Is there a serious question to be tried?
24 The applicants' argument that there is a serious question to be tried may be summarised as follows. They say that the collaborative arrangements described above between the respondents involve a circuitous device to circumvent the constitutional obligation imposed by s 51(xxxi) of the Constitution. That constitutional requirement is then embodied in s 519 of the EPBC Act. They also raised the matters summarised in [18] and [19] above. During the course of the oral hearing today the applicants have also alleged that they have arguable causes of action for unjust enrichment and/or false or negligent misstatement. It is significant to note that no statement of claim has yet been filed in the proceedings. Those fresh alleged causes of action are perhaps most fully described in [6] and [7] of the applicants' revised document headed "Outline of oral case of applicants: hearing of interlocutory application" which was handed up at the start of this morning's hearing:
6. Each Applicant and each class Applicant also has a claim against the Commonwealth's fellow joint venturer State which takes the transfer of the land from the Foundation at the end of the 'Project' for unjust enrichment [see the transferee under the typical transfer: Bradshaw page 96]. The four elements of unjust enrichment are: [i] an enrichment; [ii] of the defendant [the State]; at the expense of the claimant; [iv] in unjust circumstances. Enrichment includes loss in value of land. Unjust circumstances include 'duress' [in this case induced panic funds] and 'mistake' [induced by the erroneous representations of the Fourth Respondent, with probable knowledge of the other Respondents].
7. Each Applicant and each class Applicant also has a claim against the Foundation for false and negligent misrepresentation in relation to the whole 'Acquisition' Project:
a. Whilst each 'Offer' is in similar form each is different to the next tranche and the representations were ramped up as the Offers progressed; in the first Offer dated 31 October 2012 [see Hutton at Tab 27], and repeated in the second Offer of 11 March 2013 [see Hutton at Tab 27] and third Offer of 14 May 2013 [see Esposito second affidavit]
(i) the course adopted for the "Project' was unconscionable because not only is each Offer presented as a take it or leave it offer in a circumstance of economic duress [in an unlawful attempt to avoid paying just terms] but it is intended to create a panic or stampede effect by representing there are only limited funds and that first in best dressed [and May 2013 Offer page 1, condition 6 - see Esposito sw 24/5/13 Annex JYE - 2; see Bradshaw paragraph para 26];
(ii) in addition, a false representation is made in each Offer [and repeated in subsequent Offers] that the invitation to sell at $5,000] is 'a fair and reasonable price for the land' [eg Question 5 in the first Offer] when the true position was that the fair and reasonable price for the land exceeded $21,500 for most blocks [eg Ms Esposito - see rating valuation at Esposito affidavit sworn 24 May 2013, annexure JYE - 2]; or at least $15,000 for Mr De Maria [see his Annex SDM - 5 page 27] - in other words 300% at least.
25 For the purposes of this interlocutory application, it should be accepted that, as a matter of general principle, an arrangement or scheme involving the Commonwealth and other tiers of Government could give rise to a "circuitous device" which is aimed at avoiding the constitutional requirement.
26 There is, however, a central aspect of the applicants' case which seems to me to be highly problematic in terms of whether or not there is a serious question to be tried. That fundamental problem is as follows. On the basis of the existing evidence, it is difficult to see how the challenged arrangements involve the "acquisition" of land within the meaning of both the constitutional requirement and s 519 of the EPBC Act. For the constitutional guarantee to be engaged there needs inter alia to be an element of compulsory or non-voluntary acquisition of property. Thus, for example, in Waterhouse v Minister for the Arts and Territories (1993) 43 FCR 175 at 180, Black CJ and Gummow J said:
Section 51(xxxi) is to be treated both as abstracting from other heads of power (including the incidental power) all content which would otherwise have enabled the compulsory acquisition of property, and as subjecting the power with respect to the acquisition to an obligation to provide just terms; the paragraph thus ensures that whenever property is compulsorily acquired pursuant to a law of the Commonwealth just terms must be provided, because the totality of power of compulsory acquisition is embodied in the paragraph… (emphasis added).
27 The same point was made by Dixon J in British Medical Association v The Commonwealth (1949) 79 CLR 201 at 270-271, where his Honour said:
The view has been expressed that s 51(xxxi) covers voluntary acquisition. The view has also been expressed that it covers acquisitions of property authorised by Federal law even although the property is not acquired by the Commonwealth… No doubt if you combine these views a dialectical argument may be constructed to support the conclusion that as the acquisition of the medicine from the chemist by the customer is authorised by Commonwealth law s 51(xxxi) must apply. But it is a synthetic argument, and in my opinion is unreal… There is here no compulsory acquisition by the customer of the drugs he obtains from the chemist when he presents a medical prescription. The chemist is legally free to supply them or not as he pleases.
28 This passage from Dixon J's judgment was approved in ICM Agriculture Pty Ltd v Commonwealth (2009) 240 CLR 140 at [81] and [82] per French CJ, Gummow and Crennan JJ.
29 The limitation of the constitutional guarantee or protection to acquisitions which are involuntary is implicit in the fact that, in its terms, s 51(xxxi) applies to the power of the Commonwealth Parliament to make laws with respect to the acquisition of property etc. In other words, the acquisition needs to be effected by the operation of a Commonwealth law (possibly in conjunction with other matters which have the practical result of effecting a non-voluntary acquisition of property). There is necessarily an element of compulsion or obligation in the concept of property being acquired by operation of a Commonwealth statute (possibly in some cases in combination with other actions by persons other than the Commonwealth). I cannot accept the applicants' oral submission made today that s 51(xxxi) applies to an acquisition of property even if there is no element of compulsion involved. I also reject the applicants' submission that P J Magennis supports their position on this issue. It should be noted that in that case, part of the arrangement with the Commonwealth was that the State would acquire compulsorily private land to use for soldier settlements.
30 The relevance of s 519 of the EPBC Act does not obviate the need for there to be an element of compulsion or non-voluntariness in the acquisition. That statutory provision depends on the premise that, apart from the provision itself, the operation of the EPBC Act would result in an acquisition of property which would be invalid because of s 51(xxxi) of the Constitution. It is only when that premise exists that a statutory obligation arises under s 519 and obliges the Commonwealth to pay an affected person a reasonable amount of compensation. But if there is no "acquisition" for the purposes of the constitutional requirement, s 519 is not engaged.
31 Here, the landowners who do not wish to sell their land under the project are free to continue to hold their land subject to any relevant land use restrictions. They are in no different position in that respect to any other landowner whose right to use their land is subject to zoning restrictions which, while normally imposed by State or local government laws, may themselves be the indirect consequence of an order made by the Commonwealth Minister under the EPBC Act. But even if it were to be accepted that the proposed rezoning to E-2 is the consequence of the Minister's direction under s 130 of the EPBC Act, the overall effect of these regulatory matters is that the use of land will be limited to specific purposes. No possessory or proprietary rights are vested or divested so as to engage either s 51(xxxi) of the Constitution or s 519 of the EPBC Act.
32 As the Commonwealth points out, in the recent High Court decision in J T International SA v Commonwealth (2012) 86 ALJR 1297 (the Plain Packaging Case), all six Justices in the majority confirmed that s 51(xxxi) was not engaged where there was no relevant "acquisition" in circumstances in which no one acquired a benefit or advantage of a proprietary character from the acquisition (see at [42] per French CJ, at [147] per Gummow J, at [169] per Hayne and Bell JJ, at [277] per Crennan J and at [357] per Kiefel J). In particular, all the majority Justices in that case rejected Deane J's suggestion in the Commonwealth v Tasmania (1983) 158 CLR 1 (Tasmanian Dams Case) that the "benefit" that was obtained need not be of a proprietary character for s 51(xxxi) to be engaged. An acquisition of property was not made out by a mere restriction on or extinguishment of a right of property, nor by an adverse impact on the "general economic and commercial position occupied by traders".
33 It is made express in various of the pro forma letters described above that the opportunity for landholders in the Heritage Estates to sell their land under the project is entirely voluntary. That essential point is reinforced by clause 2 of the "Acknowledgements" in the offer to sell document, which expressly states that the project is voluntary and there is no obligation to proceed and the landholder can withdraw at any time prior to settlement. If a landholder decides to take advantage of the opportunity which has been presented, that is entirely a matter of their choice. There is no compulsion or obligation to sell to the Foundation. If an individual landowner elects not to participate in the project, he or she will presumably continue to hold their land subject to the proposed new rezoning.
34 It seems to me that this is sufficient of itself to find that the applicants' case does not involve a serious question to be tried (or, if it does, the question is a very weak one). But there appears to be another serious hurdle in the applicants' way. To the extent that the applicants argue that the relevant "acquisition" relates to the operation of the EPBC Act and the Minister's decision dated 13 March 2009 which prevents the rezoning of the land to permit residential development, three Justices of the High Court held in the Tasmanian Dams Case (at 144-146, 181-182 and 248 per Mason J, Murphy J and Brennan J respectively), that the fact that a Commonwealth Minister has a power of veto of any development of, or activity on, land owned by a State or a person does not amount to a vesting of possession in the Commonwealth. Only Deane J expressed a different view (see at 282-288). The other three members of the Court expressed no view one way or the other on that issue.
35 It may be accepted that an acquisition could be established where a person has effectively been deprived of "the reality of proprietorship" by an indirect acquisition through the operation of an Act, such as the EPBC Act, of "the substance of a proprietary interest (see, for example, Bank of NSW v The Commonwealth (1948) 76 CLR 1 at 349 per Dixon J and Newcrest Mining (WA) Ltd v The Commonwealth (1997) 190 CLR 513 at 633-634 per Gummow J). In Newcrest, the Commonwealth acquired identifiable and measurable advantages in the form of the minerals which were freed from the rights of Newcrest to mine them.
36 Here, while it might be argued that the Commonwealth derives some benefit in terms of protecting the environment and conservation values of Booderee National Park, as well as generally advancing the objects of the EPBC Act, it is difficult to see how any of that involves the vesting of a possessory or proprietary right in the land which is sold to the Foundation, or otherwise results in the Commonwealth acquiring some identifiable and measurable advantage which is sufficient to attract the constitutional guarantee (see also ICM Agriculture at [85] and the Plain Packaging Case at [32]).
37 For the following reasons, I also consider that there is no serious issue to be tried regarding the applicants' causes of action allegedly based on unjust enrichment and false or negligent misstatement. As to the former, I have great difficult in seeing how there can be an arguable case or serious issue to be tried in circumstances where, on the applicants' own valuation evidence, the offer made by the Foundation to those who lodge an offer to sell form and are accepted receive an amount which is either 10 or 11 times greater than the value identified by the applicants' own valuer.
38 There are other difficulties with the unjust enrichment argument. Even if, contrary to the above, there is an arguable issue, the interlocutory relief sought does not address the matter. Further, I do not accept the applicants' argument that there is a serious issue that the "rush" created by the sale process constitutes duress for the purposes of unjust enrichment. And insofar as the applicants rely on "mistake" as an element of this cause of action. I do not consider that there is a serious issue to be tried concerning the alleged misrepresentations on which the mistake case is based. Nor was I taken to any evidence which identifies any mistake arising from the project.
39 As to the applicants' false/negligent misstatement case, it seems to rely upon two alleged misstatements made in the "frequently answered questions" section of one of the Foundation's pro forma letters. The first of those statements relates to the claim that "There are no grounds for compensation". As Mr King accepted in oral argument, if I reject the applicants' s 51(xxxi)/s 519 claim as raising no serious issue, that finding must inevitably doom the separate challenge addressed to that statement. The next statement identified by the applicants as involving a false or negligent misrepresentation focuses on the statement that the invitation to sell at either $5,500 or $5,000 is "a fair and reasonable price for the land". In my view no serious issue is raised because, when allowance is made for the proposed rezoning of the land as would be required to produce an appropriate valuation of the land, the offer to pay those sums is well above what the applicants' own evidence suggests to be the market value of the land post the proposed rezoning.
40 At one point, the applicants also relied upon a third alleged false representation in respect of a statement made in what is described as the "third Offer" that the Commonwealth Minister had "rejected a proposed rezoning" of the land when the applicants say that the true position is that the Minister had exercised his powers under the EPBC Act to give a direction to the Council not to rezone the land, thereby creating a false impression that the rezoning authority was the Minister and distracting attention away from the right of compensation under s 519 of the EPBC Act. This alleged misrepresentation was not pressed when I pointed out to Mr King in oral argument that it was a misdescription by the applicants to refer to the Minister's decision dated 13 March 2009 as a "direction". He accepted that it was not correct to refer to that event as a "direction" under s 519 of the EPBC Act. In any event, I do not consider that there is a serious issue to be tried concerning this statement.
41 For these reasons, therefore, I am not persuaded that there is a serious question to be tried on any of the causes of action raised by the applicants or, if there is, I consider that it is very weak.