Commonwealth of Australia v Yunupingu (on behalf of the Gumatj Clan OR Estate Group) & Ors [2024] HCATrans 48 (7 August 2024)

Last Updated: 9 August 2024

[2024] HCATrans 048

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Darwin No D5 of 2023

B e t w e e n -

COMMONWEALTH OF AUSTRALIA

Appellant

and

YUNUPINGU (ON BEHALF OF THE GUMATJ CLAN OR ESTATE GROUP) AND OTHERS NAMED IN THE SCHEDULE

Respondents

GAGELER CJ
GORDON J
EDELMAN J
STEWARD J
GLEESON J
JAGOT J
BEECH‑JONES J

TRANSCRIPT OF PROCEEDINGS

AT DARWIN ON WEDNESDAY, 7 AUGUST 2024, AT 10.02 AM

Copyright in the High Court of Australia
GAGELER CJ: The appearances will be taken as they appear in the Court list.

MR S.P. DONAGHUE, KC, Solicitor‑General of the Commonwealth of Australia, appears with MR S.B. LLOYD, SC, MS N. KIDSON, KC and MS C.J. KLEASE for the appellant. (instructed by Australian Government Solicitor)

MR A.R. MOSES, SC appears with MR K.S. ANDERSON and MS J.D. ALDERSON for the first respondent. (instructed by Bowden McCormack)

MR N. CHRISTRUP, SC, Solicitor‑General for the Northern Territory, appears with MR S.J. WRIGHT, SC and MR L.S. PEATTIE for the second respondent. (instructed by Solicitor for the Northern Territory)

MR C.L. LENEHAN, SC appears with MR T.M. WOOD for the 25th to 28th respondents. (instructed by Mills Oakley)

MR S.A. GLACKEN, KC appears with MR G.A. HILL, SC and MS J.R. WANG for the 29th and 32nd respondents. (instructed by Northern Land Council)

MS R.J. WEBB, KC appears with MS C.I. TAGGART for the 34th respondent. (instructed by Crown Law (Qld))

MR P.J.F. GARRISSON, SC, Solicitor‑General for the Australian Capital Territory, appears with MS H. YOUNAN, SC and MS L.A. COLEMAN on behalf of the Attorney‑General for the Australian Capital Territory, intervening. (instructed by Government Solicitor for the Australian Capital Territory)

MR C.S. BYDDER, SC, Solicitor‑General for the State of Western Australia, appears with MS A.B. SANCHEZ‑LAWSON on behalf of the Attorney‑General for the State of Western Australia, intervening. (instructed by State Solicitor’s Office (WA))

There are submitting appearances for the fourth to 10th, 12th, 13th, 16th, 19th, 21st to 23rd, 31st and 33rd respondents.

There are no appearances for the third, 14th, 15th, 18th, 20th and 30th respondents.

GAGELER CJ: The Court has also been provided with a proposed schedule, which sets out the agreed times for the presentation of oral argument, and we will proceed on that basis.

MR DONAGHUE: Thank you, your Honour.

GAGELER CJ: Mr Solicitor for the Commonwealth.

MR DONAGHUE: Your Honours, when this Court handed down its momentous judgment in Mabo (No 2), it overturned the fiction that before British settlement, the lands and waters of Australia belonged to no one, and held that the common law of Australia was capable of recognising rights derived from the traditional laws and customs of the indigenous people who had resided in this country for at least 60,000 years. It was not lost on the Court in Mabo (No 2) that the taking of that momentous step might have implications for the validity of grants of interest in land made following British settlement and might have implications for compensation to indigenous people whose native title had been impaired or extinguished by those grants. Indeed, the question of how to deal with those two issues divided the Court in Mabo (No 2).

The way that those issues were decided by the majority in what is, in our submission, the greatest judgment of one of the great Judges of this Court, Sir Gerard Brennan, was that native title did not invalidate inconsistent grants if they occurred prior to the commencement of the Racial Discrimination Act 1975, and that no compensation was payable as a result of such grants, even if they extinguished native title. The reasoning that led Sir Gerard to that result is, in our submission, important to the disposition of ground 2 of the appeal, and for that reason I propose to spend quite some time addressing it this morning.

The effect of Mabo (No 2) was that none of the Australian States or the colonies that preceded them were exposed to liability to pay compensation for granting interests in land or for appropriating land for themselves, provided that occurred prior to 1975. On the commencement of the Australian Constitution in 1901, that was the position throughout the entire continent of Australia, which, of course, at that time, did not include any Territories, and it follows that that was the position in respect of the geographical area now known as the Northern Territory.

That remained the case for the 10 years following Federation, so any native title that existed with respect to lands and waters in the area now known as the Northern Territory was susceptible to extinguishment by the exercise of the Crown sovereign power to grant interests in rights or to appropriate land to itself. The Governor of South Australia, in administering land in the Territory under the relevant Act, which was the Northern Territory Crown Lands Act 1890, could validly grant interests in land and dedicate or reserve unalienated land to itself, irrespective of native title, just like could occur in all of the other States.

The issue in this case is whether the fact of the surrender of the Northern Territory to the Commonwealth on 1 January 1911 fundamentally changed the position with respect to native title rights and interests to land and waters that happened to be situated in the area that had been surrendered to the Commonwealth, or perhaps more specifically, in such parts of the lands and waters that happened to be on one side of the newly‑demarcated border between the Territory on the one hand and the surrounding States of South Australia, Queensland and Western Australia. The claimants’ case, as upheld by the Full Court, is that the effect of the surrender of the Northern Territory to the Commonwealth was to make native title rights in the Northern Territory immensely more economically valuable than native title rights anywhere else in Australia.

Any native title that remained on the South Australian side of the border remained susceptible to extinguishment without compensation, but any native title on the Northern Territory side of the border became, they say, protected by section 51(xxxi) of the Constitution such that thereafter, any exercise of the sovereign power to grant interests in land or to alienate land to itself – including, for example, by building roads or other infrastructure, or by granting lands as the population of the Territory grew – would be wholly invalid if it would have impaired or extinguished native title, unless just terms was paid. So, it is not just that there was an entitlement to compensation, the grants were invalid.

Of course, in practice, it was most unlikely that compensation would have been paid for two obvious reasons. First, the existence of native title was not known until 1992, decades after the last of the pleaded Acts in issue in this proceeding; and second, section 51(xxxi) was thought to be irrelevant to the Territories, that having been the position emphatically infirmed by the unanimous Court in 1969 in Teori Tau, and not doubted at all until five years after Mabo (No 2) was decided in 1997 in Newcrest.

So, the effect of the claimant’s argument is that for the period from 1911 through to the grant of self‑government to the Territory in 1978, a vast but indeterminate number of grants of interest in land in the Territory were invalid. Now, I mention this with hesitation because I hope not to be diverted, but we have filed – in our submission, the Court does not need evidence to draw the basic inferences that underpin what I just said: specifically, that large parts of the Northern Territory are likely to be areas where native title exists, or did exist, as at 1911; two, that given the substantial growth in the population of the Territory over that period of time, many grants of interest in land or exercises of power by the Crown to appropriate land or minerals to itself are likely to have occurred, and that that would be inconsistent with native title.

If, however, your Honours would be assisted by evidence to underpin those propositions, in our submission, really by way of constitutional fact, we have provided and filed an affidavit of Mr Gavin Loughton, affirmed on 1 July 2024, which exhibits three publicly available documents. Two of them are maps created by relevant government departments – one around 1885, the other around 1916 – and those maps provide a pictorial representation of the type and geographical distribution of tenures across the Northern Territory as at those two dates. The third document is a publication by the Australian Bureau of Statistics, which gives your Honours an indication of the growth of the Territory, or more specifically, the non‑Indigenous population growth during the period from 1911 to the present, including up to 1978.

Paragraph 16 of Mr Loughton’s affidavit identifies the inferences that we submit can be drawn from those documents, but the basic point, in our submission, is what can be seen – your Honours do not need to turn to it – from the second of those maps, the 1916 map, where ‑ ‑ ‑

EDELMAN J: It is a little bit more than constitutional fact, is it not? There are inferences that are sought to be drawn which may be contested.

MR DONAGHUE: They may be contested, your Honour. As I understand, the first respondent has made its position clear that it does not accept the probative value of what is in the affidavit, but it does not object to us putting it before the Court to gain such assistance as your Honours can. Our point, essentially, is that the second map shows that, with the exception of the area around Darwin where you can see in green on that map that there were some grants of freehold title, nowhere else in the Territory do you see grants of freehold. There were pastoral leases in parts of the Territory, and the rest of the Territory was available for lease for various different sums of money.

We say that is helpful because that provides a solid basis to infer that very little extinguishment of native title is likely to have occurred as at the date when the Commonwealth accepted the surrender of the Northern Territory, so that, in our submission, it provides an evidential foundation for the proposition that everything that happened after the Commonwealth accepted the Territory is at risk of invalidity because it is likely that the balance of the Territory was land that was subject to native title. Now, I cannot prove that ‑ ‑ ‑

GORDON J: It is common ground, is it, that this was not before the court below?

MR DONAGHUE: It is.

GORDON J: Why not?

MR DONAGHUE: Well, in part, your Honour, because the court below was constrained as a matter of authority on some of the issues – and the debate was not on the issue I can see that this is most relevant to, but it was not before the court below, no. But, in my submission, we provided it to provide assistance to the Court, largely as a matter of constitutional fact and, as I say, in my submission, your Honours could draw the relevant inferences without it. Indeed, a similar submission to the submission I am now making was made in Newcrest without supporting evidence. But I do read the affidavit and invite your Honours to gain such assistance from it as you are minded to.

GAGELER CJ: Mr Donaghue, we will reserve our position on this after and decide on the status of the affidavit after hearing from the respondents.

MR DONAGHUE: If the Court pleases. On the case advanced by the claimants and accepted by the Full Court, on the commencement of the Native Title Act in 1994, the effect of that Act would have been to validate all of the grants that I have just indicated or otherwise exposed to be invalid at the price of the Commonwealth becoming liable to pay compensation in respect of all of those invalid grants or invalid reservations to itself over the period stretching across the whole timeframe, from 1911 to 1978, with interest.

So, we are exposed, it is suggested, to compensation with respect to grants throughout the whole Territory and possibly a hundred years or more of interest. It is on that basis that our submission is that your Honours can comfortably proceed upon the basis that the effect of the analysis is that native title holders, or traditional owners who have native title extinguished in the Territory, have an interest that is vastly more economically valuable than any other native title holder in Australia. Because, as I have said, for everybody else, prior to 1975, it is clear that there is no compensation obligation. Our submission ‑ ‑ ‑

EDELMAN J: So, when you say “for everybody else”, you mean for all other Aboriginal people?

MR DONAGHUE: I mean for native title holders in any of the States.

EDELMAN J: Yes. But not necessarily for non‑native title holders who had property rights in what became the Northern Territory.

MR DONAGHUE: Your Honour, for reasons I will develop, our argument does not touch them. Our argument is quite specific. It is that native title is exposed only to what I am going to call the relevant sovereign power – the power to grant interest in land or to appropriate land to itself. Native title is otherwise, on our case, protected by 51(xxxi) in the same way as any other property rights within the Territory. So, it is only because of that specific characteristic of native title that we submit that there is a relevant difference.

GORDON J: Sorry, you just fell away then. I did not hear what you said.

MR DONAGHUE: I am sorry, your Honour. The point that I was – I was foreshadowing where I am going to come. The basic proposition is that native title holders in the Territory are, on the case against us, entitled to vast compensations by reason of 51(xxxi), including interest, that is not available to native title holders in any other part of Australia.

GAGELER CJ: But you could say the same about property owners. You do not need to confine the proposition to native title holders so far as section 51(xxxi) is concerned. If the position adopted by the Full Court of the Federal Court is correct, then any property owner in a Territory is in a vastly superior position to a property owner in a State.

MR DONAGHUE: Your Honour, that is true insofar as – if your Honour is putting to me that the States have a power to compulsorily acquire property from anyone without the payment of compensation, I accept that is true. But the argument that I will come to develop shortly is that the differentiation to which I am drawing attention is a differentiation as to the characteristic of the rights in question. Native title, having been recognised by the common law – for reasons I will develop in a moment – only on the basis that it was inherently susceptible or defeasible to the exercise of what I am calling the relevant sovereign power – section 51(xxxi) is said to have changed the character of the property in the Territory by stopping it being defeasible to the exercise of a power which is a characteristic of native title everywhere else – that is the shorter point.

GLEESON J: It is not really – why is it a change to a characteristic of the native title rights? It is a change to the scope of the power.

MR DONAGHUE: Your Honour, without seeking to avoid that question at all, can I develop our submission to explain the answer to that because if I try to do it shortly, I will lose all structure. I am going to develop that at some length.

Our submission, your Honours, is that the Constitution does not mandate what we suggest is an arbitrary and invidious distinction – one Justice McHugh thought might be socially divisive – between the rights of native title holders in the Territory and those elsewhere in Australia, for two reasons which are entirely independent of one another and which are the subjects of grounds 1 and 2.

The first reason, which is ground 2, is that Justice Brennan’s reasoning in Mabo, which is reflected in numerous subsequent decisions of the Court, establishes that the common law was able to recognise native title only on the basis that it is susceptible to a particular kind of sovereign power, being the power to grant interests in land or to appropriate unalienated land to itself. For that reason, native title as a legal right recognised by the common law by the Australian legal system is, and always has been, inherently defeasible to the exercise of that power. That susceptibility, being what the Court has called a characteristic of the recognition of native title as property by the Australian legal system, the exercise of the power cannot involve an acquisition of property; it is the occurrence of a contingency to which the property has always been subject.

EDELMAN J: Do you say that in relation to native title over land or do you say that in relation to all native title rights over waters, fish, chattels?

MR DONAGHUE: So, where what I am calling the relevant sovereign power does not extend, the argument would not hold, and I think – and I expect this is underpinning your Honour’s question – in relation to offshore native title, then the Court has said, well, there is no radical title there and there is no inherent sovereign power to grant interests in that area, so the argument would not extend.

EDELMAN J: It was a narrower question. So, native title, for example, that arises from the taking of fish, for example, the possessory right over the fish and the content of it looks almost identical to the possessory right recognised by the common law, but your submission is that the native title right to possession of fish, for example, is inherently defeasible in a way that common law rights to possession are not.

MR DONAGHUE: I think, your Honour – I will consult with my colleagues and come back to you if this answer is wrong, but, your Honour, in my submission, the answer is that Justice Brennan’s limit on the recognition was not with respect to any aspect of property rights; it was that native title could not be recognised if it was inconsistent with the two powers I have identified: to grant interests in land and to appropriate land to itself.

EDELMAN J: So, it is just native title to land you are concerned with?

MR DONAGHUE: Yes. I will come back to you if I need to qualify that answer, your Honour. So, that is ground 2.

Ground 1, which Mr Lloyd will address, is entirely independent and is the argument that a law of Commonwealth Parliament that has no constitutional support other than section 122 of the Constitution is not subject to constraint in 51(xxxi). That, of course, was the legal position emphatically supported by the unanimous Court in Teori Tau. The correctness of Teori Tau then divided the Court 27 years later in Newcrest where Teori Tau was not friendless. Chief Justice Brennan and Justices Dawson and McHugh all strongly reaffirmed the correctness of Teori Tau, but the issue, of course, again divided the Court 12 years later in Wurridjal.

The precedential status of those decisions – particularly Teori Tau and Wurridjal – loomed large, for obvious reasons, in the Full Federal Court, and they are again in play in this Court. Although, our ultimate submission is, given the uncertainty and the conflict in the authorities, it may well be appropriate for this Court simply to decide the matter as a question of principle, rather than to fight about ratios.

GAGELER CJ: Can I just ask about the relationship between these grounds? You are taking us through them – ground 2, ground 1, ground 3.

MR DONAGHUE: Yes.

GAGELER CJ: It is your submission that each of those grounds necessarily has to be addressed and determined in this appeal?

MR DONAGHUE: So, if the Commonwealth wins on either ground 1 or ground 2, then it would not be necessary to decide the other ground, because the appeal would be allowed on that basis, because the compensable acts could not give rise to an obligation for compensation under 51(xxxi) for either of those reasons. Ground 3 arises even if we lose on grounds 1 and 2. And I may leave it to Ms Kidson to explain this on ground 3, but there is a possible contingency where ground 3 might arise even if ground 1 or 2 have been decided in the Commonwealth’s favour. But, largely, grounds 1 and 2 would dispose of the appeal.

GORDON J: Can you just explain to me what that is?

MR DONAGHUE: What the contingency is? The reason I said I would leave to Ms Kidson is I cannot.

GORDON J: Okay.

EDELMAN J: Putting the contingency aside, is ground 3, in one sense – without disturbing the way you present the argument – ancillary to grounds 1 and 2, in the sense that ground 3 is what establishes the existence of a native title to which ground 1 and 2 are concerned?

MR DONAGHUE: There is substantially so because the claim is mostly about mining rights. So, if the native title does not extend to the mining rights, then that removes a lot, but not everything.

GORDON J: But that is not before the Court, that issue. In other words, there has been no determination of whether or not there are native title rights and interests and whether or not they include the minerals in the land.

MR DONAGHUE: But ground 3, your Honour, is that the effect of the reservation in the 1903 pastoral lease granted by South Australia before surrender ‑ ‑ ‑

GORDON J: I accept that – and that is the reason why the question from Justice Edelman may be important. If you start by looking to see what the inconsistency is, even on your test, do you not have to address ground 3?

MR DONAGHUE: If we are right about ground 3, then even if there was native title in the claim area, and even it would otherwise have included the right to take bauxite, that right will have been extinguished. If that is so, then a large part of the compensation claim will have been removed. But there are, as I understand it – because of the inclusion in the compensable acts of five special mineral leases – issues that extend beyond what would be covered by the reservation in the 1903 lease. That is why grounds 1 and 2 are not rendered redundant if we win ground 3.

GORDON J: I thought that the argument was that we determined ground 3 and that, therefore, had a flow‑on effect for other ‑ ‑ ‑

MR DONAGHUE: If ground 3 – sorry, your Honour.

GORDON J: And, therefore, that we did not need to look at those other grants because they were determined by the answer to ground 3.

MR DONAGHUE: By ground 3, indeed. So, Ms Kidson confirms that the way they fit together is that the vesting of minerals by section 107 of the 1939 Ordinance is affected by ground 3 but special mineral leases are not. So, they remain in play even if we win ground 3, and that is why your Honours would need to decide at least one of grounds 1 and 2. I hope that makes sense in terms of how things fit together.

GAGELER CJ: Yes.

BEECH-JONES J: Mr Donaghue, you say that in this native title claim there are other interests that had nothing to do with minerals. Is that right or not?

MR DONAGHUE: I do not say that, but I believe that to be the case.

BEECH-JONES J: Right.

MR DONAGHUE: But I also, as I understand it – the overwhelming part of the compensation claim, which your Honours now have part of before you, is about minerals.

The final point I would make by way of introductory submissions is to emphasise that since 1 January 1994, the inherent defeasibility of native title to the exercise of the relevant sovereign power upon which our whole argument on ground 2 depends, has been removed by the Native Title Act. So, as a result of that, since 1994 – and into the future – native title can only be impaired or extinguished in the limited circumstances permitted by the Native Title Act, and nothing that I am going to put to your Honours in this case changes that. It does not change things for the future. The present litigation is looking back in time to quite a long time ago before the Native Title Act and before the Racial Discrimination Act and calls for the Court to apply the principles articulated in Mabo (No 2) unaffected by those two statutes.

So, while the case is of very great importance, it is of very great importance because of the consequences of those old past Acts, not in terms of the way that governments going forward ‑ ‑ ‑

GORDON J: I assume you will come to it, but there is at least some argument that although the Native Title Act in 1994 was forward‑looking and not backward‑looking, at least in one aspect, that the common law at least looks to see and is informed by the statutory regimes that have been put in place.

MR DONAGHUE: Well, in my submission, your Honour, it cannot be the case that statutory regimes put in place in 1994 change the legality of what happened when the compensable acts occurred decades beforehand. In my submission, your Honours should rule upon the validity of those Acts on the common law as articulated in Mabo (No 2), and that is what I am about to invite your Honours to do.

So, my part of the oral submission, ground 2, will involve me seeking to establish three propositions, each of which have two paragraphs of our oral outline. The first proposition is that the basis upon which the common law permitted the recognition of native title was the basis explained by Justice Brennan in Mabo (No 2), and it is that native title is susceptible to extinguishment or impairment by exercise of the sovereign power to grant interests in land, or to appropriate unalienated land to itself. And because that is a mouthful, hereafter I propose just to refer to that as the relevant sovereign power, but that is what I mean.

GAGELER CJ: Which can be either legislative or as permitted by statute Executive.

MR DONAGHUE: Yes, although Justice Brennan says in Australia it has long been exclusively statutory.

GAGELER CJ: Yes.

MR DONAGHUE: But it can be both. That is outline paragraphs 2 and 3. The second proposition is that in Newcrest, Justice Gummow with the concurrence with the other three Justices who joined in the order of the Court, correctly held that the inherent susceptibility of native title to the exercise of the relevant sovereign power meant that the exercise of that power would not constitute an acquisition of property within 51(xxxi). Contrary to some of the submissions put against us, that does not deny that native title is property, and it does not deny that the exercise of other powers to extinguish or impair native title might constitute an acquisition of property. The submission is quite consistent with 51(xxxi) being able to protect native title from other exercises of Commonwealth power. It is only inherently susceptible to the relevant sovereign power. That is paragraphs 4 and 5.

The third proposition is that the notion that property may be inherently susceptible or inherently defeasible to the occurrence of a particular contingency is not confined to property that is created by statute and that, that being so, there is no basis to adopt a special rule in the context of 51(xxxi) for statutory property as opposed to other property. What matters is that the property has the characteristic of being inherently defeasible to a particular contingency that has occurred, and that might be a characteristic of common law property, just as it might be a characteristic of statutory property. That is outline 6 and 7.

GORDON J: Is that any more to say that you seek to extend the rule in relation to statutory rights to these native title rights?

MR DONAGHUE: Your Honour, I do not accept that I need to extend the rule. In my submission, Newcrest already ‑ ‑ ‑

GORDON J: No, the effect of it. I am asking what the effect of your submission is.

MR DONAGHUE: The effect of my submission is that the same principle that the Court has applied on numerous occasions in relation to statutory rights, that those cases are just an instance of a more general proposition that property that is inherently defeasible to a contingency is not acquired on the occurrence of the contingency. So, I accept that the cases are mostly statutory cases – on one view of it, they are all statutory cases – but they are not cases where the statutory character of the property is the critical consideration. What matters is that it is inherently defeasible to ‑ ‑ ‑

EDELMAN J: There are many, many property rights that are inherently defeasible, subject to a condition.

MR DONAGHUE: Yes.

EDELMAN J: So, the right to possession is inherently defeasible, subject to somebody with a greater right to possession taking possession; your right is defeased. But no one would ever say that that is not an acquisition of property – that that prevents an acquisition of property, that because your possessory title is not the greatest title recognised by the common law that the Commonwealth does not have to pay compensation if it took your title.

MR DONAGHUE: Your Honour, I do not need to and I am not advancing a proposition of that width, but I will come to a number of examples of recognition of non‑statutory property. And so, there are old cases, for example, where a grant is made subject to a reservation – so, a grant of a 1,000 acres, subject to a reservation that 10 acres made be resumed for a public purpose. The person who receives that grant undoubtedly has title to the property for the period of time – in the case I am going to go to, 60 years – 60 years later, the reservation is exercised and 10 acres is reclaimed for a public purpose, to become a public park.

That, in our submission, is not an acquisition of the 10 acres, because the grant was always, from the time of its inception, subject to the exercise of that power, and so it was inherently defeasible to the exercise of that power. That is the analogy that I am drawing, but I will come to it.

Can I ask your Honours, starting with my proposition 1, to take up Mabo v Queensland [No 2] [1992] HCA 23; (1992) 175 CLR 1, which is in volume 9, tab 87. When your Honours have it, could you start at page 15 in the short but significant reasons of Chief Justice Mason and Justice McHugh. Your Honours can see in the middle of the page, the first line of their Honours’ judgment:

We agree with the reasons for judgment of Brennan J.

What their Honours then do, really, in the rest of the three-paragraph judgment, is to explain the result in the case:

In the result, six members of the Court (Dawson J. dissenting) are in agreement that the common law of this country recognizes –

So, their Honours there are using the notion of recognition that you will see flowing through Justice Brennan’s judgment:

recognizes a form of native title which, in the cases where it has not been extinguished, reflects the entitlement of the indigenous inhabitants, in accordance with their laws or customs, to their traditional lands –

Although, as the next line then goes on to recognise, that entitlement might be:

subject to the effects of some particular Crown leases –

So, one sees there the possibility, already reflected, that native title might be giving way to grants that have occurred. Then, a few lines further down, a line begins:

The main difference between those members of the Court who constitute the majority is that, subject to the operation of the Racial Discrimination Act 1975 (Cth), neither of us nor Brennan J. agrees with the conclusion to be drawn from the judgments of Deane, Toohey and Gaudron JJ. that, at least in the absence of clear and unambiguous statutory provision to the contrary –

So, that there you can see is principle of legality language, which the minority Justices used:

neither of us nor Brennan J. agrees with the conclusion to be drawn . . . that . . . extinguishment of native title by the Crown by inconsistent grant is wrongful and gives rise to claim for compensatory damages. We note that the judgment of Dawson J. supports the conclusion of Brennan J. and ourselves on that aspect –

And then their Honours say, in the last line and over the page:

We are authorized to say that the other members of the Court agree with what is said in the preceding paragraph about the outcome of the case.

So, the Court splits four to three on the question of whether the extinguishment of native title by inconsistent grant is wrongful and gives rise to compensation. So, when your Honours see our friends relying upon the reasons of Justices Deane and Gaudron with respect to acquisition and compensation questions, they are relying on dissenting reasoning.

EDELMAN J: There is nothing in the Chief Justice and Justice McHugh’s judgment that suggests that they are talking about anything other than compensation for a wrong, rather than compensation for an acquisition under section 51(xxxi).

MR DONAGHUE: I accept that there is no reason to read their Honours as saying anything about 51(xxxi) – and I will come to that – but what they are expressly saying is that they do not agree that the extinguishment by inconsistent grant is wrongful. Why is it not wrongful? I will go on to develop this – because native title is susceptible to that exercise of power.

Now, in our submission – so, having agreed with Justice Brennan, his Honour’s is the leading judgment, clearly, and it is the judgment that we submit has found favour in the subsequent jurisprudence of this Court. The submission that I am about to develop is, we contend, entirely faithful, completely faithful, to the reasoning of Justice Brennan in this foundational judgment. There is no respect, in my submission, in which we can fairly be accused of departing or undercutting in any way the foundational recognition of native title in the common law.

Can I ask your Honours, in Justice Brennan’s reasons, to start at page 29. I will not read it to you, but on the top of page 29, the first half of page 29, his Honour is explaining why the proposition that when the Crown assumed sovereignty over Australia, it, by reason of acquiring sovereignty, became the universal and absolute beneficial owner of the land.

His Honour is explaining why it is necessary, as you see on the top line of 29, why that rule “invites critical examination”. It invites critical examination because, as his Honour concludes about a third of the way down the page, the:

law is unjust, and its claim to be part of the common law to be applied in contemporary Australia must be questioned.

Then, halfway down 29, in the next paragraph:

In discharging its duty to declare the common law of Australia, this Court is not free to adopt rules that accord with contemporary notions of justice and human rights if their adoption would fracture the skeleton of principle which gives the body of our law its shape and internal consistency.

Now, that is a framework conception that one sees repeatedly through his Honour’s reasons. He says that we can develop the common law, but subject to the constraint that we cannot if doing so would fracture the skeleton of principle of our law. That then frames what you see at the bottom of 29, the last line:

this Court is free to depart from English precedent which was earlier followed as stating the common law of this country –

but:

it cannot do so where the departure would fracture what I have called the skeleton of principle.

Then, at about point 4 on the page:

If a postulated rule of the common law expressed in earlier cases seriously offends those contemporary values, the question arises whether the rule should be maintained and applied. Whenever such a question arises, it is necessary to assess whether the particular rule is an essential doctrine of our legal system and whether, if the rule were to be overturned, the disturbance to be apprehended would be disproportionate to the benefit flowing from the overturning.

That, then, is what his Honour does. He identifies in the next paragraph a few uncontentious links in the argument, but then at the end of page 30, says that the contrary rule, the absolute beneficial ownership rule, rests on a number of bases. His Honour identifies four:

In the first place, it is said that the Crown is absolute owner because “there is no other proprietor”. This basis denies that the indigenous inhabitants possessed a proprietary interest.

That, he identifies as the “negative basis”. Then, his Honour says, but there are:

three positive bases to show why it is necessary –

the rule is necessary, and the second of those is the one most relevant to my argument:

One basis is that, when English law was brought to Australia with and by British colonists, the common law to be applied in the colonies included the feudal doctrine of tenure.

What one then sees, structurally, in his Honour’s reasons, is he works through those four bases that are identified there: the no other owner basis, the tenure basis, and then two others that do not matter for current purposes. You see in the very important and famous reasoning in the case from page 31 through to 42, an analysis of terra nullius, and ultimately, at the end of the discussion, a rejection of terra nullius at page 42 ‑ ‑ ‑

GORDON J: One important aspect of the question posed is at the end, just before the heading “The acquisition of sovereignty”, and that is the question of – acquired the lands, but did they acquire beneficial ownership of the land? That became the issue which was of some importance to the following analysis.

MR DONAGHUE: Indeed, your Honour, this is all about explaining – all four of these bases, in my submission, are about explaining his conclusion that the Crown did not acquire absolute beneficial ownership. So, there were four bases upon which it was said the rule about beneficial ownership was defensible, and his Honour goes through, one by one, and explains why they do not require that conclusion. Ten pages of the reasoning from the middle of 31 through to page 42 is about rejecting the terra nullius basis, and then you see on page 42, at about point 4, the conclusion just under the quote:

Whatever the justification advanced in earlier days for refusing to recognize the rights and interests in land of the indigenous inhabitants of settled colonies, an unjust and discriminatory doctrine of that kind can no longer be accepted.

So, terra nullius is rejected. Then what his Honour does, over the page on 43, again under the quote – this is the last paragraph of the reasoning under the terra nullius part of the judgment – returns to the skeletal principles:

recognition by our common law of the rights and interests in land of the indigenous inhabitants of a settled colony would be precluded if the recognition were to fracture a skeletal principle of our legal system. The proposition that the Crown became the beneficial owner . . . has been supported by more than a disregard of indigenous rights and interests.

So, it has been supported by more than terra nullius:

It is necessary to consider these other reasons for past disregard of indigenous rights and interests and then to return to a consideration –

And we have emphasised these words:

of the question whether and in what way our contemporary common law recognizes such rights and interests –

So, his Honour did not see recognition necessarily as a binary – yes or no. One had to consider whether the common law recognises and how the common law recognises. So, what then follows is his Honour’s consideration of the other reasons, that is, bases two, three, and four that I identified earlier.

BEECH-JONES J: Mr Solicitor, just so I know where you are going, what is the skeletal principle of our legal system you say can never be fractured?

MR DONAGHUE: I am about to show it to your Honour. It is the fact that grants can be – it is the relevant sovereign power; the capacity of the Crown to grant interests in land and appropriate and alienate land to itself, but your Honour will see it in just one moment. So, if your Honours could go over the page to page 45.

GORDON J: Sorry, 45?

MR DONAGHUE: Page 45. We are here dealing with the second basis, the doctrine of tenure basis. At 45, at about point 7 – maybe seven lines up from the second‑last paragraph on the page, his Honour says:

Though the rejection of the notion of terra nullius clears away the fictional impediment to the recognition of indigenous rights and interests in colonial land, it would be impossible for the common law to recognize such rights and interests if the basic doctrines of the common law are inconsistent with their recognition.

And then answering your Honour Justice Beech-Jones’ question:

A basic doctrine of the land law is the doctrine of tenure –

Reading the third line up from the bottom:

and it is a doctrine which could not be overturned without fracturing the skeleton which gives our land law its shape and consistency.

So, his Honour is expressly situating the doctrine of tenure within the framework of the fracturing of skeletal principles, the constraint upon the development of the common law. And then, skipping forward to page 47, his Honour returns to this theme near the bottom of the page. He says, about five or six lines up from the bottom:

Crown grants should be seen as the foundation of the doctrine of tenure which is an essential principle of our land law. It is far too late in the day to contemplate an allodial or other system of land ownership. Land in Australia which has been granted by the Crown is held on a tenure of some kind and the titles acquired under the accepted land law cannot be disturbed.

GLEESON J: So, that is a limitation on sovereign power?

MR DONAGHUE: It is a limitation on the capacity to recognise native title, because if the recognition of native title would have prevented – would have disturbed the grants of interest in land in exercise of the sovereign power, that would have fractured an essential postulate of the system of land law.

GLEESON J: I think I was directing you to a different point: the doctrine of tenure is a limitation on sovereign power?

MR DONAGHUE: In my submission, your Honour, the doctrine of tenure is a manifestation of sovereign power. So, the exercise of that sovereign power to grant rights to others is an exercise of the sovereign power, just as it would be for the Crown to appropriate land to itself. What Justice Brennan is saying is, I could not develop the common law to recognise native title if it would interfere with that sovereign power.

EDELMAN J: And the exercise or the grant under an exercise of sovereign power is, itself, subject to another exercise of sovereign power. In other words, the Crown retains the ability to extinguish a grant.

MR DONAGHUE: Its own grant?

EDELMAN J: Yes.

MR DONAGHUE: Yes, but subject to the non‑derogation principle, which I am about to come to, which features in his Honour’s extinguishment of – so it does retain the power ‑ ‑ ‑

EDELMAN J: Yes.

MR DONAGHUE: ‑ ‑ ‑ but it needs to be very clear about it exercises it, and that makes a difference when one comes to the grant of Crown lands law. Turning over the page to page 48, about point 3 down the page, there is a citation of a number of cases, then his Honour says:

The Crown was treated as having the radical title to all the land in the territory over which the Crown acquired sovereignty. The radical title is a postulate of the doctrine of tenure and a concomitant of sovereignty. As a sovereign enjoys supreme legal authority in and over a territory, the sovereign has power to prescribe what parcels of land and what interests in those parcels should be enjoyed by others and what parcels of land should be kept as the sovereign’s beneficial demesne.

That is, in our submission, what I have called the relevant sovereign power. His Honour then – I will not read it again, but the next sentence makes the same point again. And finally – not finally, but for ‑ ‑ ‑

EDELMAN J: The radical title is not really a title at all. Radical title is a sovereign power. I think Maitland described it as an exercise of governmental power.

MR DONAGHUE: Your Honour, I do not disagree.

GORDON J: Do you propose to read the next bit? His Honour goes on by explaining the radical title, and then explains:

it is not a corollary of the Crown’s acquisition of a radical title to land in an occupied territory that the Crown acquired absolute beneficial ownership of that land to the exclusion of the indigenous inhabitants.

MR DONAGHUE: It is not a corollary of that.

GORDON J: Yes.

MR DONAGHUE: I totally accept that, your Honour. This reasoning is ultimately explaining that – and the case ultimately overrules all of the old cases that said on sovereignty you get absolute beneficial ownership. What it puts in its place is that on sovereignty you get radical title, and radical title being the logical postulate necessary to then enable the exercise of the relevant sovereign power, because, conceptually, how does the Crown grant interests in land if it does not already have an interest in the thing that it is granting? So, the radical title is the logical postulate for a doctrine of tenure where all interests in land tie back to grants from the Crown.

EDELMAN J: But strictly, the label “radical title” is a bit of a misnomer, because as an exercise of sovereign power it is not necessarily confined to land. It is the ability to exercise sovereign power, potentially, over chattels, things that are severed from the land and over the land itself.

MR DONAGHUE: Your Honour, in my submission, we used particularly – we used in our submissions, and it generated some confusion amongst our friends, the expression “the exercise of radical title” in the way that your Honour has just put to me as a convenient shorthand for what I am now calling the exercise of the relevant sovereign power.

Our friends said, the Commonwealth is totally confused and radical title does not mean any of that and it is only about the prerogative and it has not meant anything since there have been grants of statutory powers. We said in reply, we were trying to use it in the way we understood the Court in the New South Wales Aboriginal Council Case to use it, where there is the phrase “the exercise of radical title”, but we are sorry we confused you all and what we mean is the exercise of the sovereign power to grant interests in land – which is usually statutory, it has been statutory in Australia for, I think, 150 years.

So, when I am using that phrase, I am talking about the exercise of a power conferred generally by statute to grand interests in land, which does not depend upon, legally, radical title. Radical title is the postulate that is assumed so as to make the exercise of that power coherent within ‑ ‑ ‑

STEWARD J: Is “postulate” the right word? Would it be “capacity” – sovereign capacity?

MR DONAGHUE: If one conceives of – you can call it that. Part of the reason that I am being cautious, your Honour, is that, particularly those advising the Commonwealth who live in the world of native title, say that there are many books written about what radical title does and does not mean, and different people have different theories. So, I am trying to avoid confusion by focusing on the power to which we say recognition of native title was subject. Because it was subject not to radical title, it was subject to the exercise of the power to grant interests in land or appropriate it to itself.

EDELMAN J: But, logically, that power – accepting everything you say – is not necessarily just confined to land. It is a sovereign power that could be exercised, for example, over chattels as well – which may become relevant when one talks about things that are severed from the land.

MR DONAGHUE: Your Honour, I can see the force of that. Can I come back to your Honour about that? I will come back to your Honour after the break. On page 50, near the bottom, his Honour returns to the theme:

Recognition of the radical title of the Crown is quite consistent with recognition of native title to land –

which, returning to your Honour Justice Gordon, would not have been the case if it was absolute beneficial ownership, because:

for the radical title, without more, is merely a logical postulate required to support the doctrine of tenure (when the Crown has exercised its sovereign power –

So, his Honour does not seem to be equating the radical title and the sovereign power, it is the logical postulate required to support:

tenure (when the Crown has exercised its sovereign power to grant an interest in land) and to support the plenary title of the Crown (when the Crown has exercised its sovereign power to appropriate to itself ownership of parcels of land within the Crown’s territory). Unless the sovereign power is exercised in one or other of those ways, there is no reason why land within the Crown’s territory should not continue to be subject to native title.

So, his Honour is, in terms – the “unless” is recognising that if the sovereign power has been exercised in one of those ways, there is a reason to conclude that the land should not continue to be subject to native title. That is essentially why – as I will develop in a moment – his Honour concludes there is no entitlement to compensation, because the capacity of the common law to recognise native title gives way – necessarily gives way – as an ingredient to recognition. But I have jumped ahead of myself, so I will step back.

Before I continue with Mabo, can I just interpose a brief reference to a latter decision of this Court, Queensland v Congoo [2015] HCA 17; (2015) 256 CLR 239, which your Honours will find in volume 14, tab 103. I just want to seek to make sure that there is no confusion about what I mean when I speak about recognition of native title or the withdrawal of recognition of native title. So, Congoo [2015] HCA 17; 256 CLR 239, volume 14, tab 103 – and the only paragraph I am taking your Honours to is paragraph 31 on page 263, in the joint reasons of Chief Justice French and Justice Keane.

GORDON J: Did you say 31?

MR DONAGHUE: Paragraph 31, I did. So, their Honours are here explaining, in terms that I do not apprehend to be controversial, what recognition is about:

The recognition of native title rights and interests translates aspects of an indigenous society’s traditional relationship to land and waters into a set of rights and interests existing at common law. The metaphor of “recognition” reflects the proposition that the common law cannot transform traditional laws and customs, the relationships to country –

So, those traditional laws and customs in the relationship to country may well continue totally irrespective of what the common law thinks about them. What recognition extinguishment – reading on near the bottom of the page:

“Extinguishment” describes the result of applying principles by which common law recognition is withheld or withdrawn in the face of legislative or executive acts affecting the land or waters in which native title is said to subsist.

So, it is not just recognition at the outset. Recognition could have been withheld, but also it might be withdrawn. And when native title is extinguished, that is what happens. So, in our submission ‑ ‑ ‑

GORDON J: Do you accept what they go on to say at 32, or are you going to come to that?

MR DONAGHUE: I have no difficulty with 32, your Honour.

GAGELER CJ: Mr Solicitor, I think is said something – I think very similar – at paragraphs 155 to 156 in this judgment. But it is not new in this judgment – it goes back to Yarmirr, and it was particularly well articulated in Akiba. The point being that native title involves the common law recognising another system of law, and what is being called the “extinguishment” of native title is just the limit of that rule of common law recognition being reached.

MR DONAGHUE: Yes.

GAGELER CJ: It is the one rule with two sides: recognition and extinguishment.

MR DONAGHUE: Extinguishment being the limit of recognition ‑ ‑ ‑

GAGELER CJ: Or simply non‑recognition.

MR DONAGHUE: Or withdrawal of recognition, if something happens later.

GAGELER CJ: So, if that is the common law rule, I am just not quite sure what your focus on radical title and the doctrine of tenures does to assist, and I do not know why you would say the rule would be different for land and water, for example.

MR DONAGHUE: So, your Honour, if I have given the impression that I have a focus on radical title, I am sorry, because I am distinctly endeavouring not to have a focus on radical title for the reason that your Honour just puts. My focus is upon defeasibility to the exercise of the relevant sovereign power to grant interests that are inconsistent with the common law continuing to recognise native title.

My basic point is that even if native title has been recognised by the common law in a particular area, if the Crown subsequently exercised its power to grant interests in that land, that exercise of power would be an exercise of power that would cause the recognition of native title to cease, because the common law could not continue to recognise native title within the Australian legal system consistently with the Crown having the power to grant interests in land, and that is the power that Justice Brennan says the Crown must have as a concomitant of sovereignty.

So, were it otherwise – and this is the minority position in Mabo – once the native title has been recognised, the attempts to grant a subsequent inconsistent interest would be wrongful, it would be impairing the pre‑existing property right that the common law has recognised and it would be erroneous for that reason.

The only reason I am possibly drawing a distinction between onshore and offshore is that I am concerned that in one of the cases, the Court said, because with respect to areas outside the low‑water mark of Australia, the sovereign power to which I am referring did not run, that the Crown did not have the inherent power to grant interests in land or to appropriate land to itself in those areas.

GAGELER CJ: It depends what you mean by inherent power, but because of the Waste Lands Acts and other legislation of a constitutional nature, the Crown did not have prerogative power to simply grant interests in land, and there was a complex relationship between statute and executive power, really, at all times relevant to this litigation.

MR DONAGHUE: I think offshore, subject to common law public rights of navigation, which I think, in the case I had in mind, was the reason that native title was not able to be recognised – not because it was inconsistent with the power to grant interests in land but because it was inconsistent with common law rights that had a different origin.

GAGELER CJ: I know Justice Brennan spoke about sovereignty and sovereign rights, but when you get down to the nitty‑gritty, you have to break that down a little more.

MR DONAGHUE: His Honour, as I read his judgment in Mabo (No 2), was trying to effect a reconciliation between the abolition of a rule that had been thought to be quite well entrenched and that had a long body of authority behind it, about absolute beneficial ownership, and the way that the rights that were hitherto, or were hereafter, rather, to be recognised by the common law were to intersect with rights and interests that had been granted under the pre‑existing legal system.

I confess, for the purposes of this case, I have not carefully directed my mind to the situation other than the land law situation, and in my submission, your Honours do not need to do so here, and it may be that you should not if the issues have not been fully explored. But with respect to land law interests, it is certainly enough for our purposes – and we say, entirely consistent with the way that Justice Brennan reasoned – to accept that the common law cannot recognise or continue to recognise native title in the face of the exercise of either of the limbs of the relevant sovereign power.

In taking your Honours to Congoo, as I did, I was not intending to suggest that it was new. It was a convenient encapsulation of the point, but I accept that your Honour the Chief Justice reasoned similarly, and I accept that there are earlier cases that said the same thing, so, it was not breaking new ground. I was just seeking to make plain that I was not saying anything about the continuation of native title rights or interests as a matter of traditional law, I was merely making a submission about the translation of those rights into the common law, and that is what matters for the purposes of our case. Can I ask your Honours – I am nearly finished with Mabo, to go to ‑ ‑ ‑

EDELMAN J: But is the core of your submission really, then, that what makes native title rights at least in relation to land inherently defeasible is that they are always subject to this exercise of sovereign power?

MR DONAGHUE: Yes.

EDELMAN J: Whether one calls it radical title, or whatever label one puts on it.

MR DONAGHUE: Of sovereign power, or what I have called the relevant sovereign power, because I do not go so far as to say any sovereign power.

GORDON J: Sorry, do not go so far as to ‑ ‑ ‑

MR DONAGHUE: So far as to say any sovereign power.

GORDON J: I was going to say, that is the bit that is addressed in paragraph 32, one is looking to see what the nature of the exercise is.

MR DONAGHUE: Yes. But my argument – so, if the Commonwealth, pursuant to an ordinary compulsory acquisition statute, exercises its power not to grant new interests in land or to appropriate land to itself, but just to say – in relation to an area where there might be normal common law rights, native title rights, a variety of rights – and the Commonwealth just says, we are taking this whole area of land to build an airport, or something of that kind.

I do not suggest that 51(xxxi) would draw a distinction between native title rights and other common law rights in that scenario, because native title has not always been susceptible to the exercise of the statutory power to take land under a compulsory acquisition statute for any purpose. It is more limited than that, and that seems to be – when I come to Newcrest, that is the explanation, in our submission, for Newcrest, and I do not know if your Honour Justice Jagot will recall in Congoo on the Federal Court, but the answer that the Federal Court gave in Congoo reflected that exact distinction, so it said the statutory power that has been exercised there in relation to military bases is not the statutory power to which native title is inherently susceptible, and so ‑ ‑ ‑

BEECH‑JONES J: Accepting all grants of land are statutory, you say, just the exercise of the sovereign power involved in a statute. That is not the sovereign power you are talking about?

MR DONAGHUE: I am not talking about any statutory power. I am talking about the sovereign – a sovereign power, whether statutory or prerogative, to grant interests in land or to appropriate unalienated land to itself.

BEECH‑JONES J: And you just draw a distinction between some forms of acquisition that might involve an acquisition of native title, and some that do not.

MR DONAGHUE: Because if the Crown is seeking to acquire alienated land, for example, it cannot appropriate that to itself, and usually it does not have that power – it would need to use a compulsory acquisition statute, but that is not part of the relevant sovereign power.

GAGELER CJ: I am not sure I fully understand that. The rule of recognition at common law is that native title in land and water is recognised, subject to an exercise of statutory power – or potentially executive power, if authorised by statute – to create rights or interests that are inconsistent with native title. If the rights or interests created are inconsistent, then the recognition ceases, we give that the label of extinguishment. Is that too simplistic?

MR DONAGHUE: Your Honour, in my submission, it is wider than what Justice Brennan said. It is consistent with what his Honour said, but it is wider than what his Honour said, because he never put it as broadly as the capacity to create any interests that are inconsistent with native title. He linked it to the two things that I am calling the relevant sovereign power.

GAGELER CJ: I understand that. One, his Honour was not directly or at least principally concerned with what we now call extinguishment; two, there were a series of cases – Fejo, Yarmirr, Akiba, Congoo – which were specifically concerned with this concept of extinguishment and they sort of fleshed it out a lot more than one finds in Mabo itself. Not inconsistently, but ‑ ‑ ‑

MR DONAGHUE: Indeed, not inconsistently, and I am about to come to Fejo – so, I agree with that, and I do not seek to dissuade your Honour from what your Honour put to me, but I do not need the Court to embrace that proposition. It is sufficient for me for the Court to embrace what I have called the relevant sovereign power. If your Honours were to hold native title is inherently susceptible to the exercise of sovereign power simpliciter, then that would produce the same answer for the Commonwealth.

GORDON J: So, in short, ensuring we are clear about what you say is the more limited basis, tell us again what you say is that carve‑out.

MR DONAGHUE: That native title is inherently defeasible to the exercise of the power, one, to grant interests in land or; two, to appropriate to itself interests in unalienated land.

GAGELER CJ: This is what Justice Brennan was saying at pages 50 to 51.

MR DONAGHUE: Yes, and I think ‑ ‑ ‑

GORDON J: It starts page 49, does it not?

MR DONAGHUE: Pages 47, 48 and 50, yes. Finally on Mabo, could your Honours turn to page 63 under the heading “The extinguishing of native title”. Here, directly under that heading, you see a paragraph that the Court has approved many times, including in Fejo at 48 and in Yarmirr at 46:

Sovereignty carries the power to create and to extinguish private rights and interests in land within the Sovereign’s territory. It follows that, on a change of sovereignty, rights and interests in land that may have been indefeasible under the old regime become liable to extinction by exercise of the new sovereign power. The sovereign power may or may not be exercised with solicitude for the welfare of indigenous inhabitants –

Now, a couple of lines later, there is a sentence that all of our friends rely on quite heavily which makes the, in my submission, uncontroversial point that:

under the constitutional law of this country, the legality . . . of an exercise of a sovereign power depends on . . . municipal constitutional law –

And your Honours will be unsurprised to hear that I do not dispute that, but it does not help our friends in the way that they seek to use it. They seek to say, that shows that native title is subject to 51(xxxi). But we say that is wrong for two reasons.

The first reason is that 51(xxxi) is a constitutional limit on power. It takes the property rights that it protects as it finds them. It does not change their character. So that, if we are correct in the submissions I have already been making that it is a characteristic of the recognition of native title by the common law that it is inherently defeasible to the exercise of the relevant sovereign power, that is true of native title as property, whether it is in a State or in a Territory, and 51(xxxi) cannot change it into property of a different kind. So that is the first reason that their reliance does not help them.

The second reason is that it is circular. To assume that 51(xxxi) constrains the power, the relevant sovereign power, and then to say on the basis of the assumption that 51(xxxi) constrains the exercise of the power, it is a circularity of the same kind, in our submission, one sees in Cunningham at paragraph 40, which I will come to later.

GORDON J: There is some argument to the contrary, and that is that one starts with, relevantly, the constitutional guarantee of 51(xxxi), one looks at Dalziel and looks at the nature of the extent to which it is broad, and it is really a prism question about where you enter the argument. So, to contend it is circular I think is probably a bit unfair. It is at least appropriate in some circumstances, on one view, to start with 51(xxxi) and the breadth, and then ask oneself whether or not that guarantee would extend to property which is then identified.

MR DONAGHUE: But my argument, your Honour, is not that native title is not property for the purposes of 51(xxxi).

GORDON J: No, I know you are not, but it is about the prism through which you enter, and it may very well be that that informs the way in which you look at in a different way; that is all.

MR DONAGHUE: I understand what your Honour is putting to me. I, with respect, would not accept that the prism changes the analysis, because even coming at it through 51(xxxi) and a wide prism and accepting that property has a broad conception in that context, one nevertheless needs to look at the characteristics of the property that is said to be being protected.

GORDON J: There is no doubt about that.

MR DONAGHUE: Your Honours, at the bottom of page 63, you see Justice Brennan recognising that:

In Queensland, the Crown’s power to grant an interest in land is –

Three lines up from the bottom:

an exclusively statutory power and the validity of a particular grant depends upon . . . the relevant statute –

So, his Honour is obviously talking, in the context of the discussion that I am about to go to, about statutory power, not prerogative power:

When validly made, a grant of an interest in land binds the Crown and the Sovereign’s successors. The courts cannot refuse to give effect to –

I will pass over that:

Therefore an interest validly granted by the Crown, or a right or interest dependent on an interest validly granted by the Crown cannot be extinguished by the Crown without statutory authority. As the Crown is not competent to derogate from a grant once made, a statute which confers a power on the Crown will be presumed (so far as consistent with the purpose for which the power is conferred) to stop short of authorizing any impairment of an interest in land granted by the Crown or dependent on a Crown grant.

Now, that reasoning, which is sometimes described as the presumption of non‑derogation, is reasoning that depends upon property deriving from a Crown grant, directly or indirectly from a Crown grant. And it is reasoning that has been approved in, amongst other places, the Native Title Act Case at page 439 by six Justices, discussing the principle of non‑derogation. Your Honour Justice Gageler in Congoo also approved that passage at paragraph 158.

The Northern Land Council, in its written submissions, says your Honours will see nothing of relevance to statutory powers in this discussion because the principle of non‑derogation from grant only constrains non‑statutory executive power, they say. In our submission, that is not an available reading, given the introduction to the passage where Justice Brennan says he is talking about exclusively statutory power.

The final point on this page is the last sentence in the paragraph. So, his Honour has talked about Crown grants, the principle of non‑derogation, that general language will not allow the impairment of a grant for that reason, and then he says, in the last sentence:

But, as native title is not granted by the Crown, there is no comparable presumption affecting the conferring of any executive power on the Crown the exercise of which is apt to extinguish native title.

So, when one has a general Crown grants statute that authorises the grant of interests in land or the Crown to appropriate land to itself, the general language in that statute will not allow the Crown to grant interests that are inconsistent with other interests it has already granted, but it will allow – even though it is general, there is no principle of legality clarity about extinguishing native title – the general grant power does extend to granting interests that are inconsistent with native title. And that is the weakness of native title as identified by Chief Justice Brennan in Wik and affirmed by six Justices in Fejo. It is susceptible to the exercise of the relevant sovereign power because it is not protected by the principle of non‑derogation.

Your Honours, I have fallen behind where I am supposed to be, but I see the time.

GAGELER CJ: How much longer do you expect to be on Mabo?

MR DONAGHUE: I have just finished Mabo. So, I was going to Fejo.

GAGELER CJ: You have finished Mabo?

MR DONAGHUE: Yes.

GAGELER CJ: Very good. All right. We will take our morning adjournment.

AT 11.16 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.32 AM:

MR DONAGHUE: Your Honours, as I said to the Chief Justice, I have finished with Mabo, but just by way of brief recap in terms of what we ask your Honours to take from that fairly long journey through his Honour’s reasons, we make the following four points. One: the foundational characteristic of native title, accounting for its inherent defeasibility to the exercise of the relevant sovereign power, is that native title has its source in another legal system pre‑dating the acquisition of British sovereignty.

Two: that that is why it depends upon recognition by the new legal system, but the recognition that was conferred was conferred only to the extent that the recognition of native title would not be inconsistent with fundamental doctrines of the new legal system, which is why native title was recognised only on the basis that it was subject to the exercise of the relevant sovereign power.

Three: that because native title was not recognised as a common law tenure, it does not receive the protections that the common law confers upon rights granted by the Crown or dependent upon Crown grant, that is, the non-derogation principles – the principle against derogation does not apply.

And fourth: that that is why general powers to grant interests in land or to appropriate interests in unalienated land are not read down to prevent them from authorising the extinguishment or impairment of native title; that being the point upon which the majority and minority in Mabo (No 2) differed.

BEECH-JONES J: Mr Solicitor, with some trepidation, can I ask you one short question about Mabo (No 2) at page 111, which is 3185 of the book, Justice Deane and Justice Gaudron.

MR DONAGHUE: About 51(xxxi)?

BEECH-JONES J: Yes, you probably know the passage off by heart.

MR DONAGHUE: Indeed. Your Honour, that is point 5 of my outline.

BEECH-JONES J: Right. What is it about that statement at the bottom of the page that you say, as I understand it, that is dependent upon the disapproved view that at common law the extinguishment creates a right to compensation?

MR DONAGHUE: What is it about it that makes it dependent?

BEECH-JONES J: How do we read it? I think that is how you construe this, to say that was the view that was discredited or disapproved of.

MR DONAGHUE: So, your Honour, the short answer – if I can confine myself to a short answer now, and come to a longer answer – the short answer is that the top half of that page is their Honours explaining why the power to grant interests that extinguish native title is wrongful; so you can see in the middle of the page their Honours say it would “wrongfully” extinguish native title.

BEECH‑JONES J: Yes.

MR DONAGHUE: So, the premise for their Honours’ reasoning, inconsistently with Justice Brennan, is that native title is not subject to the exercise of the sovereign power that we say is in an element or a characteristic. If that is your premise, my 51(xxxi) argument goes nowhere.

BEECH-JONES J: My point being, and I know you are going there, is when Justice Gaudron said that her Honour generally agreed with Justice Gummow in Newcrest, do you say that that involved her Honour saying, and I disavow what I said at the bottom of page 111?

MR DONAGHUE: Well, I do not know that I need to say that her Honour disavowed it ‑ ‑ ‑

BEECH-JONES J: Implicitly, implicitly.

MR DONAGHUE: But this passage at the bottom of 111 is plainly an obiter passage, because there was no issue in Mabo (No 2) about Commonwealth grants or 51(xxxi). And the other thing about it, your Honour, is that when this was written, Teori Tau was the law, and no one had doubted Teori Tau. So, it is most unlikely that her Honour was saying anything about 51(xxxi) in the Territory, because there was no reason to think 51(xxxi) had anything to do with the Territory, on the state of the law as it stood when Mabo was decided.

BEECH-JONES J: Well, that is Mr Lloyd’s area, I am asking your ground.

MR DONAGHUE: But, your Honour, if one, just in terms of understanding what Justice Deane and Justice Gaudron are saying here, in my submission, you should not read it on the basis that her Honour was talking about acquisitions by the Commonwealth and the Territory, because to read it as if that is what their Honours had in their mind when they wrote this is to read their Honours as having seen the future and recognised that a unanimous decision of the Court that had not previously been questioned was going to be overruled.

It is far more likely that their Honours were talking about the other kinds of sovereign powers that I referred to earlier where, as I said – perhaps not embracing the full width of the Chief Justice put to me, but we have accepted that some exercises of sovereign power would be subject to 51(xxxi); and that is why we contend that, given the state of the law at the time, that passage does not stand in our way.

EDELMAN J: Mr Solicitor, if we took your first two foundational propositions and removed the words “native title” and replaced them with the words “mercantile law” – that is, the law that derives from the practice and the practices of the law merchant – they are practices that have derived from another system that has, through custom, been recognised as conferring rights; they have been recognised by the common law to the extent that they are not inconsistent with other common law doctrines. Would you say that all of those mercantile rights are, therefore, inherently defeasible?

MR DONAGHUE: Your Honour has me at a significant disadvantage in terms of the detail of mercantile law. Conceptually, in my submission, what we are talking with inherent defeasibility is a characteristic of the right, from the time of the creation of the right, that it is subject to a particular contingency.

My submission is that native title has that characteristic. Many statutory rights but not all statutory rights have that characteristic. If the mercantile rights that your Honour is referring to have that characteristic, then I would make the same submission: that they are inherently defeasible only to the characteristic that they were defeasible to from the time of their inception, not to anything else. That is the principle of which the statutory cases are one example, and Newcrest in the context of native title is another example – and I will come to Newcrest in a moment.

Can I try to maintain some structure and ask to finish off my points in paragraphs 1 and 2 by inviting your Honours to go just to one of the subsequent cases – there are a number, and I will give your Honours some other references – but to turn to Fejo v Northern Territory [1998] HCA 58; (1998) 195 CLR 96, which is volume 7, tab 73. This is a joint judgment of six members of the Court, including Justice Gummow, which is relevant for reasons I will come to. It contains numerous passages approving aspects of Justice Brennan’s reasons that I have just taken you to.

Could you start, please, on page 127 at the bottom of paragraph 44, which is a paragraph that contains numerous quotes from previous authorities about extinguishment. You will see in the middle of page 127 there is a quote from the Native Title Act Case:

At common law . . . native title can be extinguished or impaired by a valid exercise of sovereign power inconsistent with the continued enjoyment . . . of native title –

Then the next quote – and the associated footnote we emphasise – is a quote from Chief Justice Brennan in Wik:

“The strength of native title is that it is enforceable by the ordinary courts. Its weakness is that it is not an estate held from the Crown nor is it protected by the common law as Crown tenures are protected against impairment by subsequent Crown grant –

So, that is the non‑derogation reasoning – but this is six Justices clearly endorsing it:

Native title is liable to be extinguished by laws enacted by, or with the authority of, the legislature or by the act of the executive in exercise of powers conferred upon it.”

And the footnote, in addition to Wik, says:

See also Newcrest . . . at 612‑613, per Gummow J.

Now, the passage I am about to spend a little time on is Justice Gummow at 613 in Newcrest which, we submit, has the support of four members of the Court there. If the six Justices in Fejo are not approving the reasoning you find on those pages, it is very difficult to explain what they were doing in that footnote.

Not only, in my submission, were they referring with approval to that reasoning, it is reasoning that links what Chief Justice Brennan called the “weakness” of common law – that it was not protected by the non‑derogation principle – to Justice Gummow’s statement at Newcrest about the inherent susceptibility of native title to an exercise of power of that kind. So, it is tying those concepts together consistently with the argument that I have been seeking to develop.

I will come to Newcrest in just a moment but, sticking with Fejo, if your Honours could turn over the page, you will see at 46 there is a reiteration that native title is not a common law tenure, but it is recognised by common law. Then at 48, there is an approval of the change of sovereignty passage that I read to your Honours about:

interests . . . that may have been indefeasible under the old regime become liable to extinction by exercise of the new sovereign power”.

But then I emphasise the words that follow:

How was that new sovereign power exercised in this case? The 1882 grant to Benham was made pursuant to statute. It was not made pursuant to prerogative powers.

So, six judges in Fejo, in my submission, unequivocally recognised that the sovereign power that we are talking about can be – indeed was in Fejo – exercised pursuant to statute. How as the sovereign power exercised? It was exercised pursuant to statute. When our friends say to you – as no doubt they are going to, given their written submissions – that these principles are not relevant to statutory powers, they have to overcome the fact that Fejo says otherwise. Finally, at paragraph 58 in Fejo, from the second sentence three lines down:

The legislation that provided for the making of grants in fee simple –

So, legislation again:

of waste lands provided for the creation of rights in respect of the land that were inconsistent with any continued right to native title. The rights created by the exercise of sovereign power –

That is again the statute:

being inconsistent with native title, the rights and interests that together make up that native title were necessarily at an end . . . Their recognition has been overtaken by the exercise of “the power to create and to extinguish private rights and interests in land within the Sovereign’s territory”.

That is the relevant sovereign power, citing back to Justice Brennan in Mabo. The recognition has been overtaken. So, that reasoning is a very clear endorsement by six members of the Court of the analysis that I have taken your Honours through in Justice Brennan’s reasons this morning.

I will not take your Honours to three other cases, but can I just note them. On several occasions, the Court has referred to native title rights or interests as “inherently fragile”. That is a phrase that was used in Commonwealth v Yarmirr (2001) 208 CLR 1 at paragraph 46 and 47, it is volume 6, tab 70. It was also used in Western Australia v Ward [2002] HCA 28; (2002) 213 CLR 1 at 91, and in that passage the Court also notes that the Native Title Act had changed it so the inherent fragility that existed before the Native Title Act ceased to exist after the Native Title Act. The same thing was said by the Court in the Native Title Act Case [1995] HCA 47; (1995) 183 CLR 373 on page 453: the Native Title Act removes the vulnerability to defeasance at common law.

So, in those passages, in my submission, it is plain that the inherent fragility to which the Court was referring was the inherent defeasibility to the exercise of the sovereign power to grant interest in land or appropriate land to itself. Your Honours, that is proposition 1, paragraphs 2 and 3.

Can I turn to proposition 2, which is about native title and 51(xxxi), and invite your Honours to turn immediately to Newcrest v Commonwealth [1997] HCA 38; (1997) 190 CLR 513, volume 12, tab 95. This is the only case in which this Court has been required to directly confront an argument about whether the extinguishment of native title enlivens 51(xxxi). The case arose out of an amendment to the National Parks and Wildlife Conservation Act 1975 which prohibited the carrying out on or of operations for the recovery of minerals in Kakadu National Park and which expressly exempted the Commonwealth from liability to pay compensation to any person by reason of the Amendment Act.

So, it said you cannot mine in Kakadu and we do not have to pay you compensation. The evident premise for the Commonwealth Parliament passing that Act was that 51(xxxi) did not apply in the Territory. The consequence was, after the legislation commenced, the Commonwealth proclaimed added areas of Kakadu, added areas to the national park where Newcrest held mining interests, thereby effectively depriving Newcrest of the mining leases, and because the legislation said so, of any right to compensation, Newcrest responded to that by challenging Teori Tau and contending that it did have a right to compensation.

The Commonwealth resisted the reopening application – and if your Honours could turn first to page 523, which is the report of the argument. So, at 522 there is – so, the Commonwealth is the respondent – the commencement of the Commonwealth’s argument made in the relevant respect by Mr Shaw QC. Over the page, at 523, about halfway down – so, maybe at about a third of the way down you see the submission:

Leave should not be granted to reopen Teori Tau.

And then halfway down, it said:

Further, the application of s 51(xxxi) to the Northern Territory would have the effect of invalidating significant provisions of Commonwealth legislation and would potentially invalidate every grant of freehold or leasehold title granted by the Commonwealth in the Territory since 1911 to the extent to which any such grant may be inconsistent with the continued existence of native title as recognised at common law.

Your Honours will see the reflection of what we now put again. Happily, it turned out that the Commonwealth’s argument was wrong, for reasons identified by four members of the Court, and we ask your Honours to find that our apprehensions are misplaced for the same reason as Justice Gummow found that our apprehensions were misplaced in advancing an equivalent argument in Newcrest.

It was an argument that, in our submission, if it were to be accepted, at the very least, would have been entitled to be granted some weight, if not very great weight, in deciding whether or not to reopen Teori Tau. If the consequence of reopening Teori Tau was going to be to invalidate, potentially, every grant of freehold or leasehold, you would think that that would at least be something that the Court would take into account before taking that reopening step.

So, it was, in our submission, an argument that needed to be confronted by any justice who was minded to reopen Teori Tau. Justice Gummow, of course, was so minded, and so his reasoning in addressing the argument, in our submission, is properly characterised as part of the ratio of his Honour’s decision. It was reasoning directed towards an impediment to the position that his Honour ultimately adopted, which was that Teori Tau should be reopened and overruled.

The Full Court below, in our submission, rather boldly on several occasions, including paragraphs 409 and 413, said not only that the reasoning I am about to come to was dicta, but that it was not even seriously considered dicta. And in our submission, there is no proper basis for that characterisation. The reasoning, in our submission, reflects a seriously considered and close appreciation – albeit brief – of the basis upon which the common law recognised native title and of 51(xxxi) jurisprudence.

EDELMAN J: Was there argument on that point?

MR DONAGHUE: Sorry?

EDELMAN J: Was there argument on the point of inherent defeasibility?

MR DONAGHUE: Well, your Honour, there was argument on the point of whether or not the Commonwealth’s concern – I am not sure that I can answer that other than to say the Commonwealth squarely put in issue that the consequence was going to be widespread invalidity, and that was a consequence that would follow because of the intersection between native title and 51(xxxi), squarely in play.

BEECH-JONES J: No one was testing the opposite view, though, that was before the Court, were they?

MR DONAGHUE: Well, there were certainly people before the Court who wanted to overrule Teori Tau. I do not think that the report of the argument makes it clear how that argument was responded to. But it is clear that Justice Gummow rejected the argument and, I should say, although your Honours will have seen the Full Court and our friends both rather deprecate this argument as an in terrorem argument, that is not a characterisation of it that you see in Newcrest. No one there described it in that way. In my submission, it is a serious argument directed towards an evidently serious consequence, if the point be right.

Now, Justice Gummow, if your Honours could turn to page 613 of his reasons. Your Honours will recall the six Justices in Fejo cite 612 to 613 with apparent approval in the context of explaining the weakness of native title. The argument is summarised at the top of the page ‑ ‑ ‑

GORDON J: Are you on 612 now?

MR DONAGHUE: No, I am on 613, your Honour. So, 612 is talking about the flaw in Teori Tau, as his Honour saw them, and then 613 is where the relevant reasoning for the present purposes is found. So, three lines down, the argument is summarised in terms that reflect what you have seen in the report of the argument in the Commonwealth Law Reports.

The argument is that if 51(xxxi) applies, it:

“would potentially invalidate every grant of freehold or leasehold title granted . . . in the [Territory] since 1911 –

Justice Gummow then says, in the next sentence:

Such apprehensions are not well founded.

Just pausing there, if the apprehensions are not well founded, in our submission, that can only mean that holding that 51(xxxi) applies in the Territory will not potentially invalidate all the grants of freehold or leasehold since 1911. Otherwise, they would be well founded.

What one is looking for in the reasons that follow is an explanation of why the consequences that the Commonwealth feared will not come about, and a fair reading of the reasons needs to produce that explanation. The reason I make that point is the way the Full Court read this paragraph provides no explanation for why the reasons are not well founded, and so it cannot be the right reading of his Honour’s reasons.

Why were they not well founded? The characteristic of native title – so, this goes back to a question your Honour Justice Gleeson asked me. The way Justice Gummow described it is as:

characteristics of native title as recognised at common law.

A characteristic of it as property, recognised by the common law:

include an inherent susceptibility to extinguishment or defeasance –

Not by anything, but:

by the grant –

his Honour emphasises:

of freehold or of some lesser estate which is inconsistent with native title rights; this is so whether the grant be supported by the prerogative or by the legislation.

Footnote (321). It is a characteristic of recognition at common law that it is inherently susceptible to extinguishment or defeasance by the grant or by the exercise of the relevant sovereign power.

The footnote refers to familiar passages in Mabo – page 69, which is the first reference, is to Justice Brennan’s summary of his reasoning, where there are a number of propositions. I will not take your Honours back to it. You have here native title cases, and then you have two 51(xxxi) cases cited, including Peverill, one of the leading trilogy of cases concerning the inherent susceptibility of some statutory rights to modification or variation.

In my submission, Justice Gummow’s citation of those cases – including, specifically, Peverill – plainly indicates that his Honour was connecting his analysis of the inherent susceptibility of native title to the sovereign power that I have identified to the kind of reasoning that shows that no acquisition of property is involved in the modification of some, but not all, statutory rights.

All of that is consistent with what his Honour said in his foundational judgment with Chief Justice Black as a member of the Federal Court, in a case called Minister for Primary Industry and Energy v Davey, where his Honour referred to rights that are defeasible to contingencies that are, quote:

inherent at the time of its creation and integral to the property itself.

These are these contingencies that have always existed to qualify the nature of the proprietary interest. Effectively, the Commonwealth was wrong in its apprehension that everything was invalid because the existence of native title would not cause 51(xxxi) to invalidate all of the grants because the native title would give way to the grants. That is the explanation for why the apprehension was not well founded.

Happily, there is no rule or principle in this Court that reasoning has to be verbose in order to be authoritative. Our friends complain that his Honour’s reasoning is not long enough, but his Honour’s reasoning succinctly and accurately captures why the argument is wrong, or why the argument was held to be wrong, and, in our submission, the fact that his Honour did not go on at greater length does not undercut that. I should finish the paragraph before coming to both what the Full Court said about it and the other Justices. So, that is the reasoning upon which we rely and which we ask your Honours to embrace.

EDELMAN J: But the second‑half is your qualification, is it?

MR DONAGHUE: It is.

EDELMAN J: That is why you say that is not the relevant exercise of sovereign power.

MR DONAGHUE: That is correct.

GORDON J: In other words, you have to look to the power to see whether it creates inconsistency.

MR DONAGHUE: No, not that you have to look to the power to see whether it creates – the native title is only inherently defeasible to particular powers, so if the power is not one of the particular powers to which it is inherently defeasible, then the analysis does not apply. What his Honour is talking about there, legislation such as that considered in Mabo v The Queen – that is Mabo (No 1) – and Western Australia v Commonwealth (Native Title Act), they were both cases about legislation where a State just sought to extinguish native title through the whole State.

BEECH-JONES J: That is a sovereign power but not the sovereign power.

MR DONAGHUE: But not the sovereign power.

BEECH-JONES J: That is what you say.

MR DONAGHUE: That is what we understand Justice Gummow to be saying.

GAGELER CJ: It is a bit simpler than that, is it not? The State legislation, Mabo (No 1), and the State legislation in the Native Title Act was invalid because it was inconsistent with Commonwealth legislation ‑ ‑ ‑

MR DONAGHUE: With the RDA.

GAGELER CJ: ‑ ‑ ‑ under section 109, so it was an invalid purported exercise of sovereign power.

MR DONAGHUE: I totally accept that that is so, but what his Honour seems to be ‑ ‑ ‑

EDELMAN J: He is assuming that it is within power, though, for that argument.

MR DONAGHUE: That is what he seems to be doing in this paragraph. He seems to be saying, that kind of legislation, if it was within power but was directed to extinguishment, may attract 51(xxxi). So, he seemed to be trying to carve out the question of whether different kinds of exercise of sovereign power would ‑ ‑ ‑

GORDON J: That is what I just put to you. He is looking at the power and working out whether or not it falls within what you would say gives rise to this inherence of susceptibility of extinguishment.

MR DONAGHUE: I am sorry, your Honour, I misunderstood you. Is it within the relevant sovereign power category or the other category? I agree that that is what his Honour is doing.

GORDON J: Then he goes on to say it is by the grant of that sort of interest which is inconsistent which gives rise to the possibility or potential of extinguishment:

by the grant of freehold or of some lesser estate which is inconsistent with –

MR DONAGHUE: Indeed. That is what native title is inherently susceptible to, the grant of an inconsistent interest. His Honour is saying, in my submission, sentence number one – consistently with the argument I have been putting to you – native title will not invalidate all of these grants because it is inherently susceptible to the exercise of that power. Whether or not 51(xxxi) will bite if parliaments do other things, is a question that I will leave open because it ‑ ‑ ‑

EDELMAN J: So, in essence, your submission is that what makes it inherently defeasible is not the fact that it is subject to an exercise of sovereign power generally, as all property rights are, but it is the fact that it is an inferior type of property right in the sense that it is subject to a superior grant – or a grant of what will be a superior right.

MR DONAGHUE: I would prefer to avoid, if I could, “superior” or “inferior”, but it is a right sourced in a different legal system which has significance in our legal system – in the Australian legal system – only by reason of recognition, and that recognition creates the hierarchy your Honour refers.

EDELMAN J: But the reason I use the phrase “superior” and “inferior” is that we see that elsewhere within common law property rights; that rights of possession have superior and inferior rights. An inferior right of possession – and my right of possession that is good against the whole world except for the true owner – is inherently defeasible in that sense. That was the difficulty that I had right at the start, is that has never been thought to be a characteristic that means that the property right is not subject to 51(xxxi).

MR DONAGHUE: Your Honour, my argument is not about the clash between property rights – the external conflict between them – it is about something interior to the property right that is native title. In my submission, to say that a right to possession can be defeated by a superior right of an owner, is not to say anything, really, about the characteristic of the possessory right, it is just to recognise a hierarchical relationship between them.

EDELMAN J: But it is, because the rights to possession arise because of facts in the world; because of doing something that is customarily recognised as giving a person the right, arising from the taking of something. That is the same basic notion that is being recognised when the common law recognises the customary rights that give rise to native title.

MR DONAGHUE: It is recognising the customary rights that give rise to native title.

EDELMAN J: Where the claim involves possession rather than the claim involves use or some other right.

MR DONAGHUE: Yes. My argument is sufficiently advanced for present purposes to say that whether a right be a statutory right or a common law right to property deriving from a grant subject to a reservation or a right arising from another legal system that is recognised by the common law, if at the time of the creation or recognition of that property right it is a characteristic of the right that it will lapse upon the occurrence of a contingency, that it will be defeated by another right of a particular kind. The exercise of that other right will not constitute an acquisition of property.

I have to make sure I have fully thought this through, your Honours, but it might be the case that someone who is in possession of a car that I own – well, no, that is not a good example. If the Commonwealth is the owner of a car that is in the possession of someone else and the Commonwealth asserts its right of ownership against the possessor of the car, it would not need to worry about section 51(xxxi). The notion that it would have to compensate the person, it just says, well, I have always been entitled to take this car back, I have not acquired your property in that situation.

EDELMAN J: No, but if A is the owner of the car and B is in possession of the car, and the Commonwealth takes it from B, the Commonwealth has to pay B compensation even though A can say to B, well, I can always defease your property right.

MR DONAGHUE: But that is consistent with my analysis, your Honour, because that is not – the Commonwealth taking the car in that scenario is not something that the property is inherently susceptible to. It is only the owner taking the car, so it sits with the way the analysis works.

GLEESON J: Mr Donaghue, Justice Gummow focuses on grants rather than what you have described as the relevant sovereign power. Is there any significance in that?

MR DONAGHUE: I think, your Honour, the answer is that the argument that Justice Gummow was responding to was an argument about the invalidity of all the grants, freehold and leasehold, in the Territory. So, the argument was not that any exercise of power to appropriate land to itself would also have been invalid. On my submission, had that argument been raised, it would have attracted the same answer, but all his Honour – in my submission, focusing on the grant he is just reflecting back what the Commonwealth was saying the problem would be.

BEECH-JONES J: So, the adoption of this paragraph would require an analysis that divides, relevantly, two types of legislation, just at a legislation level; that which authorises the grant, and that which is directed to the extinguishment.

MR DONAGHUE: Well, if it is grant or appropriation of the property to the Crown itself, that is one box, and outside that box is everything else. What his Honour is saying is in box one there is an inherent susceptibility to the exercise of power of that kind, the relevant sovereign power, and the reason I took your Honours at such length through Mabo this morning is that that is the way Justice Brennan repeatedly identifies it there. The Chief Justice has put to me that perhaps one could frame it more broadly than that just as an exercise of sovereign power, and I am not battling against that, but I do not need to go so far.

So, in my submission, dividing the world up in that way, what his Honour is doing is faithfully reflecting the reasoning in Mabo. Then, for everything else he is reserving his position, and he is reserving his position presumably because of the possibility that things might change. The Commonwealth has since the Native Title Act been the protector of native title against States that in some cases have sought wholesale extinguishment of it. If the Commonwealth was to change its position, his Honour is leaving open the possibility that 51(xxxi) might have something to say about that, without deciding one way or the other. That is how we read him.

Now, I said to your Honours the Full Court did not read this passage fairly. Could your Honours take up the core appeal book and go to page 143, paragraph 408. You will see we make various complaints about the Full Court’s analysis of Newcrest, but this paragraph is dealing with the key sentence about inherent susceptibility, and their Honours say:

all his Honour is saying in the first part is that native title rights and interests are defeasible. That is why he italicises “the grant”. The Crown can override and extinguish them in whole or in part. The use in this passage of the word “inherently”, in our respectful opinion, could not have been intended to carry the meaning the reference to Peverill might otherwise suggest. There is certainly no indication his Honour is saying such rights are not “property” for the purposes of s 51(xxxi) –

We agree with that:

nor that the grant of an inconsistent proprietary interest in land covered by native title would not be an acquisition.

If his Honour was not suggesting that the grant of an interest would not be an acquisition of property enlivening section 51(xxxi), what was he saying? Why were the Commonwealth’s apprehensions misplaced? If, similarly, he was not suggesting that Peverill carried the meaning of “inherently susceptible” in that case, again one wonders, respectfully, what that citation in his Honour’s reasoning was doing. Their Honours’ reading of this paragraph leaves completely unanswered the apprehension to which the Commonwealth’s argument was directed, and, in our submission, it cannot be accepted for that reason.

Now, conscious of the time, your Honours, you will have noted that the Full Court rejected our submission, that this aspect of Justice Gummow’s reasoning was supported by the other three Justices who supported the orders in Newcrest. Can I ask your Honours to go back to Newcrest and to turn, first, to page 651, which is Justice Kirby.

BEECH-JONES J: What page is that again, sorry?

MR DONAGHUE: It is 651, your Honour. When your Honours have that, about halfway down the start of the new paragraph:

Various other arguments for holding to Teori Tau are collected in the opinions of Brennan CJ, Dawson and McHugh JJ in this matter. Some of them lay emphasis on the supposed consequences of the opposite theory for the validity of grants of freehold or leasehold title made by the Commonwealth in the Northern Territory –

On the face of it, that does look like an argument of the precise kind to which Justice Gummow was responding, and also when in its terms his Honour is referring to various arguments collected in the opinions of the three Justices there noted, and Justice McHugh at page 576 directly addresses the Commonwealth argument. So, both because the argument as described seems to be the Commonwealth’s argument and also because in his terms he is directing these remarks to the various views collected by Justices that include Justice McHugh, we submit his Honour is clearly referring to the relevant Commonwealth argument. And he says:

For the reasons given by Gummow J, I am not convinced that these apprehensions are well founded.

Now, with respect to the Full Court, your Honours, it is hard to be clearer than that. His Honour Justice Gummow said the apprehension is not well founded and explained why; Justice Kirby says, I agree with him that the reasons are not well founded; and the Full Court says Justice Kirby did not mean that. Their Honours say that at 415, but I will not take your Honours back to it. Justice Gaudron, at page 561, commences her Honour’s reasons by saying that she agrees generally with the reasons for judgment of Justice Gummow and the orders that he proposes.

Now, none of the subsequent reasons that her Honour expresses deal with the particular argument we are now concerned with. So, there is no reason, based on anything else your Honour says, to carve out from her Honour’s agreement Justice Gummow’s reasoning at 613.

GORDON J: She deals with the 51 head of power question.

MR DONAGHUE: Yes, your Honour, but her Honour also – as your Honours will have noted – would have overruled Teori Tau; reopened and overruled Teori Tau. So, if her Honour was not agreeing with Justice Gummow’s reasoning for rejecting the Commonwealth’s argument, where did she deal with an argument that the Commonwealth advanced as an impediment to reopening a case that her Honour was prepared to reopen.

Your Honours are, in my submission, confronted with the choice that her Honour either failed to deal with an argument squarely in the way of a step that her Honour would have taken or she dealt with it consistently by adopting the reasons of another judge. That, we submit, is clearly the preferable reason, there being no reason to conclude that her Honour did not mean what she said when she expressed her agreement with Justice Gummow.

Justice Toohey, over the page – I am reminded, at 565 her Honour expressly agrees with Justice Gummow’s reasons for reopening and overruling Teori Tau. It is in my submission a stretch to conclude that her Honour disassociated herself with a part of his Honour’s reasoning that led to that conclusion that the reopening was appropriate.

GAGELER CJ: Mr Solicitor, where are you going with this? You are not suggesting that the two sentences in Justice Gummow’s judgment form part of the ratio that is in some way binding, are you?

MR DONAGHUE: Your Honour, I am suggesting that – in the end, no, because Teori Tau was not overruled in Newcrest.

GAGELER CJ: Yes. So, you cannot have it both ways.

MR DONAGHUE: No, but what I am saying though is that – and the reason Teori Tau was not overruled in Newcrest was because of Justice Toohey – your Honour, I am about to come to it. If one separates the ratio of a judgment versus the ratio of the entire Court, it was part of the ratio of Justice Gummow’s reasons, it was just because of the way the Court came together on the ultimate principles that it does not create a ‑ ‑ ‑

GAGELER CJ: So, it is a solemn statement, it is part of the reasoning of Justice Gummow, and it is supported by some other members of the Court.

MR DONAGHUE: We say three other members of the Court. Then your Honours have to decide what you are going to do with that. Obviously, your Honours would not be constrained by it is a matter of authority in any event. Really, where I am going is to say the Court has been here before, it has heard the argument that I am advancing before, four Justices have looked at the argument before and have said it is wrong because native title is inherently susceptible to the grant of sovereign power. That is what your Honours should again hold, that is our submission on ground 2, in a nutshell.

Probably, having put it in that way, I will not detain your Honours on it any longer other than just to give your Honours a reference to Justice Toohey at 560 where his Honour expressly says that he does not agree with the Commonwealth’s argument. That is at 560, about point 6:

not persuaded by the argument of the Commonwealth that the application . . . would potentially invalidate every grant –

So, we know his Honour did not agree with the argument and we had no other reasons for why that is so, but we do know that his Honour agreed with Justice Gaudron, who agreed with Justice Gummow. In our submission, again, rather than conclude there are no reasons, you should conclude Justice Gummow’s were the reasons. As I have already said, one needs to then account for the fact that six Justices in Fejo appear to approve that reason, at 613.

I will not take your Honours to it, but I mentioned Congoo v Queensland. That is not in the joint book, but the Full Court quote the relevant paragraph on paragraph 424, page 147 of the core appeal book. This is a decision of the Full Federal Court where the relevant judgment was given by ‑ ‑ ‑

GORDON J: What page is that, sorry, Mr Solicitor?

MR DONAGHUE: Page 147, your Honour.

GORDON J: Thank you.

MR DONAGHUE: Paragraph 424, with joint reasons of Justice North and Justice Jagot as your Honour then was. There is a reference at the top of that passage to Justice Gummow in Newcrest at 613:

would support the conclusion that extinguishment of native title does not necessarily involve an acquisition of property.

Your Honours recognised the analogy with Telstra, which I am going to come to. But then, in the next long paragraph, said:

the inherent susceptibility –

was not susceptibility to the kind of exercise of power that had occurred under the relevant regulation. So, it was the second aspect of Justice Gummow’s reasoning at 613 that seems to have accounted for the decision there. The appeal to this Court in Congoo resulted in a division of opinion such that the Full Court’s judgment stood.

Your Honours have already mentioned Justices Deane and Gaudron in Mabo, which is the only reference one sees in Mabo itself to acquisition of property, and I think I have probably sufficiently said what I want to say about that. Really, two points: that the reasoning at 111 is premised upon the extinguishment of native title being wrongful and creating an entitlement to damages. If that is your starting point, then my analysis – the analysis the Commonwealth has been advancing – does not hold.

If that is your starting point, then native title is not inherently defeasible to the kind of exercise of power involved. It is not surprising that Justices Deane and Gaudron adopted a different view, but it is a minority view, that is our first point. Our second point is that, in any event, it is far from apparent that their Honours had in mind acquisitions of property in the Territory. It is only in the Territory that the Commonwealth could exercise the relevant sovereign power; it is usually exercised by the States.

When the Territory was surrendered to the Commonwealth, it acquired radical title and the capacity to exercise the relevant sovereign power. If their Honours were not contemplating the Territory, they therefore probably were not contemplating the relevant sovereign power and their reasoning would be consistent with the second aspect of Justice Gummow in 613. We are talking about different sovereign powers, in other words.

Your Honours, noting the time, can I go to the third proposition, which is inherent to feasibility is not limited to statutory rights. Justice Gummow obviously proceeded on that basis in Newcrest. The Full Court thought that that was a radical departure from existing doctrine. We submit that it was nothing of the kind.

Can I ask your Honours to turn to the Commonwealth’s written submissions, as an efficient way of making the next part of my argument. When your Honours have them, to turn to page 35 of the submissions. If your Honours have them, you will see the heading:

Any “property” can be “inherently defeasible”

We start with a quotation from Professor HLA Hart ‑ ‑ ‑

STEWARD J: What page is this, Mr Solicitor?

MR DONAGHUE: It is page 35 of our submissions, in the bottom right‑hand corner, paragraph 105.

STEWARD J: Thank you.

MR DONAGHUE: We start with Professor Hart:

the word “defeasible” is “used of a legal interest in property with is subject to termination or ‘defeat’ in a number of different contingencies but remains intact if no such contingencies mature”.

We then make the point that that is why there is no inconsistency inherent with our acceptance that native title is property on the one hand and our submission that it is inherently defeasible to the relevant sovereign power on the other. Those contentions are totally reconcilable with one another:

the concept that property might be “defeasible” is not a novel notion developed in the context of s 51(xxxi), nor a concept that is confined to statutory rights.

Footnote 107. We have extracted the relevant part of Justice Gummow in JT International:

even at general law, an estate or interest in land or other property may be defeasible upon the operation of a condition subsequent in the grant, without losing its proprietary nature.

There is an example from Butt, Land Law:

a grant “to A and his heirs, but if the land ceases to be used as a school then it shall return to the grantors –

That is an interest in land, at the time of its creation, subject to a contingency or a condition which, if it occurs, does not involve acquiring the property. Why not? Because the property never had the element that would be necessary for there to have been an acquisition. The rights that the property conferred were always of a lesser kind.

GLEESON J: In that context, what is the source of the condition?

MR DONAGHUE: I think in the Land Law example, it is a condition in the will that just says, well, I am creating a right in property in somebody else, but I am making it subject to a contingency. There is a case in the Privy Council called Cooper v Stuart which we mentioned in our reply I think which we have not given your Honours in the bundle, but there is a useful discussion of it in one of the other cases that is there, and if your Honours could turn it up, it is McGrath v Williams, which is volume 20, tab 137. This is the case I was foreshadowing when I answered Justice Edelman’s question earlier this morning. If you have McGrath, could you go to page 481, and there is three lines down a reference to the language of the Privy Council in Cooper v Stuart:

“It is obvious that such a provision does not take effect immediately; it looks to the future, and possibly to a remote future. It might never come into operation, and when put in force it takes effect in defeasance of the estate previously granted, but not as an exception.” In that case, there was a grant of 1400 acres reserving any quantity of land, not exceeding 10 acres, in any part of the grant, as might be required for public purposes.

So, at the time the grant occurs – it is a grant in land – a reservation is made of the possibility that at some future point it will be said up to 10 acres are needed for public purposes. That then occurs in Cooper v Stuart 60 years after the land is granted, and that does not affect the character of the grant as property while it is in effect but “it takes effect in defeasance of the estate previously granted” is the way the Privy Council analysed it.

GLEESON J: I accept that the language of defeasibility was introduced by Justice Gummow, but are there instances where defeasibility has been a feature of the common law, as opposed to an aspect of the grant or the exercise of power?

MR DONAGHUE: Your Honour, his Honour Justice Gummow, as we understand it, saw – and I think consistently with what Justice Edelman is putting to me – the possibility that property might be defeasible to other contingencies as being an accepted element of property law.

EDELMAN J: But that is not enough for section 51(xxxi). Surely you would not say that if I have a property right that is defeasible by some third party but if a condition subsequent arises that the Commonwealth can acquire that without compensation.

MR DONAGHUE: No, because it is only defeasible to the contingency and, in that case, the contingency is not the Commonwealth doing anything, so the Commonwealth would have to pay. But, your Honour, if we take the Cooper v Stuart example in the Territory, so after 1911, and the Commonwealth pursuant to the relevant Crown lands grants someone 1,400 acres subject to the same reservation and then takes the 10 acres for a public park, in my submission, that is not an acquisition of property.

BEECH-JONES J: But they are the source of the property. They are the source of the grant. The native title of the Commonwealth is not the source of the grant.

MR DONAGHUE: That is true, your Honour, but, in my submission, it does not matter because the conceptual point is that the property, as a characteristic of the property from the time of its creation, is subject to a contingency.

BEECH-JONES J: I understand that, but there is a difference.

MR DONAGHUE: In the context of native title, native title is not granted by the Commonwealth, but native title is recognised by the common law, subject to the capacity of the Commonwealth to exercise particular powers. As it was, I think, in maybe the Butt, Land Law example, the occurrence of the contingency does not have to be within the control of the person who created the property; so, I grant you this land on the basis that you can have it except if it ceases to be used as a school, then it reverts. The question of whether it ceases to be used as a school or not may not be within the control of the grantor but nevertheless the property is inherently susceptible to that condition.

GORDON J: But it is within the control of the grantor because they have been able to impose the condition.

MR DONAGHUE: Well, they have imposed the condition. Maybe 60 years later someone stops – the person has died – and the property ceases to be used as a school. It does not matter that the contingency is in somebody else’s control, it just matters that the property has always been subject to the contingency.

EDELMAN J: Except you are running two different points together. So, one point is that native title, like all other property rights, are always subject to the contingency of the exercise of sovereign power – put aside rules about non‑derogation for grant. If that were right, then Justice Gummow’s second point – if that were sufficient to immunise a property right from section 51(xxxi), then Justice Gummow’s second point would be incorrect. But you are running together a separate point with that and saying there is something special not about the exercise of sovereign power but about the exercise of sovereign power that involves a grant, and that something special seems to be that this is a property right that does not have the same force as other property rights. But we see that all through the system of property ‑ ‑ ‑

MR DONAGHUE: Your Honour, that is not the something special in my argument. This comes back – and I apologise if I have been unclear – to the point that I made earlier this morning about the structure of Justice Brennan’s reasons. His Honour was all – it was all about, we can develop the common law to remove these unjust rules but only if to do so will not fracture skeletal principles, and the skeletal principle expressly identified, as I answered your Honour Justice Beech‑Jones, was the doctrine of tenure, the capacity to grant particular interests in land and appropriate.

The reason, as I understand his Honour’s reasoning, that that particular exercise of sovereign power is carved out is because that is what you need to carve out to avoid fracturing skeletal principles of the legal system, that is why recognition is contingent on that kind of sovereign power, and other kinds of sovereign power, it was not essential that they be excluded, so his Honour did not exclude them. That explanation accords with what Justice Gummow said, and it is not about native title being lesser or the relativities of the rights, it is about what the limit on recognition was. Because it was doctrine of tenure, that is where I get the two limbs of the relevant sovereign power.

There are three authorities that I would seek to take your Honours to before I sit down, and I will do them all quickly. First, Commonwealth v WMC Resources [1998] HCA 8; (1998) 194 CLR 1, which is volume 6.

GORDON J: What tab is that, please?

MR DONAGHUE: It is tab 69, your Honour.

GORDON J: Why are we going to these cases?

MR DONAGHUE: We are going to these cases because they are three in the line where the Court has discussed inherent susceptibility in a 51(xxxi) context, and what I am seeking to persuade your Honour is that they do not articulate the relevant principles in a way that confine them to statutory rights, that is my point.

So, in WMC – I do not think, in light of the time, I need to trouble your Honours with what it was all about. Basically, it was about whether mining exploration permits held by WMC that it lost involved an acquisition of property, and a majority of the Court held it did not. Some members of the Court, because – the majority all accepted it was property, but Chief Justice Brennan and Justice Gaudron found no acquisition because the Commonwealth did not acquire anything. Justice McHugh and Gummow found that the permits were inherently defeasible to the modification that occurred.

So, they were, I accept, statutory property, but it is the reasoning that I am seeking to rely upon. If your Honours could turn to Justice Gummow’s reasoning, paragraph 195. His Honour says, in the last sentence:

By reason of this nature of the property concerned there could be no acquisition –

Then he explains that in 196:

To accept this proposition is not to assert that the defeasible character of the statutory rights in question denies them the attribute of “property” in the “traditional” sense . . . For example –

His Honour then shifts from the statutory context:

the vested interest of a beneficiary under a settlement in which the settlor reserved a power of revocation would, pending such revocation, be proprietary in nature. A revocable trust is enforceable in equity whilst it subsists and the revocation would be without prejudice to prior distribution of income or capital. The point of present significance is that in some circumstances, of which the statutory rights in this case are an instance, the nature of the property may be such that its defeasance or abrogation does not occasion any acquisition in the constitutional sense.

In my submission, his Honour is plainly not limiting that analytical framework to statutory rights. Indeed, in the middle of the paragraph, he talks about non-statutory rights, and then he describes statutory rights as “an instance”. The Full Court at paragraph 380, assert that:

Gummow J’s reasoning, and his conclusion, is . . . firmly confined to statutory rights.

And we respectfully submit that that is not an available reading of what his Honour said.

BEECH-JONES J: Other than what you are now putting about native title, can you give us an example of some other right, defeasible right, that the Commonwealth would not be liable for, if acquired, outside a statutory context? Is there any other type of property interests out there?

EDELMAN J: You would say a grant of a lease that is subject to a condition subsequent ‑ ‑ ‑

MR DONAGHUE: I would – I cannot say that any category of property will always be, but it is certainly possible for Commonwealth to create property rights that are defeasible in that way.

BEECH-JONES J: In the seat of government, or in a Territory, or something like that.

MR DONAGHUE: Yes, and you could say, I allow you to occupy this site for X purpose but I can reclaim it at any time. If the Commonwealth granted someone a right of that kind and then exercised the capacity to reclaim, in my submission, that would not be an acquisition of property, even if 51(xxxi) does apply in the Territory.

I am reminded that there is actually – I will not take your Honours back to it, but in Newcrest itself, later in his analysis of the statutory rights in play there, Justice Gummow emphasises that they were subject, they had been granted subject to particular provisos such that if they had occurred, there would not have been an acquisition; but what happened was not that kind of sovereign power. So, even though they were inherently defeasible to that contingency, they were not inherently susceptible to what happens. I will see if I can turn up the page reference for your Honour; I had at one point planned to take your Honours to that.

Also, finally, staying in WMC, at paragraph 203, his Honour’s conclusion in the last few lines, the:

proprietary rights which were created in respect of the Permit –

So, they were property:

were liable to defeasance. By reason of their nature, upon such defeasance of those rights there would be no acquisition –

So, his Honour is saying when the contingency happens, it is not an acquisition for 51(xxxi).

Cunningham v Commonwealth [2016] HCA 39; 259 CLR 536, your Honours, is volume 6, tab 71. Your Honours may recall this was a case brought by former members of Parliament about challenges to changes to their retiring allowances, which the Court unanimously held did not involve an acquisition of property other than on just terms – so again, obviously, statutory rights. The circulatory reasoning I mentioned is at paragraph 40, but I will not take your Honours to it. At paragraph 43, this is in the joint reasons of Chief Justice French and Justices Kiefel and Bell:

“property” in s 51(xxxi) has always attracted a liberal construction –

We accept that:

Some cases concerning s 51(xxxi) have drawn a distinction between rights recognised by the general law and those which have no existence apart from statute and whose continued existence depends upon statute. The dichotomy is useful.

We do not deny that:

Rights which have only a statutory basis are more liable to variation than others.

Now “more liable” to variation may well be true as a factual claim, because, indeed, I think it is observed in Peverill, often rights that are created by statute are rights that are inherently susceptible to exercises of future statutory power – particularly, think social services benefits and matters of that kind. Not all statutory property – so, intellectual property or copyright, for example, has statutory foundation but is not inherently susceptible in that way. But to say that statutory rights are more liable to variation is distinctly not to say that only statutory rights may have that characteristic. And then, in paragraph 46:

The plaintiffs’ submissions –

are criticised as overlooking that:

within particular statutory rights a feature which is critical to their nature as “property” for the purposes of the application of s 51(xxxi) –

or the submissions overlook a feature that is “critical to their nature” of property:

If a right or entitlement was always, of its nature, liable to variation –

and these are the words I particularly emphasise:

apart from the fact that it was created by statute, a variation later effected cannot properly be described as an acquisition of property.

That is, the critical feature is not that the property was created by statute. The critical feature is that you can identify something about the right or entitlement that shows that it was always, of its nature, liable to variation. And if you can do that, the occurrence of that contingency does not involve an acquisition of property, and is therefore quite inconsistent with the Full Court’s analysis at 386 and 387.

Your Honour the Chief Justice at paragraph 63 explained why it was not the case that all statutory rights are inherently susceptible to variation. In explaining that the abstraction analysis one finds derived from Schmidt is a qualification on the general idea endorsed in Kartinyeri that whatever Parliament can make it can unmake – so, the fact that Parliament has ample power to create rights in property does not mean that when it removes them it necessarily will not contravene 51(xxxi) because of that abstraction.
But then your Honour explains, at 66:

potential characteristic of a statutory right of property created in the exercise of another grant of legislative power is that the right may be created on terms which make that right susceptible to administrative or legislative alteration or extinguishment without acquisition. That is to say, susceptibility to alteration or extinguishment by subsequent administrative or legislative action might be a characteristic of the right that is created – “inherent at the time of its creation and integral to property itself”.

Citing Justice Gummow in Davey. That is the same analysis, in our respectful submission, as one sees in Newcrest. And it is not an analysis that depends upon the statutory nature of the right; it depends upon the characteristics of the right at the time it is created. That same passage, and I do not think I have time to take your Honours to it, but that same idea – the Davey idea – “characteristic of the right inherent at the time of its creation and integral to the property itself” – is the explanation for Telstra v The Commonwealth (2008) 234 CLR 10.

I will not take your Honours to it, but it was a case about Telstra being required to give other competitors access to its local loops so that they could provide competing telecommunications services, and Telstra said that the requirement to give access involved an acquisition of property, and the Court said, well, when we look at how you acquired these loops, you were always required to provide access of that kind, so that the claimed acquisition failed because, effectively, using the Davey phrase, they were always subject to the access regime, so the bundle of rights never had:

the nature and amplitude which its arguments assumed.

Now, of course, your Honours, I accept that those cases are not native title cases. But they are cases, quite inconsistently with the propositions put against us, that fix not upon the statutory source of the right but upon the characteristic of the right, and particularly, whether it was subject to a contingency at the time of its creation.

If that is right, if your Honours accept that that is the principle, we submit Justice Gummow was not taking a large step at all in Newcrest when he said, because of the limitations on how the common law was able to recognise native title and to continue to recognise native title, it is inherently susceptible to the exercise of that power, and has always been. From the time of its recognition by the common law, it is inherently susceptible to the exercise of that power and therefore, the exercise of that power does not involve an acquisition of property on exactly the same reasoning you see in Cunningham, WMC and Telstra.

So, in our submission, the reasoning that Justice Gummow adopted was not the heresy that the Full Court thought, it was reasoning that commended itself to the majority and we submit it should be reasoning that commends itself to your Honours. If you accept that, ground 2 should be allowed. The Newcrest passages that I had mentioned, in answer to your Honour Justice Beech‑Jones, are at 618 and at 634.

Your Honours, those are our submissions on ground 2. I have taken 15 minutes of time that I had promised to Mr Lloyd. If your Honours were prepared to return that 15 minutes to us by a shorter luncheon adjournment, I would be grateful.

GAGELER CJ: We are prepared to accede to that request.

MR DONAGHUE: Thank you, your Honour.

GAGELER CJ: Is Mr Lloyd doing ground 1?

MR DONAGHUE: He is doing ground 1.

GAGELER CJ: And what happens with ground 3?

MR DONAGHUE: Ms Kidson is doing ground 3.

GAGELER CJ: At what time?

MR DONAGHUE: In order to conclude by the end of the day. So, the agreed allocation between the parties had the Commonwealth concluding at the end of the day, and as between Mr Lloyd and Ms Kidson, there is a cast‑iron commitment.

GAGELER CJ: And we will finish at 4.15 pm?

MR DONAGHUE: With the fifteen minutes that your Honours have kindly promised us, yes.

GAGELER CJ: Yes. On that basis, we will adjourn until 2.00 pm.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.05 PM:

GAGELER CJ: Yes, Mr Lloyd.

MR LLOYD: I propose to spend the first 10 minutes or so introducing the eight propositions I will address.

GAGELER CJ: You are going to have to speak up, Mr Lloyd, I am sorry.

MR LLOYD: I propose to spend the first 10 minutes or so introducing the eight propositions I will address. I will then turn to address each one in more detail in turn. The first proposition is that, putting aside any effect of section 51(xxxi), section 122 empowers the Parliament to:

make laws for the government of any territory –

including laws that effect an acquisition of property. I doubt that that is particularly controversial. I note that Justice Gummow said as much in Newcrest, even though he would overturn Teori Tau at page 594. In any event, under this proposition, I will also address the breadth of section 122.

The second proposition is that section 51(xxxi) is a “power to make laws” – using that expression as a formulation – with respect to:

the acquisition of property on just terms –

for what I will call, as a shorthand, “section 51 federal purposes”. Chapter 1 of the Constitution is entitled “The Parliament”. Part V of Chapter 1 contains section 51. Part V is entitled “Powers of the Parliament”. Section 51, itself, is entitled, “Legislative powers of the Parliament”. Its chapeau then provides that:

Parliament shall . . . have power to make laws for –

So, that is the same expression as used in 51(xxxi). Then the chapeau continues:

for the peace, order, and good government of the Commonwealth –

It then identifies for the subject matters of laws that the Commonwealth Parliament shares with the States. They are, in this sense, federal concerns. One of those matters is:

the acquisition of property on just terms –

in paragraph (xxxi). That is a power to acquire:

from any State or person –

it does not say Territory:

for any purpose in respect of which the Parliament –

again, the formula:

has power to make laws –

That is the expression used in the chapeau and identifies, we say, the other 39 matters in section 51. They are the matters which I will henceforth refer to as “the section 51 federal purposes”.

GAGELER CJ: How do you deal with section 96?

MR LLOYD: I will have to look at section 96, your Honour.

GAGELER CJ: In due course, Mr Lloyd.

MR LLOYD: Thank you, your Honour. Proposition 1 is that section 51(xxxi) empowers the making of laws that effect an acquisition of property for section 51 federal purposes. We accept that this a controversial proposition amongst the present parties.

GORDON J: I am sorry, Mr Lloyd, but I am having great difficulty hearing. Would you mind pulling the microphone a bit closer to you and see whether that helps?

GAGELER CJ: I think if you raise the microphone, Mr Lloyd – it is already sitting on some sort of stand – if that could be raised, it would be good.

GORDON J: Even an appeal book that is not being used might be helpful.

MR LLOYD: I hope that is better. Proposition 3 is, where a law that effects or empowers an acquisition of property is made under both section 51 and section 122, the just terms guarantee applies to the law.

The shorthand expression “abstracting” is sometimes used to explain how section 51(xxxi) relates to other heads of power in section 51. It is now well understood that this expression explains the result of a rule of construction. When a law confers two powers to do a thing, one of which is restricted or subject to restrictions, then an inference will or may arise that to the extent that the two laws overlap, the constrained power will be the sole power to do that thing.

One can see an example of that explanation in the context of section 51 – I will not take the Court to it – in Newcrest at page 550, Justice Dawson is there citing the exact passage dealing with that subject from Schmidt. We say that that just shows that that is the explanation of abstracting. Now, as a rule of construction, it is of course, subject to a contrary intention. I think of that rule, in my mind, as the Anthony Horden principle, although it is no doubt called other things. It has been used to explain how section 51(xxxi) abstracts from the other powers in section 51 on multiple occasions.

These various section 51 heads of power can also make laws that apply in Territories – that is, laws that could also, in respect of the Territory, have been made under section 122. So, the question necessarily arises, when a law effecting an acquisition of property is supported by both a section 51 head of power and also a section 122 power, does the just terms requirement apply? The majority in Newcrest held that it does. The Commonwealth contends that that aspect of Newcrest was correctly decided.

It follows that the Commonwealth position is that any law effecting or empowering an acquisition of property that is supported both by section 122 and section 51(xxxi), abstracting from all the other 51 heads of power, is subject to the just terms constraint. As a practical matter, following the establishment of self‑government in the Australian internal Territories, it is hard to imagine that there would be many Commonwealth laws that would not attract the just terms constraints.

GAGELER CJ: Mr Lloyd, can I just stop you there, just flagging a concern that I have. I think what you just articulated is the view of Justice Gaudron in Newcrest – I may be wrong. I have never understood how that squares with the abstraction principle that you have already articulated. If you could explain that when you get to that point in your argument, I would be greatly assisted.

MR LLOYD: I will certainly do that, your Honour.

BEECH‑JONES J: Mr Lloyd, could you also, when you get to this, explain exactly what you mean by “capable of being supported by”, especially in the context of not purposive powers, the other powers. Do you mean a law that is with respect – that could be supported as a law with respect to any power?

MR LLOYD: That is what I mean.

BEECH‑JONES J: So, that is what you mean. And is that the law in all of its applications?

MR LLOYD: In all of its applications. It could be supported entirely as, for example – this is an example we will come to – it could be supported entirely under section 51(xxvi) or it could be supported under section 122 – is that an issue? Then, if, in all of its operation it is able to be supported by one of those heads of power – because it is a law with respect to that head of power – that is what I am talking about.

BEECH‑JONES J: Right.

GORDON J: One more question I would like you to address. You need to address the criticisms made of the fade‑in and fade‑out aspect, i.e., if one falls away, then you have something which is subject to 51(xxxi), and then it is not subject to 51(xxxi). No doubt you will come to it. It is one of the criticisms made of it.

MR LLOYD: I hope that I will come to it, your Honour. What we say is that, looking to the future, in circumstances of the internal Territories, it is likely that there will be rare instances of the just terms constraint not applying to Commonwealth laws because most laws by the Commonwealth are not done solely under the Territory’s power.

Proposition 4 is where a law that affects or empowers an acquisition of property is made solely under section 122, the just terms guarantee does not apply. This proposition is really a reflection of the logic of the first three. Section 122 contains a power of eminent domain that is not directly constrained by a just terms requirement. A law made under both section 122 and section 51 head of power is subject to the just terms constraint by operation of something analogous to the Anthony Hordern principle ‑ ‑ ‑

BEECH‑JONES J: So, in that case, 122 has carved out of it the head of the power in 51.

MR LLOYD: To the extent of the overlap. So, where there is a law that is supported by both, then the just terms constraint takes priority or becomes the sole power to support that law.

GAGELER CJ: That is an abstraction from section 122. You say you have a double abstraction. You have 51(xxxi) abstracting from the head of Commonwealth power, and then that abstracted head of Commonwealth power abstracting from section 122. Is that the way it works?

MR LLOYD: In substance, there is an indirect abstraction. Section 51(xxxi) is, as a kind of general principle, abstracting from all the other section 51 heads of power. But then there can be laws that are made both under 122 and a section 51 head of power. That gives rise to the question of what one does in that case. Is there a tension between – does one say that the just terms constraint does not apply because there is an unconstrained head of power that supports it, or does one say that section 51(xxxi) does apply, and we accept that the intention of 51(xxxi) is to be a constraint on any law that is wholly supportable under section 51(xxxi), even if it is also separately supportable under section 122.

GAGELER CJ: I see.

MR LLOYD: In that sense, it is not exactly the same abstraction, but it operates in a similar way. Now, proposition 5. If propositions 1 to 4 are accepted, then proposition 5 means we need to establish whether or not the impugned laws are laws made solely under the Territory’s power. Proposition 5 is: the impugned ordinances were under section 21, or its successor, section 4U, under the Northern Territory (Administration) Act, and that those empowering provisions were made solely under section 122.

BEECH‑JONES J: Just coming back to that earlier question. If, for some reason, under this ordinance, they had acquired land that was used for a lighthouse, would the exercise of the power in that circumstance attract 51(xxxi)? A general law applying to Territory for the particular exercise involves something that might have a connection with a federal head of power.

MR LLOYD: If it is a Commonwealth enactment, then one applies the test that I have indicated. If it is an Act of a Parliament, one would see, is it wholly supportable under the lighthouse’s power? Is it wholly supportable also under the Territory’s power? Then the just terms constraint applies.

BEECH‑JONES J: If it not wholly supportable under the lighthouse’s power, only the Territory’s power, no just terms.

MR LLOYD: That is so. Having said that, that is not the case that we face. The case we face is a case where the laws – the ordinances are not obviously made by the Commonwealth Parliament, so section 51(xxxi) is a constraint on the Commonwealth Parliament, so one has to identify the law to which it applies, and that is the Northern Territory (Administration) Act which creates the power to make ordinances.

GLEESON J: You are just talking about section 21 of that Act?

MR LLOYD: I am talking about section 21. So, that is the law for that purpose, or section 4U, which replaced it. So, what we say, in essence, is that when one looks at that law – section 21, for example, and I will take the Court to this – it is a law that is only made under section 122. Then, after that, any ordinances made under that power – so, that is where 51(xxxi) would bite, if it bites at all. We say it is only made under 122. Subsequent to that, there is then just the statutory question, which is whether or not the ordinance is within the power to make ordinances.

Now, proposition 6 addresses an alternative proposition, which is – it is put against us that the approach that I have just advanced in proposition number 5 should not be accepted and that the proper way of analysing it is by looking just at the ordinances themselves, rather than at the law made by the Commonwealth Parliament. We deny that, but we would say even if we are wrong and a proper way of analysing it is to look at the ordinances themselves, these ordinances were solely made under section 122. The relevant powers – and I will identify what they are when I go to them in detail – are not – the whole operation of a power cannot be said to be supported by any other head of section 51 head of power.

Proposition number 7 says it would be incongruous for 51(xxxi) to apply to section 122. Now, this proposition arises, we say, even if it be accepted that section 51(xxxi) uses language broad enough to extend directly to section 122. So, that is to say, even if your Honours reject propositions 1 to 6, proposition number 7 is itself sufficient to uphold ground 1.

GORDON J: So, this is a textual argument? So, even if 51 is broad enough to extend to apply to 122, what is the answer?

MR LLOYD: The answer is that there is a contrary intention which makes it incongruous for it to apply.

GORDON J: What is that?

MR LLOYD: Section 122 is enlivened when the Commonwealth accepts, or acquires, a Territory. This can, and has, happened when a part of a State has been surrendered to the Commonwealth. We say that it is an intention of sections 111 and 122 that the Commonwealth, upon such surrender, that it have full dominion over the surrendered Territory, which is to say it receive all of the sovereign powers that the State had, and it is plain that part of the sovereign powers that the State had is the power to assert and create rights over unalienated Crown land, the power discussed by my learned leader in relation to ground 2, that is that particular sovereign power.

This was a key power to the States and an important way for the States to both earn revenue in land dealings and rent, and also to manage and control their territory and encourage development. That is the sovereign power discussed at length by Justice Brennan in Mabo (No 2). If section 51(xxxi) applies to section 122, then the Commonwealth can never have received that aspect of the sovereign power because it could not just grab interest in land, it would have to acquire the land first, and that is why everything would be valid unless there is an acquisition.

So, the incongruity is if 51(xxxi) applies, then the sovereign power to grant land – unalienated land – would be, in effect, not given. So, the Commonwealth taking over the role of the State, that part the State has surrendered to it, does not actually have ‑ ‑ ‑

GAGELER CJ: It does not have everything the State had. What it has is qualified by other provisions of the Constitution. There are many, many other provisions that qualify Commonwealth power in a Territory.

MR LLOYD: I accept that, your Honour. But we say it had to be in the mind of the founders that when a territory of land, which was controlled by States, could be dealt with by States, was given or accepted by the Commonwealth, that it was intended that the Commonwealth would at least have the power to grant interests in land in exactly the same way as the Commonwealth did. In this case, the Northern Territory Acceptance Act in section 7 continues on all of the South Australian laws. They all thought that they had the same powers to grant ‑ ‑ ‑

BEECH-JONES J: Who is “they”? When were “they” having this intention?

MR LLOYD: In that case, it would be the Parliament enacting the Northern Territory Acceptance Act.

BEECH-JONES J: The Commonwealth Parliament in 1910 ‑ ‑ ‑

MR LLOYD: The Commonwealth Parliament.

BEECH-JONES J: It is their intention that matters?

MR LLOYD: I am not saying it is their intention that matters. I am saying that it was understood that they were getting a power – and we say that that is consistent with the founders’ intention that they were to get a power to create – to have a territory that could create a new State, and we would say that that new State would be able to have the same powers as the existing States. And for them to have the same powers as the existing States, the commonwealth needs to have the same ambit of sovereignty as ‑ ‑ ‑

EDELMAN J: But it is not getting that sovereignty from the State. It is not a transfer of sovereignty. It is a relinquishment of title and an acquisition of title, but it is not a transfer of political sovereignty.

MR LLOYD: Well, in 1901, the Commonwealth had no – I use this term with some trepidation – radical title over any of the Commonwealth. The States had the radical title. The States had the power to grant interest in and to appropriate land to itself. That was exclusively a State matter. And when the Commonwealth – when a part of a territory is surrendered to the Commonwealth, what the Commonwealth gets is that bit of sovereignty that it did not formerly have. It might get other things as well, I accept.

EDELMAN J: What I am querying is your assumption that it gets that from the States, rather than the fact that the Commonwealth has that as a result of its position as a sovereign that now has title to the territory. It is not a transfer of State sovereignty to Commonwealth sovereignty.

MR LLOYD: Actually, I do not think my argument relies upon it being a transfer; my argument is that the Commonwealth becomes in the same position as the State, and we say that it was the intention of the Constitution in having a power where a bit of a State could become a Territory with a view to it becoming a State at some point in time in the future, that that ambit of sovereignty would be able to be fully exercised without the constraint of section 51(xxxi). So, we say that that is an incongruity.

It would be incongruous to imagine a regime whereby the Commonwealth could take territory from a State and then cease to have powers to be able to manage the land of that State in the same way as a State could, such as to grant interests in land without compensation, which States could do. We say that the intention of Chapter VI of the Constitution was to allow that, and imposing section 51(xxxi) on to it is incongruous with that implication from the Constitution.

The last proposition, proposition 8, is that Wurridjal did not create a binding ratio inconsistent with the above propositions. And then, if it did, we would seek to reopen it, but our primary position is that it did not. In short, we say that section 51(xxxi) is directed only at acquisitions for so‑called section 51 federal purposes.

We will say the law before Teori Tau, that was the law. We will say that the proposition was supported by four Justices in Newcrest, and is consistent with the result in that case; it was thus not overturned by Newcrest. We will say that only three Justices in the majority in Wurridjal found that 51(xxxi) was not directed only to section 51 federal purposes; that is not sufficient to overturn the pre-existing principle. Contrary to the reasons of the court below, we will contend that proposition 2 remains good law. It follows that it is unnecessary to reopen Wurridjal.

GAGELER CJ: Mr Lloyd, before you go on, could you try adjusting that microphone again, please? Just raise it further.

MR LLOYD: So, I will now return to proposition 1. Section 122 can be found in the appeal book – I am sorry, the joint book of authorities in volume 1 at page 93. It appears in Chapter VI, entitled “New States”. It empowers the Parliament to make laws for the purpose of:

the government of any territory –

This is not a power that was included in section 51. Section 51 conferred specific heads of legislative power for the Commonwealth. Section 122 is a special legislative power; it empowers laws to be made for the government of a Territory. Thus, it allows not only any subject matter of law pertaining to the Territory, it also allows for the making – laws establishing a system of government. In this way, it is of a different order to the powers conferred by section 51.

BEECH-JONES J: Would you accept that it allows laws that operate outside the Territory – so, in a State?

MR LLOYD: I accept that laws under the Territory’s powers can apply outside the Territory.

BEECH-JONES J: All right. So, what do you say about Justice Gummow’s Territory tourist office example, where the Commonwealth acquires State property in a capital city for a Territory tourist office? Do they have to pay compensation, or not?

MR LLOYD: We say it is an extreme example that has never happened. There has never been a case along those lines. The Commonwealth has never done that. To judge the power by reference to the possibility of that is inappropriate, we say. There would be a question of nexus that would have to be considered, in the same way as – for example, this Court has never been asked to consider if one State wanted to compulsorily acquire the land in another State, or wanted to compulsorily acquire from a resident of that State land that they held in another State. There would be questions of nexus to be involved. We say that that is an extreme example, like the possibility of the Commonwealth using the Territory’s power to acquire land from a land from a State. That is what we say in relation to his Honour’s example.

While it may be accepted that section 122 enables the Parliament to make laws for this purpose, it does not use – I should say, for much of the time, at least up until Wurridjal, the Commonwealth should have thought – certainly for the period after Teori Tau and prior to Wurridjal, the Commonwealth would have thought it had that power, and so there was decades of possibility of that. So, we think there is a just basis for saying it is an extreme example.

While it may be accepted that section 122 enables the Parliament to make laws for this purpose, it does not use the identical formulation. That is to say, section 122 can make laws for the purpose of acquiring property; it does not use the formulation power to make laws, which is the formulation used in 51(xxxi) itself and in the chapeau to section 51 – and nor is it in the section or the heading about powers of a Parliament.

Now, there are three kinds of Territories that can be – or categories of Territories that section 122 applies to. The first is Territories surrounded by a State and accepted by the Commonwealth. The category of territory is addressed specifically by section 111 of the Constitution, and it provides that the Commonwealth shall have “exclusive jurisdiction” over that territory. We say that territory no longer involves a distribution of powers between the Commonwealth and the State. The Commonwealth obtains the sovereign powers that formerly belonged to the State, or at least can exercise them in a way that it formerly could not. It is then exclusively, we say, within Commonwealth control.

The second category is envisioned by section 122 as a territory placed by the Crown under the authority and accepted by the Commonwealth. The third category is a territory “otherwise acquired”. That is, otherwise than from States or from the Crown. Categories 2 and 3, we say, also involve new territories that necessarily involve no land that had formerly been a State, and also no distribution of powers between the States and the Commonwealth.

GAGELER CJ: What is an example of the third category, “otherwise acquired by the Commonwealth”? Is there an example? Has it happened?

MR LLOYD: I am instructed that there has been a question whether the mandate territory of New Guinea might fall within that, as opposed to – as a reference from the Crown. I think Papua is from the Crown and New Guinea is from the UN, or the League of Nations or something.

BEECH-JONES J: Are they all covered by the external affairs powers?

MR LLOYD: I will come to that.

BEECH‑JONES J: Take your course, M Lloyd. Whenever you wish to.

MR LLOYD: Just to foreshadow, we say that there is no authority saying that once an external piece of land becomes a Territory, it is then covered by the external affairs power.

BEECH-JONES J: Any authority to the contrary? I am just aware of authorities that say external to Australia.

MR LLOYD: Yes. Well, I will take your Honours to the cases, or at least give references to them. I think we refer to them in footnotes 33 and 34 of our ‑ ‑ ‑

BEECH-JONES J: Submissions?

MR LLOYD: ‑ ‑ ‑ submissions. The clearest authority is Fishwick v Cleland, as I recall, which indicates that – or at least suggests – I do not want to suggest it is ratio, but suggests that PNG was part of the Commonwealth, as opposed to external to the Commonwealth.

So, common among the three categories is that the States have no legislative power over them. Even those territories that were originally parts of States are subject to the exclusive jurisdiction of the Commonwealth. It is in that context that the scope of the power to make laws for the government of any Territory must be understood. That legislative power has been described as:

of a different order to those given by s 51 . . . unlimited by reference to subject matter . . . as large and universal a power of legislation as can be granted. It is non‑federal in character in the sense that the total legislative power to make laws to operate in and for a territory is not shared in any wise with the States.

All of those quotes were from Chief Justice Barwick in Spratt v Hermes at pages 241 to 242. I will not take the Court to that. I can indicate that similar things were said by other Justices in that case. Justice Kitto at 250 to 251 said:

it seems clear enough that the limitations which Chap. I puts upon legislative power in the working of the federal system, anxiously contrived as they are with the object of keeping the Parliament to the course intended for it, are thrown aside as irrelevant when the point is reached of enabling laws to be made for the government of territories –

The passage, we say, emphasises two matters. First of all, the breadth of section 122, and secondly, unlike all the heads of power in section 51 that were, as his Honour put it, anxiously contrived, section 122 was not anxiously contrived. One sees in section 51 that the word “State” appears 22 times in section 51, the word “Territory” appears no times ‑ ‑ ‑

GAGELER CJ: Mr Lloyd, it is very hard to take that language from a case like Spratt v Hermes, which was argued in the context of looking to the relationship between section 122 and Chapter III of the Constitution. We now think about that relationship quite differently from those days, which I think were the 1970s, were they? Early 1970s.

MR LLOYD: Yes, or perhaps even earlier than that.

GORDON J: 1965.

MR LLOYD: I am going to do a historical sweep to say that this aspect of the principle has been maintained ‑ ‑ ‑

GORDON J: The aspect being that 51 is contrived, and 122 is not?

MR LLOYD: That section 51 contains an anxious contrivance of how much should go to the Commonwealth and how much should go to the States, where section 122 is an unabandoned grant of – as Justice Windeyer said at 273 – complete sovereignty to the Commonwealth.

Before leaving Spratt, and to avoid returning to it, I noted the Justices who describe section 122 as plenary all acknowledged that, notwithstanding the breadth of the power, it was not independent of or uncontrolled by other provisions of the Constitution. Chief Justice Barwick says that at 242, Justice Windeyer at 277. So, it is not part of our case that section 122 is untouched by the Constitution. We accept that it is very integrated, and indeed, the acceptance of the correctness of Newcrest shows that, in fact, the extent to which the just terms requirement is not imposed is actually quite likely – going forwards, anyway – to be quite rare in relation to self‑governing Territories, at least.

The next case in the historical development is Berwick Ltd v Gray (1976) 133 CLR 607, in volume 5 of the book, starting at page 1137, I think it is, at tab 61:

The short and compelling answer to this argument is that the power conferred by s. 122 to make laws for the government of a Territory is a plenary power and that all that need be shown to support an exercise of the power is that there should be a sufficient nexus or connexion between the law and the Territory.

Then, a bit further down the page, his Honour notes that section 122 needs flexibility to deal with ‑ ‑ ‑

STEWARD J: Mr Lloyd, what page is that, sorry?

MR LLOYD: It is page 607 of the report, and page 1137 of the volume.

STEWARD J: Thank you.

GORDON J: I understand that the first bit you took us to was the first sentence of the second paragraph. What was the next one, please?

MR LLOYD: At the bottom of the page, the beginning of the next paragraph, “The power conferred” down to “administrative institutions”. We say section 122 plainly confers an extremely broad and flexible power on the Parliament, capable of addressing whatever are the circumstances in any given Territory. One is left with the purpose of making laws for the government of the Territory.

That power sustains laws that just have a nexus with the good government of the Territory. In that way, the legislative power conferred by section 122 on the Commonwealth Parliament in respect of a given Territory is akin to the legislative power enjoyed by a State Parliament in respect of that State. It includes a power of eminent domain, to acquire the property of others.

This – which is a power from the breadth of the language itself – was made express in Teori Tau, and the relevant reference in Teori Tau is [1969] HCA 62; 119 CLR 564, at page 570.2, volume 15, page 5859. That passage is a passage of the unanimous decision of this Court. The language of section 122 is apt to confer a power of eminent domain. The relevant passage says:

Section 122 of the Constitution of the Commonwealth of Australia is the source of power to make laws for the government of the territories . . . In terms, it is general and unqualified. It is apt to confer, amongst other things, a power to make laws for the compulsory acquisition of property.

We say that the weight of this judgment should not be, in some way, downgraded by the fact that it was made ex tempore. It was seriously considered – I think the then Solicitor‑General, Mr Ellicott and Mr McLelland appeared for the Commonwealth.

EDELMAN J: Strictly, considering the emphasis on precedent in your submissions, this authority is not precedent about proposition, given that the point was not argued because the respondents were not called upon.

MR LLOYD: In my submission, a case does not cease to have precedence because one side is not called upon.

EDELMAN J: Really?

MR LLOYD: Indeed. Called upon – because members of the Court had fairly recently heard Spratt v Hermes – most of the members of the Court, they were very familiar with it. They no doubt had written submissions on the other side. It was not like they did not receive ‑ ‑ ‑

EDELMAN J: I do not think they did have written submissions at that time.

MR LLOYD: I am not sure about that. I cannot say one way or the other. But, in my submission, it was a case which was considered clear‑cut and adopted by a unanimous Court in which a matter was determined by reference to a construction of the Constitution adopted by all seven members of the Court, and that is sufficient to be ratio. It was treated as ratio in Newcrest, for example, and, indeed, in Wurridjal.

Our first proposition goes only to the point that the terms of section 122 are sufficient to confer a power of eminent domain. There is a separate question whether, and the extent to which, other provisions in the Constitution may constrain that power. The unanimous position in Teori Tau remained unanimous, we say, in Newcrest – that is to say, that it is implicit in the four Justices who declined to overrule Teori Tau that they accepted that section 122 conferred a power of eminent domain. It is also clear that Justice Gummow, at 594, accepted that the language of 122 was sufficient to include a power of eminent domain. Justice Gaudron agreed with Justice Gummow, at 561. And Justice Kirby, at 648, at about point 7 on the page, said:

The grant of power by s 122 to make “laws for the government of any territory” must be taken to include a power to legislate for the compulsory acquisition of property. Such power is, as it was in 1901, an essential feature of “government”.

So, we say that is, again, another unanimous decision of this Court, saying that their power does extend that far. That is all I want to say about proposition 1. I will move now to proposition 2, which is that section 51(xxxi) is a power to make laws with respect to the acquisition of property on just terms for section 51 federal purposes.

Upon Federation, the Commonwealth was not vested with any real property, although it did get some shortly thereafter. It was, no doubt, self‑evident that the Commonwealth would need to acquire land from the States or private persons from time to time to undertake its functions throughout the Commonwealth.

As I will seek to show, section 51(xxxi) was inserted for two purposes: first, to ensure that the Parliament had the power to make laws for acquiring property when considered appropriate for the peace, order and good government of the Commonwealth; and secondly, to subject the power to a just terms requirement.

In that regard, if I can take the Court to W.H. Blakely, which is not in the book, but which has been handed up separately and to page 521. This is a unanimous decision of the Court. The Court at the top of page 521 says:

The power to acquire property compulsorily would probably have been regarded as forming an incident of almost every other power which is expressly granted by s. 51 in the absence of par. (xxxi.), and the grant of a specific power would have been in itself unnecessary. At all events that is the view which no doubt would now commend itself to constitutional lawyers.

The Court then continued to observe that the founders also – and I quote here:

desired to limit the power of acquisition by imposing a condition that it must be exercised upon just terms.

The vehicle they chose to do that was to confer a specific but restricted power. Thus, section 51(xxxi) served those two purposes. And the Court further continued about the middle of the page – they said:

Naturally the power of acquisition must be for objects which fall within the Federal province.

And we say the reference to the federal province refers to the section 51 powers that may have, themselves, supported the acquisition of property referred to earlier in that paragraph. Now that position is also confirmed by the drafting history, which is conveniently summarised in Newcrest by Justice Kirby at 649, starting with proposition 3:

An explanation for this differentiation may exist in the history of s 5l(xxxi). The location of the provision in the list of the Commonwealth’s legislative powers suggests that it was not conceived of as a constraint on power but as an ‑ ‑ ‑

STEWARD J: Sorry, Mr Lloyd, I missed the page again.

MR LLOYD: Sorry, it is 649 of the report.

STEWARD J: Thank you.

MR LLOYD:

The location of the provision in the list of the Commonwealth’s legislative powers suggests that it was not conceived of as a constraint on power but as an affirmative contribution to that power, although on the condition stated. In their text of 1901, Quick and Garran explained that the addition of the provision was proposed at the 1898 session of the Constitutional Convention to overcome doubts which were expressed that the proposed Federal Parliament would not have “a right of eminent domain for federal purposes”.

I stop here to make two points. The ambit of the doubt was in relation to, we say, the section 51 heads of powers – that makes sense. The section 51 heads of powers were liable to require acquisitions in States. There was no doubt that the power existed in respect of the Territories over which the Commonwealth would have complete dominion.

So, section 51 was in part to remove the doubt pertaining to the section 51 heads of power. After the reference to footnote (443), Justice Kirby continues:

The function of the paragraph as a grant of federal power has long been accepted by this Court. The function of s 122 is different. It was not part of the assignment of powers as between the new federal polity and the States, which was the general concern of s 51. To that extent the territories power in s 122 has been described as “non‑federal” in its essential character.

This discussion confirms that Justice Kirby understood that the historical source indicated that 51(xxxi) was directed to the substantive section 51 heads of power and not to section 122. We say that that historical understanding is correct. Also on the point, and somewhat taking it a step further, is a decision of this Court in Svikart v Stewart [1994] HCA 62; (1994) 181 CLR 548, in volume 15.

JAGOT J: At 114 ‑ ‑ ‑

MR LLOYD: At 114, I understand. Now, that case concerned section 52(i) of the Constitution. It conferred on the Parliament:

exclusive power to make laws for the peace, order, and good government of the Commonwealth with respect to “[t]he seat of government –

And then, relevantly:

and all places acquired by the Commonwealth for public purposes”.

In Svikart, the Commonwealth had acquired certain land in the Northern Territory post self‑government for defence purposes. A question arose whether section 52(i) applied to places acquired by the Commonwealth in a Territory – that question is summarised at page 557. If it did, it would exclude the operation of laws made by the Northern Territory legislature. The joint judgment reached the conclusion that section 52(i) was only intended to provide power that was exclusive only of State legislative power – that is, not exclusive of section 122 legislative power – and that conclusion is at page 560.

In reaching that conclusion, their Honours considered aspects of the history of the drafting of the Constitution. The predecessor to 52(i) was clause 53, originally referred to:

places acquired . . . with the consent of the parliament of the state in which –

the place is situated. Now, that was drafted at a time before the Commonwealth was given the power of eminent domain in 51(xxxi). Then, on page 559, there is a passage at the bottom of the page that begins “The words”:

The words “with the consent of the parliament of the state in which such places are situate” remained in cl. 53 until . . . 1898 . . . At that Convention Mr. O’Connor successfully moved the insertion in the draft Bill of what was to become s. 51(xxxi) of the Constitution, giving the Parliament power to make laws with respect to the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws.

When 51(xxxi) was included in the draft, there was then no longer any need, of course, to refer to places acquired with the consent of the state. The joint judgment reasoned that places in Territories were always out of the range of 52(i), both before and after 51(xxxi), because in the previous paragraph they say:

the Commonwealth would, in any event, have political dominion and legislative authority.

in the Territories. That indicates that section 122 already included all necessary power to acquire land in the Territory, even before 51(xxxi) existed. Further, it implies that 51(xxxi) was not directed at the Territory’s power. Then, from the bottom of page 559 and over the page, the majority notes that:

The removal of the words –

about the consent was:

explicable only by reference to –

the insertion of 51(xxxi). Their Honours then say:

At all events, that was the context in which the amendment was made and, no reference being made to places in a Territory, it can hardly be thought that its purpose was to extend the ambit of the clause to places acquired in a Territory.

We say that means that neither 52(i) nor, we contend, 51(xxxi) were directed at acquisitions under 122. They were concerned with what Blakely had referred to as the “federal province”; that is to say, laws made with respect to one of the section 51 heads of power. So, we say that is another judgment of a majority of this Court that supports proposition 2.

Then, of course, Teori Tau had already, by this time, unanimously determined that 51(xxxi) was directed at section 51 federal power. That is at page 570 of the judgment in Teori Tau, which is – the passage at the bottom of that page, we say, is only explicable on the basis that – their Honours say:

Section 51 is concerned with what may be called federal legislative powers as part of the distribution of legislative power between the Commonwealth and the constituent States.

And 51 obviously includes 51(xxxi), and so we say that is another court that embraces our proposition 2. In Newcrest a different issue arose, which was: does the just terms guarantee apply to a law supported by both 51(xxxi) and 122? It may be observed that four members of the Court maintained the position in Teori Tau that 51(xxxi) confers power only in respect of federal purposes.

GAGELER CJ: Mr Lloyd, are you up to paragraph 10 of your outline, at this stage?

MR LLOYD: I am still on proposition number 2, which is troubling me. Yes.

GAGELER CJ: Could I just go back to paragraph 9 for a moment?

MR LLOYD: Sorry, go back to paragraph ‑ ‑ ‑

GAGELER CJ: Paragraph 9, for a moment.

MR LLOYD: No, sorry, I am on paragraph 9.

GAGELER CJ: All right. Okay. Well, I have interrupted you now, I will continue the question. Your proposition refers to section 51 federal purposes. The reason for my question about section 96 earlier relates to the case of ICM Agriculture that you have not referred to in these submissions. If you take that into account, I do not think that you could refer to section 51 federal purposes. You might have to cross out the section 51.

MR LLOYD: I accept that, your Honour. There are some other federal purposes that perhaps come from other sections such as section 96. But we say that the line that is drawn is between the Territories which are not for a federal purpose, and ‑ ‑ ‑

GAGELER CJ: So, you might have section 51, section 52, section 96 ‑ ‑ ‑

MR LLOYD: Indeed.

GAGELER CJ: ‑ ‑ ‑ potentially section 71. There are other provisions.

MR LLOYD: I accept that federal purposes would be a better description.

GORDON J: And so, what does that mean?

MR LLOYD: It means ‑ ‑ ‑

GORDON J: If it is not 51 purposes in the way that the Chief Justice has put to you, we know that it is subject to 52 and 96 and all the other attachments that attach to it, what does it mean when you have a plenary power like this?

MR LLOYD: Well, for present purposes we say that 51(xxxi) is focussed upon federal purposes, and most of those federal purposes are in section 51. We say it is clear from the cases I have already been to that federal purposes are dealing with where there is some aspect of the compact – or distribution of powers between States and the Commonwealth, and that is to be distinguished from situations where there is not a distribution of power between States and the Commonwealth, and wherever one draws the line of where federal purposes are, the Territories are on the other side of that line, otherwise it has no meaning at all. We say there is clearly a distinction being made between laws done that are solely for Territory purposes and laws done for federal purposes.

GORDON J: Thank you.

MR LLOYD: I see the time; I am going to have to speed up significantly. But, if so, I will just give the Court some references. In the four members of the Bench who, we say, uphold proposition 2 in Newcrest, one can see that at page 532 in Chief Justice Brennan, at point 7, and 42 at about point 5; Justice Dawson at 548, over the page to 549, at 551 in reference to Clunies‑Ross, and then at 552 and 553 at about point 8; and Justice McHugh at 583 at point 2, and at the bottom of that page – 583 at the bottom of that page.

Justice Toohey is the fourth judge. He does not say it as clearly as the other judges say it, I accept. But we say that it is clear in deciding to not overturn Teori Tau, he has accepted that section 51(xxxi) is directed towards federal purposes. That is how he was able to make an exception and see Teori Tau as being a case about a law that was only done under Territories power.

It may be accepted that Justices Gaudron, Gummow and Kirby did not see 51(xxxi) as being constrained in a way that did not apply to section 122. They were of a different view, but were in a minority. Justice Gaudron, of course, had her alternative basis, which I have already, I think, in substance explained how we say it works. That if a law is made under two powers, one being section 122, and one being supported by, in effect, 51(xxxi), because it is abstracted from one of the other section 51 heads of power, then at that point, there is what is at least broadly analogous to an Anthony Hordern point that for that law, that law should be seen as only made in respect of the section 51(xxxi) and has the constraint imposed on it.

BEECH‑JONES J: Anthony Hordern only applies where one power is wholly contained within the other. That is just not the case for 51 and 122. There may be overlap, but they both operate in different spheres. Just exactly how, textually, does that work? Does it withdraw from 122? Is there that double abstraction that you referred to earlier?

MR LLOYD: What we say is, where you have one broad, unconstrained power, and one narrower, constrained power ‑ ‑ ‑

BEECH‑JONES J: What is the narrower, constrained power?

MR LLOYD: The narrower, constrained power is 51(xxxi).

BEECH‑JONES J: Lighthouses everywhere.

MR LLOYD: I am sorry?

BEECH‑JONES J: Lighthouses across the country. They are not constrained, they are just different. Section 51 is not narrower, it is just ‑ ‑ ‑

MR LLOYD: What I mean by constrained is, the power to make laws for the acquisition of property is constrained by the requirement to give just terms. Any source of power under section 51 is subject to the requirement to give just terms, whether it be lighthouses or anything else. Insofar as a law could be made pertaining to lighthouses or anything else, that is supported by both a section 51 head of power and the section 122 head of power, because to the extent that it applies in the Territory – not its totality, but to the extent that it applies in the Territory – we accept that, by way of analogy with the Anthony Hordern principle, that to the extent of the overlap; to the extent that 51(xxxi) overlaps with a law that is also supportable separately under section 122, it would apply.

I should say, if there was a law about all lighthouses in Australia, we do not necessarily say that would even necessarily be supportable by section 122. It may or may not, it depends on what the terms of the law are. But if there was a Commonwealth enactment which was just about Northern Territory lighthouses, it may well be supportable under both, and we say the way that it works is that – accepting that in, I think, Wurridjal, Justices Hayne and Gummow referred to the abstraction idea as a metaphor, it is the same kind of metaphor that explains what is happening. To the extent of the overlap – so, to the extent that there is a law that is wholly supportable – the law being the key provision – wholly supportable by both heads of power, then the 51(xxxi) becomes – the constraint applies as if it is the only head of power. Whether one says it is the only head of power – it is really metaphorical.

GORDON J: Sorry, when you say “only head of power”, you are not talking about 51(xxxi) though, you are talking about another section 51 head of power.

MR LLOYD: Well ‑ ‑ ‑

GORDON J: So, you have a section 51 head of power, you have a section 122 head of power, and then you have 51(xxxi) and you disapply it to 122. Is that the way it works?

MR LLOYD: Sorry, your Honour. If you have, say, a head of power to do with lighthouses, but the particular provision is to acquire land for a lighthouse – so that is the section we are talking about. That law that acquires land for a lighthouse is actually not at all supported by that lighthouse’s power. It is supported by 51(xxxi), because it wholly abstracts the power from the lighthouses power to acquire property. So then that law could be wholly supported by 51(xxxi).

Then you ask, well, is the lighthouse only in the Territory? Yes, the lighthouse is only in the Territory. Could it be wholly supported by section 122? Yes, in my scenario it could be wholly supported by section 122. So, you have two separate sources of power, and what we are saying is how the abstraction works is that at that second stage, because of the importance of the guarantee in 51(xxxi), it becomes the sole source of power to make that law where there is overlap.

If, however, there is a law that is not supportable at all under any section 51 head of power or any federal power, the laws that are solely made under section 122, we say, are not touched by 51(xxxi). There is no abstraction there because there is no overlap for any abstraction to take place.

GAGELER CJ: Mr Lloyd, just speaking for myself – and I know that this has been said judicially before – this third proposition seems to contradict your first two propositions. You are accepting that section 51(xxxi), to some extent, abstracts from section 122.

MR LLOYD: My second proposition is that section 51(xxxi) is directed only to the federal heads of power. My third proposition is that when you have a constraint imposed by 51(xxxi) that supports a law that is also supported by section 122, then one has to resolve – and there are two ways of resolving it. One could say, well, the section 122 head of power is unconstrained, so, who cares about the just terms constraint. And that was, of course, the position that the Commonwealth argued for in Wurridjal and in Newcrest and in Teori Tau. The Commonwealth are now saying, we accept the wisdom of Newcrest, that when those two sources of power can wholly support a particular provision, that because of the importance of the section 51 guarantee, it can, at that point – if you want to use the metaphor – abstract from that power.

Another way of putting it is just that it is not avoided – that the guarantee in 51(xxxi) is not avoided simply by reason that it is independently supportable by section 122. I do not want to get bogged down by metaphors. We are saying that the appropriate balance – that achieves a constitutional balance in which, we say, the result of that Newcrest position is a very sensible result, in that, basically, all federal laws that just terms require – all laws in which a federal purpose is being pursued in an acquisition, the just terms requirement applies.

In the rare laws which are done only under section 122, the people affected by those laws are in the same position as they would be if they were in a State. In fact, in practice, people in the territories are in a better position still, because the Commonwealth Parliament has decided to impose a just terms constraints upon the self‑governing Territories – but that is a choice of the Parliament. What we are saying is that constitutionally, they should be treated the same, and our argument – which is to say, the Newcrest argument – results in equality of treatment, broadly speaking, as far as it can be achieved.

GAGELER CJ: So, there are three possible positions. One is Teori Tau, two is Justice Gaudron in Newcrest and the third is Justice Gummow in Newcrest. I think they are the three alternatives, and you are opting for the middle position, which is Justice Gaudron and Justice Toohey.

MR LLOYD: Yes, and the Commonwealth has – and what we say is in Teori Tau, what might be loosely called the Teori Tau position was in fact only a law about section 122 laws. So, it can be explained consistently with Justice Gaudron’s position in Newcrest, and we say that that is correct as a matter of authority but also as a matter of principle and as a matter of the outcome achieved is the right outcome. It means that section 51(xxxi) is imposed in every sphere of the federal purposes for which it was aimed at, and the main purpose of proposition 2 is to show that it was there to resolve a concern about the power in relation to federal purposes, and it does that, and the Justice Gaudron result is, we say, the correct result and the one that this Court should adopt.

BEECH‑JONES J: Are you going to address Justice Gordon’s fluctuating power question?

MR LLOYD: In the sense that if you change the law the ‑ ‑ ‑

BEECH‑JONES J: The Commonwealth withdraws from the treaty, and the law may have been supported by an external affairs power. I mean, it is not ‑ ‑ ‑

MR LLOYD: Well, there may be a question, which does not really arise in this case, as to whether the question of validity is to be judged continuously or at a time. We would say it does not have to be resolved, but if that is the consequence of it, then a law that is solely under section 122 – I mean, again, it is a fairly extreme example – but a law that is solely under section 122 should not be subject to a just terms constraint. So, if it has the possibility that some fact has changed – perhaps the defence power is another example. With acquisitions ‑ at least with acquisitions, there will be a question as to what the position is at the time of the acquisition, and so one will just apply it by reference to the time of the acquisition.

Now, in Wurridjal – I have to, I am afraid, hurry through that. We say the position in Wurridjal is this: that there was one ground of demurrer and the ground of demurrer was that on the facts pleaded the case could not be established, and then there were three reasons, three substantive reasons – actually, four matters were advanced, but only three are dealt with in the Court, so I will stick with the three that are dealt with in the Court.

They were all posited as alternatives such that it was unnecessary to determine all of them. One sees that done, in fact, by Justice Crennan, who decided it on the basis that there was no acquisition; and by Justice Heydon who decided it solely on the just terms argument, expressly saying he was not deciding the two other possible arguments; and that left five Justices who considered the first question, which was whether or not section 51(xxxi) applied to or constrained the relevant legislation.

The five judges in the majority who upheld the demurrer are Chief Justice French, Justices Gummow, Hayne, Heydon, and Kiefel, and decided it on the just terms basis. Of those five, only four considered whether section 122 was subject to the just terms requirement. Justice Kiefel decided it based on the Newcrest basis. Justices Gummow and Hayne also agreed that that principle applied, and I will give your Honours a reference to that. It is paragraph 187, but in addition, Justices Gummow, Hayne, and Chief Justice French also decided it on the basis that section 51(xxxi) applied directly to section 122.

So, the reference in it to the power to make laws included section 122, so that the result of that case, we say, was that there was no majority for any single view, and certainly there was not four members of the Court in the majority that to overrule Newcrest or Teori Tau. So, we say that proposition 2 remains good law.

Moving on, quickly, to proposition 3, we say that the result of propositions 1 and 2 is that four laws – for proposition 3, where a law is supportable wholly by both section 51 and section 122, the just terms guarantee applies. That is the result of Newcrest. Proposition 4 is that where the law is supportable solely by section 122, the just terms guarantee does not apply. That is the result in Teori Tau, and we say that was not overturned either in Newcrest or Wurridjal, and for the reasons I have already said, is the correct view of the law.

I will move on, quickly, to proposition 5 ‑ ‑ ‑

GORDON J: In Cowen and Zines’ book, they viewed Wurridjal as what they thought was something that could be described as the final triumph of the integration view of the application of 122 to the Territory.

MR LLOYD: Perhaps I may put it this way: in Wurridjal, the Commonwealth was arguing that Newcrest was wrong, and that Teori Tau was right, and so it was posed – we would say incorrectly – as an argument between a sort of disjunctive view and an integrationist view, whereby nobody was arguing that Newcrest was correctly decided for Justice Gaudron’s principle. We say that if you accept Justice Gaudron’s principle, that is an integrationist view.

EDELMAN J: A little bit integrationist.

MR LLOYD: I would say almost entirely integrationist, with only a little exception. A little exception for laws made by the Commonwealth Parliament pertaining to territories and solely to territories, which, at least in respect of internal Territories, is likely to be extremely rare since in self‑government, which is what Justice Toohey said in Newcrest. He saw it as being largely a historical question, we accept that and say that that is true. While it is theoretically possible for the Commonwealth to still pass laws solely under section 122, it does not happen often.

The next question is whether or not section 21 is such a law. Section 21 can be found in volume 1, at page 106. It is, in effect, a law just to make ordinances. We say the only head of power that can support section 21 is section 122, so therefore section 21 of the Northern Territory (Administration) Act is a law solely supported by section 122. Then, we say, at that point one can apply by way of analogy the analysis that applies in Palmer v Western Australia [2021] HCA 5; (2021) 272 CLR 505, at paragraphs 119 to 120. It is in volume 13 of the bundle, tab 98.

Now this was about other guarantees, not 51(xxxi), but we say by analogy it should apply as well. So, if you have a law which is made – and when one looks at the law of the Parliament, the law of the Parliament – the relevant paragraphs are 119 and 120. Here, the law of the Parliament is the law that makes section 21. We say it is only a law under section 122, therefore that leaves the only question left as being the so‑called statutory question, which is ‑ ‑ ‑

GAGELER CJ: Mr Lloyd, how do you square that with Capital Duplicators (No 1) and the line of authority to which it refers? If you set up a legislative body, then the legislative body is creating its own laws; it is not an exercise in delegated legislation in the same way as the case to which you have just referred.

MR LLOYD: I accept there is a difference, but nonetheless if the constraint on 51(xxxi) is on the Commonwealth Parliament, that is where it bites, we say, and we say that there is no other law under section 51 or anything else that would support it, only section 122, and ‑ ‑ ‑

BEECH-JONES J: Just so I get this, and I do not mean to be obsessed about lighthouses, but if there was an ordinance made about lighthouses you would say, tough luck. That does not engage 51(xxxi) because the law it is made under could uphold the overall law in all its applications, but only be supported by 122. Is that right?

MR LLOYD: That is so. So, you look at the law of the Commonwealth Parliament, the law of the Commonwealth Parliament could only be made under section 122, is that a valid law? Once you say that is a valid law, then one goes on. It works exactly the same way, we say, in that Palmer Case. I accept there are differences as to what the guarantee is, but it does end up with the result that if you apply the test directly to the action or to the delegated legislation you might come up with a different result than if you applied it to the statute.

GAGELER CJ: My point is it is not delegated legislation, and there is so much history there; it is simply not delegated legislation.

MR LLOYD: Can we move on to proposition 6, your Honour. Proposition 6 deals with whether or not any of the powers are – I have almost no time to develop this – but section 107 is a power to vest property in minerals and the Crown. We say that it is simply only supported by section 122. The NLC says, but it only impacts native title holders, and so a differential impact is enough to make it a law with respect to – under the race power. We say that, under section 51(xxvi), it has to be deemed necessary by Parliament. It is impossible to say that in 1939 the Parliament passed that law because it was deemed necessary for the Aboriginal people, and so that is an impossible ask for them.

The other power that it was made under is – it was not even mentioned by my friends, the NLC – is section 54D. I will give your Honours a reference to where to find that, it is in volume 2 at page 279, it is the power to make special mineral leases. My friends say under the Mining Ordinance at that time there was a Part VIIA which made a number of special provisions in relation to mining and Aboriginal reserves. We accept that, but 54D was not part of that special provision, it is not part of Part VIIA. When one looks at section 54B, it is a power that can be exercised, not only on Aboriginal reserves but also on other Crown land.

So, when one looks at it, if the Commonwealth came the day after it was enacted and said section 54D is the law with respect to races, there is no way it could sustain the law. So, we say that, to that extent, it is not supported by the races power.

BEECH‑JONES J: Mr Lloyd, I am a little bit lost. Section 54D of which one in volume 2? The Mining Ordinance, did you say?

MR LLOYD: It is tab 33.

BEECH‑JONES J: Tab 33, thank you.

MR LLOYD: I think I said page 279. Then, external affairs power – I will be very brief on this. We say that – I mean, no one is saying that this law is supported by the external affairs power. What is said against us is that laws that affect external territories would necessarily engage the external affairs power, and that would lead to the result that 51(xxxi) would be engaged in every external territory but not internal Territories, and they say that that is perverse and wrong.

Our answer is: we do not agree that the external affairs power is engaged in every external territory, and so we say that the Court should not try and decide that. This Court has never held that it is. We note in footnotes 33 and 34 cases suggesting that it is not – of our reply, sorry, footnotes 33 and 34. In Fishwick v Cleland at 197, said:

On the whole it seems preferable to refer the source of power over New Guinea to s. 122 rather than to s. 51(xxix), the legislative power with respect to external affairs.

So, that is as near an indication as we get to that.

GAGELER CJ: Mr Lloyd, the effect of this argument is that the Commonwealth is disavowing the application of the external affairs power to, say, the Australian Antarctic Territory.

MR LLOYD: No, the effect of our submission, as we say in our written submissions, is that the Court does not have to determine that and should not determine it here, but we say the Court has not ever said that that applies. To the extent that the Court has ‑ ‑ ‑

GORDON J: What does not apply? When you say – what does not apply, section 51(xxxi) or external affairs? I could not quite understand what the proposition is.

MR LLOYD: The Court has not held that a law made with respect to an external territory is supported by 51(xxix).

GAGELER CJ: Well, I mean, that is true as a fact. Are you making some submission on the basis of that?

MR LLOYD: We are saying that to the extent that there is authority on the point, the authority suggests that once a territory becomes an external territory – I am sorry, once some land becomes an external territory, it is part of the Commonwealth for the purposes of 51(xxix). Or at least we say that the Court does not need to determine that issue here, and should not determine it, but to the extent that there is authority on the point, the authority supports the contrary view. Ultimately, it is only a sort of in terrorem argument because this is not a case that decides that issue, but to the extent that the Court feels that it should look at it, that is what we say is the power.

Given the time, and because there is a lot to be said on ground 3, I think I will have to settle on what I have said on proposition 7 and 8 in my original introduction. In relation to – I mean, I have said that we say we do not need to reopen. There is a very succinct summary in volume 22 of a recent book by Mr Herzfeld and Mr Prince in which he goes through the ratio point, and I just say that the Commonwealth would happily embrace both the statement of principles and the application of the principles curiously lead to this case in which the learned authors indicated errors in the court below, we rely upon those errors. So, that interpretation extract is at tab 156 and the two paragraphs in particular are [34.120] and [34.140], I think. I think I should stop.

GAGELER CJ: Thank you, Mr Lloyd. Ms Kidson, are we on track?

MS KIDSON: I believe so, your Honour.

GAGELER CJ: You probably have to put the microphone down, Ms Kidson.

MS KIDSON: I believe that should be all right. Your Honours, ground 3 raises a single issue for determination by the Court, which is whether by the minerals reservation in the 1903 pastoral lease, under South Australia legislation, the Crown asserted, and thereby appropriated to itself, ownership of all minerals on or under the surface of the lease.

GAGELER CJ: You are also going to have to speak up, please.

GORDON J: I think it needs to go down lower.

MS KIDSON: If the minerals reservation did assert full beneficial ownership, then the subsequent enactment by the Commonwealth of section 107 of the Mining Ordinance 1939 would not have had any effect on any native title rights in minerals, and therefore no question of any invalidity would arise.

So, just in answer to the questions about the relationship between the grounds that were put by your Honour the Chief Justice, if we lose ground 2, then ground 3 is enlivened because if ground 3 is successful, then there is no Commonwealth liability for the enactment of section 107, no matter what. However, ground 3 would not dispose of everything in the separate question because the separate question also includes issues in relation to the grant of special mineral leases, all of which occurred after this legislative vesting of property in minerals.

It is accepted in the Statement of Claim that although it is alleged to initially be invalid – the legislative vesting – the effect of the Native Title Act would have been to validate that, so that when one now looks at special mineral leases, one looks at them with the view that any native title rights and minerals had previously been extinguished. The pleaded case does not rely upon any effect on a native title right in minerals. It relies upon other native title rights to take resources generally to access, use, live on the land, et cetera. So, even if ground 3 is successful, the constitutional grounds still arise in order to deal with those compensable acts.

EDELMAN J: Ms Kidson, I have a small difficulty not just with that proposition but with a theme that underlies all of your submissions and some of the respondents’ submissions as well, which is, if there seems to be an assumption that minerals in the ground are chattels, so that one can speak of rights to the minerals as though they had an existence in law ‑ ‑ ‑

MS KIDSON: We do not say that. Minerals are part of the land, but the authorities established they are a part of the land that can be severed from the land and can be dealt with separately with a separate title to minerals. So, it is in fact the act through a reservation which we accept in this case is an exception. That is what it does; it severs title to the minerals from title to the land.

EDELMAN J: There is a question of law, though, as to what that actually means because, in a sense, it is a notional severance. The minerals have not actually been removed and become chattels.

MS KIDSON: No.

EDELMAN J: That notional severance could be viewed in several ways. It could be viewed as effectively conferring a right or a profit à prendre to go and take the minerals and to convert them into a chattel. Or alternatively, it could be, in a very curious way, conferring a property right to an area of land under the surface that comprises of that area that is made up of the minerals. But I am not even sure how one would do that with unworked minerals.

MS KIDSON: Certainly, your Honour, there is a difference between minerals in their natural state in the ground, and then when the minerals themselves are physically severed from the ground and taken away. For example, minerals legislation, mineral leases, et cetera, transfer ownership of minerals upon severance from the ground to the holder of the mining right, whereas a reservation is dealing with separation of title whilst the minerals remain in their natural state. From the authorities, that permits several things. One of which we rely upon is the ability to invoke certain remedies in order to actually protect any unlawful or unauthorised taking or dealings with those minerals, when, effectively, someone else is possession of the surface of the land.

So, we certainly say that it is well‑established in the authorities that there is separate title to minerals and that the effect of an exception of the kind we are dealing with here is to retain or – I should say is to ensure that ownership or title to the minerals is with the Crown after the grant.

EDELMAN J: Do you say the same thing about trees then as well, that if there was legislation that gave you a title to a tree, that the tree would then have a separate existence from the land?

MS KIDSON: I actually will come to that specifically, your Honour, because it is one thing that it has raised. There is as difference between the legal ability to accept something like trees from a grant and then whether in any particular case that is what has been done, or whether what has been done is in fact properly characterised as some sort of right to go and take trees or to cut wood.

EDELMAN J: Or a conferral of an exception of the area of land to which the tree is attached or acceded.

MS KIDSON: If the actual clause reserving or accepting, though, is directed only to the trees, unless one can infer that it accepts also the land under it or the relative area of land, then it would not operate in that way as opposed to, for example, the kind of reservation or exception which is not uncommon which reserves, for example, the first 100 feet or 100 metres below the low‑water mark. That is a true exception because it actually does not pass that part of the land in the grant. I am just conscious of time, your Honours, and I will say more about that.

What I really wanted to say is that, certainly looking at the authorities prior to the decision in Mabo (No 2), there is no doubt that they all regard a minerals reservation – which I am just using generically to describe the type of clause; the lease, in this case – in favour of the Crown in a Crown grant as having the result that beneficial ownership of the minerals was in the Crown after the grant, and we have gathered references to that effect in our submissions‑in‑chief at paragraph 147.

Now, we completely accept that those authorities were delivered at a time when the law considered – or, certainly, the belief would have been – that the Crown had beneficial ownership to all land, including minerals. But we say that is not the answer to the question that is posed because one has to look at the function and the purpose of putting a reservation in a grant, and that function or purpose can alter depending upon whether it is, for example, a grant of fee simple or, in this case, leases, and to look at what was the legislative intention to be achieved or the objective intention to be achieved by that clause, by that reservation.

GAGELER CJ: Ms Kidson, you have used the language “beneficial ownership”. Is that the language of the cases – beneficial ownership – which is an equitable concept?

MS KIDSON: Perhaps I should simply say “exclusive possession”. It requires exclusive possession. And, certainly, the language of ownership and beneficial ownership is used across the authorities, but I am happy to just stay with exclusive possession.

GAGELER CJ: I think it might be put against you by Mr Glacken or someone on his team that it does not have to be exclusive of the world. The possession need not be absolute, exclusive possession. It just has to be better than the guy’s possession who you are suing. So, it may be possible to have Crown title – well, trying to use a neutral word – that is qualified by native title but still be sufficient to bring the action against the trespasser.

MS KIDSON: What the Crown has to be able to have in order to be successful in an information for intrusion is, effectively, the best possession. There can be no situation which can arise where anyone can have better possession than the Crown, because if that happens, the information fails. So, we say, certainly the premise in the authorities has been that what the Crown needs is exclusive possession because then it is unassailable no matter what the circumstances are. So, that is the right that is taken.

In the Commonwealth’s submission, because we say that is a very important – if not primary, but at least a very important function and purpose, is that the Crown needed to be able to have the ability – once it is putting itself out of possession of the surface of the land, it needed to have some ability to be able to still protect minerals, the nature of its interests that are left behind, so to speak. It does that by ensuring that it is in a position to be able to bring what was considered to be the only available remedy at the time, which was an information for intrusion, and that required exclusive possession.

So, we say, if that is accepted to be the function and the purpose and the objective intention, other clause or a provision of this kind, well, then the decision in Mabo does not change that because, by its very nature, the inclusion of a reservation of minerals is an assertion of exclusive possession in those minerals.

STEWARD J: Can I ask you a question – sorry, Ms Kidson. Is another way of looking at this to say that the Crown, by various Acts, asserted exclusive regulatory domain and control over minerals? They being a public assert which gave it the ability to deliver title to a person who held a miner’s right upon extraction. I am thinking in particular of section 20 of the Northern Territory Mining Act 1903.

MS KIDSON: Your Honour, if you are looking at one of the functions of a reservation of minerals as to enable the Crown to be able to grant rights to others in relation to those minerals ‑ ‑ ‑ ‑

STEWARD J: And control.

MS KIDSON: ‑ ‑ ‑ then, in that way, yes. But what we are saying is that, with the common law remedy of information for intrusion, regulatory control would not meet that test; it has to in fact be considered a common law to be exclusive possession. So, that is why that is the nature of the right; that must remain in the Crown or be in the Crown after grant. So, we accept that there are some things that could still be done by the Crown – such as granting mineral leases, et cetera – without necessarily acquiring, but we rely upon the function of an available remedy which does require rights of this kind.

So, what we say is that prior to Mabo (No 2), the assertion of ownership would have been seen as an assertion of an existing propriety right, which would then be appropriately characterised as a mere holding back of something that the Crown already had. Indeed, now, even when property has been legislatively vested in the Crown, there are still reservations, and it still performs that function. But we say, since Mabo, and with the understanding that we now have of the true nature of the Crown’s title, that the assertion should be seen as the Crown creating rights by appropriating to itself exclusive possession of the minerals. In this case, that has happened pursuant to statute. We do draw support for that analysis from the reasons of Justice Drummond as the trial judge in Wik Peoples v Queensland, and also from the reasons of your Honour the presiding judge in the New South Wales Aboriginal Land Council Case, which I will take the court to very shortly.

Before I go into the cases I do just want to emphasise three aspects of the historical context that we say informs the construction of the function of a minerals reservation in the South Australian legislation in question. Now, these are largely set out in our submissions‑in‑chief at paragraph 133 to 137, and we draw heavily in that analysis from two texts: Chitty’s Prerogatives of the Crown, published in 1820, and Robinson’s The Law and Practice of Civil Proceedings, published in 1908. We have provided extracts of both of those texts in the joint bundle. They are both in volume 22 – tab 147 for Chitty, and tab 159 for Robinson. I do not propose to take the Court to those, but just to highlight key aspects.

The first aspect is the position of a lessee vis a vis minerals at common law. This perhaps goes to the question your Honour Justice Edelman raised, although somewhat indirectly. Unlike, for example, a grant of fee simple, where the function of a mineral reservation will in fact be to ensure the property in minerals does not pass to the grantee, that is not a concern with a lease, because no property passes with a lease, but possession passes with a lease. So, at common law, unless the lease provided to the contrary, by taking possession of the surface of the land, a lessee also took constructive possession of minerals on or under the land if the minerals formed part of the lessee’s title.

So, one of the functions, we say, of the minerals reservation is to ensure that a lessee cannot be put in constructive possession of the minerals, because that would potentially defeat an action in intrusion. And while a lessee did not have property in the minerals, they could work any mine already opened at the time of grant, but they could not open any new mine or otherwise work the minerals.

The second aspect of the historical context is that at the time in question, the only remedy that was certainly considered to be available to the Crown at common law to stop a person taking minerals without lawful authority and to recover damages for the minerals taken was an information of intrusion. This was a proceeding brought by the Attorney‑General on behalf of the Crown in the nature of an action for trespass.

To sustain that, as I have said, because it is in the nature of trespass, the Crown did require exclusive possession, or it had to have possession that would trump any other kind of possession. For that reason, we say that the submissions of the NLC at 123 to 124, where they say that radical title was sufficient to found information for intrusion, we say that is wrong. There has to be an exclusive possessory right.

The Crown did not need to enter land in order to have ‑ ‑ ‑

EDELMAN J: But this has to be assessed, because what your argument is about is construing the exception and reservation clause in the 1903 lease.

MS KIDSON: Yes.

EDELMAN J: This has to be assessed at what the legal understanding was at that time, because those are the people who are drafting against that understanding at that time, and radical title was not the understanding in 1903.

MS KIDSON: No. Certainly, your Honour. We say that the legislation and the clause must be construed in accordance with, certainly, what the understanding was about, for example, what remedies were available. To the extent to which the declaratory theory of the common law would say that we cannot look at the position in 1903 with an assumption that in fact the Crown held beneficial ownership of the land ‑ ‑ ‑

EDELMAN J: Why not? What we are trying to do is work out what the objective meaning was of the words that are used in this clause, and one looks at the facts and circumstances that existed at that time. It is not a question of applying the declaratory theory of the law, it is a question of trying to understand what a reasonable person in the parties meant by the words they used.

MS KIDSON: We would say that what was intended at the time was that after a grant, minerals would be accepted from the grant, it would never form part of the land that was accepted for grant ‑ ‑ ‑

EDELMAN J: The clause goes a lot further than minerals. The clause, when one looks at it, looks very much like it is saying that it is everything under the subsurface, then you have the trees on the surface, and it is accepting from the grant all the areas of land that the trees are on, as well as all the areas under the surface.

MS KIDSON: My response to that, your Honour, would be that certainly in the authorities it is not an uncommon clause. It is not uncommon to have a reservation of timber, and wood, and ochre, and sand, and rights of way, and future rights to resume. These are all relatively common. Not obviously present in every grant, but the way in which those – for want of a better word – reservations, using that term loosely, operate is different, according to the type of – not only the subject matter, but also the nature of what it is that is being reserved.

GORDON J: When you say nature, do you mean the terms upon which it is being reserved?

MS KIDSON: It can be, but one of the difficulties with this area is what has developed in the law is an acceptance of fluidity of meaning of some of the terminology, so that sometimes the language of reservation is used, but it is interpreted as in fact operating as an exception, whereas sometimes the language of accepting and reserving has been interpreted as operating for a true reservation.

GORDON J: So, are we not driven to look at the two Acts read together, and then the reservation itself?

MS KIDSON: Yes, and I am going to take your Honour to the statutory scheme to explain why we say it should be interpreted in a particular way. My point is, really – and perhaps I am pre‑empting where I was planning to get to in the end – to say that just because that clause is interpreted as having a particular effect in relation to minerals, it does not mean that it has the same effect in relation to other things that are the subject matter of that clause. I will take your Honour, or at least refer the Court ‑ ‑ ‑

GORDON J: Is that because you seek to draw a distinction between minerals and trees based upon the authorities about minerals? Is that your short point?

MS KIDSON: No, it is to say that the words “accepting” and “reserving” do not necessarily operate and have the same effect even within the same clause to different subject matters. With each time, you have to look at what was the intention. What was the actual intention in relation to that particular subject matter, and ‑ ‑ ‑

GORDON J: So, is the subject matter – sorry, you mean trees versus minerals?

MS KIDSON: Yes, yes. So, trees, for example – and we have not dealt with them in our submissions, but they are dealt with in the Northern Territory submissions. There are many other statutory provisions which relate to the status of trees and wood and how you might interpret the intention of that – of that same clause, but in relation to that subject matter.

GORDON J: Thank you.

MS KIDSON: I will have to move very quickly. Although the Crown did not enter land in order to have possession, it had to be able to prove possession by proving title. If there was no record of title, then there had to be a procedure known as an inquisition or an inquest of office. Through that inquiry process, if there is then a finding that the Crown had established title, then that would be called an office found. So, that was an alternative way of proving title by the Crown, but it would have to go through that inquisition process, whereas title by record, you simply produce the record.

The final aspect is that of the historical context because, as we have said, it was widely understood at that time in question that the Crown could not bring an action for ejectment. That was in part due to the fiction that the Crown could not be dispossessed. Whereas intrusion lay for an invasion of the Crown’s land and damage to the land without requiring dispossession, ejectment lay for actual ouster of the plaintiff from possession, and consequently it was seen as not available to the Crown. That was the position in Australia until 1960, at which point this Court held that a statutory action for ejectment was available to the Crown. Without going to it, I just refer the Court to the decision in Commonwealth v Anderson [1960] HCA 85; (1960) 105 CLR 303, and that is in the bundle at volume 5, tab 67.

Perhaps the issue that your Honour Justice Edelman, raised, the government’s respondent and the NLC parties contend that the decision in Anderson means that the Court must now construe the statutory scheme relevant to the grant of the pastoral lease on the footing that the Crown could have brought an action for ejectment, and therefore anything we say about construing the legislation on the basis that the Crown needed to be able to bring in information, not intrusion, is wrong. We say that is wrong, that the statute and grant must be construed having regard to the mischief to which they were directed at the time.

In our written submissions‑in‑chief, at footnote 623, we have cited numerous references demonstrating that in 1903, and indeed earlier than that, the view was that ejectment was not available. I just want to – no, given the time, I am not going to physically go to one of those authorities, which was the decision of Justice Gummow in Wik Peoples v Queensland (1996) 187 CLR 1, and it is in the bundle at volume 18, tab 124, page 6903 is the page for judgment.

STEWARD J: Was that 693?

MS KIDSON: Page 6903 of the bundle. The page in the case is 190.

STEWARD J: Page 119?

MS KIDSON: Page 190.

STEWARD J: Thank you for that.

MS KIDSON: Having been all about pastoral leases, it is a part of the judgment where his Honour is not yet considering the effect of a pastoral lease. He is just looking at the general provisions of the Land Act 1910 (Qld) to see whether any aspect of the general legislative scheme might be said to have extinguished native title. We say his analysis is useful because he considers specific statutory provisions in the Queensland Act and there are analogous provisions in the South Australian legislation with which we are concerned. They are provisions which deal with trespassers on Crown land, and his Honour links the purpose of those statutory provisions to the uncertainty about the common law remedies that are available to the Crown at that time.

On page 203, which created a penalty for unlaw occupation of Crown land – sorry, he was dealing with two sections of the Queensland Act: sections 203 and 204. Section 203 created a penalty for unlawful occupation of Crown land and section 204 provided a statutory procedure for ejectment for anybody unlawfully occupying Crown land. What his Honour said, and this is at the bottom of page 191 – he said that:

The 1910 Act and its predecessors were enacted at a time when there was doubt whether at common law the Crown was obliged to proceed by way of information for intrusion because it could not maintain an action for ejectment. These doubts since have been dispelled.

And his Honour cites the decision in Anderson, but then he says:

However, they assist in perceiving the purpose of the first paragraph of s 204 –

Which was the statutory ejectment procedure:

in conferring a specific remedy for the removal of trespassers from Crown land.

I will just make three observations about that, because it is an ejectment and recovery of possession provision. Firstly, we say that his Honour’s analysis supports our submissions that the availability to the Crown of any remedies for trespass does form part of the historical context in which the relevant legislation falls to be construed, and one looks to it at the time of the law in question and not with the benefit of hindsight. We also say that Justice Gummow is speaking of a very similar time period to this case; he was dealing with 1910. Whether there was uncertainty about the availability of an action in ejectment in 1910, there was undoubtedly uncertainty about it in 1903 and earlier.

Thirdly, we say that the specific remedy provided by the Queensland statute, importantly, was for the removal of trespasses from Crown land. So, not land subject to a lease, or a license, or a fee simple; Crown Land. By definition, that was land that was not subject to any right or other interest. If one thinks through about remedies, it is land for which there would be no proof of title by record. So, if the Crown had been obliged to proceed by way of information of intrusion as a remedy, it may have had to done so through a process of inquisition in order to prove title, but the statutory remedy bypasses all of that.

Finally, also, Justice Gummow commented on the fact that these provisions – if you looked at the historical reasons that have led to these provisions, they demonstrate that an end sought to be achieved by these sorts of provisions was security of tenure against third parties and protection of the Crown’s interests. We say that it endorses, or certainly supports, the view we have taken, which is one must look at the ultimate legislative object of other minerals reservation and then the function performed in achieving that object.

Now, I just wanted to take your Honours to the statutory context. There are two Acts operating together here: the 1890 Crown Lands Act of South Australia and the 1899. They are both in volume 2 of the bundle. The 1890 Act is in tab 37. Perhaps what I will do is just foreshadow, really, what I am going to say that your Honours should take from this review. We would say that viewed in its historical context ‑ ‑ ‑

GORDON J: I am so sorry, would you mind speaking up? I cannot hear you.

MS KIDSON: I am sorry. I will just foreshadow, really, ultimately what we say your Honours should take from the provisions I am about to draw to your attention. Viewed in its historical context, the scheme under those Acts operating together was that specific remedies were provided by the legislation that only operated in relation to Crown land, and they were directed to protecting the interest of the Crown against trespass and the unlawful taking of all sorts of resources without authority on Crown land. There are no provisions of that kind directed to land where an interest has been granted in fee simple or in lease. What there are, though, are mandatory reservations to be inserted in the grants of that kind.

We say that it is a scheme where the legislature had its mind turned towards what remedies would be available to the Crown in order to protect its interests, having in mind the difficulties that were available at common law. They have enacted statutory processes for Crown land where there may be difficulty invoking those procedures, but where they have granted land, particularly of the state of the law at the time, including decisions such as Attorney‑General v Brown, they have enacted, rather required, mineral reservations to do that work.

First of all, the 1890 Act. We did neglect in our bundle to provide your Honours with a definition of “Crown lands” in section 5, we have provided that separately to the Court. It is, perhaps, a ubiquitous definition; it is simply land that is effectively subject to no other interest.

GAGELER CJ: Is this point contentious?

MS KIDSON: I do not think it is, we have just provided it because it is not there, your Honour. Then section 6 of the Act just confers a broad power on the governor to create rights and others, to grant interest in land to dedicate to reclaim to reserve, and it is a non‑exhaustive power. So, we say it does not exclude any other provision of the Act from also operating to confer rights.

Section 8, I will just run over quickly. These are just provisions which mandate certain reservations and other interests. So, section 8 deals with fee simple as well as, effectively, a statutory reservation, it effectively directs interpretation of a fee simple grant to not include minerals. Then section 31, which is on page 303 of the book, and that is just the requirement to include “a reservation to the Crown” of all minerals in every lease under Part II. Now, if I can just ‑ ‑ ‑

GORDON J: That was also covered by section 8, was it not?

MS KIDSON: Section 8 was for fee simple grants.

GORDON J: And any lease under Part II.

MS KIDSON: It says that, but then section 31, which is in Part II is then the specific provision that actually gives the terms of the reservation.

GORDON J: Thank you.

MS KIDSON: Now, if I can then just quickly draw the Court’s attention to those three provisions I was referring to which deal with Crown lands. The first one is section 96, which was page 310 of the bundle. That is a statutory power for a person authorised by the minister to forcibly eject any person. There is then section 97 which creates a penalty for unlawfully occupying Crown land, or lands “vested in the Crown”, which I believe would be a reference to lands that had been dedicated.

Then section 106, which is another penalty provision for damaging or taking certain things from Crown lands. In addition to a penalty, a person is obliged to pay the value of the thing taken, as well. So, in that way it is a full substitute for an action at trespass. Now, as I said, there was no provision in the 1890 Act or in the 1899 Act of that kind that operated other than in relation to Crown lands.

BEECH-JONES J: Sorry, could you just say that again?

MS KIDSON: There were no statutory provisions that operated on anything other than Crown land that provided for things like trespass or unauthorised use.

BEECH-JONES J: I see. There was no comparable remedy for land granted on a lease.

MS KIDSON: That is right.

BEECH-JONES J: Right.

MS KIDSON: So, if your Honours can then just go to the 1899 Act, which is in the same volume but tab 43, and to section 24, and so this is the provision that then made it mandatory for a pastoral release to contain whatever covenants, exceptions, reservations, et cetera, were then provided in Schedule A. So, we say it is not just a may, it is a must, it is a mandatory requirement. Then in section 25, there has been introduced a statutory prohibition on a pastoral lease authorising a lessee to effectively work minerals of any kind.

That meant that the position at common law where a lessee could work existing mines, that was gone; a pastoral lessee could do no work in relation to minerals. Then Schedule A, which is just a couple of pages further on in the extract, that is the list of the various covenants, exceptions, conditions, et cetera. The one we rely upon is (l), which is:

An exception or reservation in favour of the Crown, and all persons –

Et cetera. Now, we say that that is a scheme in which minerals were not to form part of the land granted, whether in fee simple or by way of lease, and that the relevant effect of the 1899 Act was essentially to put a pastoral lessee in the same position as lessees under Part II and so far as minerals were concerned. We do say that if one looks at the scheme in its historical context – and we do it in exactly the same way that Justice Gummow did with the Queensland scheme in Wik – it is a scheme where these provisions perform at least a function in order to ensure that the Crown has remedies to be able to protect its interest.

Now, in terms of the extent to which some of the respondents speak of these provisions, we say that the NLC parties at 120, they failed to appreciate that these provisions that they rely upon are directed to Crown lands. They had no operation in relation to lease land.

GORDON J: Had no operation in relation to ‑ ‑ ‑

MS KIDSON: In relation to leased land. To the extent that they rely upon another Act, the Northern Territory Mining Act 1903 (SA), that did not commence until 1 January 1904, so it does not form part of the context for interpreting this legislation. Your Honours, I have five minutes, so I am going to just make some highlights ‑ ‑ ‑

GAGELER CJ: If you need a few more minutes, you can take it.

MS KIDSON: What I will do is not take the Court directly to cases but provide you with the references and say what we consider to be the import of it. We do address the function of a minerals reservation in our submissions‑in‑chief at 140 to 142, and we say that what a minerals reservation did not have to do was that it did not have to prevent property from passing.

What it did need to do, though, was it had to prevent possession from being able to be asserted by a lessee, and it did that by severing title. Severing title of the minerals from the land to be granted, and that way, even when the pastoral lessee was in possession of the surface of the land, there could never be constructed possession of anything below the surface of the land.

We also say that it was an assertion of rights so that it actually affected the appropriation of a right of exclusive possession, and at the same time created a record; created a record of that title, which meant that an information for intrusion could be available by record, without having to go through an inquisition process of proving title. We rely, for the way in which a minerals reservation operates, both as the basis, substantively, for information for intrusion, and the way that a reservation in a grant operates as proof of title of minerals, we rely upon the decision in Attorney‑General v Brown (1847) 1 Legge 312. It is in volume 20, tab 130 of the authorities.

That was a decision of the Full Court of the Supreme Court of New South Wales. It involved land that had been the subject of a grant of fee simple with a reservation of all mines of gold, silver, and coal. The fee simple holder then leased the land, and the lessee mined coal without any authority of the Crown. The Attorney‑General successfully brought an information for intrusion against Brown.

There were several grounds of objection by Brown to that proceeding, most of which I need not touch upon. One of them was an assertion that the Crown never had property in the minerals. This is what provoked, then, the ruling of the court that the Crown had always been in possession of all land in the colony; that ruling ultimately having been overturned by Mabo.

We accept, obviously, that as a premise which would no longer apply, or may have been thought to apply at the time but which has since proved to be false. But we say that does not affect what the case stands for otherwise. The actual terms of the reservation are on the case page of 313, point 6. I simply make the point that it just uses the language of “reserve”, it does not use the language of “exception”. That became the subject of one of the objections.

Insofar as when it came to proof of title by record, the court did away with the idea that the Crown did not have property to begin with, did not have possession to begin with, but what it said in terms of proof of title was, because Brown was saying that the Crown needed to go through an inquisition process to prove its title – the court said, no, it does not, because there is no such thing as anybody having a title other than a title granted by the Crown and it is to be assumed that the Crown had power and had title to be able to make those grants.

Indeed, Brown himself relied upon the validity of the fee simple grant from which he took his title. The court said that unless one was going to say that every Crown grant was invalid, then one assumes the Crown had power to make the grant and therefore the actual grant can be the record; the reservation of minerals in it can be the record that proves the Crown’s title to the minerals.

All one had to do, and the Attorney‑General did it in that case, was produce the grant with the reservation in it, and that was proof of title. The other objection was that the actual clause used the word “reserve” minerals, and so one of the arguments that was made by Brown was that, effectively, that was simply the creation of the equivalent of a profit a prendre. It was not actually the taking of the title of minerals.

It was in this case that really seems to be the genesis of the idea that the word “reserve” does not necessarily have to only mean reserve, it can also mean except. So, the difference between the two conceptually is that an exception takes out something physically from what is to be granted, and it is something that exists at the time of the grant, and you sever it and take it out, so it never forms part of the grant, as opposed to a reservation where everything passes in the grant but you reserve a right or some power to be exercised in relation to what has passed.

We accept that with a minerals reservation, whether the language used is “reserve” or “except”, it always acts in truth as a matter of law as an exception because it is taking title to the minerals physically out of what is the subject of the grant. So, what we say ‑ ‑

BEECH-JONES J: But your point of difference to the Full Court then is that that function of that exception is to confer an exclusive right of possession on the Crown to ground this action. Is that right?

MS KIDSON: Yes. We say that one of the things that the Crown did when making a grant – so it grants rights to another, but it also decides what it will take for itself. What it took for itself was the ability to protect the minerals that would be remaining in land that would be in the possession of another. So, they reserved to themselves, or took to themselves, the ability to bring an action for an intrusion with necessary rights, and that is a right of exclusive possession in the minerals.

EDELMAN J: I must say, that does not accord with my understanding of the difference between a reservation and an exception. An exception, as I understand it, is in the language of holding back. It involves no creation of rights at all. It is simply a grant of an area of surface or an area of subsurface but excepting an area that is not included. There is no grant at all, whereas the reservation has to involve the creation of something new.

MS KIDSON: Yes.

EDELMAN J: Whether it be by a re‑grant from a lessee or somehow an exercise of what we would now see as radical title.

MS KIDSON: We accept that the language of holding back and keeping back has been used to describe what happens with an exception for the very reasons your Honour has just articulated. What we say, though, is that is a characterisation of what has in fact occurred through an exception, and when one is talking about a scenario where the Crown does have – prior to the grant has those rights, then it is quite appropriate and correct to characterise that as a holding back.

What we say is that if one looks to legislative intention, what was the end result that was to be achieved, and then what function is performed by the reservation in order to achieve that, well, if the objective intention was to achieve a situation where the Crown was in a position and had all necessary rights to be able to bring an information for intrusion, then one should characterise the – effectively, the taking of those minerals out of the land should be characterised as an act of appropriation.

EDELMAN J: Yes, because that depends – and you accept – that in 1903 there was this theory of beneficial ownership, but everything then depends upon your view that there was great doubt about whether or not you could bring an information of intrusion over land which was then thought – subsurface which was then thought that there was beneficial ownership by the Crown.

MS KIDSON: We do say that that would be the understanding of the law, and we draw support from Justice Gummow in Wik for that proposition, and because even within the decision of Anderson itself there is an acknowledgement about the uncertainty, and examples are given.

EDELMAN J: Well, Justice Gummow refers to Anderson, Anderson refers to Chitty, and Chitty says that the Crown can waive that, and the Crown could waive that and bring their claim for trespass or an information of intrusion.

MS KIDSON: Could, except ‑ ‑ ‑

EDELMAN J: So that the actual chain does not quite support the proposition that you are putting.

MS KIDSON: Your Honour, I have to go back to Chitty because my recollection – I hope it is not wrong – is that certainly the Crown have the ability to waive that, but there was a problem structurally with ejectment because it required an assertion of dispossession, and that is why it was not available – but I will just check that – whereas the statutory procedure that was brought in for ejectment did not require an assertion of dispossession. That is why it could be used by the Crown. It became almost a prima facie show cause for the person in allegedly unlawful possession to prove possession.

EDELMAN J: Thank you.

MS KIDSON: I am just going to draw your Honours’ attention then to two cases that we say are consistent. They are cases both in a post‑Mabo environment, and one is the decision of Justice Drummond in Wik Peoples v Queensland (1996) 63 FCR 450, and it is in the bundle at volume 21, tab 146, page 8207. I suspect this is one where the Court will not follow me unless I ask you to go to it, if I could ask you to take it up.

GORDON J: You want us to go to it?

MS KIDSON: Yes, so volume 21, tab 146.

GORDON J: This is page 491 of the report?

MS KIDSON: It is, yes. Your Honours can see there at question 3, and this is just to indicate because Wik was a series of separate questions that this passage we are going to take your Honours to is in relation to this question, which is all about where the effectively statutory vesting of property in minerals and whether that effected in native title rights to minerals, and also to indicate that although Wik was on appeal to the High Court, question 3 was not challenged. So, nothing in the High Court’s decision affects anything that was held by Justice Drummond.

If your Honours could just turn to page 493, at point F of the page at the bottom, his Honour sets out section 6 of the, effectively, 1909 Crown Lands Act. This is a provision which effected statutory vesting of property in minerals, but it did it in different categories and in different ways. The one that we are concerned with here is (iii), which is vesting property in four particular minerals in relation to grants of fee simple after a particular date.

The date is 1 March 1899, and I will tell you the significance of that date shortly. I just wanted to also draw your attention to (v), which is effectively a catch‑all. So, it is all other minerals that have not already been addressed on or below land which is not alienated in fee simple. If your Honours can then go to page 496, it is effectively the second paragraph commencing:

As to section (6)(1)(iii) –

In that passage, his Honour explains that the significance of the date of 1 March 1899 is that was the commencement of the Mining Act 1898 (Qld). Prior to that Act, those minerals had passed in fee simple grants, the fee simple owner had title to those minerals, but that Mining Act introduced a mandatory reservation of those minerals so that no fee simple grants after that date would have had title to those minerals.

His Honour was dealing with a vesting of property legislatively in 1909 in a scenario where in fact any fee simple grants in the preceding 10 years, the Crown already had those minerals because they had been subject to mandatory reservations. What we rely upon is that his Honour’s description of what this illegal scenario was in relation to those minerals. Towards the end of that paragraph, what he says is that the effect of the legislative vesting of property in 1909 was merely to confirm the Crown’s ownership of those minerals in those lands that had been asserted by the reservations that were required by section 58 of the Mining Act.

So, his Honour saw a situation where the reservation of the minerals for the previous 10 years actually had the same effect as the statutory vesting of property. Ownership of the minerals – I am sorry to keep using that term, but it is the term that is used in the authorities – was in the Crown, and all the statutory vesting did was to confirm it.

GORDON J: What do we make of the last sentence of that paragraph? And how does that sit with the subparagraph (v) you took us to where there is a positive assertion about:

All other minerals . . . are the property of the Crown.

MS KIDSON: Because the legislative vesting of property happened in Queensland in stages. This initial stage was vesting property in minerals that had not been alienated to others. So, it took minerals that were not – except in the case of gold and silver; it did take back gold and silver that had been alienated. In other cases, it effectively vested property but left title to minerals that had passed unaffected. Subsequent legislation then came in and effectively took back title to those minerals as well.

So, the point that his Honour is making here is the extent to which there were fee simple grants prior to 1 March 1899 where a title to those minerals had passed. This legislative provision did not seek to take them back.

GORDON J: Do we have any similar provision in our legislation to that which is set out in subparagraph (5) that you took us to on page 494?

MS KIDSON: Yes, so subparagraph (5) is the provision, but it only relates to unalienated. So, it is effectively anything that has not already been covered by subparagraphs (1) to (4), where no other person has title in the minerals, property is vested in those. As I said, subsequent legislation comes along and does a clean sweep and takes it all back, vests property in all minerals.

Section 107, the provision here, is a provision which did not affect minerals where title had passed. So, section 107 has a proviso which excludes fee simple grants from its effect. That is the 1939 ordinance. That is section 107 of that provision. Then there is subsequently a 1953 ordinance in the Territory which comes along and takes all the alienated minerals.

So, we say that is consistent with our contention about the character of what has occurred under a reservation and that is done in a scenario – and not only is there full awareness of Mabo but it is done by a judge in a case where he is knee deep in looking at these issues and that is his characterisation.

I am very mindful of the time, your Honour. So, the other case we rely upon is the decision of your Honour in New South Wales Aboriginal Land Council v Minister Administering the Crown Lands Act (2016) 260 CLR 232. That is in volume 10, tab 92. The paragraph we rely upon is paragraph 112 where, having gone through a process of explaining the change in understanding of the law from Attorney‑General v Brown, your Honour indicated that the actual outcome of the case in Brown, even if the law – as found to be the case in Mabo – applied, would be no different. What would be different would just be “the steps in the analysis”. We certainly understood that to be that, as I have said, rather than the Crown asserting existing ownership of minerals and holding them back, the Crown asserts ownership, or asserts exclusive possession, by appropriating. It is an act of appropriation to the Crown of the rights in those minerals. In that way, the legislative intention and the objective is fulfilled.

Now, I am very mindful of the time, so I am going to largely rely upon my written submissions. In terms of – if I could just make some short points about the approach to construction of those rights. One of the concerns of the Full Court – or the reasons of the Full Court – at paragraph 112 of the judgment was their Honours seem to think that only a statute directed at mining generally could have the function that the Commonwealth contended for, as opposed to what they characterised as a lands legislation statute directed to granting interests of land to third parties.

We say that the very fact that interests are being granted to third parties is what gives rise to the need to sever the title of minerals from the land and to give the Crown the rights to protect those minerals.

STEWARD J: Well, that is why I drew to your attention section 20 of the 1903 Act, because it gives the Crown the ability to pass title to the minerals to a person with a miner’s right.

MS KIDSON: It said the Crown is wanting to pass title. We are talking about a scenario where the Crown retains title but wants to be able to prevent unlawful interference, unlawful taking.

STEWARD J: But the question is how could it pass – what does it need to have in order to be able to be in a position to give good title to those minerals? Anyway, just have a think about it.

MS KIDSON: All right. Perhaps if I could take that on notice, your Honour.

STEWARD J: At this late stage, have a think about it.

MS KIDSON: Yes. Again, the only thing we would say is that the Full Court thought that section 24 of the 1899 Land Act – that is the provision that mandates the reservation and pastoral release – was purely about rights as between the lessee and the Crown. But we just say that, with respect, that ignores the fact that the reservation in the grant is the very proof of title that is required to bring in information of intrusion against a third party.

We really say that, because the test of inconsistency here is what rights were, we say, created in the Crown – what rights did the Crown hold, perhaps, after the reservation, is an objective test – that the answer should not change depending upon the nature of the case that arises in the court. By that I mean, if the case before the court was effectively the equivalent of the Attorney‑General v Brown, if it was a case where the Court was having to decide if minerals were being unlawfully taken by someone without any
authority from the Crown, is the position of the Crown that they would simply have to stand by idly and be able to do nothing about It, or is an action for an intrusion available to them?

To invoke the well‑known phrase of Lord Diplock, if the courts can identify the target of Parliamentary legislation, then their proper function should see that it is hit. The Gumatj respondent asked the Court to record that it has been missed, but we ask the Court to hit the target, and we say it is no real leap if one accepts the function and objective legislative result that is intended to be achieved by the insertion of minerals reservations.

In relation to the text of the reservation itself, I am simply going to rely upon our written submissions there, and our reply submissions, particularly, at paragraphs 151 to 154. In terms of the submissions I was making before about the fact that the same language – the words “excepting” and “reserving” apply to, for example, trees and wood as well as to minerals – does not determine the actual legal effect of that clause in relation to that particular subject matter.

There are numerous cases where the exact same language is used, and effectively has a distributive effect. We give one example, which I think the solicitor general referred your Honours to. It is Mcgrath v Williams, in volume 20, tab 137. So, that is a case where there are five reservations, all the same language, ranging from a public way, to indigenous timber, to land within 100 feet of the high-water mark, to all mines of gold and silver, and to a power to resume, and they all had different legal effect. So, two were held to be true exceptions – actually physically taking out what was granted – three were true reservations. They were effectively the creation of rights which may or may not happen in the future.

Attorney‑General v Brown also had the same language – reservation – for a right to resume, as well as minerals. So, we say the language is not determinative, even within the one clause. One looks at what it is operating on and is it appropriate that it is to be seen as either a true exception or true reservation.

Those are my submissions, and I thank the Court for its indulgence with time.

GAGELER CJ: Thank you, Ms Kidson. The indulgence that we have been prepared to extend this afternoon should not be treated as a precedent for the rest of the hearing. We have an agreed timetable, and the Court will expect counsel to adhere to that timetable tomorrow. So, we start tomorrow with the Northern Territory, I believe. The Court will now adjourn until 10.00 am.

AT 4.32 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 8 AUGUST 2024