GUMMOW J. These cases in the original jurisdiction of the Court present challenges by the plaintiffs to the validity of the Tobacco Plain Packaging Act 2011 (Cth) ("the Packaging Act"). The plaintiffs invoke the restraint upon legislative power found in s 51(xxxi) of the Constitution. For the reasons which follow the challenges should fail and I joined in the orders pronounced on 15 August 2012.
That failure illustrates the propositions that s 51(xxxi) gives protection against acquisition of property without just terms but "not to the general commercial and economic position occupied by traders" and that to treat this commercial and economic position as if it had a distinct proprietary character would be to repeat what in Truax v Corrigan Holmes J identified in a similar context as the fallacy of "delusive exactness". His Honour said:
"Delusive exactness is a source of fallacy throughout the law. By calling a business 'property' you make it seem like land, and lead up to the conclusion that a statute cannot substantially cut down the advantages of ownership existing before the statute was passed. An established business no doubt may have pecuniary value and commonly is protected by law against various unjustified injuries. But you cannot give it definiteness of contour by calling it a thing."
Previous federal legislation
Tobacco advertising is controlled by the Tobacco Advertising Prohibition Act 1992 (Cth), but s 9(2) thereof provides that words, signs or symbols that appear on a tobacco product or its packaging do not constitute a tobacco advertisement.
However, the Trade Practices (Consumer Product Information Standards) (Tobacco) Regulations 2004 ("the 2004 Regulations"), made under the Trade Practices Act 1974 (Cth), require that a prescribed graphic health warning must cover at least thirty percent of the front surface of tobacco packaging and ninety percent of the back surface.
In respect of tobacco products to be supplied after 30 November 2012, the Competition and Consumer (Tobacco) Information Standard 2011 ("the 2011 Regulations"), made under the Competition and Consumer Act 2010 (Cth), will require that a prescribed graphic health warning must cover at least seventy‑five percent of the front of the packet, and at least ninety percent of the back outer surface.
The prescribed health warnings include an invitation to call the "Quitline" service; the "Quitline" logo with the number "13 7848" is the registered trade mark, in respect of health educational services, of the Anti‑Cancer Council of Victoria.
Section 10 of the Packaging Act provides that the 2004 Regulations and the 2011 Regulations prevail to the extent of any inconsistency with the Packaging Act.
No challenge is made in these proceedings to the validity of the 2004 Regulations or the 2011 Regulations. What primarily is at stake is the utilisation of the remaining space on the front of tobacco packages for the display of trade marks and product get‑up without the restraints imposed by the Packaging Act.
The parties
In matter No S409 of 2011 ("the JTI Matter") the plaintiff, JT International SA ("JTI"), is incorporated in Switzerland. JTI is the registered owner of one trade mark and exclusive licensee of four trade marks, all registered under the Trade Marks Act 1995 (Cth) ("the TMA"). The registrations are in respect of tobacco products falling within class 34 of the international trade mark classification.
Registered trade marks numbers 339477 and 348139 have respective priority dates in 1979 and in 1980. The earlier registration comprises "Camel" in fancy script and the latter "Camel" in plain script. Registered trade marks numbers 1276704 and 1351189 have later priority dates respectively in 2008 and 2010. The first of these trade marks uses the representation of "Camel" in fancy script, the subject of the 1979 registration, together with additional graphic material including a desert scene with a camel, palm trees and a pyramid. The most recent registration is a drawing of a camel in silhouette.
JTI is exclusive licensee of these four trade marks. JTI is registered owner of the remaining registration, number 1007693, which has a priority date in 2004, and comprises the words "Old Holborn" displayed upon what appears to be fancy packaging in the shape of a tobacco pouch. Tobacco products are distributed and sold in Australia in packaging featuring the registered trade marks and the brand names "Camel" and "Old Holborn".
In the second matter, No S389 of 2011 ("the BAT Matter"), the first plaintiff, British American Tobacco Australasia Limited ("BAT Australasia"), is a trading corporation, incorporated under the Corporations Act 2001 (Cth) ("the Corporations Act"); the second plaintiff, British American Tobacco (Investments) Limited ("BAT Investments"), is incorporated under the laws of England and Wales; the third plaintiff, British American Tobacco Australia Limited ("BATA"), is a wholly owned subsidiary of BAT Australasia and is a trading corporation, incorporated under the Corporations Act. BATA carries on the business of manufacturing or importing and of marketing, selling, distributing and displaying packets of cigarettes under the "Winfield" brand and the "Dunhill" brand. Since July 2010 BATA has sold in Australia hundreds of millions of packets of Winfield cigarettes and tens of millions of packets of Dunhill cigarettes.
BAT Australasia is the registered owner under the TMA of trade marks numbers 270845, 752287, 917043 and 1326870 ("the BAT Trade Marks"). All feature the brand name "Winfield" with additional material and are registered in class 34. The registration of the second and third of these trade marks bears endorsements as to colour. The trade marks were first registered respectively in 1973, 1998, 2002 and 2009.
The BAT Matter also involves other species of intellectual property. It is accepted by the Commonwealth that BAT Australasia is the owner of original artistic works pursuant to the Copyright Act 1968 (Cth) ("the Copyright Act") comprising the material (excluding health warnings) on the packaging for the products marketed as "Winfield Optimum Night", "Winfield Blue", "Winfield Red", "Winfield Silver" and "Winfield Gold" ("the BAT Copyrights").
BAT Investments is the owner of registered design number 323481 under the provisions of the Designs Act 2003 (Cth) ("the Designs Act"). The design ("the BAT Design") is registered with lodgment date of 31 October 2008, in respect of a "ribbed pack". The newness and distinctiveness of the design is said to reside in the features of shape and configuration of a ribbed pack illustrated in the representations accompanying the registration. BAT Investments also is grantee of Patent No 2001258572 under the Patents Act 1990 (Cth) ("the Patents Act") for an invention titled "Smoking article packaging" ("the BAT Patent") which claims a method of re‑sealing the contents in that packaging. The Dunhill branded cigarettes referred to above were sold in packaging which utilised the BAT Patent and applied the BAT Design.
The plaintiffs in both the JTI Matter and the BAT Matter assert common law rights of goodwill in the get‑up of their products in addition to their statutory rights.
The JTI Matter
JTI complains of the effect upon these trade mark registrations of the Packaging Act and of the Tobacco Plain Packaging Regulations 2011 ("the Packaging Regulations") made under the Packaging Act. JTI contends that the effect is, under pain of offence and civil penalty provisions contained in the Packaging Act, to require the elimination of all distinguishing features of its tobacco packaging and to permit, on the area of packaging remaining after the health warnings, the use only of the brand or business name or variant name (eg "Camel") in small plain font against a background in a drab colour known as Pantone 448C.
JTI seeks declaratory relief that in its application to the JTI registered trade marks the Packaging Act (and thus the Packaging Regulations made thereunder) is invalid. JTI also complains of the effect of the Packaging Act upon what it claims are its common law rights in the get‑up of its products. To the defence, in which the Commonwealth pleads that s 51(xxxi) is not engaged with respect to the Packaging Act, JTI pleads and demurs, and its demurrer is set down before the Full Court.
On the hearing of the demurrer there were interventions by Queensland, the Northern Territory and the Australian Capital Territory. Each intervener supported the submissions by the Commonwealth as to the absence of any "acquisition" as required by s 51(xxxi).
The BAT Matter
By order of a Justice of this Court made on 28 February 2012 questions have been reserved for determination by the Full Court in the BAT Matter pursuant to s 18 of the Judiciary Act 1903 (Cth). The effect of Qu (1) is to ask whether all or some of the provisions of the Packaging Act result in an acquisition otherwise than on just terms of the BAT trade marks and the BAT Copyrights, the BAT Design and the BAT Patent, and the common law rights of BAT Australasia and of BATA. Question (2) asks whether the resolution of Qu (1) requires the determination at trial of any disputed facts. Question (3) assumes an affirmative answer to Qu (1). Question (4) raises the validity of s 15 of the Packaging Act; the text of s 15 is set out later in these reasons.
There were interventions in the BAT Matter by Philip Morris Ltd ("Philip Morris") and by Van Nelle Tabak Nederland BV and Imperial Tobacco Australia Ltd (together "Van Nelle") in support of the plaintiffs and interventions in support of the Commonwealth by the Northern Territory and the Australian Capital Territory. The demurrer in the JTI Matter and the questions reserved in the BAT Matter were heard consecutively.
It is convenient to begin with some consideration of the relevant intellectual property legislation, beginning with the trade mark legislation.
The TMA
The issues which are presented in these cases respecting the "taking" and "acquisition" of proprietary interests are to be approached with an appreciation that trade mark legislation, in general, does not confer a "statutory monopoly" in any crude sense. Rather, the legislation represents an accommodation between the interests of traders, in the use of trade marks in developing the goodwill of their businesses and turning this to account by licensing arrangements, and the interests of consumers, in recognising trade marks as a badge of origin of goods or services and avoiding deception or confusion as to that origin.
The term "trade mark" is defined in s 17 of the TMA as a "sign" which is used or intended to be used to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person. A trade mark must be capable of graphic representation (s 40).
The Registrar is obliged by s 68 to register a trade mark which is accepted for registration and in respect of which there has been no successful opposition. A trade mark may be registered with limitations as to colour, in respect of the whole or part of the trade mark. Examples are the "Winfield" registration numbers 752287 and 917043. To the extent that a trade mark is registered without limitations of the exclusive right of use as to colour, the trade mark is taken to be registered for all colours (s 70).
Section 21 states that a registered trade mark "is personal property" and that equities in respect of it "may be enforced in the same way as equities in respect of any other personal property". It is important to note that a registered trade mark may be assigned or transmitted, with or without the associated goodwill and for all or some only of the goods or services for which it is registered (s 106). From the date of registration (s 20(3)), the registered owner is given by s 20(1) "the exclusive rights" (a) to use the trade mark and (b) to authorise others to do so, in relation to the goods or services in respect of which the trade mark is registered (emphasis added). Use by an authorised user is taken for the purposes of the Act to be a use by the owner (s 7(3)).
The exclusive right of use in respect of the goods or services for which there is a registration is given effect and extended by the infringement provision in s 120. Under the chapeau "When is a registered trade mark infringed?", s 120 gives three distinct answers. The first appears in sub‑s (1), the second in sub‑s (2), and the third in sub‑ss (3) and (4). Section 120, excluding the appended Notes, reads:
"(1) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
(2) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:
(a) goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or
(b) services that are closely related to registered goods; or
(c) services of the same description as that of services (registered services) in respect of which the trade mark is registered; or
(d) goods that are closely related to registered services.
However, the person is not taken to have infringed the trade mark if the person establishes that using the sign as the person did is not likely to deceive or cause confusion.
(3) A person infringes a registered trade mark if:
(a) the trade mark is well known in Australia; and
(b) the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to:
(i) goods (unrelated goods) that are not of the same description as that of the goods in respect of which the trade mark is registered (registered goods) or are not closely related to services in respect of which the trade mark is registered (registered services); or
(ii) services (unrelated services) that are not of the same description as that of the registered services or are not closely related to registered goods; and
(c) because the trade mark is well known, the sign would be likely to be taken as indicating a connection between the unrelated goods or services and the registered owner of the trade mark; and
(d) for that reason, the interests of the registered owner are likely to be adversely affected.
(4) In deciding, for the purposes of paragraph (3)(a), whether a trade mark is well known in Australia, one must take account of the extent to which the trade mark is known within the relevant sector of the public, whether as a result of the promotion of the trade mark or for any other reason." (emphasis in original)
The remedies for infringement include an injunction and damages or an account of profits (s 126). An authorised user who brings an infringement action must join the registered owner as a defendant (s 26(2)).
Regulations made under the Act may provide that a specified sign is not to be used as a trade mark or as part of a trade mark; but the regulations may not affect an already registered trade mark (s 18).
A trade mark is subject to removal from the Register for non‑use, as provided in Pt 9 (ss 92‑105). In particular, s 92(4)(b) specifies a non‑use period of three years ending one month before the filing of the application for removal. Part 8, Div 2 (ss 85‑90) provides for rectification of the Register by curial order if a ground in s 87 or s 88 is made out. These grounds include the loss of distinctiveness after registration whereby the trade mark becomes the "generic" description or name of an article, substance or service (s 87) and the presence of circumstances at the time of the rectification application which made the use of the trade mark likely to deceive or cause confusion (s 88).
Threshold propositions
In oral submissions the Queensland Solicitor‑General submitted, essentially with the support of the Commonwealth Solicitor‑General, that, (i) absent some prohibitions elsewhere in the common law or in statute, there was at common law a freedom to use any word or device in association with the provision of goods or services, (ii) that common law freedom was not proprietary in nature, (iii) it was this common law freedom of traders, whether the plaintiffs or others, which the Packaging Act restricted, (iv) the "exclusive" rights of a registered owner identified in s 20(1) of the TMA, to use and to authorise use, were directed to the imposition in favour of the registered owner of a duty or obligation upon others, thereby restricting what otherwise was their freedom of use, (v) it was this right to exclude which constituted the personal property in a registered trade mark spoken of in s 21 of the TMA, (vi) the Packaging Act in no way impinged upon the rights of exclusion of others conferred by the TMA upon registered owners.
These propositions may be accepted, but, as will appear, are not decisive of the operation of s 51(xxxi) in the JTI Matter and the BAT Matter.
It also is true, as another threshold proposition, that while the TMA facilitates the exploitation of registered trade marks in trade and commerce, trade mark registration systems ordinarily do not confer a liberty to use the trade mark, free from what may be restraints found in other statutes or in the general law. The point was made with respect to the Trade Marks Act 1955 (Cth) by Deane J in New South Wales Dairy Corp v Murray Goulburn Co‑op Co Ltd where he referred to:
"the availability of ordinary criminal or civil procedures to prevent dishonesty, fraud and passing‑off and by the fact that registration of a trade mark does not ordinarily constitute a licence for what would otherwise be unlawful conduct: see, eg, Lyle and Kinahan Ltd's Application; Van Zeller v Mason, Cattley & Co; and note the narrowness of the trade mark exception in s 51(3)(c) of the Trade Practices Act 1974 (Cth)".
In particular, the TMA does not immunise the use of a registered trade mark from the law of passing‑off. Rather, s 230 makes special provision on the subject. The use of a registered trade mark may be enjoined at the suit of a third party who makes out a case of passing‑off; however, damages may not be awarded if the defendant was unaware of the plaintiff's common law rights and had no reasonable means of finding this out when the defendant began its activity and this activity ceased immediately upon the defendant becoming so aware.
But while all these threshold propositions should be accepted, they do not foreclose submissions that there has been a sufficient degeneration of property rights brought about by the Packaging Act to engage s 51(xxxi). Rather, the threshold propositions do not cover the relevant field of property rights.
The rights given to registered trade mark owners to assign their marks with or without goodwill, to license authorised users, and to bring proceedings against other parties for infringement may be of great commercial value. So also the generation of goodwill derived from the distinctiveness of the registered trade mark which flows from its use. It will be necessary shortly to return to these matters.
The Copyright Act, the Designs Act and the Patents Act
Much the same may be said of the other items of statutory intellectual property relied upon in the BAT Matter.
Copyright is "personal property" which is transmissible by assignment as provided in the Copyright Act and by will and by devolution by operation of law (s 196). Section 31(1)(b) of the Copyright Act specifies that copyright in relation to an artistic work is the exclusive right "(i) to reproduce the work in a material form; (ii) to publish the work; (iii) to communicate the work to the public". The effect of s 13(2) is that exclusive right includes the authorisation of another to do the acts specified in s 31(1)(b).
It is an infringement of the copyright in an artistic work, without the licence of the owner of the copyright, to do any of these acts in Australia or to authorise the doing of any of these acts in Australia (s 36(1)).
The Designs Act confers upon the registered owner of a registered design the "exclusive right" during the term of the registration, among other things, to make a product which embodies the design and to use such a product in any way for the purposes of any trade or business, and to authorise any person to engage in those activities (s 10(1)). These exclusive rights are "personal property" which are capable of assignment and devolution by will and by operation of law (s 10(2)). It is an infringement of a registered design, without the licence or authority of the registered owner, to engage in any activity in respect of which exclusive rights are conferred by s 10 (s 71). There are provisions for compulsory licences (s 90) and the revocation of registration after grant of a compulsory licence (s 92).
Section 13(1) of the Patents Act confers upon the patentee the "exclusive rights" to exploit the invention and to authorise that exploitation. These exclusive rights are "personal property" which are capable of assignment and of devolution by law (s 13(2)). The term "exploit" is defined as follows in Sched 1:
"exploit, in relation to an invention, includes:
(a) where the invention is a product - make, hire, sell or otherwise dispose of the product, offer to make, sell, hire or otherwise dispose of it, use or import it, or keep it for the purpose of doing any of those things; or
(b) where the invention is a method or process - use the method or process or do any act mentioned in paragraph (a) in respect of a product resulting from such use."
Chapter 11, Pt 1 (ss 117‑123) makes detailed provisions for infringement. Chapter 12 (ss 133‑140) provides for compulsory licences and revocation if the reasonable requirements of the public with respect to the invention are not satisfied.
Conclusions respecting intellectual property legislation
The upshot is that (a) while the Commonwealth and supporting interveners are correct in their submissions that it would be wrong to approach the issues arising under s 51(xxxi) of the Constitution on the footing that registration under the TMA or the Designs Act, a grant under the Patents Act, or the subsistence of copyright, confers some unconstrained right to exploit those items of intellectual property or an immunity from the operation of regulatory laws, (b) that is not sufficient to dispose of the case presented for the application of s 51(xxxi).
The Packaging Act
The central provisions of the Packaging Act should now be indicated, with some reference thereafter to provisions thereof which deal with the intersection between that statute and the TMA and the Designs Act.
Chapter 3, Pt 2, Div 1 (ss 31‑36) of the Packaging Act creates a range of offences, with attached criminal and civil penalties. These offences include those for selling or supplying "tobacco products" in retail packaging which does not comply with a "tobacco product requirement" (s 31), purchasing such products other than for personal use (s 32), packaging such products for retail sale (s 33), manufacturing non‑compliant retail packaging of tobacco products (s 34) and manufacturing tobacco products that are so packaged (s 35). Part 2, Div 2 (ss 37‑39) creates offences with attached criminal and civil penalties for selling or supplying "tobacco products" which do not comply with a "tobacco product requirement" (s 37), purchasing such products other than for personal use (s 38), and manufacturing such products (s 39).
While Pt 2 of Ch 3 fixes upon "a person", Pt 3 of Ch 3 fixes upon the activities of "constitutional corporations" but otherwise follows the scheme of the offences in Pt 2.
The term "tobacco product" is defined in s 4(1) so as to include processed tobacco and products of a non‑therapeutic nature which are manufactured to be used for smoking, sucking, chewing or snuffing. It includes cigarettes. The expression "tobacco product requirement" is central to the formulation of the offences created by Ch 3. The definition of that expression in s 4(1) refers principally to requirements which are specified in Ch 2, Pt 2 (ss 18‑29) or prescribed by the Packaging Regulations, which have been made under Ch 2, Pt 2. Accordingly, I now turn to Ch 2, Pt 2.
Section 18(1)(a) requires the outer surfaces of retail packaging not to have any decorative ridges, embossing, bulges or other irregularities of shape or texture. This would, it may be accepted, deny the application of the BAT Design. Regulation 2.1.1 of the Packaging Regulations requires that a cigarette pack not contain an opening, other than a fliptop lid, that can be re‑closed or re‑sealed after the opening is first opened. This, it may be accepted, denies the exploitation of the BAT Patent by the patentee or any licensee, as well as by an infringer.
No "trade mark" and no "mark" may appear anywhere on a "tobacco product" other than as permitted by the Packaging Regulations (s 26). The term "trade mark" is not defined and may be taken as including registered and common law trade marks. On the other hand, "mark" is defined in s 4(1) very widely so as to include "any line, letters, numbers, symbol, graphic or image". With respect to the appearance of trade marks upon retail packaging, the brand, business or company name for the tobacco products and any other trade mark permitted by the Packaging Regulations may appear, but otherwise no trade mark may appear (s 20(1), (3)). No trade mark may appear on any wrapper (which must be plastic or otherwise transparent), other than as permitted by the Packaging Regulations (s 22). In the absence of other colour prescription by the Packaging Regulations, all outer and inner surfaces of the retail packaging of tobacco products, and both sides of any lining of a cigarette pack, must have a matt finish and be "drab dark brown", save for health warnings, requirements of other relevant legislation, and the brand, business or company name for the tobacco product (s 19).
Section 42(b) of the TMA requires rejection of an application if the use of the trade mark "would be contrary to law"; but s 28(2) of the Packaging Act stipulates that for the purposes of s 42(b) of the TMA the Packaging Act does not render the use of a trade mark contrary to law. Further, s 28(3) of the Packaging Act provides that the operation of that statute does not make it reasonable or appropriate not to register a trade mark, to impose conditions or limitations upon registration or to revoke its registration.
Section 29 of the Packaging Act provides that failure to utilise a registered design as a result of complying with the Packaging Act does not provide a basis for a compulsory licence under s 90 of the Designs Act or for revocation under s 92.
Section 15(2) of the Packaging Act is a distinct and important provision. It states that:
"if, apart from this section, this Act would result in [an acquisition of property from a person otherwise than on just terms] because it would prevent the use of a trade mark or other sign on or in relation to the retail packaging of tobacco products, or on tobacco products, then despite any other provision of this Act, the trade mark or sign may be used on or in relation to the retail packaging of tobacco products, or on tobacco products, subject to any requirements that may be prescribed in the regulations for the purposes of this subsection."
Section 15(3) confirms the continued operation of any tobacco product requirement that does not result in such an acquisition.
The plaintiffs in the BAT Matter challenge the validity of s 15(2). It is undoubtedly accurate to say that the Parliament may not confer upon courts exercising federal jurisdiction a choice as to the content of the law to be applied in adjudicating a "matter", if the result of doing so is that the Parliament has not made a law supported by a head of legislative power. But s 15(2) is not of that character. Section 15(2) is a severability provision of a specific application but of the same genus as that of which s 15A of the Acts Interpretation Act 1901 (Cth) is another member. To apply s 15(2) would not be to "read up" the Packaging Act in the impermissible manner discussed in Pape v Federal Commissioner of Taxation.
The issue on the demurrer and the questions reserved
The issue then posed by the demurrer and the leading questions reserved, in effect, is whether the tobacco product requirements of the Packaging Act do not amount to an "acquisition" of the property of the plaintiffs so that s 15(2) is not engaged. This presents two questions. The first is whether there is a "taking" or "deprivation" of the property of the plaintiffs and, if so, the second question is whether the Packaging Act effects an "acquisition" of property otherwise than on just terms as proscribed by s 51(xxxi) of the Constitution. The distinction between the two questions appears from the pithy statement of Gibbs CJ, Wilson, Brennan, Deane and Dawson JJ to the effect that rights of property may be extinguished without being acquired. The submissions of the plaintiffs, in some instances directly, and in others with more subtlety, sought to displace or diminish the importance of that second question. That attempt was contrary to established authority in this Court.
For the reasons which follow, there is sufficient impairment, at least of the statutory intellectual property of the plaintiffs, to amount to a "taking", but there is no acquisition of any property. The result is the plaintiffs' cases for invalidity fail.
Section 51(xxxi) of the Constitution and statutory entitlements
In Wurridjal v The Commonwealth Crennan J said of s 51(xxxi):
"It can be significant that rights which are diminished by subsequent legislation are statutory entitlements. Where a right which has no existence apart from statute is one that, of its nature, is susceptible to modification, legislation which effects a modification of that right is not necessarily legislation with respect to an acquisition of property within the meaning of s 51(xxxi). It does not follow, however, that all rights which owe their existence to statute are ones which, of their nature, are susceptible to modification, as the contingency of subsequent legislative modification or extinguishment does not automatically remove a statutory right from the scope of s 51(xxxi).
Putting to one side statutory rights which replace existing general law rights, the extent to which a right created by statute may be modified by subsequent legislation without amounting to an acquisition of property under s 51(xxxi) must depend upon the nature of the right created by statute. It may be evident in the express terms of the statute that the right is subject to subsequent statutory variation. It may be clear from the scope of the rights conferred by the statute that what appears to be a new impingement on the rights was in fact always a limitation inherent in those rights. The statutory right may also be a part of a scheme of statutory entitlements which will inevitably require modification over time."
It should be accepted that while the registered trade marks owe their legal character to their registration under the TMA, rather than to the general law, it would be an error to proceed on the footing that because some valuable rights conferred by statute, such as fishing licences and petroleum exploration licences, have been held to fall outside the constitutional criterion of "property", no right sourced in federal law may fall within it.
Such licences as those just mentioned commonly are granted so as to lift a statutory prohibition imposed upon engagement in the activity in question and the grant is expressly made subject to the terms of the statutory regime as they stand from time to time. That is not the case with the various species of "intellectual property" within the description in s 51(xviii) of the Constitution, namely copyrights, patents of inventions and designs and trade marks. It is true that upon grounds specified in the relevant statutes patents and designs may be revoked and trade mark registrations may be expunged from the register. But 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.
In the end, one cannot gainsay two statements by Windeyer J. The first, in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd, is that "although the proposition may involve one's conception of the nature of property, it can hardly be said that a registered trade mark is not a species of property of the person whom the statute describes as its registered [owner], and which it permits him to assign" (emphasis added). The second, in Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation, is that the essential nature of copyright is "a negative right ... a power to prevent the making of a physical thing by copying" rather than "a right in an existing physical thing". Hence, copyright is "properly called an incorporeal right". Subsequently, in Australian Tape Manufacturers Association Ltd v The Commonwealth, Dawson and Toohey JJ said there could be no doubt "that copyright constitutes property within the scope of s 51(xxxi)". The same may be said of patents and registered designs.
It also should be accepted that at general law the goodwill attached to the business of the plaintiff by reason of the exploitation of trade marks and associated get‑up answers the description of property. In Federal Commissioner of Taxation v Murry it was said in the joint reasons:
"From the viewpoint of the proprietors of a business and subsequent purchasers, goodwill is an asset of the business because it is the valuable right or privilege to use the other assets of the business as a business to produce income. It is the right or privilege to make use of all that constitutes 'the attractive force which brings in custom'[]. Goodwill is correctly identified as property, therefore, because it is the legal right or privilege to conduct a business in substantially the same manner and by substantially the same means that have attracted custom to it. It is a right or privilege that is inseparable from the conduct of the business."
And, as Windeyer J emphasised in Colbeam Palmer, protection of property is the foundation in equity of the passing‑off action. Further, it is well established that such an action may protect the goodwill derived from slogans and visual images which build up an association with the business of the plaintiff.
However, it should be borne in mind that all these items of "property" are, as Higgins J put it, "artificial products of society", not "physical objects" the boundaries of each class of which "are fixed by external nature"; more precisely, as Isaacs J emphasised with respect to trade marks, these are not affirmative rights like the property in goods and are not rights "in gross, or in the abstract".
These considerations direct further attention to the identification of those rights which constitute the property in question in these cases. This is an essential first step in the identification of that of which there has been a deprivation or "taking". It is convenient first to say something respecting the position in the United States.
The Fifth Amendment
Reference was made in the submissions of various parties and interveners to decisions of the United States Supreme Court upon the "taking" clause of the Fifth Amendment.
Both in this provision and in s 51(xxxi) the term "property" is used with respect to the group of rights inhering in ownership and, as the Supreme Court put it, not in any "vulgar and untechnical sense". In this Court, it has been emphasised that "to characterise something as a proprietary right ... is not to say that it has all the indicia of other things called proprietary rights" and that "the protection given to property rights varies with the nature of the right"; this understanding of the general law has influenced the interpretation of s 51(xxxi).
Perhaps it was with this similarity of approach in mind that in 1941 Dixon J said in Andrews v Howell:
"The source of s 51(xxxi) is to be found in the fifth amendment of the Constitution of the United States, which qualifies the power of the United States to expropriate property by requiring that it should be done on payment of fair compensation."
However, it has been apparent for some time that with respect to "taking" and "acquisition" some important distinctions are to be observed between the United States and Australian Constitutions. As early as 1944, McTiernan J, after referring to several decisions of the United States Supreme Court, said that the differences between the two constitutional provisions "would suggest a need for caution in the application of the American decisions regarding the power of eminent domain and the safeguards upon its exercise". Nine distinctions were drawn in Smith Kline & French Laboratories (Aust) Ltd v Department of Community Services and Health.
The Fifth Amendment, which also applies to the States by the medium of the Fourteenth Amendment guarantee against the deprivation of property without due process of law, is expressed in the form of a negative, appears with the due process clause, and speaks of private property being "taken" for "public use". On the other hand, s 51(xxxi) is directed to the Parliament and speaks of "acquisition" for any "purpose" in respect of which there is federal legislative power. "Acquisition" is a term which indicates, as Gibbs J put it in Trade Practices Commission v Tooth & Co Ltd, "not every compulsory divesting of property is an acquisition within s 51(xxxi)".
It should be emphasised that under the Fifth Amendment, even if just compensation be made, the "taking" must be for "public use", that is to say for "the public good, the public necessity or the public utility". In Kelo v City of New London, the Supreme Court ruled that the federal judiciary should not make an independent judgment as to whether a taking of private property is for a "public use"; rather, the question is whether the government authority, federal, State or local, can make a rational argument that the taking resulted in a "public benefit".
The effect of the United States decisions is to accept that the "taking" clause may be engaged without what the decisions in this Court would classify as an "acquisition". However, the greater scope this gives to the Fifth Amendment has been tempered by a doctrine permitting "regulation" which does not amount to a "taking"; "regulation" will amount to a "taking" if the regulatory actions in question are "functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain".
Reference was made in several submissions to the characterisation of the Packaging Act as a law of "trade regulation" as determinative or at least indicative of the placement of the law outside the application of s 51(xxxi). However, to adopt this course would be to provide a false frame of reference. The caution given by Mason J in Trade Practices Commission v Tooth & Co Ltd should be borne in mind. His Honour there said:
"It is one thing to say that a law which is merely regulatory and does not provide for the acquisition of title to property is not a law with respect to acquisition of property."
Remarks by Brennan J in The Commonwealth v Tasmania (The Tasmanian Dam Case) also are relevant here:
"In the United States, where the Fifth Amendment directed that private property should not be 'taken' without just compensation, the Supreme Court construed the provision as one 'designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole': Armstrong v United States. If this Court were to construe s 51(xxxi) so that its limitation applies to laws which regulate or restrict use and enjoyment of proprietary rights but which do not provide for the acquisition of such rights, it would be necessary to identify a touchstone for applying the limitation to some regulatory laws and not to others. The experience of the Supreme Court of the United States was frankly stated in Penn Central Transportation Co v New York City:
'... this Court, quite simply, has been unable to develop any "set formula" for determining when "justice and fairness" require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons.'"
Brennan J continued:
"In this Court, the limitation in par (xxxi) has not been thought hitherto to apply to a regulatory law that did not effect an acquisition of property. In Tooth's Case, the distinction between a law that provides for an acquisition of property and a law that does not was clearly drawn."
His Honour then repeated the passage from the reasons of Mason J in Tooth which has been set out above.
Also in the Tasmanian Dam Case, Mason J, in a passage later approved by Dawson J, said:
"The emphasis in s 51(xxxi) is not on a 'taking' of private property but on the acquisition of property for purposes of the Commonwealth. To bring the constitutional provision into play it is not enough that legislation adversely affects or terminates a pre‑existing right that an owner enjoys in relation to his property; there must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be." (emphasis in original)
Substance and degree - three leading decisions
Whether the law in question sufficiently impairs the group of rights inhering in the property in question as to amount to an involuntary taking of that property, presents questions of substance and degree, rather than merely of form. That this is so is well settled by authority beginning at least with the reasons of Dixon J in Bank of New South Wales v The Commonwealth ("the Banking Case"). However, the consequence is that close attention is required to the terms in which the various cases applying that reasoning were decided. Expressions of conclusion in one case as to the deprivation of property, and, if so, the existence of an acquisition of property, do not necessarily provide a sufficient guide to the outcome in later disputes.
In that regard something should be said respecting three cases upon the development of doctrine from which submissions in the present matters sought to draw support. They are Minister of State for the Army v Dalziel, the Banking Case and the Tasmanian Dam Case, with reference to the reasons of Deane J.
The respondent in Dalziel occupied, as a weekly tenant of Bank of New South Wales, vacant land in the Sydney central business district upon which he conducted a parking station. In pursuance of authority conferred by regulations made under the National Security Act 1939 (Cth) the Minister took possession of that land for defence use purposes as fully "as if" the Minister held an unencumbered fee simple, and for a period not to extend more than six months after war hostilities ceased.
The Minister unsuccessfully submitted that Dalziel retained his weekly tenancy and the Bank its fee simple in the land, and that there had been no taking of any recognised estate or interest in the land, and therefore there had been no "acquisition".
Latham CJ, although in dissent, did indicate that as applied to land the term "property" in s 51(xxxi) may mean both the physical subject matter in relation to which exist rights of ownership, including a range of uses, and those rights of ownership themselves.
The present matters before the Court concern intellectual property which has no physical subject matter, unlike a parcel of land or a chattel. However, although disavowed, some of the submissions by the plaintiffs and supporting interveners sought to objectify the intellectual property, particularly the registered trade marks, by attributing a character distinct from the bundle of rights given by the statutes in question. Perhaps to overcome this difficulty, counsel drew attention to the cardboard boxes upon the packaging of which the Packaging Act operates. Like a parcel of land, there might be postulated many uses of that physical subject matter, and thus a range of restraints or "regulation" of that subject matter. However, as counsel for Van Nelle correctly accepted, the only use to be postulated of the packaging was as a cigarette container. To focus upon the cardboard boxes as the subject of the proprietary rights of the plaintiffs would be to present a case both unreal and synthetic.
In Dalziel, Starke J said that, whilst what was conferred upon the Commonwealth was neither ownership nor any estate in the land, the right of temporary possession was to be classified "under the denomination of jura in re aliena [a right in the thing of another], and so a right of property, the subject of acquisition". On the other hand, Rich J concluded that "the Minister has seized and taken away from Dalziel everything that made his weekly tenancy worth having, and has left him with the empty husk of tenancy". Likewise, Williams J emphasised that the Commonwealth had divested Dalziel of that exclusive possession which was "of the very essence of the proprietary interest conferred [by his tenancy]".
It is with an appreciation of the unsuccessful submission put by the Minister in Dalziel and of the somewhat divergent approaches in the reasoning of the Court in that case, that there should be read the synthesis attempted by Dixon J in the Banking Case. In particular, the phrase "innominate and anomalous interests" used there may accommodate the classification by Starke J of the right to possession conferred upon the Commonwealth as jura in re aliena. Dixon J said:
"I take [Dalziel] to mean that s 51(xxxi) is not to be confined pedantically to the taking of title by the Commonwealth to some specific estate or interest in land recognized at law or in equity and to some specific form of property in a chattel or chose in action similarly recognized, but that it extends to innominate and anomalous interests and includes the assumption and indefinite continuance of exclusive possession and control for the purposes of the Commonwealth of any subject of property." (emphasis added)
The provisions of Divs 2 and 3 of Pt IV of the Banking Act 1947 (Cth) were held by Dixon J effectively to deprive the private banks of the substance and reality of proprietorship of their assets and undertaking and the shareholders of the substance and reality of proprietorship of their shares, and to place this beneficial enjoyment and control in the hands of agents of the Commonwealth. What distinguished this conclusion from that in Dalziel was that it was reached not directly as in Dalziel, but indirectly by reference to the circuitous devices constituted by the interconnected plan which his Honour saw laid out in Divs 2 and 3 of Pt IV of the statute. The phrase "possession and control" was used by Dixon J to identify the substance of the property of which the banks and their shareholders had been stripped in favour of the Commonwealth; it was not used to indicate that s 51(xxxi) was engaged by a "taking" which yielded no more than some measure of control of the use of that which had been taken. Yet that is how some of the submissions by the present plaintiffs assume the remarks of Dixon J are to be understood.
It is, however, apparent that in the Tasmanian Dam Case, Deane J considered that the absence of a material benefit to the Commonwealth of a proprietary nature, at least in that case, did not avoid the conclusion that there had been an acquisition of property for the purposes of the Commonwealth. His Honour went on to support that doctrinal conclusion on two grounds.
One ground was that because "property" in s 51(xxxi) includes the "innominate and anomalous interests" to which Dixon J had referred in the Banking Case, there was no reason in principle why "a corresponding benefit under a legislative scheme cannot, in an appropriate case, be regarded as property". However, as indicated above, Dixon J used this expression with reference to the rejection in Dalziel of the submission that what had to be taken was some specific estate or interest in land recognised at law or in equity, and in the Banking Case what had been taken from the banks and the shareholders and placed in the hands of the agents of the Commonwealth was the substance of proprietary interests.
The other ground which Deane J advanced in the Tasmanian Dam Case was by way of analogy expressed as follows:
"The benefit of a restrictive covenant, which prohibits the doing of certain acts without consent and which ensures that the burdened land remains in a state which the person entitled to enforce the covenant desires to have preserved for purposes of his own, can constitute a valuable asset. It is incorporeal but it is, nonetheless, property."
However, restrictive covenants are not imposed in gross but must "touch and concern", that is to say benefit or enhance the value of, the land of the covenantee. There is a binary relationship between the two parcels of land, one bearing the burden and the other receiving the benefit.
The proposition that there need be no corresponding benefit of a proprietary nature which, with some hesitation, Deane J accepted in the Tasmanian Dam Case, was not adopted in that case by any other member of the Court. Other passages in his Honour's reasons have been referred to in later cases, but in support of the proposition that to enliven s 51(xxxi) there must be the derivation of an identifiable and measurable advantage of a proprietary nature.
Nevertheless, to varying degrees, the plaintiffs in the present cases and supporting interveners sought to rely upon what Deane J had said, at least as a means of supporting the sufficiency of an attenuated connection between the operation of the Packaging Act and the derivation of a benefit to the Commonwealth. But, as indicated above, that reasoning in the Tasmanian Dam Case was not soundly based.
Subsequent decisions
A comparison between several decisions given after the Tasmanian Dam Case was drawn by Gaudron and Gummow JJ in a passage in Smith v ANL Ltd. On the one hand, their Honours noted:
"The legislation which was invalid in its application to the plaintiff in Georgiadis [v Australian and Overseas Telecommunications Corporation] denied his right to recover damages for non‑economic loss and deprived him of his entitlement to full recovery of economic loss, [even though it] did not extinguish the whole of the rights comprising his common law cause of action. The law which was successfully challenged in Newcrest Mining (WA) Ltd v The Commonwealth did not in terms extinguish Newcrest's mining tenements and the Kakadu National Park extended only 1,000 m beneath the surface. Nevertheless there was an effective sterilisation of the rights constituting the property in question, the mining tenements. On the surface and to the depth of 1,000 m, s 10(1A) of the National Parks and Wildlife Conservation Amendment Act 1987 (Cth) forbade the carrying out of operations for the recovery of minerals. As a legal and practical matter, the vesting in the Commonwealth of the minerals to that depth and the vesting of the surface and the balance of the relevant segments of the subterranean land in the Director of National Parks and Wildlife denied to Newcrest the exercise of its rights under the mining tenements."
The passage in ANL continued:
"On the other hand, the degree of impairment of the bundle of rights constituting the property in question may be insufficient to attract the operation of s 51(xxxi). For example, the prohibition imposed under the legislation upheld in Waterhouse v Minister for the Arts and Territories upon the export of the applicant's painting left him free to retain, enjoy, display or otherwise make use of the painting. He was free to sell, mortgage or otherwise turn the painting to his advantage, subject to the requirement of an export permit if the owner or any other person desired to take it out of Australia. The legislation considered in British Medical Association v The Commonwealth, and held invalid on other grounds, today perhaps would be thought to be nearer the line of invalidity. In British Medical Association, Dixon J was of the opinion that there was no involuntary taking of property from chemists without just compensation. The chemists were legally free to supply pharmaceuticals or not, as they pleased, in a situation where, if a sale were made at other than a price fixed by the Commonwealth, there would be little or no other trade for them in that commodity."
In Australian Tape Manufacturers Association Ltd v The Commonwealth, the Court unanimously upheld the validity of a law which provided that copyright in a published sound recording was not infringed by the making on private premises of a copy of the recording on blank tape for the private and domestic use of the maker. This result was reached on the basis that, although the law reduced the content of the exclusive rights given to copyright owners, there was no "acquisition of property". As Dawson and Toohey JJ put it, there was no acquisition of property by the conferral of a freedom generally to do something which previously constituted an infringement of the proprietary right of another.
On the other hand, the defendant tortfeasor considered in Georgiadis was, pro tanto, relieved of liability. Further, the sterilisation of the mining tenements in Newcrest augmented the title of the Commonwealth and the Director to the land in question. These two cases illustrate the proposition that the modification or deprivation of the proprietary rights of one party may yield to another party a countervailing benefit or advantage of a proprietary nature.
Conclusions as to "taking"
As noted above, the TMA, like other trade mark legislation, does not confer on registered owners or authorised users a liberty to use registered trade marks free from restraints found in other statutes. Nevertheless, the power of exclusion which is conferred by the TMA, the Patents Act, the Copyright Act and the Designs Act does carry with it the right to relax that exclusivity in favour of licensees and assignees of the intellectual property in question, who on their part undertake obligations to the licensor or assignor. Those rights of the intellectual property owner may properly be regarded as proprietary in nature for the purposes of s 51(xxxi) of the Constitution.
The rights mentioned in respect of registered trade marks are in substance, if not in form, denuded of their value and thus of their utility by the imposition of the regime under the Packaging Act. Section 28 of the Packaging Act goes to some lengths to preserve registrations against attack under the TMA by reason of non‑use necessitated for compliance with the Packaging Act. Nevertheless, whilst the registration, like the weekly tenancy of Mr Dalziel, may remain, it is impaired in the manner just described.
In Mattel Inc v 3894207 Canada Inc Binnie J said that registered trade marks operated "as a kind of shortcut to get consumers to where they want to go, and in that way perform a key function in a market economy". The system established by the Packaging Act is designed to give the opposite effect to trade mark use, namely by encouraging consumers to turn away from tobacco products even if that otherwise is where they would "want to go". This is achieved by the contraction of device trade marks to the bare brand name and the required appearance of brand names, including those separately registered as word marks, in small print against a background of unattractive colour. A licensee or assignee, at peril otherwise of contravening the offence provisions in Ch 3 of the Packaging Act, would be enabled to exercise a licence or enjoy the assignment only in this constrained manner. The result is that while the trade marks remain on the face of the register, their value and utility for assignment and licensing is very substantially impaired.
The situation is even more drastic as regards the BAT Copyrights, the BAT Patent and the BAT Design at stake in the BAT Matter. Use of the artistic works on retail packaging of tobacco products is denied by the operation of s 20(3) of the Packaging Act. Use of the BAT Design would conflict with s 18(1) of the Packaging Act and exploitation of the BAT Patent would conflict with reg 2.1.1(2) of the Packaging Regulations.
The circumstances just described are sufficient to render the operation of the Packaging Act a "taking" of these items of intellectual property.
The situation respecting goodwill associated with the get‑up of the packaging of tobacco products requires further consideration. This is because, unlike the statutory species of intellectual property just described, the common law restricts the exploitation of goodwill by its assignment. At common law the goodwill would be assignable only in conjunction with the goodwill of the business in respect of which the get‑up was used. The underlying reason for the common law taking this attitude to assignments of goodwill is the loss of distinctiveness leading to the likelihood of deception of consumers as to the origin of goods. This reasoning may also apply to licensing of common law marks.
It is unnecessary to pursue further the question of whether the rights adhering to common law goodwill do not extend to rights of assignment or licensing and thereby deny subject matter for any deprivation by the Packaging Act sufficient to engage s 51(xxxi). This is because, in any event, there has been no acquisition of any interests of a proprietary nature by the Commonwealth or any other party by reason of the regime established by the Packaging Act.
Conclusions as to "acquisition"
In the Tasmanian Dam Case, Mason J said of the federal legislation there under challenge:
"In terms of its potential for use, the property is sterilized, in much the same way as a park which is dedicated to public purposes or vested in trustees for public purposes, subject, of course, to such use or development as may attract the consent of the Minister. In this sense, the property is 'dedicated' or devoted to uses, ie, protection and conservation which, by virtue of Australia's adoption of the Convention and the legislation, have become purposes of the Commonwealth. However, what is important in the present context is that neither the Commonwealth nor anyone else acquires by virtue of the legislation a proprietary interest of any kind in the property. The power of the Minister to refuse consent under the section is merely a power of veto. He cannot positively authorize the doing of acts on the property. As the State remains in all respects the owner the consent of the Minister does not overcome or override an absence of consent by the State in its capacity as owner."
Brennan J concluded:
"Unless proprietary rights are acquired, par (xxxi) is immaterial to the validity of the impugned Commonwealth measures. Though the Act conferred a power upon the Minister to consent to the doing of acts which were otherwise prohibited on or in relation to land, that power was not a proprietary right."
These statements exemplify the application of the established doctrine of the Court respecting s 51(xxxi).
The objects of the Packaging Act stated in par (a) of s 3(1) include the improvement in public health by discouraging people from using tobacco products and from relapsing if they have stopped such use, and by reducing exposure to smoke from tobacco products. Parliament desires to contribute to achievement of those objects by regulating the retail packaging and appearance of tobacco products to reduce their appeal to consumers, increasing the effectiveness of health warnings thereon and reducing the ability of retail packaging to mislead consumers about the harmful effects of using tobacco products (s 3(2)).
Another object stated in s 3(1) is the giving of effect to certain obligations upon Australia as a party to the WHO Framework Convention on Tobacco Control, done at Geneva on 21 May 2003 ("the Convention").
JTI submits (i) there can be an "acquisition" within s 51(xxxi) which is not proprietary in nature and (ii) the pursuit of the legislative purposes in s 3 of the Packaging Act confers the requisite advantage upon the Commonwealth to satisfy the requirement of an "acquisition". Proposition (i) should be rejected as inconsistent with the authorities discussed above. As to (ii), pursuit of the legislative objectives stated in s 3 of the Packaging Act does not yield a benefit or advantage to the Commonwealth which is proprietary in nature.
No doubt the implementation in municipal law of a treaty obligation of sufficient specificity may be a "purpose in respect of which the Parliament has power to may make laws" within the meaning of s 51(xxxi). However, the reasoning and outcome in the Tasmanian Dam Case indicates, as is apparent from the passage in the reasons of Mason J set out above, that the mere discharge by the Commonwealth of a treaty obligation itself is insufficient to provide an "acquisition" by the Commonwealth. JTI also points to the benefit to the Commonwealth in expected reduction in public expenditure on health care. But, as the Northern Territory correctly emphasised in its submissions, the realisation of such an expectation is conjectural. So also is any suggested enhancement of goodwill attached to the Quitline logo already appearing in the health warnings on the packaging of the plaintiffs' products. These outcomes would depend upon a complex interaction of regulatory, social and market forces comparable to that interaction considered and rejected as insufficient in Bienke v Minister for Primary Industries and Energy.
In its submissions Philip Morris contended that it was sufficient that there has been obtained no more than some identifiable benefit or advantage, which, while not of a proprietary character, is at least a benefit or advantage "relating to the ownership or use of property" (emphasis added). For this proposition Philip Morris relied upon the use of such words by Deane and Gaudron JJ in Mutual Pools & Staff Pty Ltd v The Commonwealth. Philip Morris then submitted that the Packaging Act conferred such a benefit on the Commonwealth because the statutory regime "controlled" the exploitation of the trade marks on the packaging even though the Commonwealth itself did not exploit the trade marks; it was sufficient that the control related to the use of the trade marks. Counsel for the plaintiffs in the BAT Matter submitted to similar effect.
However, as Hayne and Bell JJ explain in passages in their reasons with which I agree, to characterise as "control" by "the Commonwealth" compliance with federal law which prescribes what can and cannot appear on the retail packaging of tobacco products diverts attention from a fundamental question presented by s 51(xxxi) of the Constitution. Compliance with the federal law does not create a relationship between "the Commonwealth" and the packaging which is proprietary in nature.
Moreover, the major premise which Philip Morris sought to derive from the passage in the reasons of Deane and Gaudron JJ in Mutual Pools is not soundly based upon it.
The passage in their Honours' reasons in Mutual Pools reads:
"Nonetheless, the fact remains that s 51(xxxi) is directed to 'acquisition' as distinct from deprivation. The extinguishment, modification or deprivation of rights in relation to property does not of itself constitute an acquisition of property. For there to be an 'acquisition of property', there must be an obtaining of at least some identifiable benefit or advantage relating to the ownership or use of property. On the other hand, it is possible to envisage circumstances in which an extinguishment, modification or deprivation of the proprietary rights of one person would involve an acquisition of property by another by reason of some identifiable and measurable countervailing benefit or advantage accruing to that other person as a result."
Deane and Gaudron JJ were distinguishing two species of benefit, each sufficient for an "acquisition". The first would be exemplified by the acquisition of land by a resuming authority, where what was taken was received by the authority. The second would be exemplified by cases of a countervailing benefit or advantage of a proprietary nature. An example is the benefit or advantage to the obligee of an extinguished or modified chose in action, as in Georgiadis and ANL. In the latter case, Gleeson CJ said that the combined legal effect of the two statutory provisions in question was that "the appellant's pre‑existing common law right was modified; and a corresponding benefit was conferred on the respondent".
That is the sense in which the passage in the reasons of Deane and Gaudron JJ in Mutual Pools was understood by French CJ, Gummow and Crennan JJ in ICM Agriculture Pty Ltd v The Commonwealth.
The outcome
In oral submissions the Commonwealth placed at the forefront of its arguments first that no "property" had been "taken" and, secondly, that in any event there had been no "acquisition" of "property". The upshot is that the Commonwealth should succeed on the second of these grounds.
That makes it unnecessary to rule upon two further and related submissions by the Commonwealth. The first is that there is no contextual, structural or historical reason to treat every transfer of property as an acquisition to which s 51(xxxi) applies where the transfer is "incidental to regulation in the public interest". The second proposition is that s 51(xxxi) has no operation where the acquisition of property without compensation "is no more than a necessary consequence or incident of a restriction on a commercial trading activity ... reasonably necessary to prevent or reduce harm caused by that trading activity to members of the public or public health".
These submissions bring to mind remarks by Brandeis J in his dissenting reasons in Pennsylvania Coal Company v Mahon:
"Every restriction upon the use of property imposed in the exercise of the police power deprives the owner of some right theretofore enjoyed, and is, in that sense, an abridgment by the State of rights in property without making compensation. But restriction imposed to protect the public health, safety or morals from dangers threatened is not a taking."
It is sufficient for present purposes to say that propositions of the width of those put by the Commonwealth have not so far been endorsed by decisions of this Court and that whether such propositions should be accepted would require most careful consideration on an appropriate occasion.
Orders
The demurrer by JTI to the defence by the Commonwealth should be overruled. There should be judgment in the action for the Commonwealth. JTI should pay the costs of the Commonwealth of this action, including the demurrer.
On the questions reserved in the BAT Matter, Questions (1) and (2) should be answered "No"; Qu (3) should be answered "Does not arise"; Qu (4) should be answered "No"; Qu (5) deals with costs and should be answered "By the plaintiffs".