Powers of the New South Wales Parliament
86 The Plaintiff contended that if s6 of the Act authorised subcl 22AA(3) of the Compensation Arrangements, then s6 is beyond the legislative power of the Parliament of New South Wales. This was based on the contention in par 20(b) of the Plaintiff's Amended Statement of Claim to the following effect:
"The provisions of subsection 6(3) of the Act, to the extent that they purport to authorise an arrangement to the effect of subclause 22AA(3), are beyond the legislative power of New South Wales in that they purport to deprive named persons of their property without just, or any properly adequate, compensation."
87 The Defendant denies this paragraph and, in addition, says that the Court should refuse to grant any relief to the Plaintiff on the basis of the seven interim payments of compensation totalling more than $11 million made under the Compensation Arrangements as amended in 1990. Submissions were not, however, directed to this issue.
88 The matter before the Court turns on the Amended Agreed Facts as set out above. The basic allegation of the Plaintiff was that the cap for which subcl 22AA(3) provides, is not a "just", or "properly adequate", "compensation". This is an issue of fact. No paragraph of the Statement of Agreed Facts touches on it. Rather the Plaintiff seems to submit that any form of compensation not expressly related to the quantum of property of the character in question in these proceedings, must necessarily be other than "just" or "properly adequate". It is by no means clear to me that this is so. Other circumstances may be relevant. However, rather than determine the matter on this basis, it is desirable to deal with the Plaintiff's legal submissions on the assumption that its factual allegation is correct.
89 The basic submission was that contrary to the conventional wisdom as to the scope of the doctrine of parliamentary supremacy, the legislative power of the Parliament of New South Wales is restricted. The relevant restriction is that the Parliament may not "deprive known persons of their property without just, or any properly adequate, compensation".
90 By s5 of the Constitution Act 1902 (NSW):
"5 The legislature shall, subject to the provisions of the Commonwealth of Australia Constitution Act , have power to make laws for the peace, welfare, and good government of New South Wales in all cases whatsoever …"
91 Of such a provision, the High Court has said:
"… a power to make laws for the peace, order and good government of a Territory is as ample and plenary as the power possessed by the Imperial Parliament itself. That is, the words 'for the peace, order and good government' are not words of limitation. They did not confer on the courts of the colony, just as they do not confer on the courts of the State, jurisdiction to strike down legislation on the ground that in the opinion of a court, the legislation does not promote or secure the peace, order and good government of the colony. Just as the courts of the United Kingdom cannot invalidate laws made by the Parliament of the United Kingdom on the ground that they do not secure the welfare and the public interest, so the exercise of its legislative power by the Parliament of New South Wales is not susceptible to judicial review on that score. Whether the exercise of that legislative power is subject to some restraints by reference to rights deeply rooted in out democratic system of government and the common law ( Drivers v Road Carriers (1982) 1 NZLR 374 at 390; Frazer v State Services Commission (1984) 1 NZLR 116 at 121; Taylor v New Zealand Poultry Board (1984) 1 NZLR 394 at 398), a view which Lord Reid firmly rejected in Pickin v British Railways Board (1974) AC 765 at 782, is another question which we need not explore." ( Union Steamship Co of Australia Pty Limited v King (1988) 166 CLR 1 at 10).
92 The issue posed for our consideration in this case is whether or not the right to receive "just" or "properly adequate" compensation is such a "deeply rooted right" as to operate as a restraint on the legislative power of the Parliaments of the States.
93 In Pye v Renshaw (1951) 84 CLR 58, in a joint judgment, five members of the High Court said:
"If a State Act provides for the resumption of land on terms which are thought not to be just, that is of no consequence legally: it cannot affect in any way the validity of the Act or of what is done under the Act and the effect of Act No 14 of 1950 is to make it perfectly clear that all relevant legislation of the Parliament of New South Wales is intended to take effect unconditioned by any Commonwealth legislation and irrespective of the existence of any agreement between the Commonwealth and the State of New South Wales … There is no possible ground of attack on the validity of this legislation, there is no ground whatever for saying that it is inoperative, and all courts are bound to give effect to it according to its tenor." (at 79-80)
94 The Plaintiff referred to the following sentence in the judgment in support of the proposition that the above passage in the joint judgment of the High Court was obiter dicta. Immediately after the above quoted passage, the Court said:
"Counsel for the Plaintiff did not indeed profess to attack the validity or efficacy of any State legislation."
95 Pye v Renshaw involved a challenge to the validity of a Commonwealth State arrangement for the acquisition of land. An earlier version of this arrangement had been struck down by the High Court in P J Magennis Pty Limited v The Commonwealth (1949) 80 CLR 382 on the basis that it constituted an acquisition by the Commonwealth on other that just terms, contrary to the requirements of s51(xxxi) of the Commonwealth Constitution.
96 In Pye v Renshaw, the joint judgment referred to the effect of the decision in the Magennis case, and quoted with approval a passage from the judgment of Latham CJ in that case in the following way:
"The position thus reached could not, of course, affect the validity of any State legislation authorising the acquisition of land, because State powers are in no way affected by s51(31). As Latham CJ said ( Magennis at 405):
'There is no doubt as to the power of the State Parliament to provide for compensation for land resumed upon any basis which it thinks proper.' " (at 78-79)
97 The Court explained that the effect of Magennis was that the State Act was treated as "inoperative" because there was no agreement binding on the Commonwealth, and accordingly nothing upon which the State Act could operate. The issue in Pye v Renshaw arose because the New South Wales Parliament repealed the Act which had been found to be "inoperative" in Magennis. The State Act no longer turned on the existence of a valid agreement with the Commonwealth, as the assumed basis for any acquisition of property under the State Act. The issue in Pye v Renshaw was whether or not the State was using the power of resumption for a purpose for which the power had been given by the State Act or, as the Plaintiff submitted, it was in fact being used for an improper purpose of carrying into effect the Commonwealth scheme.
98 On this basis, the above passage in Pye v Renshaw was not a necessary step in the reasoning of the High Court's decision. Nevertheless, this Court should follow such a clear statement of principle in a unanimous judgment of the High Court that has never been doubted.
99 Indeed, in another joint judgment in Minister for Lands (NSW) v Pye (1951-52) 87 CLR 469, the High Court said, again obiter:
"… the legislative power of the Commonwealth with respect to the acquisition of property for Commonwealth purposes is limited by the constitutional requirement of just terms. There is no similar limitation upon the legislative power of the State of New South Wales. The Parliament of the State, if its sense of justice allows it to do so, can authorise people's property to be taken or their services to be conscripted without just recompense, or indeed without any recompense at all." (at 486)
100 The issue arose directly in Mabo v Queensland (1986) 166 CLR 186. In that case, the submission that the Queensland Parliament did not have the power to deprive a person of property rights without compensation was expressly put to the Court as a ground for the invalidity of the Queensland legislation which purported to extinguish native title rights. That submission was rejected by the Court (at 202 per Wilson J, with whom Mason CJ at 195 and Dawson J at 241, agreed; at 213 per Brennan, Toohey and Gaudron JJ; and at 224 per Deane J). This constituted part of the reasoning of the Court and cannot be dismissed as mere obiter dicta.
101 The position is, in my opinion, put beyond doubt by the decision of the High Court in Teori Tau v The Commonwealth (1969) 119 CLR 564. In that case the Court had before it an acquisition in an external Territory made on other than just terms. The issue before the Court concerned the Territories power in s122 of the Commonwealth Constitution. The Court was concerned to determine whether this power, like the powers found in s51 of the Constitution, had had abstracted from them a power to make laws for the acquisition of property, by reason of the provision in s51(xxxi), such that acquisition of property could only be effected by the Commonwealth on just terms. The Court in an unanimous judgment of a seven person bench, said:
"In our opinion, this submission is clearly insupportable. 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. Section 122 is concerned with the legislative power for the government of Commonwealth Territories in respect of which there is no such division of legislative powers. The grant of legislative powers by s122 is plenary in quality and unlimited and unqualified in point of subject matter. In particular, it is not limited or qualified by s51(xxxi) or, for that matter, by any other paragraph of that section.
While the Constitution must be read as a whole and as a consequence, s122 be subject to other appropriate provisions of it as, for example, s116, we have no doubt whatever that the power to make laws providing for the acquisition of property in the Territory of the Commonwealth is not limited to the making of laws which provide just terms of acquisition." (at 570)
102 In my opinion, an acquisition under the authority of a statute of a State Parliament is in the same position as an acquisition by statute under the Territories power of the Commonwealth Constitution. Teori Tau cannot be distinguished. It is binding on this Court and should be applied.
103 In Newcrest Mining (WA) Limited v The Commonwealth (1996-97) 190 CLR 513, the authority of Teori Tau was challenged and, by majority, affirmed. Even the reasoning of the minority would be of no assistance to the Plaintiff in the present case. The issue turned on whether or not the restriction in s51(xxxi) should be applied to laws passed in reliance upon s122. (See Gaudron J at 565; Gummow J at 614; and Kirby J at 652-657.) This analysis turned on the construction of the Commonwealth Constitution, and is of no avail to the Plaintiff with respect to a State power.
104 It appears that, in the early years of independence, State courts in the United States did develop a doctrine which denied a legislative power to acquire property without compensation. (See the cases referred to by Professor Sherry in a number of articles: "The Founders Unwritten Constitution" (1987) 54 University of Chicago Law Review 1127 at 1142; "The Ninth Amendment: Righting an Unwritten Constitution" (1988) Chicago-Kent Law Review 1001 at 1005-1006; "Natural Law in the States" (1992) 61 Cincinati Law Review 171 at 193-194, 204-207; "Independent Judges and Independent Justice" (1998) 61 Law and Contemporary Problems 15 at 16-18).
105 The Plaintiff was unable to point to any judicial pronouncements, let alone a decided case, which indicated, at any time, that any such principle existed in the common law of England, or of the Colonies of Australasia, or of Australia. It advocated the development of the common law, by the recognition of such a principle for the first time in this case. Even if it were open, which I do not believe it is, to this Court to develop the common law in this way, it should be slow to do so.
106 A reason for the courts not disturbing a principle which has been so well established in Australian constitutional law for so many years, is that in 1988, the people of Australia were asked to vote at a referendum on a proposal to alter the Constitution by introducing a new s115A as follows:
"115A A law of a State may not provide for the acquisition of property from any person except on just terms."
107 This proposal was defeated at the referendum, albeit as one of four amendments put as a single question. The courts should not change the constitutional law of the States in a manner which the people of the States have so recently rejected.