can be no reason to doubt the correctness of the general thrust of the comments in the passage which I have quoted. In the absence of compelling grounds, it is the duty of the Court to respect, indeed, to defer to, the enactment of the legislature until that enactment is adjudged ultra vires.

In this case, the enactment of the legislature provides for immediate termination of the lease. The balance of convenience is affected by the perceived strength of the prima facie case. I do not perceive the GRF’s case for invalidity of the Act to be a strong one. Indeed, it is difficult to identify a serious question to be tried in circumstances where there are a number of constitutional heads of power which, prima facie at least, would appear to provide ample support for the terms of the Act. These include section 122 of the Constitution, section 51(xxix) of the Constitution with respect to “external affairs” and of course section 51(xxxi) itself.

As the Commonwealth has also submitted, insofar as the GRF relies on a proposed absence of just terms, it is difficult to understand that proposition merely from the conditional character of section 6(1) of the Act. Section 6(1), in terms, provides that if there has been such an acquisition of property, then reasonable compensation will be paid. In these circumstances, my preliminary evaluation is that the case for relief is weak, indeed, as I have said, difficult to understand on the basis of the submissions that have been put to date.

Be that as it may, there is also the problem that the GRF does not confront the reality of the fundamental change in circumstances between the position in 2022 when the Commonwealth permitted the GRF to remain in possession of the land, and the position as at today’s date. The change in circumstances is the legislative action that the Commonwealth has taken through the provisions of the Home Affairs Act to terminate the lease in the clearest possible terms.

In those circumstances, I accept the submission for the Commonwealth that, based on the reasoning of Acting Chief Justice Mason as summarised in Castlemaine Tooheys, there would need to be compelling grounds in order to grant the GRF the relief it seeks in its application.

In respect of the other issues which the GRF has raised, I also accept the submission for the Commonwealth that the evidence provided in relation to what is described as “the integrity and security” of the buildings is too vague and nebulous to provide any particular evidence of irreparable damage to the GRF. I accept also that insofar as this might be recourse to some kind of submission about the GRF’s own national security interests, that is not a matter that can be given weight by the Court as between what might be the national security interests of the GRF as opposed to the national security interests of the Commonwealth.

In any event, it seems to me that this is by the by in that the GRF has not referred to anything other than its desire to maintain the “integrity and security” of its buildings. There is no meaningful evidence to explain why the GRF takes the view that it would need to destroy the buildings and, in any event, as the Commonwealth has submitted, if that ultimately turns out to be the case then that is a decision wholly within the control of the GRF. In any event, the evidence is clear that this assumes that the GRF would be successful in the overall proceedings and therefore is a contingency only.

Overall, however, effect must be given to the clear provisions of the Home Affairs Act in which Parliament has made the decision to terminate the lease and all interests without any form of temporal delay or other reservation of rights. In these circumstances, it is the terms of the Home Affairs Act itself which constitutes the radical change in circumstances and indicates that there is no proper foundation for the granting of the interlocutory injunction as sought by the GRF.

For these reasons, I accept the submissions of the Commonwealth that the interests which the GRF has identified in its affidavits and otherwise through the submissions put on its behalf are plainly outweighed by the interest in not preventing the operation of the Act, the sole function of which is to terminate Russia’s interests in the land, according to the explanatory memorandum and second reading speech, for national security reasons. It is immaterial that those reasons are not referred to in terms on the face of the Act.

As the Commonwealth has submitted, it is not to the point that the Commonwealth may not have identified an immediate purpose for which it requires the land, given that the Commonwealth has a clear sovereign interest in being able to determine that the particular land will not be occupied by the GRF, and has done so in the Home Affairs Act. In these circumstances, the appropriate order which should be made is that:

1. The application filed 23 June 2023 be dismissed.

Now, that leaves, Mr Begbie, the issue, which I have not addressed in my reasons, of what happens now. I think, in circumstances where I have no application, no evidentiary foundation, and Mr Hyde has no instructions one way or another, there is nothing I can meaningfully do about that. You can take it that you have liberty to restore. Otherwise, I also have not dealt with the question of costs. I know you have sought costs; I am wondering if simply costs should be reserved.

MR BEGBIE: We would say in the cause, your Honour, but that is – can your Honour hear ‑ ‑ ‑

HER HONOUR: Costs be costs in the cause?

MR BEGBIE: Yes, your Honour.

HER HONOUR: Yes. Mr Hyde, I am content with that order.

MR HYDE: I have no submissions I wish to make against that proposition.

HER HONOUR: Okay. The costs – and so, order 2 will be:

2. The costs of and associated with the application filed 23 June 2023 be costs in the cause.

Now, otherwise – sorry, Mr Begbie.

MR BEGBIE: And as – I am sorry, I am cutting your Honour off. I was just going to respond to your Honour’s point about our point. We understand the situation, your Honour. We think Russia has a decision to make now and it will – we will engage with it very promptly about that, and if there is anything that requires us to come back to the Court, we will do so. Hopefully it will not happen, but it may be a fairly short time before we are back, if we do not get the agreement we need on that, your Honour.

HER HONOUR: Okay, so be it. Now, just otherwise – I mean, administratively, I can just refer the matter to the Registrar, I do not need to make a formal order, I think, about that. The matter can be administratively referred to the Registrar to see where it goes from here as a substantive matter.

MR BEGBIE: Yes, your Honour.

HER HONOUR: All right. Mr Hyde, anything else?

MR HYDE: Nothing, your Honour.

HER HONOUR: All right. Thank you. The Court will adjourn.

AT 11.03 AM THE MATTER WAS ADJOURNED