Spencer v Commonwealth of Australia

INTRODUCTION AND SUMMARY 1 Mr Peter Spencer commenced this proceeding on 12 June 2007. When commenced, the Commonwealth was the only respondent. The State of New South Wales was joined as a respondent on 12 November 2010. The application and statement of claim sought various forms of declaratory relief and damages arising out of what was alleged to be the acquisition of property held by Mr Spencer. The acquisition was alleged to have occurred as a result of the State enacting vegetation clearance laws pursuant to agreements between the State and the Commonwealth to do so, in order that the Commonwealth could meet its targets under the Kyoto Protocol to the United Nations Framework Convention on Climate Change of 11 December 1997 and the State could secure Commonwealth funding for various policy initiatives on environmental reforms, especially in relation to restricting native vegetation clearance. The procedural history of the matter is considerable, but ultimately the trial was conducted effectively and efficiently by all concerned. 2 For the reasons set out below, there will be orders dismissing the application. 3 In summary, I have concluded that the two impugned federal laws should not be characterised as laws with respect to the acquisition of property. When considered at a broader level, in their practical operation and effect as part of a scheme involving four intergovernmental agreements and state legislative controls on native vegetation clearance, there was no acquisition of property in contravention of s 51(xxxi). 4 In the July 2007 decision of the NSW Rural Assistance Authority that Mr Spencer's farm was not commercially viable because of the impact of the State's native vegetation laws there was what can be characterised as a "sterilisation" or a "taking", but it was by the State, and there was no acquisition by the State nor by any other person of an interest or benefit of a proprietary nature in the bundle of rights Mr Spencer held in his farm. If, contrary to my findings there had been an acquisition of his bundle of rights in Saarahnlee, Mr Spencer was offered just terms in November 2007 by the State's offer to pay the then properly assessed market value for Saarahnlee. 5 I have found Mr Spencer has not proven the existence of any "informal arrangement" between the Commonwealth and New South Wales. Nor does he have any private right of action in respect of the respondents' conduct even if contrary to my findings that conduct was unlawful or the legislative or executive acts invalid. Nor has he proven any economic or non-economic losses flowing from the alleged unlawful conduct of the respondents.

STRUCTURE OF THESE REASONS 6 I begin these reasons with a short description of Mr Spencer's claims and the course of this proceeding. I then set out the witnesses called and the evidence adduced at trial. Next I turn to factual findings about Mr Spencer's land, the regulatory history of land clearing in New South Wales, the Kyoto Protocol and the intergovernmental agreements between the Commonwealth and New South Wales which are impugned by Mr Spencer in this proceeding, including Mr Spencer's claims involving an informal arrangement outside the four written agreements. I then turn to an application of the law Mr Spencer seeks to invoke in support of his claims, dealing with the claim under s 51(xxxi) of the Constitution, which is his principal claim, and his private law action which he describes as an "action on the case". Finally, I make some findings about Mr Spencer's damages claims. 7 There are a number of matters raised by the parties in evidence and submissions but which in my opinion do not need to be determined. I address those at [126] to [135] below.

A DESCRIPTION OF MR SPENCER'S CASE AND THE COURSE OF THIS PROCEEDING

Mr Spencer's claims 8 At the beginning of his final written submissions, Mr Spencer reproduced the 1979 advertisement for the property which he purchased and called "Saarahnlee", and which is the centrepiece of his claims in this proceeding. COOMA 5414 ac freehold alpine property of breathtaking natural beauty. Three 5,000 ft peaks. Permanent trout creeks, teaming with native wildlife. Dozens of delightful cabins or homestead sites magnificent mountain retreat for professional or business person great potential for tourist development also considerable agricultural potential as about 3000ac easily improved. Present improvements include habitable homestead in lovely setting, small shearer's quarters, various outbuildings substantial eucalyptus oil distillery, electricity and phone connected. 9 I note here that the word "Saarahnlee" is variously spelt in the evidence. Mr Spencer's evidence is that the word is a combination of the names of his children. I have adopted the spelling "Saarahnlee" as it appears to me to be the one generally put forward by Mr Spencer. 10 Mr Spencer has lost most of Saarahnlee. I say "most" because the evidence is unclear whether he retains a proprietary interest in Lot 50, a matter to which I return in other parts of these reasons. There is no doubt whatsoever that loss has been of immensely significant proportions to him, in all senses of the word "loss", not simply in a financial way. His evidence and submissions in this proceeding make that point clear. His damages claims in this proceeding are built around not only the loss of the property itself, but the loss of the several projects he had planned to undertake on that property, and the very personal losses he submits have flowed from the claimed unlawful acquisitions. 11 Somewhat ironically, given the twists and turns this proceeding has taken over the last eight years, the core aspects of Mr Spencer's claims can be summarised relatively shortly. Mr Spencer claims that, as a result of formal agreements (or an informal arrangement) between the Commonwealth and the State, which were made consequent upon first the enactment of federal legislation concerning natural resources management and second Australia's commitments under the Kyoto Protocol, the State enacted legislation and made regulations prohibiting the clearance of native vegetation without the State's consent. Mr Spencer alleges that Commonwealth funding under the intergovernmental agreements was used as leverage by the Commonwealth to ensure the State enacted a sufficiently tight scheme of vegetation clearance regulation. His claim centres on the way these vegetation clearance prohibitions affected the use to which he could put his property, Saarahnlee. He claims the prohibitions, including a refusal of permission to clear a large amount of vegetation on his property in 2007, resulted in his property being assessed by the State's Rural Assistance Authority as commercially unviable. He claims this assessment, together with the fact that he was unable to pursue a number of projects on the property which would have necessitated land clearing, ultimately or eventually led to the property being sold by the mortgagees. In simple terms, he claims that but for the existence and effect of the NSW vegetation clearance laws, he would still be on his property Saarahnlee and would be well advanced on a number of different and financially productive projects (either alone or in conjunction with other investors) such as wind farming, fine merino production and trout farming. Instead, he claims he is without a home at all, and financially ruined. 12 Taking into account both the length of time over which this proceeding has developed, and the fact that Mr Spencer ultimately represented himself, in the context of this proceeding any exposition of Mr Spencer's claims in more detail must rely on at least three sources. 13 The first source is his case as pleaded, which is set out in the Further Amended Statement of Claim (FASOC) filed on 14 February 2011. That document came about by the orders of Justice Emmett on 11 February 2011, and was drafted with the benefit of the High Court's reasons for judgment in Spencer v Commonwealth [2010] HCA 28; 241 CLR 118. 14 In the FASOC he seeks the following declaratory relief against the Commonwealth: (1) A declaration that the Natural Resources Management (Financial Assistance) Act 1992 (Cth) and the Natural Heritage Trust of Australia Act 1997 (Cth) are invalid, or invalid insofar as they "authorised the making of unconstitutional agreements whose effect or purpose was the acquisition of land including the Applicant's land otherwise than on just terms"; (2) A declaration that the intergovernmental agreements are themselves "invalid and/or void". That claim appears to be put on a similar basis (see paras [34] and [44] of the FASOC, read with the second prayer for relief). 15 Mr Spencer seeks against the State declarations that the Native Vegetation Conservation Act 1997 (NSW) and the Native Vegetation Act 2003 (NSW) are invalid. 16 The basis for declaratory relief against both respondents is first that the identified Commonwealth legislation is not authorised by s 51(xxxi) and is invalid. Second, that the identified NSW legislation is also invalid by reason of non-compliance with s 51(xxxi). Third, that the intergovernmental agreements could not be authorised by a valid law of the Commonwealth because the State agreed to "make and adopt measures with respect to the acquisition of property of … the Applicant otherwise than on just terms in consideration of the payment of moneys" by the Commonwealth (para [34] of the FASOC read with the first prayer for relief). 17 Damages or compensation are claimed against both respondents. The first basis is that the "acquisition" of Saarahnlee contrary to s 51(xxxi) has resulted in the Commonwealth being unjustly enriched (para [55] of the FASOC), and the applicant seeks either an account of profits or compensation, the basis for which is not further explained. 18 Further, there are pleadings against both the Commonwealth (paras [56A] to [56D]) and the State (paras [66] and [67], by reference to the former paragraphs) headed "action on the case". In these paragraphs it is alleged that the arrangements between the Commonwealth and the State, and the payment of monies from the Commonwealth's Natural Heritage Trust to the State were to induce the State to enact its native vegetation clearance legislation. It is then alleged that these "State measures" were directed at the applicant and caused him loss and damage, which is particularised only in the following way: a. The commercial viability of the Applicant's property Saahranlee has been destroyed or prevented by the combined actions of the First and Second Respondents and each of them; b. The reasonable user of the property between about 1997 to date has been prevented by the actions of the First and Second Respondents; c. The Applicant's ecosystem services enterprises on the land adopted as an alternative to farming and grazing have also been destroyed or prevented on the property; d. Carbon sequestration and carbon abatement rights have been taken or acquired; e. Improvements to the property specified in paragraph 5 herein have been taken or acquired; f. Crown lease rights have been prevented or acquired as specified in paragraph 5 (c) herein. 19 The second source is a document Mr Spencer's legal representatives provided in May 2014. In late April 2014, there appears to have been a request from the Court for an agreed summary of the matter and its current status. The need for such a document is apparent when one has regard to the complicated procedural history of this matter, as I set out below. In addition to a summary agreed by the parties, a document entitled "Profile of Applicant's Case" appears also to have been produced in response to the Court's request. In that document, the allegation is made that there was a "scheme" or "joint venture" between the Commonwealth and the State to use state laws as "the instrument of acquisition for a Commonwealth 'purpose' … namely the satisfaction of its obligations under the UNFCCC … and Kyoto Protocol". The document alleges the Commonwealth received benefits including the "substantial carbon sequestered on the land", accounted for in the national carbon accounts and fixed at "at least $25 million". This is also characterised in the document as an unjust enrichment of the Commonwealth. 20 In this document, there is no reference to the "action on the case" allegations. 21 The third source is the final submissions produced by Mr Spencer himself after the close of evidence, and after oral submissions. These submissions run to 92 pages. Given Mr Spencer represented himself at trial, and was refused an adjournment he sought so as to try and obtain different legal representation (a matter I deal with below), it is appropriate in my opinion that the Court use his final submissions as another source of understanding how he puts his claim. There is no prejudice to the respondents in doing so: both respondents have had ample opportunity to respond to the matters Mr Spencer has raised, and they have done so comprehensively. 22 Although these written submissions range widely over a number of issues and sources, not all of which can be said to be relevant to the legal and factual issues in this proceeding, my understanding of the steps in Mr Spencer's claim in relation to s 51(xxxi) which can be discerned from these written submissions is as follows: (1) First, Mr Spencer claims he has three kinds of property rights: fee simple in his property Saarahnlee; a "subset of fee simple", profit à prendre in relation to carbon stored in trees on his property; and finally perpetual Crown leasehold in the parts of his property which were not held in fee simple, that kind of leasehold being, he submits, "most like fee simple of all other property known to law". (2) Second, he submits the respondents "entered into arrangements and contrivances to get around s.51(xxxi)" of the Constitution. He submits the Commonwealth cannot pay the State to make an unjust acquisition of property, without paying compensation, and with the parties "sharing the benefits of the property thus unjustly acquired". (3) His property (in the three senses he has used the term) has been acquired for the purposes of s 51(xxxi) because the rights he could exercise over that property and which are bound up with ownership were "effectively sterilised" by the NSW vegetation clearance laws. The Commonwealth obtained a benefit from this sterilisation: namely a costs saving from the avoidance of the need to take other measures to reduce emissions in order to meet the Kyoto Protocol targets. (4) The "effective sterilisation" occurred through the legislative scheme in the NSW Native Vegetation Act 2003 and the Native Vegetation Regulation 2005 (NSW) made under that Act: an absolute prohibition on clearing without approval, the Minister being the consent authority, and consent depending on the application of a complex environmental assessment methodology - "the myriad onerous, minute and detailed standards" there set out. The Act also reverses the onus of proof in relation to an allegation of clearing without approval, "permits intrusive search without warrant" and "abolishes the privilege against self-incrimination", all of which combines, Mr Spencer submits, to force farmers such as himself to bear the costs, by holding our most significant capital goods - our production goods - in a kind of compulsory supposed pre-1788 botanical museum. The Native Vegetation Act stands for the unequal, capricious, discriminatory, disproportionate, unjustified oppression of a minority; and as since ancient times, we come to the Court for justice. (5) This, he submits, is an acquisition and not an extinguishment of rights because the State has appropriated to itself the full measure of the use-rights in question, to grant or withhold permission to exercise them, from nought to a hundred percent, in the second respondent's own discretion, for a purpose determined unilaterally by their own conception of their own management of my property for their own preferred development as defined by them, to effect any result from preservation on the one hand to total extirpation of native vegetation in favour of agriculture on the other, and everything in between, and to arbitrarily benefit whatever political favourites they choose to benefit, and impose the costs by unequally discriminating against any minority target group they choose, which was farmers; subject only to the Environmental Outcomes Assessment Methodology …. So unless the respondents are going to argue that the Environmental Outcomes Assessment Methodology ranks higher than the Constitution, therefore the use-rights have been acquired, not extinguished. … … the government has not effected a termination, extinguishment or modification of use-rights; but has by compulsion acquired the use-rights to the land, regards itself as the best and rightful manager, consider that they are deciding the best use and mix of relevant productive factors, consider that they are deciding the best balance of present versus future interests in the resources in question literally into the indefinite future, and regard themselves as running production of what they think best on the land. That's why it's called natural resource management for ecologically sustainable development. … … they [i.e., the respondents] are using my land to grow native vegetation. (Emphasis in original.) (6) Although he submits it is not necessary to prove the Commonwealth obtained a benefit from the acquisition if the State obtained a benefit (as he contends), Mr Spencer contends that nevertheless the Commonwealth did obtain two kinds of benefits. First, a financial advantage in the costs savings from other measures to reduce emissions to meet Kyoto Protocol targets. Second, the "proprietary advantage" of carbon sequestered in native vegetation on Mr Spencer's land as a result of banning land clearing. (7) He then submits it is common ground that just terms, or compensation, have not been paid, and declaratory relief should be given in relation to the invalidity of both the Commonwealth and NSW legislation set out at [14] and [15] above. 23 In addition to declaratory relief in relation to the state and federal legislation, Mr Spencer contends he is entitled to damages in tort. A carefully stepped through sequence of propositions about how the respondents' liability to pay damages arises has never been given. The pleadings are wholly inadequate on this matter. The profile of case contains little more than assertion. Understandably, this was a difficult exercise for Mr Spencer, as a lay person, to tackle in his final submissions. 24 Mr Spencer described this cause of action as an "action on the case". I will say more about that description later in these reasons. Mr Spencer invoked the decisions in James v Commonwealth [1939] HCA 9; 62 CLR 339, Beaudesert Shire Council v Smith [1966] HCA 49; 120 CLR 145 and Northern Territory v Mengel [1995] HCA 65; 185 CLR 307. He submitted that Mengel is not authority that action on the case has ceased to exist or been assimilated to negligence, and continued: James, Beaudesert and Mengel have in common that they would all recognise an action on the case for damages for economic loss where the defendant was motivated by an intention to cause harm to the plaintiff by an act which was unlawful in the sense of positively forbidden by law; assuming the other elements of action on the case were made out. 25 As I understand it, Mr Spencer's claim is that, if he is correct that the respondents (or either of them) effected - through the intergovernmental agreements and the identified federal and state legislation - an acquisition of his property contrary to s 51(xxxi) of the Constitution, he has a cause of action of the kind set out in Mengel, which he has described as an "action on the case". He claims: In this case, there was definitely an intention to inflict the harm in question, namely, to deprive me of my use-rights causing economic loss. The purpose of the whole exercise was to prevent farmers and landholders from exercising their lawful rights; to punish them if they did; and without paying compensation for the adverse effect; so the respondents could use those lands for their own ends. This is proved by Section 3 of the Native Vegetation Act; and by the definition of 'ecologically sustainable development'. Section 3 (b) says the Object is to "prevent broadscale clearing", which as we have seen, is defined to include even a single blade of grass. The same clause goes on to say "unless it maintains or improves environmental outcomes", which as we have seen, was based on a methodology which impermissibly failed to take into account human values, was grossly irrational in the Wednesbury sense, and thus reckless in tort as to the damage done to property rights by the application of this standard. And the definition of ecologically sustainable development shows that the respondents thought, that what they were doing, was "integrating" economic and environmental considerations. In other words, they thought that the environmental benefit they were obtaining, had to be at the cost of the economic loss they were imposing; because, to their minds, they thought that the environmental benefits outweighed, i.e. justified the economic losses. So they intended the losses that they imposed. 26 There is also a brief reference to a cause of action in negligence - namely that the respondents had a duty of care not to enter into arrangements to effect an unjust acquisition of property. There has been to date no real mention of such a cause of action and it is not a matter which can be raised in final submissions. 27 As to the measure of damages claimed, that is put in several ways. First, against the State, Mr Spencer claims the difference between the value of Saarahnlee with and without the controls under the NSW native vegetation legislation. In his final submissions he does not appear to put a precise figure on this claim. 28 Second, against the Commonwealth, Mr Spencer claims that "the measure of damages be the Commonwealth's own account of the proportion that my land area contribution bore to the whole, in the maximum value or expected value that the Commonwealth attached to carbon in its own carbon accounts". In his written submissions he quantifies this in the following way: As per tonnage witness's agreed carbon retention on Saarahnlee being 3MM Tonnes, price being $24.00 per tonne as per the Carbon Tax legislated price for Kyoto period 1990 Jan to Dec 2012 = $72 million at this rate the lock is as stated in agreement/treaty - perpetual. 29 Having made those two claims, in another part of his written submissions he then also makes a damages claim only against the State for "Related Costs from loss of farm": this relates to the cost of a new northern boundary fence along the boundary of Saarahnlee with the Namadgi National Park and Mr Spencer claims $250,000. 30 He then makes a damages claim only against the Commonwealth for "property restitution": Mr Spencer alleges Saarahnlee is "still on the market" and could be repurchased for approximately $2.5 million. 31 He then makes a series of claims as against both respondents: (1) Loss of wind farm potential: "As per Steen Stavnsbo's estimate. $ 700,000.pa for 20 years aggregate $14,000,000, plus any refit and another period of 20 years"; (2) Loss of opportunity, in terms of the potential of all the projects Mr Spencer planned for his land, taking into account its "value to me" and its "inability to be replaced other than by way of restitution". Mr Spencer does not identify a fixed sum for this, but this appears to encompass the basis of the valuation of Saarahnlee given by Mr Davies, which was just over $9 million; (3) Loss due to personal distress, family dislocation and removal from the farm, disappointment and pain. No figure is placed on this, and later in his final submissions Mr Spencer appears to submit the figure for this claim should be "as the court determines"; (4) Storage of furniture, plant and equipment from the farm: $40,000 per year from March 2010; (5) "Destruction of personnel [sic] belongings, furniture, plant and equipment on and following eviction until current": $100,000; (6) "Farm and asset and infrastructure maintenance left for 8 years": $150,000; (7) "Legal fees research and costs for lawyers over and above allocation of costs by the court for the 8 years of proceedings. … damages as the court determines". 32 Some of these claims are clearly in the alternative to others. The largest is obviously the carbon sequestration claim for $72 million against the Commonwealth. The wind farm losses in excess of $14 million appear to be the next largest, and they are made against both respondents. The loss of Saarahnlee itself on one measure ("value to me") would be placed at more than $9 million and on another (the buyback proposal) at more than $2.5 million. I deal with Mr Spencer's damages claims at [652] to [795] below. 33 I note, as the respondents also note in their final submissions, that this inventory of losses excludes any specific claims for losses over some of the projects which Mr Spencer claimed he was conducting, and or alternatively, proposed to conduct on Saarahnlee - such as the fine merino wool project. To some extent, they are subsumed in his claim as now expressed that he has lost Saarahnlee, and what he has lost is its value to him. Nevertheless, it is a distinct shift in the nature of his claim, as foreshadowed by the evidence filed on his behalf, that there are no longer particular claims for losses which were alleged to have flowed from the non-continuation of particular projects on Saarahnlee. 34 Although variously expressed in all three sources, in my opinion it is fair to say that the principal allegation made by Mr Spencer has remained constant throughout these three iterations of his case against the respondents. It appears to consist of the following steps (variously expressed in different documents, and sometimes within the one document): (1) Mr Spencer, as the owner of Saarahnlee, held a "bundle of rights" over that property including fee simple in part of it, Crown leasehold in other parts, rights to use and develop the property as he saw fit, and rights in the carbon sequestered in vegetation on Saarahnlee. (2) In three stages, or by three courses of conduct, both the Commonwealth and the State effected an acquisition of Mr Spencer's property, contrary to the guarantee in s 51(xxxi) of the Constitution. (3) Those three stages were: (a) The Commonwealth enacted the Natural Resources Management (Financial Assistance) Act and the Natural Heritage Trust Act; (b) Relying on the Commonwealth legislation and s 96 of the Constitution to provide funds to the State, the Commonwealth concluded with the State the "1997 Agreement" to deliver the Natural Heritage Trust (FASOC [14]), the "2000 Salinity Agreement" (FASOC [24]), the "2002 Salinity Agreement" (FASOC [26]) and the 2003 "Trust Agreement" to deliver the Natural Heritage Trust (FASOC [28]). In these reasons I will refer to the Natural Heritage Trust agreements as the "1997 NHT Agreement" and the "2003 NHT Agreement"; (c) The State, in response to (and induced by) the provision of funds from the Commonwealth, and the imposition of pressure by the Commonwealth, enacted the Native Vegetation Conservation Act 1997 and the Native Vegetation Act 2003, preventing Mr Spencer from clearing any native vegetation on his property without the State's approval. I interpolate here that the allegations about the "pressure" applied by the Commonwealth to the State may be the highest that, ultimately, the existence of any "informal agreement or arrangement" was put. (4) There was, in this course of conduct, an "acquisition" of a benefit or advantage of a proprietary character by the Commonwealth, in that it acquired either a financial advantage (not having to fund other ways to meet its Kyoto Protocol targets), or it obtained the benefit of the carbon stored in the native vegetation on Mr Spencer's land and what would otherwise have been Mr Spencer's proprietary rights to use or sequester that carbon. (5) The State also acquired, in this course of conduct, a benefit or advantage of a proprietary character (see FASOC [36A]-[36B] and [63]), which was effectively to control what occurred on, or what was done with, Mr Spencer's land. (6) Those courses of conduct, as well as resulting in the invalidity of the federal and state legislation, and the intergovernmental agreements, caused Mr Spencer loss and damage in a way which creates in either or both of the respondents a legal obligation to pay him compensation. 35 Prior to embarking on an examination of these claims, it is necessary to turn to the procedural history of the case. From there, it is necessary to set out the factual background, and to make the necessary findings of fact on the evidence, to which the legal principles arising in those steps in Mr Spencer's claims can be applied.

PROCEDURAL HISTORY 36 For reasons which I explain below, Mr Spencer ultimately represented himself at the final hearing of this matter, having had legal representation for all of the seven and a half years his proceeding had been in this Court. In various submissions, both written and oral, he gave some explanations about why he had terminated the retainer of his lawyers, and no more need be said about those explanations. It is important however to note that, as part of those explanations and at various other points during the final hearing and the interlocutory application for an adjournment, Mr Spencer did emphasise that the way he wished to present his case, including the evidence on which he wished to rely, differed from the way his lawyers had conducted the case on his behalf to the point at which he terminated their retainer. The change in direction affected the nature and scope of the evidence upon which Mr Spencer ultimately relied, and is reflected in these reasons. 37 In my interlocutory ruling on an adjournment application made by Mr Spencer in October 2014, I described some of the history of this proceeding: see Spencer v Commonwealth [2014] FCA 1117. 38 It is appropriate to repeat, and add to, that history, given these are my reasons for final judgment in the proceeding. 39 This proceeding has a long history. It was first issued on 12 June 2007. On 26 July 2007 the first respondent (then the only respondent), the Commonwealth, filed a notice of motion seeking summary dismissal of the proceeding pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth), which was heard by Emmett J in May and June 2008. On 26 August 2008, his Honour gave reasons why both Mr Spencer's interlocutory application for interim relief and the proceeding should be dismissed: see Spencer v Commonwealth [2008] FCA 1256. Orders were made on 28 August 2008 dismissing the proceeding: Spencer v Commonwealth (No 2) [2008] FCA 1378. 40 Mr Spencer was granted leave to appeal the decision of Emmett J on 9 October 2008. The appeal was heard by a Full Court in February 2009 and, on 24 March 2009, the Full Court dismissed Mr Spencer's appeal: Spencer v Commonwealth [2009] FCAFC 38; 174 FCR 398. Mr Spencer sought special leave to appeal to the High Court. His application was adjourned pending delivery of the High Court's judgment in Arnold v Minister Administering the Water Management Act 2000 [2010] HCA 3; 240 CLR 242: see Spencer v Commonwealth [2009] HCATrans 126. Arnold was handed down on 10 February 2010. The Court in Arnold applied its decision in ICM Agriculture Pty Ltd v Commonwealth [2009] HCA 51; 240 CLR 140, judgment in ICM having been handed down on 9 December 2009. The Court's decision in ICM was to be important in the determination of Mr Spencer's claims in the High Court. 41 On 12 March 2010 Mr Spencer's application for special leave was referred to an enlarged full court for argument as on appeal: Spencer v Commonwealth [2010] HCATrans 55. On 1 September 2010 the High Court granted special leave to appeal, allowed Mr Spencer's appeal, set aside the orders of the Full Court and Emmett J and dismissed the Commonwealth's application for summary dismissal: Spencer v Commonwealth [2010] HCA 28; 241 CLR 118. 42 Following the High Court decision, the proceeding returned to the docket of Emmett J. On 12 November 2010 the State of New South Wales was added as a respondent to this proceeding. 43 Since its remitter, there have been a number of interlocutory disputes about discovery, including claims by the Commonwealth of public interest immunity: see, e.g., Spencer v Commonwealth (No 3) [2012] FCA 637; Spencer v Commonwealth (No 4) [2012] FCA 1142; Spencer v Commonwealth [2012] FCAFC 169; 206 FCR 309. 44 The proceeding was re-docketed to Cowdroy J in February 2013. Following the retirement of Cowdroy J, the proceeding was transferred to the docket of Gleeson J on 17 April 2014. 45 On 22 May 2014 her Honour made orders for preparation for trial including filing of evidence and submissions, and, without any objection from the parties, provisionally listed the matter for hearing commencing on 24 November 2014 with an estimate of three weeks. It was as part of this process that the parties prepared the documents to which I have referred in [19] above. Further directions hearings were held before Gleeson J in June and August 2014, where orders were made relating to the filing of a draft court book index. 46 The proceeding was docketed to me on 4 September 2014 and, on 11 September 2014, a directions hearing was held where orders were made varying some of the timetable for preparation for trial. The parties made conscientious efforts to comply with the trial preparation timetable. 47 On 2 October 2014, the applicant's then legal representative filed and served a notice of intention of ceasing to act pursuant to r 4.05(1)(a) of the Federal Court Rules 2011 (Cth). Although no notice of ceasing to act under r 4.05(1)(b) of the Rules has ever been filed, the Court and the parties then proceeded on the basis that Mr Spencer was thereafter representing himself. 48 By an application dated 10 October 2014, Mr Spencer applied for orders vacating the trial which was listed to commence on 24 November 2014, with an estimate of three weeks. He sought an order that the matter be relisted for a convenient date in 2015, and that the timetable for trial preparation be varied to take account of the new trial date. The principal basis for the adjournment application was his termination of the retainer of his legal representatives. 49 I refused the adjournment application for the reasons set out in my 17 October 2014 reasons for judgment: Spencer v Commonwealth [2014] FCA 1117. Thereafter, substantial accommodations were made for Mr Spencer in order to ensure the trial could begin and proceed as scheduled. In my orders of 17 October 2014, I granted Mr Spencer leave to have a person sitting at the bar table with him to assist him during any pre-trial hearings and during the trial. Further, I relieved Mr Spencer from preparing the court book and ordered the Commonwealth to prepare, file and serve the court book including the agreed tender bundle in electronic form, as well as serving a hard copy on Mr Spencer. The Commonwealth then engaged in the considerable ongoing task of updating the court book and the electronic index as evidence rulings were made and the parties made elections about the tender or non-tender of various evidence. I also directed that Mr Spencer be provided on a USB an electronic copy of the transcript of the trial which was to be updated on a daily basis and provided to Mr Spencer at 9.00 am the morning before the hearing resumed each day. 50 The matter proceeded to trial on 24 November and was completed within the estimated time. It was conducted cooperatively and efficiently and all parties, their counsel and instructing solicitors, and Mr Spencer's assisting "team", have the Court's gratitude for the way the matter was conducted. In his final submissions, Mr Spencer alleged that the Commonwealth, in particular, has neglected or failed to meet its model litigant obligations. Certainly in relation to the part of the trial in which I have been involved, there is no foundation whatsoever for that kind of allegation against either respondent. Quite the contrary.

Some observations about the way the trial proceeded 51 At various points during the trial, Mr Spencer made statements about his lack of preparation, and his inability to cope. It is appropriate that I express my general view about those statements, so that where it might seem that Mr Spencer was pressed into continuing when he was saying he could not, my reasons for the way the trial was conducted are transparent. I give one example, which occurred during the valuation evidence: MR SPENCER: Okay. Just another comment I wish to make if I may. If I'm going to be held accountable for every document in the evidence book, when I've only had three weeks to get prepared for this case, when I've already applied to this case an interlocutory hearing to be taken off for four months to get ready, it's not an equitable situation at all. I have not read every document. I've made that quite clear. I physically, humanly can't do it. Thank you. 52 It is not the case that Mr Spencer had only three weeks to prepare for this case. The great bulk of the preparation had been done on his behalf while he was legally represented. 53 The evidence demonstrates Mr Spencer had been intimately involved in all aspects of this case for the whole of the seven years. He brought other litigation dealing with the same broad subject matter. His opening of several hours was presented in a way which showed tremendous familiarity with the material he considered important, as did his oral evidence. 54 What was apparent is that Mr Spencer had very firm views about how he wanted his case presented, and how he did not. Whether this was a cause for the termination of the retainer of his lawyers is not a matter on which I should speculate. At many times during the trial he would dismiss the relevance of significant parts of the respondents' evidence, including the documentary evidence. His concept of the case was in that sense very different to that of the respondents. This had nothing to do with preparation, but with perspective. 55 Even if Mr Spencer had been given his requested four months of additional time, I do not consider he would have spent any more time looking at evidence, whether in affidavits or in documents, that he did not consider important or relevant to how he saw the case. If he did not consider something relevant, he did not bother much to recall it or deal with it. That was his approach, and it was very evident during the trial itself. Rather, what is more likely to have occurred (and did indeed occur after judgment was reserved and Mr Spencer had a chance to put in additional documents) is that he continued to find documents supporting his view of the case, rather than attending to evidence (such as that of Mr Connolly) which was unhelpful and adverse to his claims. I make these observations not to criticise Mr Spencer at all, but rather to explain why at various points during the proceeding when he protested about his lack of time or resources, I made what I considered reasonable accommodation for him, but otherwise determined that giving Mr Spencer more time would be unlikely to resolve his difficulties.

Admissibility rulings 56 On the evening of Friday 21 November 2014, shortly before trial was due to commence on Monday 24 November 2014, the State filed written objections to the affidavit evidence filed by Mr Spencer. The Commonwealth also filed a list of objections in court on Monday 24 November 2014, and both respondents developed those objections by way of oral submissions on 26 November 2014. 57 Bearing in mind that Mr Spencer was self-represented, I relieved Mr Spencer from the need to respond in writing to those objections, but directed instead that he respond orally to a series of questions provided to him by email from my chambers on Monday 24 November 2014. Mr Spencer did so in court on 26 November 2014. 58 As I noted in my judgment on the respondents' objections, the objections, if all upheld, would remove most of Mr Spencer's evidence: Spencer v Commonwealth [2014] FCA 1288, at [13]. As I noted at [13]-[14]: The general approach I have taken to the objections puts some considerable weight on the need for this matter, after seven years and the investing of considerable resources by all parties and the Court, to proceed as fairly and efficiently as possible, and without significant disruption, if that can reasonably be avoided. To disrupt the presentation of Mr Spencer's case by removing the majority of his affidavit evidence, and that of his witnesses, would not serve the interests of the administration of justice generally, nor s 37M of the Federal Court Act in particular. It may prompt attempts by Mr Spencer to call new evidence, which, given his lack of legal experience, may not be any more compliant with the rules of evidence but will certainly delay the trial and increase the costs and resources expended by all involved, including the Court. It is apparent from various submissions made by Mr Spencer that he did not make the forensic judgments about the contents of the affidavit material. Indeed it appears he may not have been familiar at all with large parts of that evidence (other than his own) until he was required to deal with the objections. The infirmities said to exist in Mr Spencer's evidence can in my opinion be dealt with as effectively through submissions as to weight and relevance. Indeed, that is a course likely to advance the interests of the administration of justice in the sense of providing a more intelligible route for Mr Spencer to understand and deal with what the respondents submit are the difficulties he has in proving his case. Adopting this approach in my opinion contributes to a fairer trial for Mr Spencer than refusing to allow him to adduce most of his evidence at all. 59 As I noted at [16]-[18] of my judgment, a large proportion of the objections fell broadly into two categories: relevance, and objections to statements of opinion contrary to s 76 of the Evidence Act 1995 (Cth). Other objections were based on the impugned statements being in the nature of an assertion or conclusion, or "not the best evidence", and the Commonwealth in particular raised other objections to some of Mr Spencer's proposed expert witnesses expressing opinions either not based on any specialised knowledge or based on "second-hand views" and "speculation". 60 For the reasons set out in that judgment, I ruled that two affidavits sworn by Mr Spencer other than for the purposes of tender at trial were inadmissible including because they had been superseded by Mr Spencer's later affidavits. I also ruled to be inadmissible an affidavit sworn by Ms Jeanne Hughes, a farmer whose property had also been affected by the native vegetation clearance laws, on the basis that her predicament was not relevant to whether Mr Spencer could make out his claims; and certain paragraphs from an affidavit sworn by Dr Alan Moran, on the basis that the contents of those paragraphs were argumentative as to matters of law, expressed opinions about matters not relevant to the issues in this proceeding, and attempted to give a narrative of certain facts required to be proved by direct evidence. The remainder of the respondents' objections were not upheld.

Subpoenas 61 At the time that I refused Mr Spencer's adjournment application on 17 October 2014, I also made an order, after Mr Spencer foreshadowed an intention to subpoena people to give evidence outside the individuals for whom affidavits had been provided, that: Any requests for leave to issue subpoenas for witnesses at trial are to be filed by 10 November 2014. 62 In substantial compliance with that request, on 11 November 2014 Mr Spencer filed and served by email requests to issue 28 subpoenas for persons to attend trial and give oral evidence, together with a volume of accompanying material seeking to identify the basis on which the witnesses were able to give evidence relevant to the issues in the trial. 63 The persons identified in the applications included two former Prime Ministers of Australia, a former Premier of New South Wales, a former Premier of Queensland, three current federal Members of Parliament, a current state Minister, two current state Members of Parliament, a number of former state and federal Members of Parliament, and a range of other individuals, some of whom held public office and some of whom were from private organisations. All were identified by Mr Spencer as having made comments, or voiced opinions about, the issues of climate change and carbon sequestration, Australia's targets under the Kyoto Protocol, the merits of policies restricting vegetation clearing on private land as a mechanism to reduce carbon emissions and the merits of compensation for landholders affected by such policies. 64 Given the time remaining before the trial was to commence on 24 November 2014, the parties appeared before me on 12 November 2014. Mr Spencer was then given an opportunity from Thursday 13 November to Monday 17 November 2014 to respond in writing to the respondents' submissions on his applications. As I noted in my judgment on the subpoena applications, Mr Spencer is to be commended for his efforts to meet the timetable imposed by the Court, bearing in mind the other deadlines he had to meet during that time: Spencer v Commonwealth [2014] FCA 1234, at [6]. 65 On 18 November 2014, I granted leave to Mr Spencer to issue subpoenas to three witnesses: Mr Charles Armstrong, Dr David Kemp and Mr Malcolm Peters, and the evidence those witnesses ultimately gave at trial is described below. The reasons for granting leave to issue those subpoenas, and refusing leave to issue the other 25 subpoenas sought by Mr Spencer, are set out in Spencer v Commonwealth [2014] FCA 1234. At the time that I granted leave, I also directed Mr Spencer to consult with a Registrar of this Court in relation to the proper form of the subpoenas, the requirements for service and the requirements for matters such as conduct money. 66 Among the witnesses to whom I refused leave to issue a subpoena was one Mr Bernard Sullivan. However, in refusing leave, I foreshadowed generally that Mr Spencer was not precluded from making, during the trial, a further application in relation to the witnesses I had refused: Spencer v Commonwealth [2014] FCA 1234, at [55]. On the fourth day of trial, 27 November 2014, Mr Spencer made by way of email to my chambers a further application for a subpoena to be issued to Mr Sullivan, a valuation expert, on the basis that there were a number of questions required to be asked of him as to the method and procedure used to prepare his valuation of Saarahnlee. As I set out further below, Mr Sullivan had been retained by the Nature Conservation Trust on behalf of the State to conduct a valuation of Saarahnlee in 2007. Mr Sullivan's report was, however, not filed independently in this proceeding. At the time that he sought leave to issue the subpoena, Mr Spencer understood that Mr Connolly, who was called as an expert witness on valuation for the State, had prepared his valuation and report by reference to Mr Sullivan's valuation. On 27 November 2014, I granted Mr Spencer leave for the issuing of a subpoena to Mr Sullivan to attend trial and give oral evidence, and I made orders on 28 November abridging the time for that subpoena to be served. At the time I granted leave, I inquired whether and Mr Spencer accepted that it may be appropriate for there to be an order that Mr Sullivan be remunerated in accordance with his usual professional rates. 67 The trial commenced with openings by the respondents, as a further accommodation to Mr Spencer. He was then given some additional time to prepare his own opening, which he delivered ably. The parties cooperated in the order and scheduling of the witnesses, which proceeded efficiently. At the conclusion of the evidence and after a short adjournment, the respondents again were asked to commence final oral submissions so as to assist Mr Spencer with a framework for his own submissions. The respondents also handed up final written closing submissions. Mr Spencer was then given a further one-day break to prepare for oral submissions, which he then delivered on 11 December 2014. Directions were given for Mr Spencer to file his final written submissions by 2 February 2015, a period he agreed was sufficient. The respondents were given a further two weeks or so to file submissions in reply. In early February 2015 Mr Spencer requested and was granted a short extension of time for filing his final written submissions. 68 As part of his submissions, Mr Spencer also relied on the following documents which had been filed on his behalf at various stages of this proceeding: written submissions prepared by his former counsel and filed on 1 June 2010 on Mr Spencer's behalf in support of the High Court special leave application; written submissions in support of Mr Spencer filed on 7 June 2010 by the NSW Farmers' Association seeking leave to intervene in the High Court special leave application; an outline of submissions in this proceeding dated 16 May 2013 prepared by Mr Spencer's former counsel; and the "Profile of Case" document provided to the Court in May 2014 by Mr Spencer's former counsel, to which I have referred earlier in these reasons.

Peter Spencer 69 Mr Spencer faced the difficult task of both being the principal witness and conducting his own case, as well as attempting to make decisions about what material to present, and what could be left out. He performed these tasks with diligence, and it was evident throughout the conduct of the trial that he made forensic decisions with a good understanding of what parts of his case he wished to emphasise. 70 As a witness, it is fair to say that Mr Spencer was sometimes given to exaggeration and hyperbole, and I found he could at times seem unconcerned with whether he was recalling events entirely accurately. The fact that the events which are the subject matter of this proceeding have occupied his life for more than ten years make that entirely understandable at one level - both as to the emotional weight they have for Mr Spencer, and the number of facts and events he must try to keep in his recall. These features of his evidence do mean however that for the purposes of fact-finding, there are occasions (few in number) where I found his evidence not entirely reliable. For example, in relation to the events of the clearing proposal for Saarahnlee in 2007, I have found the evidence of the State's witnesses, together with the documents, the most reliable source of an account of what occurred. 71 Mr Spencer was given to sweeping and generalised statements from time to time, and there were some inconsistencies in his evidence especially on the damages aspect, because of this. Had I needed to reach the point of quantifying any losses, it would not have been possible to do that reliably on his evidence as it stood. 72 Overall however, I find Mr Spencer did his best in a difficult situation, both as a witness and as an advocate.

Brian Plummer (applicant) 73 Mr Plummer was called by Mr Spencer and gave evidence regarding what he described as "the problems faced by farmers" as a result of the passage of the Native Vegetation Conservation Act 1997 and the way the scheme set out in that legislation was subsequently managed by the State. Critically, Mr Plummer's evidence was relied upon in respect of a letter said to have been sent by the Commonwealth Minister for Environment and Heritage Senator Robert Hill to NSW Premier Bob Carr, which I deal with later in these reasons as it was one of the planks relied on by Mr Spencer to prove the "informal arrangement". 74 Mr Plummer is a farmer in Tottenham, New South Wales, a member of the Fiveways Landcare Group and former Secretary of the Tottenham branch of the NSW Farmers' Association. In his evidence, Mr Plummer addressed the concern local farmers in the community had with the introduction of the Native Vegetation Conservation Act 1997. Mr Plummer informed the Court that the Fiveways Landcare Group commenced a project in order to educate politicians and bureaucrats on the group's concerns and the difficulties they faced as a result of the Native Vegetation Conservation Act 1997. As part of the project, the Fiveways Landcare Group arranged for Premier Bob Carr to attend the Fiveways area. 75 It was Mr Plummer's evidence that on 24 March 2000, the then Director-General and Assistant Director-General of the Cabinet Office, Roger Wilkins and Chris Guest attended a meeting of the Fiveways Landcare Group to prepare for Premier Carr's visit. Mr John Cobb, President of the NSW Farmers' Association, also attended that meeting. Mr Plummer contends that during that meeting, Mr Cobb provided him with a copy of a letter addressed from Senator Hill to Premier Carr, which letter Mr Plummer deposed in general terms "stated that if the NSW Government did not halt land clearing within NSW then the Federal Government would withhold NSW's share of the Natural Heritage Trust Funding, which at the time was the entire Bushcare Program." At trial, Mr Plummer gave evidence that reading the contents of the letter "was like a big wakeup call … There's further pressures here than just the State Government. It's coming from a federal directive." Mr Plummer gave evidence that upon realising the Federal Government's role, the Fiveways Landcare Group initiated a meeting with their Federal Member for Parkes, Tony Lawler and he exhibited to his affidavit a letter addressed to him from Mr Lawler dated 21 June 2000 referring to their discussion. Mr Plummer's evidence was that he no longer has that letter in his custody or possession and that he could not be certain whether or not it had been destroyed by him. 76 For reasons I set out below, I found Mr Plummer to be a reliable witness, the respondents' submissions notwithstanding.

John Williams (applicant) 77 Dr Williams is an Adjunct Professor in Public Policy and Natural Resources Management and had been a founding member of the Wentworth Group of Concerned Scientists. Previously, he had been the Chief Scientist of the NSW Department of Natural Resources following his retirement from the CSIRO as Chief of Land and Water in 2004. He was not required for cross-examination. Initially he was put forward by Mr Spencer as an expert witness but in my admissibility ruling I limited the use of his evidence under s 136 of the Evidence Act to evidence of historical facts: Spencer v Commonwealth [2014] FCA 1288, at [58]. 78 In his affidavit, Dr Williams deposed that he and other scientists had advocated to the State and Commonwealth Governments a proposal to use native vegetation to store carbon to mitigate climate change, namely "a proposal to lock up carbon by native vegetation and other forestation projects". He further deposed that he became aware of implementation concerns amongst farmers about loss of use of land for agricultural purposes. He deposed that, as a result, he recommended to the NSW Government with the endorsement of the Wentworth Group that in such cases the land should be purchased by the State. He deposed "I am aware that the administrative procedures and processes involved appeared to be delayed, very cumbersome and largely ineffectual when set against the purposes proposed by the Wentworth Group." 79 Copies of an extract from the 2003 Wentworth Group report to the NSW Premier and of a submission dated March 2010 from the Wentworth Group to the Senate inquiry into native vegetation laws were among the documents exhibited to his affidavit. The 2003 Wentworth Group report was elsewhere in evidence before me. As I explain elsewhere in these reasons, it is the case that the Wentworth Group advised the establishment of the Native Vegetation Reform Implementation Group (known also as the Sinclair Group), and the NSW Government ultimately relied on the Sinclair Group's recommendation about compensation to establish the exit assistance scheme process. Whatever the inadequacies of the amount of funds set aside for that (one of Mr Spencer's criticisms) or the cumbersome nature of the process (one of Dr Williams' criticisms), the relevant fact for the purposes of this proceeding is that Mr Spencer was able to access the exit assistance scheme and was offered what he concedes was market value for Saarahnlee, which he elected not to take.

Shayleen Thompson (applicant) 80 An affidavit affirmed by Ms Thompson was filed on behalf of the Commonwealth. However, by the time of trial, it was Mr Spencer who sought to rely on Ms Thompson's evidence. At the time of affirming her affidavit on 15 May 2008, Ms Thompson was the First Assistant Secretary, Strategies and Coordination Division, in the Commonwealth Department of Climate Change. She gave evidence regarding the Kyoto Protocol and Australia's commitments under it, including evidence about greenhouse gas emissions, measures to reduce or mitigate emissions in Australia and Australia's reporting obligations under the Protocol. Ms Thompson also gave evidence about emissions trading and the Federal Government's position on emissions trading, at least at the time of affirming her affidavit in 2008. Her evidence was not controversial, and she was not required for cross-examination.

David Thompson (State) 81 Mr Thompson was called to give evidence on behalf of the State. At the time of the relevant events in 1998, Mr Thompson was employed by the Soil Conservation Service, a division of the NSW Department of Primary Industries, as the District Soil Conservationist at Cooma. Mr Thompson has been employed with the Soil Conservation Service since April 1988. Mr Thompson's evidence provided an overview of protected land under the Soil Conservation Act 1938 (NSW), the process for obtaining clearing applications and how he and his colleagues assessed clearing applications pursuant to the Soil Conservation Act 1938. In particular, Mr Thompson gave evidence that he had inspected Saarahnlee on 1 July 1998 in connection with a possible clearing application. Mr Thompson deposed that this was a "pre-application" inspection which allowed Mr Spencer to show his property and to point out the area he wanted to clear, and exhibited to his affidavit notes and various documents relating to that visit. Mr Thompson's evidence in relation to his inspection of Saarahnlee was not raised in cross-examination by Mr Spencer.

Raymond Willis (State) 82 Mr Willis also inspected Saarahnlee in connection with a proposal for land clearing, albeit much later on 19 February 2007, and was called to give evidence by the State. Mr Willis was employed between 2004 and 2010 at the Murrumbidgee Catchment Management Authority as Catchment Coordinator (Property Vegetation Planning) and deposed that he was the team leader involved in assessing land clearing applications. Mr Willis gave evidence that catchment management authorities were set up by the State Government in 2004 in connection with the implementation of the Native Vegetation Act 2003 including to assess applications to clear vegetation. Specifically, he deposed that the role of the Murrumbidgee Catchment Management Authority under the Farmers Exit Assistance Program was to process property vegetation plans made by landholders and to provide information to landholders about the program. In respect of the methodology and system used to assess land clearing applications, Mr Willis deposed that there was a general requirement that a clearing proposal have an overall result of maintaining or improving environmental outcomes. 83 Mr Willis gave evidence that he spoke with Mr Spencer on several occasions in 2006 and 2007 in relation to the Farmers Exit Assistance Program. Mr Willis gave evidence that he attended Saarahnlee for a site visit on 19 February 2007. He deposed that: Prior to the inspection, Mr Spencer had not identified the part of his property that he wanted to clear. On 19 February 2007, at the start of the inspection, I said to Mr Spencer words to the effect of "What area do you want to clear Peter?" He threw his arms up in the air and said "Well I don't know I just want to access the Farmer's Exit Assistance Program." I said "You can't do that. In order to do that, you need a red light to clear. What part of the property do you want to clear? It's not our property. We can't tell you what you want to clear." Adam, Julie and I showed him maps of his property. I said "Peter, we need a line on a map. Where would you like to clear?" 84 Mr Willis deposed that after driving around the property with Mr Spencer, a colleague of Mr Willis drew a line and hatching on a map marking out a proposed area for clearing. He deposed that looking at that map, "I said to Mr Spencer words to the effect of 'Leave it at that?' Mr Spencer said 'Yes'." A copy of that map with the hatchings was in evidence before me. In documents annexed to Mr Willis' affidavit were various references to the proposal as being a proposal to clear 1,402 hectares. 85 Mr Willis gave some further evidence about how Mr Spencer's proposed land clearing was assessed and stated "it is my understanding that Mr Spencer's application to clear received a red light since he proposed to clear a large area of land and the area he wanted to clear contained vegetation that was significant on the local, regional and landscape scale." He further deposed that the proposal "red lighted at the biometric assessment stage and the threatened species stage. Carbon emissions or greenhouse issues did not factor into those assessments, nor did it factor into the assessment process generally." Mr Willis described and annexed various documents relating to the site visit and assessment, and a letter he prepared to Mr Spencer dated 6 March 2007 which advised Mr Spencer the proposal could not be approved, and provided further information about the Farmers Exit Assistance Program. That letter is described further below, in my findings of fact about the inquiries and assessments about vegetation clearance that took place. 86 In cross-examination, Mr Spencer asked Mr Willis some general questions regarding his impressions of Saarahnlee. After prompting from the Court, Mr Spencer also cross-examined Mr Willis about how the calculation of the size of area proposed to be cleared was performed. Mr Willis gave evidence that was "not up to us to decide, that was up to the land holder to agree to, and you had agreed to that on the day." Based on that indication from Mr Spencer, he deposed, a figure was calculated using various mapping techniques. 87 I found Mr Willis to be a reliable witness.

John Dyson (State) 88 Mr Dyson was called to give evidence by the State. Mr Dyson, from approximately 1998 to 2001, was the Resource Planning Manager at the NSW Department of Land and Water Conservation, where his role included administering and assessing land clearing applications. Mr Dyson also attended a pre-application site inspection of Saarahnlee, on 10 September 1998. He described the purpose of that visit as being for Mr Spencer to provide information about proposed land clearing and discuss his proposal to clear vegetation to undertake a number of agricultural projects. 89 His evidence was one of the pieces of evidence upon which the State relied to establish that Mr Spencer had been told on several occasions that he should lodge applications to clear smaller parcels of land, which might have better prospects of success. I do not consider this evidence to be relevant to any findings I need to make in this proceeding.

Charles Armstrong 90 Mr Armstrong was subpoenaed by Mr Spencer to give evidence about the views of the NSW Farmers' Association. Mr Armstrong is a farmer with a longstanding history of some 25 to 30 years' involvement in the NSW Farmers' Association, including holding at various times the offices of president, vice president and treasurer of the association. Mr Armstrong's opinion evidence went to the impact that both the Native Vegetation Conservation Act 1997 following the State Environmental Planning Policy 46 and the Native Vegetation Act 2003 had on farmers in New South Wales, from the viewpoint of the NSW Farmers' Association. It was Mr Armstrong's evidence that the operation of farms, the value of farms and also the investment return on farms were impacted by the operation of both the 1997 and 2003 Acts. In particular, Mr Armstrong deposed to the views of the NSW Farmers' Association regarding a report by the Commonwealth Department of Agriculture's Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES): a body of that stature in Canberra was able to put together the sorts of things that we were really - we, as farmers, were really concerned about, and my recollection of - of that, again, as a - really an ultimately summary that there was something like $1 billion of both lost production and lost opportunity was the - the two real factors that ABARES looked at and established as a result of the native vegetation. So in effect it was costing primary industry or costing farmers, or turn it round the other way, that farmers were in fact contributing to the whole issue of - of carbon up to an extent of about a billion dollars - that was ABARES' figure - and we were footing the bill. 91 Mr Armstrong gave evidence that from the viewpoint of farmers, the "only reason" Australia was able to meet its targets under the Kyoto Protocol was because of the requirement to end broadscale clearing, and the carbon offsets that would thereby be generated. In this sense he corroborated Mr Spencer's theories underlying this proceeding. I allowed Mr Armstrong to give this evidence on the basis that his position with the NSW Farmers' Association enabled him to give an account of the perspectives of that organisation at the relevant times, but his evidence has not been relevant to any of the factual findings I have made.

Malcolm Peters 92 Mr Peters was also subpoenaed by Mr Spencer to give evidence in the proceeding as to the views of the NSW Farmers' Association. Mr Peters stated his occupation to be a cattle farmer, and he held positions on a number of representative farming bodies. Mr Peters was the president of the NSW Farmers' Association from 2002 to 2005 and also held the position of Director of the National Farmers' Federation during that time. 93 In his evidence, Mr Peters described how the NSW Farmers' Association lobbied the Commonwealth Government on the impact of native vegetation laws on farmers. In evidence before me was correspondence sent by Mr Peters in March 2002 in his capacity as president to the Prime Minister, Deputy Prime Minister and various ministers as part of those lobbying efforts. 94 Mr Peters deposed that in a subsequent meeting, in response to that letter, he was advised by the then Deputy Prime Minister, John Anderson, that the introduction of the Native Vegetation Conservation Act 1997 was a unilateral decision of the NSW Government. Mr Peters stated that the NSW Farmers' Association did not accept that. In the Association's view, the Federal Government had influenced the NSW Government to introduce the legislation and the later reforms. Mr Peters gave some evidence about the Native Vegetation Reform Implementation Group, which was made up of delegates from both the agriculture industry (including the NSW Farmers' Association) and environment organisations and in 2003 provided input to the NSW Government on the proposed reforms to the native vegetation legislation. He gave evidence that the Native Vegetation Act 2003 as ultimately enacted did not reflect the recommendations in reports produced by the Sinclair Group, nor by the Wentworth Group. In cross-examination, Mr Peters conceded that some recommendations by the farmers' representatives as reflected in the Sinclair Group report were successfully reflected in amendments to the legislation, although "[w]e won on a bit and the environmental groups won most of it". Mr Peters gave evidence that the NSW Farmers' Association was disappointed by the outcome and that in its view only a token amount of money was made available to compensate farmers affected by the legislation. 95 Like Mr Armstrong's evidence, Mr Peters' evidence - while corroborative of the position Mr Spencer sought to put - did not assist me in making any of the factual findings I needed to make, although the evidence of both Mr Armstrong and Mr Peters provided some context for farmers' perspectives at the time of these reforms, balancing the perspectives of government which were apparent from the documentary evidence.

Dr David Kemp 96 Dr Kemp was the former federal Minister for the Environment and Heritage from 2001 to 2004 (being a period that covered, in particular, the introduction of the Native Vegetation Act 2003 in New South Wales) and, by way of subpoena, was to be ordered to attend to give evidence on 1 December 2014. In particular, as set out in my reasons for granting leave for the issuing of subpoenas, I considered there was a reasonable prospect Dr Kemp may be able to give relevant evidence about the existence or non-existence of the alleged informal arrangements: Spencer v Commonwealth [2014] FCA 1234, at [45]. As events unfolded, that subpoena was ultimately set aside and orders made in its place compelling Dr Kemp to attend. I need not recite those events in these reasons, suffice to say the process of having Dr Kemp, a former Minister of the Commonwealth, appear to give evidence after the Court had made a decision that he should be required to do so was more circuitous and complicated than it should have been, through no fault of Mr Spencer's. 97 Dr Kemp gave evidence that the Commonwealth Government was concerned to reduce emissions in order to meet its Kyoto Protocol targets, that to encourage that reduction the Commonwealth was keen to see broadscale land clearing occurring in Queensland and New South Wales (the principal emitters of greenhouse gases from land clearing in Australia) reduced or stopped, and that that clear Commonwealth objective was communicated to those States. He stated that the Commonwealth was concerned by the lack of effective action in New South Wales at the time and was seeking reform of the way in which the NSW Government managed vegetation clearance, including by way of Commonwealth programs seeking to influence the rate and character of vegetation clearing. He gave evidence that the Native Vegetation Act 2003 was a matter for New South Wales, and that the Commonwealth's only real concern with the NSW legislation was that it did not prevent the Commonwealth pursuing its strategies and that New South Wales was prepared to cooperate with the Commonwealth in pursuit of those strategies. He stated that compensation was a matter for the States, and that the Commonwealth made a clear distinction between structural adjustment assistance, such as might be provided to assist with resettlement, and compensation to affected individuals. In response to the suggestion put to him in cross-examination that there was an informal agreement or arrangement between the Commonwealth and New South Wales made, or extended or amended, around 2003 to acquire Mr Spencer's property, Dr Kemp gave evidence that all the arrangements involving payment between New South Wales and the Commonwealth were done in writing, and that no informal arrangements existed in this context. He also gave evidence that there was no intention to acquire Mr Spencer's property other than on just terms. 98 Once he did appear, Dr Kemp was a helpful, frank and cooperative witness whose evidence I found reliable.

Bernard Sullivan 99 Mr Sullivan is the valuer who was retained by the Nature Conservation Trust on behalf of the State to conduct a valuation of Saarahnlee in 2007. Mr Sullivan attended court on 3 December 2014, in compliance with the subpoena addressed to him, issued at Mr Spencer's request. That afternoon, shortly before Mr Sullivan was due to be called, Mr Spencer advised the Court that he did not intend to call Mr Sullivan to give evidence as Mr Spencer had been proceeding on a misunderstanding about which of Mr Connolly's reports would be relied on by the State. Mr Spencer then made an oral application for a one week adjournment for the hearing of expert evidence as to valuation, on the basis that his valuation expert Mr Davies had not reviewed the recent report by Mr Connolly. Counsel for the State, opposing the adjournment, submitted the Connolly report relied upon by the State had been filed and served in September 2014, albeit that service was upon Mr Spencer's then lawyers, and had further been included in the court book filed and served on Mr Spencer on 20 November 2014. The State further noted the significant arrangements that had been made by Mr Sullivan and Mr Connolly to attend court, having each travelled some four to five hours from regional New South Wales. I accepted those submissions and refused Mr Spencer's application for adjournment. In doing so, I noted that Mr Davies and Mr Connolly were likely to have had the opportunity that morning to confer as to their views, and I indicated that if necessary further accommodations could be made if I formed the view while evidence was being given that Mr Davies was not in a position to assist the Court. In fact, this is what occurred and Mr Davies was given an overnight adjournment to collect his thoughts before being cross-examined. 100 Given that he had travelled a long way unnecessarily, I determined that Mr Sullivan should be compensated for his expenses, and he gave evidence only as to that issue, following which an order for his expenses was made.

David Evans, carbon expert (applicant) 101 Dr Evans is an engineer who worked as a contractor for the Australian Greenhouse Office from 1999 to 2005 and the Department of Climate Change in 2010 in the area of carbon accounting, and was one of two people who developed the FullCam system used by the Commonwealth in carbon accounting. Dr Evans was called by Mr Spencer to give expert evidence about the way in which the Commonwealth monitored land clearing and the carbon accounting associated with land clearing. Dr Evans deposed that FullCAM simulation involved scanning satellite imaging of 25 m by 25 m plots of land across Australia to monitor land clearing and revegetation. Where there was a change in status in terms of clearing and revegetation, the FullCAM system was used to estimate the carbon in the vegetation, debris and so forth attributable to that 25 m by 25 m plot. In his expert report, Dr Evans gave opinion evidence as to the amount of carbon dioxide that would be emitted by clearing for pasture and grazing all the trees on Mr Spencer's land, and the estimated values of those tonnes of emissions calculated according to a range of alternative carbon values, namely various Australian carbon tax rates, historical world carbon prices and Australian Treasury projected carbon prices. 102 The oral evidence given by Dr Evans concurrently with Mr Sturgiss is described below.

Robert Sturgiss, carbon expert (Commonwealth and State) 103 Mr Sturgiss was, at the time of trial, the Assistant Secretary, National Inventory Systems and International Reporting Branch of the Commonwealth Department of the Environment. His curriculum vitae shows a long involvement within the federal bureaucracy with issues of climate change and greenhouse gas emissions. He described, in short compass, the conclusion of the Kyoto Protocol and Australia's ratification of it, as well as the measures then taken by Australia to comply with the international obligations it had assumed. He also gave some evidence, and expressed some opinions, about the way in which Australia measures greenhouse gas emissions for, amongst other things, the purpose of assessing its compliance with its obligations under the Protocol. He also gave some opinion evidence about how emissions which may have flowed from a "clearing event" on Mr Spencer's property would, or could, have affected the "inventory" kept by Australia in relation to meeting the emissions targets to which it had committed under the Protocol. Finally, he gave some evidence about the international pricing of carbon. He was a clear and capable witness with an impressive command of his subject matter and where his evidence is relevant to my findings, I have accepted it. 104 At trial, Dr Evans and Mr Sturgiss gave evidence concurrently. In respect of the areas in which the experts agreed, Mr Sturgiss first gave agreed evidence in respect of Australia's obligations under the Kyoto Protocol, including that Australia's target under the Protocol was to limit, in the period 2008 to 2012, emissions to 108% of its emissions in 1990. He described the different ways in which emissions arose, including from coal combustion, agricultural processes related to livestock management and land clearing and reforestation. In respect of land clearing, he noted that the breakdown of carbon in soil may take a number of years and as such emissions estimated to have occurred in 2008 may in fact stem from activity some years earlier. Dr Evans gave evidence agreed between the experts describing the nature and methodology of the FullCAM model, and Mr Sturgiss added that the greenhouse gas inventory functioned as an account of actual emissions not accounting for the abatement of emissions that may otherwise have occurred. Dr Evans then gave further evidence describing broadly how he had used the FullCAM model to derive an estimated carbon value, including by selecting for variables such as rainfall, temperature and forest species. Mr Sturgiss agreed the results thus obtained seemed likely for the kind of simulation performed. 105 The experts then turned to what the Commonwealth had suggested may be their areas of disagreement, being the appropriate date or dates to use in identifying carbon prices, and the appropriate market or markets from which the carbon price should be taken in a valuation exercise. Dr Evans gave evidence that carbon prices vary widely by date and by market, and for that reason a variety of dates had been used in his report. He noted, for example, that the price of carbon permits had now collapsed to less than $1 per tonne. Mr Sturgiss gave evidence that the global carbon market was a market for the purchase of instruments giving a carbon credit worth one tonne of carbon dioxide and reflecting an abatement action elsewhere in the system. He agreed that the current price in the global market was very low, at less than $1 per tonne, and gave evidence that the tracking system under the Kyoto Protocol was set up in such a way that it is still possible for a party or a government to purchase permits from the international markets now to acquit against their emissions targets for the period 2008 to 2012. He gave evidence that Australia had not yet completed the final review process for its national carbon inventory report, and that from that moment parties have an additional three months in which to acquire an international permit to meet their obligations for the 2008 to 2012 commitment period. Dr Evans agreed with that evidence. 106 Mr Sturgiss gave evidence that Australia had met its Kyoto Protocol targets for the 2008 to 2012 period, subject to the completion of the independent final review process expected to occur by August 2015. Dr Evans agreed with the proposition put by counsel for the Commonwealth that, subject to any issues identified in the final review, even if the entirety of Mr Spencer's land had been cleared in 2000 there would have been no occasion for Australia to purchase carbon credits in respect of the 2008 to 2012 period. He also agreed that, if the commitment had not been met, the Commonwealth would be able to purchase credits in the market at any time up to August 2015 at the prevailing market rate, which was now very low. 107 Finally, Dr Evans gave further evidence regarding the approach he had adopted in using the FullCAM model and its possible limitations. Mr Sturgiss gave additional evidence that, in the event Australia had not met its targets, it also had the option of deferring its commitment or the gap to a future period, albeit with a 30% penalty incurred. In cross-examination by Mr Spencer, Mr Sturgiss also gave evidence the emissions from land clearing in Australia had fallen from 131 million tonnes in 1990 to an average of around 45 to 50 million tonnes per year in the 2008 to 2012 commitment period and agreed that other energy emissions in that period had increased in a manner apparently offset by the decrease in land clearing. Commenting on that evidence, Dr Evans stated that the emissions reduced by virtue of the ban on land clearing were taken up by other sectors of society, such that the burden of meeting the targets might be said to have fallen mainly on those prevented from clearing land.

Alan Moran, carbon expert (applicant): evidence given separately 108 Dr Moran was called as an expert witness by Mr Spencer and provided an interim expert report at an early stage of these proceedings on considerations affecting Australia's graziers with substantial areas of native vegetation arising from Australia's ratification of the Kyoto Protocol. At the time of providing the interim report Dr Moran held the position of Director, Deregulation at the Institute of Public Affairs and had previously been a senior official in the Productivity Commission. For the reasons set out in my judgment on admissibility, a subsequent report by Dr Moran was ruled to be inadmissible: Spencer v Commonwealth [2014] FCA 1288, at [51]. 109 Dr Moran's interim report, dated 9 April 2008, stated the opinion that Australia would not meet its Kyoto Protocol targets without including land clearing and was likely to miss its target even if land clearing was included. Dr Moran expressed the view that the proposition that land clearing regulations were made in order to meet Australia's commitments in its national greenhouse accounts was clearly accurate, and that if the Commonwealth did not have the benefit of reduced emissions from preventing land clearing, it would face a heavy financial burden associated with meeting its targets. At trial, Dr Moran was cross-examined briefly by the Commonwealth and gave evidence that, as it turned out, Australia did meet its Kyoto Protocol commitments. 110 I have not had to consider any contentious aspects of Dr Moran's evidence in any of the findings I have made in these reasons.

Colin Davies, valuation expert (applicant) 111 Mr Davies is a valuer, who was called as a witness by Mr Spencer. Mr Davies was instructed to assess the market value of Saarahnlee as at 18 March 2008, for the purposes of the NSW Farmers Exit Assistance Program, which it was common ground was at least in part a response to the recognised impact of the prohibitions on native vegetation clearance. Mr Davies carried out four inspections of the property for the purposes of his report, although he noted (at p 4) that a complete inspection of the property was not possible because many access tracks were obstructed by fallen timber, and because of the "density of timber". Mr Davies' report set out the following values for Saarahnlee: $1 million in respect of the freehold interest, $2 million in respect of leaseholders' improvements, $4,922,000 in respect of timber treatment and $1,129,450 in respect of pasture, water and fencing. His report set out the methodology by which those values were derived, including by reference to recent sales results achieved for nearby properties, as well as describing the land details, its location and its improvements. 112 Mr Davies appeared at trial on 3 December 2014 in order, as had been proposed, to give evidence concurrently with Mr Connolly, the valuation expert for the State. As events unfolded, that did not occur. Consistent with what Mr Spencer, in seeking an adjournment on 3 December, had submitted (as described above in relation to Mr Sullivan), Mr Davies stated that he had not read or considered the report of Mr Connolly sought to be relied on by the State, beyond discussing a particular section in conference with Mr Connolly that day. In any event, by that time, Mr Spencer had also indicated that he did not propose to cross-examine Mr Connolly. As such, I formed the view and counsel for the State agreed there was little point in hearing evidence concurrently. 113 Mr Davies was cross-examined as to the contents and methodology of his report, on the basis that if required to comment on Mr Connolly's report in a way that he did not feel equipped to do, he would be afforded time to review the report overnight and the opportunity to answer those questions the following day. Mr Davies gave evidence that, although the sum total of the various values set out for Saarahnlee was just over $9 million, it was not in any way his view that Saarahnlee had a market value of $9 million. In particular, he also gave evidence that in valuing the improvements, he had sought to assess their value to the owner, as distinct from their value to the market, with a view to how they would be valued by Mr Spencer if he were to sell. Similarly, he accepted that the value of what he called "timber treatment" or clearing could not be assessed readily on a market basis, because it was hard to find comparable sales. He conceded that it was doubtful whether the quote he had used as a basis for estimating the cost of clearing was a good proxy. He accepted he did not seek to assess whether the timber treatment added to the market value of the property. He accepted that no economically rational farmer would seek to clear Saarahnlee, as the cost of doing so far outweighed the value it would add, but he contended that there may be benefits in increased long-term productivity of the land. He also gave evidence that, in his instructions from Mr Spencer, it was put to him that Mr Spencer had a property affected by the native vegetation clearance laws that he did not wish to sell. He appeared to build Mr Spencer's reluctance into his approach to his valuation. 114 After the opportunity to review Mr Connolly's report overnight, Mr Davies gave evidence the next day commenting on that report. He gave evidence that he had approached his report taking the highest and best use of the land, which he viewed as being that all of the property could be used for agriculture and specifically for grazing. He accepted that, in contrast, Mr Connolly had valued some land as grazing land and other timbered land at a different value. 115 Mr Davies' evidence was problematic. He appeared genuinely willing to assist the Court and I did not find him evasive. However, his evidence was confusing, in that when pressed he was quite unable to explain in a rational way how he had reached the figures he had put in his report. The explanations he sought to give by reference to the value of improvements were not rational, and there was never any persuasive or logical explanation for how he could reach a value of over $9 million for a property that two other qualified valuers had placed at between $2 million and $2.5 million.

Robert Connolly, valuation expert (State) 116 Mr Connolly was called to give valuation evidence by the State. Mr Connolly had previously inspected Saarahnlee for the purpose of providing a valuation report for the defendants in the NSW Supreme Court Proceedings No 30002 of 2008, Spencer v NSW Minister for Climate Change, Environment and Water and Nature Conservation Trust of New South Wales (see Spencer v NSW Minister for Climate Change, Environment and Water [2008] NSWSC 1059), in which he valued the property as at 30 August 2007 at $2.36 million. A copy of that report dated 7 May 2008 was exhibited to Mr Connolly's affidavit in this proceeding. Mr Connolly had inspected the property in 2008 and inspected it again on 11 August 2014, with permission from the new owners (apart from Lot 50, which was inspected from its boundary with Lot 47). 117 Mr Connolly was subsequently instructed to provide a further opinion as to the market value of the property as at 30 August 2007. He affirmed the figure of $2.36 million. Mr Connolly's instructions included a copy of Mr Spencer's affidavit setting out various business projects including trout, wool and sheep genetics, water bottling, firewood, eucalyptus oil distillation, the carbon sink project and wagyu cattle. In Mr Connolly's opinion, those potential projects did not add any extra value to the land. 118 Mr Connolly was also instructed to consider and comment on Mr Davies' report, and gave evidence that the basis of the report was flawed and its methodology inappropriate. Although he agreed with Mr Davies' sales evidence, Mr Connolly considered that the property only had about half the 594 hectares of cleared pasture country set out in Mr Davies' report, the balance of the 594 hectares being uncleared natural timber and regrowth. He also considered the dry sheep equivalent value used to estimate the productive capacity of that land had been overestimated. Mr Connolly expressed the view it would be uneconomic fully to clear bushland as the cost of clearing would exceed the cleared value of the pasture land, and as such, no value should be attributed to what Mr Davies called "timber treatment" (or, clearing). 119 He also gave evidence that none of the Native Vegetation Conservation Act 1997, the Native Vegetation Act 2003 and the Native Vegetation Regulation 2005 had any adverse effect on the market value of Saarahnlee. 120 Despite a clear invitation from the Court, Mr Spencer declined to cross-examine Mr Connolly. 121 Mr Connolly's criticisms of Mr Davies' valuation were cogent, and I found him a reliable witness.

Stuart Smith, mapping expert (State) 122 Mr Smith is a senior scientist working in remote sensing and analysis at the NSW Office of Environment and Heritage. He was called to give evidence as a mapping expert by the State, the purpose being to verify how much of Saarahnlee had been under clearing controls prior to 1997. Mr Smith gave evidence that approximately 3,213 hectares of Saarahnlee were considered to be protected land, and that the remaining 1,915 hectares were non-protected land. Those figures were calculated using a digital process known as spatial referencing or georeferencing from points on maps. Copies of spatially referenced maps of Saarahnlee were exhibited to Mr Smith's affidavit, including a map with markings demarcating protected land. Mr Spencer took up with Mr Smith the correct way to calculate the measurement of hectares on steeply sloping land (an issue to which Mr Spencer returned at several points in the trial, but which in my opinion is not relevant to any of the matters I have to decide), but otherwise did not challenge his evidence. I accept Mr Smith's calculations.

Steen Stavnsbo, wind farm expert (applicant) 123 Mr Stavnsbo is a wind farm consultant who has known Mr Spencer for some ten years. In his affidavit he deposed that he attended Saarahnlee on several occasions between approximately 2003 and 2008, in connection to a request from Mr Spencer for a feasibility study into harnessing the wind energy on his property. Mr Stavnsbo deposed that, in his view, the land was suitable for wind farm usage and exhibited to his affidavit documents including the feasibility report produced by the company NEG Micon (Australia) in November 2003 and what was described as a preliminary development agreement between ANZ Infrastructure Services Limited, EHN (Oceania) Pty Limited and Mr Spencer. That document bears the title "Heads of Agreement" and the date 20 May 2004. It was accepted by Mr Spencer during his cross-examination that no wind farm development agreement was ultimately concluded, although "an access agreement, the heads of agreement" was concluded. Once that concession was made, the somewhat novel process which might otherwise have been implemented to allow Mr Stavnsbo to give evidence was not required. 124 Mr Stavnsbo also deposed that the benefits usually provided to a landowner providing wind turbine positions in respect of a wind farm project generally took the form of either a form of land rental payment (a specific flat fee per turbine) or a percentage of wind farm revenues. He deposed that between 2% to 5% of gross revenues was not uncommon in his experience, and stated the preliminary agreement annexed to his affidavit provided for revenue at 2.65% of gross revenues. Mr Stavnsbo estimated that assuming a particular type and number of turbines were installed at Saarahnlee, gross revenues would accrue to Mr Spencer of approximately $700,000 per annum. 125 Mr Stavnsbo resides in Aarhus, Denmark. Mr Spencer claimed he could not afford to bring Mr Stavnsbo to Australia and that during the trial Mr Stavnsbo would not be in Denmark, but elsewhere. He suggested using Skype. Consideration was given to this possibility and inquiries were made with Court officials to confirm it was possible. On the fifth day of trial, the Commonwealth conceded that no cross-examination was required provided Mr Stavnsbo's references to the preliminary wind farm development agreement were not read as evidence of the fact of such an agreement being finalised. Accordingly Mr Stavnsbo was not required for cross-examination and his affidavit was read. There are no controversial aspects of Mr Stavnsbo's evidence which have informed my findings.

Mr Spencer's claim under s 61 of the Constitution 126 Little attention was paid to this aspect of the FASOC by the respondents, and indeed it might be said this aspect of Mr Spencer's claim was faint. 127 In one set of submissions relied on by Mr Spencer, those filed on his behalf in the High Court special leave application, the following submissions were made: In R v Hughes Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ accepted the statement of Mason CJ in R v Duncan; Ex parte Australian Iron and Steel Pty Ltd that Executive power under s 61 of the Constitution extends to the entry of government agreements between the Commonwealth and State on matters of joint interest so long as the end to be achieved and the measures by which it is to be achieved are consistent with, and do not contravene the Constitution. It is submitted that this means that intergovernmental agreements are subject to the Constitutional guarantee in s 51(xxxi). The question of whether an exercise of pure Executive authority by the Commonwealth, such as an exercise of prerogative power, is subject to s 51(xxxi) has never been the subject of full argument in this Court. It is submitted that the issue does not arise in this case either. (Citations omitted.) 128 The submissions filed by the NSW Farmers' Association, intervening in the High Court and on which Mr Spencer relied in this proceeding, proceed only on a characterisation of the two federal laws in their operation upon the intergovernmental agreements and in their real and practical operation, but without reference to s 61. 129 Despite the pleading in para [48] of the FASOC, in Mr Spencer's final submissions there is nothing to develop this allegation independently of the challenge to the two federal laws, and the intergovernmental agreements as the consequences of the exercises of power under s 96. 130 It is therefore not surprising that the respondents' final submissions do not address any arguments about s 61 as a freestanding source of power for the intergovernmental agreements, and whether it is itself conditioned by s 51(xxxi). 131 Accordingly I do not propose to say anything further about s 61.

Allegations of unjust enrichment 132 This term can be found in several places in various submissions made by and on behalf of Mr Spencer. There was no development of what was meant by it in the context of the claims in this proceeding, and how a private right of this kind was said to arise. I do not propose to consider it further.

Mr Spencer's claims that the NSW native vegetation laws are invalid 133 In the submissions made on his behalf in support of the application for special leave to appeal to the High Court in June 2010, submissions were made concerning the invalidity of the two NSW native vegetation laws, based on passages from the judgment of Heydon J in ICM [2009] HCA 51; 240 CLR 140 (at [249]) and a number of earlier passages said to support that approach. The argument concerned the effect of covering cl 5 and s 106 of the Constitution. It was said, as I understand the reliance on these passages, that if state legislation was properly seen as part of a scheme "taken in concert to achieve a goal which depended on a contravention by the Commonwealth of s 51(xxxi)", to use the language of Heydon J in ICM at [249], then that state law would be invalidated by s 51(xxxi). 134 Although this is not said in so many words, as I understand the submissions, it is to try to extend what was held in PJ Magennis Pty Ltd v Commonwealth [1949] HCA 66; 80 CLR 382 a step further. That is, rather than a scheme involving federal legislation, intergovernmental agreements and consequent state legislation resulting in invalid federal legislation, but intergovernmental agreements and state legislation that would be "inoperative", this contention was designed to result in the state legislation also being held invalid. 135 Given my conclusions that the two federal laws are not properly characterised as laws with respect to the acquisition of property, and that those laws, taken together with the intergovernmental agreements and the state legislation do not effect any acquisition of Mr Spencer's property, it is unnecessary to venture into the territory of covering cl 5 and s 106.

General nature of the property 136 The following summary of Mr Spencer's land is taken from the closing submissions of the State which I accept as an accurate summary of the evidence, together with the evidence set out in the report of Mr Connolly, which I accept. The State's submissions go into considerably more detail than the findings I consider necessary for the purposes of resolving the issues between the parties but provided helpful contextual material which has assisted my understanding of the issues. 137 What is called "Saarahnlee" consists of 14 parcels of land in the area known as Shannons Flat, about 40 kilometres north-west of Cooma in New South Wales. Mr Spencer was the registered proprietor of most of the land, and Mrs Anne Spencer was for some time the registered proprietor of one parcel. The evidence reveals that the first purchase (of Lot 47) occurred in November 1980 by Mr Spencer, there was transfer of the Crown lease over Lot 48 to Mrs Spencer in May 1981, the smaller freehold parcels were purchased by Mr Spencer in November 1988 and the Crown lease over Lot 50 was transferred to Mr Spencer in July 1991. In November 1997 as a result of a family law settlement, Mrs Spencer transferred her interests in the perpetual Crown lease over Lot 48 to Mr Spencer. In or around October 2003, Mr Spencer borrowed a significant sum from his relatives, Mrs and Mr Bamber, secured by way of a registered mortgage over all of the freehold land and over Lots 47 and 48 (that is, all of Saarahnlee except Lot 50). 138 The land remained under his ownership until foreclosure by the mortgagees (the Bambers) of all the freehold land, and of Lot 47 and Lot 48 in July 2010. 139 The perpetual Crown lease over Lot 50 appears on the evidence before me to continue to be held by Mr Spencer, at least as at June 2014. This fact did not feature prominently in the evidence, and Lot 50 was generally discussed as if it also had passed out of Mr Spencer's ownership. However the pleadings and evidence do not support this assumption (if that was what it was): (1) The State's Amended Defence dated 9 September 2014 and filed 11 September 2014 states at [1(e)]: "the applicant is the holder of perpetual Crown lease 1929/12 Cooma in Lot 50 in Deposited Plan 750529, and has been since 13 June 1991, and the registered proprietor of the same since 24 July 1991." (2) The Commonwealth's Second Further Amended Defence dated and filed 3 October 2014 likewise states at [1.3]: "the applicant is the holder of perpetual Crown lease 1929/12 Cooma in Lot 50 in Deposited Plan 750529, and has been since 13 June 1991, and the registered proprietor of the same since 24 July 1991." (3) A title search in evidence which post-dates the mortgagee sale to the Bambers shows Mr Spencer was the registered proprietor. An extract from the NSW Trade and Investment Land Revenue System Financial Events, Acct 107218 Perpetual Lease (being the lease corresponding to Lot 50) shows Mr Spencer as the current holder of this perpetual lease as at 10 June 2014. (4) At various points in oral submissions, senior counsel for the State excluded Lot 50 from descriptions he gave about what Mr Spencer had lost in terms of his property rights. 140 Nothing was said in the respondents' submissions about this matter, nor did Mr Spencer make any submissions about it. If Mr Spencer had otherwise enjoyed some success in this proceeding, the ownership of Lot 50 would have been material. Given the findings I have made, I go no further than to describe what I understand to be the state of the evidence and the pleadings. 141 The total area of the property is over 5,000 hectares. Mr Connolly in his report states that the "Total Area (more or less)" is 5,205 hectares, whereas Mr Sullivan put the figure at 5,137 hectares. Mr Davies' estimate was very close to that of Mr Connolly. The exact area is not material to the issues to be determined. On any view, it is a large property. 142 The smaller parcels are freehold as ordinarily understood, but the three largest parcels (Lots 47, 48 and 50) are not. One of those - Lot 47 - is "conditional purchase" land, which is a form of restricted freehold and remains subject under s 6 of the Crown Lands (Continued Tenures) Act 1989 (NSW) to recordings in the folio of the Register created in respect of the holding. 143 Lot 48 and Lot 50 were at the relevant dates Crown leasehold. Lot 47 and Lot 48 are by far the biggest parcels - at 2,191 hectares and 1,680 hectares respectively, according to Mr Connolly. Lot 50 is the next biggest, at 740 hectares according to Mr Connolly. The remaining lots vary from just over 16 hectares to just over 145 hectares. 144 Mr Connolly's description of the various parts of the property (at pp 11-12 of his report), which I accept and adopt, is as follows: 40. The property is located about 38 kilometres north-west of Cooma at the northern end of Callemondah Road which terminates at the property gate. In the north-western part of the property there are about 300 hectares of cleared pasture country, suitable for sheep and cattle grazing. This land is generally undulating and is bisected by Flynns Creek from which the land rises to the west and to the east, interspersed with rocky knolls of granite and green timber. 41. The timbered freehold land (the majority of which is on Lot 47) ranges from undulating slopes to steeper hills, interspersed with gullies and small creeks and largely timbered with reasonably mature regrowth. There are small clearings scattered through the area along creek and gully lines. The northern boundaries of Lots 47 and 55 adjoin the 106,000 hectare Namadgi National Park along the ACT border. The north-western boundary of Lot 50 also adjoins the park. 42. The leasehold land is a mixture of regrowth and natural bush interspersed with small pockets of clearing and thinned green timber, plus some 'fingers' of cleared pasture slopes projecting into the bush along the western boundary of Lot 48 towards the south-west comer. 43. My inquiries indicate that the land was within a general rural zone at the relevant dates in the Cooma-Monaro LGA. 44. From my investigations and inspections of the property my general impressions are: (i) The homestead on the property is a feature. It has been designed and constructed in harmony with its high country environment. Its main features are a high level of insulation and thermal mass to suit the weather conditions, large bedrooms all with individual bathrooms, a large multi-purpose living room with two fireplaces and an adjacent fully fitted out kitchen plus a separate formal lounge room. Other features include a hydronic heating system and double glazing to some elevations. There are three unfinished sheds around the homestead which detract from its presentation however their intended purpose to form a protective courtyard is in keeping with the style of the development. (ii) The undulating pasture country to the west and northwest of the homestead and the small lake below the house provide an attractive landscape for rural living. The fishing lodge just below the house which looks across the lake is also a feature. (iii) Much of the hilly bush country on the freehold and leasehold blocks does not have the aesthetic appeal of natural bushland because it is regrowth. (iv) The location is at a relatively high sub-alpine elevation (ranging from 700 to 1,500 metres but the majority at 1,100 to 1,500 metres) with very cold winters. Consequently the property does not have the broader market appeal of more moderate farming climates. (v) The steep to mountainous country along the eastern side of the property includes areas of natural bushland with Mountain Ash and Alpine Ash (logged in the past). It is a rugged but scenic landscape of timbered ridges and valleys with a 700 metre frontage to the Murrumbidgee River in the north-eastern corner of Lot 50. 145 Mr Davies' descriptions do not seem to me to be at variance with those of Mr Connolly. Putting to one side for the moment the debate between the parties, and the experts, about the valuation of Saarahnlee, Mr Spencer did not make any specific criticisms of Mr Connolly's description of the property, except perhaps for general disagreement with some of the comments made by Mr Connolly about the property's "market appeal". It is also true to say that at various points in his evidence and submissions, Mr Spencer highlighted certain features of certain parts of Saarahnlee and I will return to those where necessary. 146 In evidence, Mr Spencer accepted that more than 50% of Saarahnlee was at all times covered with native vegetation that had never been clear felled and had been maintained as forest. He also accepted that as at 1990, only 346 hectares had been fully cleared and could be described as improved. He maintained as part of his case, however, that in terms of use of the remainder of the land for grazing, it was possible to use quite heavily timbered land, as the sheep needed shelter as well as pasture. Although Mr Spencer appeared to see some disadvantage to his interests in this proceeding by admitting how much of his land was covered in timber and native vegetation, it was of course the extensive nature of this coverage which meant that the vegetation clearance regimes had such a drastic effect on his property.

History of the land 147 Part of the evidence adduced by Mr Spencer at trial was a report from Mr Porter. Although Mr Porter was not called as a witness, no submissions were made that his report was factually inaccurate, and the Commonwealth relied on his report as containing a description of the history of land use on Saarahnlee. I have found the report a useful source for the history of the use of Saarahnlee. In August 1998, well before this proceeding commenced, Mr Porter prepared a report entitled "Application for clearing vegetation under the Native Vegetation Conservation Act 1997 and Farm Management Plan for 'Saarahnlee' Shannons Flat NSW". Mr Porter had described the purpose of the report in the following terms: This document has been prepared firstly to accompany an application for clearing vegetation under the Native Vegetation Conservation Act (1997). Secondly it is to act as a Farm Management Plan that will ensure that "Saarahnlee" is developed and managed in an ecological sustainable manner. This will ensure the long-term productive use of this unique sub-alpine Australian high country property is preserved for future generations. 148 I accept the following extract from Mr Porter's report as an accurate summary of the history of land use on Saarahnlee in the following terms: Land use history • 1919-1960 Lot 47, Lot 48 and Lot 50 were occupied as soldier settlement blocks. In this period Lots 47 and 48 approximately sixty percent of the vegetation was cleared using "ring-barking" methods for both grazing and logging. Lot 50 was subjected to minimal clearing for grazing. There has been substantial regrowth since the initial clearing. There was no pasture improvement program implemented after the clearing. The main enterprise undertaken by the then owners was the grazing of sheep for wool. Sheep were grazed on unimproved native grasses. Lot 47 carried 1600 wethers and 400 ewes whilst Lot 48 carried 1400 wethers and 300 ewes. Lot 50 carried 400 wethers. In the latter period cattle were introduced in conjunction with the sheep on Lot 47 and Lot 48 each lot carrying approximately 70 head of cattle. • 1919-1985 The Eucalyptus dives (broad-leaved peppermint) on the property were harvested for the production of Eucalyptus oil up to six distillation sites were used in the production of the oil. The resultant coppiced regrowth from the harvesting is substantive. In this time many roads and tracks were established throughout the property. There still exists a working Eucalyptus oil distillation plant. • 1930's NSW State Forests carried out extensive logging on the property. This was carried out on the western, central, northern and eastern slopes. The main species logged were Eucalyptus dalrympleana spp. dalrympleana (mountain gum) and larger Eucalyptus pauciflora spp. pauciflora (snow gum or white sally). As a result of this logging there is an extensive network or roads throughout the property. The roads were constructed to high standards with culverts, creeks piped and logging bridges built. These roads are now subject to erosion and require extensive maintenance. A large number of these roads are built on State Protected Lands. Some of the roads are designated Rural Fire Service fire trails that are required for the prevention and control of wildfire. • 1980's NSW State Forests carried out extensive logging on the property. This was carried out on the western, central, northern and eastern slopes. The main species logged were Eucalyptus delegatensis (alpine ash) and larger Eucalyptus pauciflora spp. pauciflora (snow gum or white sally). As a result of this logging carried out with little or no environmental considerations the undergrowth and regrowth areas are a tangled mess. This causes both a fire hazard and lessened potential for the future use of the regrowth for agroforestry. There is an extensive network or roads throughout the property as result of this and previous logging operations. These roads are now subject to erosion and will require extensive maintenance. Some of the roads are designated Rural Fire Service fire trails that are required for the prevention and control of wildfire.

Mr Spencer's use of the land 149 At trial, and putting the issues of damages to one side, in terms of Mr Spencer's s 51(xxxi) case, the main focus of the evidence was on events from about the middle of 1998, when Mr Spencer began making inquiries about developing the property and what authority was needed to clear parts of it. I return to that evidence below. 150 Prior to these events, the evidence discloses, and I find, that Mrs Spencer made up to three applications to clear parts of Saarahnlee. One application was made in approximately August 1981, and another two in September 1982. I accept the State's submissions that there is no evidence to suggest that another, larger clearing application was submitted by Mr Spencer at a later stage in the 1980s, which accords with Mr Spencer's recollection that he did not submit one. In both cases, the evidence reveals, as the State submitted, that consideration of the applications was affected by the categorisation of portions of Mr Spencer's land as "protected land" under the Soil Conservation Act 1938 (NSW) and, in relation to parts of Mr Spencer's land which were not "protected land", by environmental considerations. This led, on the evidence, to approval being given to clear only parts of the land for which permission was sought, and to the imposition of conditions on clearing. 151 Through most of the 1990s Mr Spencer was working outside Australia, and had businesses in Papua New Guinea. It seems from his evidence that he intended to retire to Saarahnlee, as well as using the property for various projects while he was overseas.

Inquiries and assessments about vegetation clearance 152 The chronology was far from precise in the evidence, but the next event which should be dealt with occurred in approximately the middle of 1998. Mr David Thompson, an officer of the Soil Conservation Service of NSW, made arrangements to visit Saarahnlee. In evidence Mr Spencer accepted that this was a time where he was "testing in my mind" what kinds of projects and what kinds of development he might undertake on the property. Mr Thompson gave Mr Spencer an application form for clearing, as his evidence disclosed he had done for many farmers who sought assistance to understand the regulatory scheme about what they could and could not do on their land. 153 It was, I find, in connection with the ideas Mr Spencer was considering at this time that he commissioned Mr Porter to prepare his report, which is dated August 1998. It is the case, whether or not Mr Spencer intended to proceed along these lines or not, that Mr Porter's report is based on an assumption that a very large part of the property would be cleared - up to 2,200 hectares. At the start of the report, Mr Porter sets out the following basic aspect with which his report deals: Areas Total area of property 5 163 ha Area of native vegetation 4 800 ha Area applied to be cleared 2 200 ha Area to be replanted 1 100 ha Area of State Protected Land 2 939 ha Area of vegetation on SPL 2 939 ha

154 I note on p 15 of the report, Mr Porter describes what vegetation (including trees) will and will not be cleared and contends that activities such as eco-tourism will be possible on the property because "sixty percent" of the vegetation is being retained. Broadly, that is consistent with the figures in the table at the start of his report. 155 A further meeting was held on Saarahnlee on 10 September 1998. This meeting was the subject of evidence from Mr Dyson, who was the principal officer from the NSW Department of Land and Water Conservation in attendance. There were some variations between his recollection of the meeting and that of Mr Spencer, but I do not consider any of those variations are material. I found Mr Dyson to be a reliable witness, whereas, for reasons I have explained above, I found Mr Spencer's recollections of the detail of events and conversations often to be unreliable, or less reliable than other witnesses'. Mr Dyson's evidence was that on the farm visit, he and those who accompanied him drove around the farm with Mr Spencer. He indicated to Mr Spencer some parts of the property that he, Mr Dyson, considered contained little remnant native vegetation and could probably be cleared with permission, so that Mr Spencer could undertake some of his projects, such as an orchard. Mr Dyson does not recall any precise figures being mentioned about how much land Mr Spencer wanted to clear, but he did recall it was a large amount. In his affidavit Mr Dyson described, and I accept, that he had a conversation with Mr Spencer on this visit about whether it would be preferable for Mr Spencer to lodge a series of applications to clear native vegetation, each covering a smaller area, explaining to Mr Spencer how this would reduce the detailed studies that were necessary, would make it easier to obtain approval and could demonstrate how Mr Spencer successfully completed one project before asking for permission to clear for another project, which would also enhance his prospects of approval. Mr Dyson gave evidence that Mr Spencer responded to this suggestion to the effect that: I don't want to lodge smaller applications. I want approval to clear everything to allow me to proceed with my overall developments. 156 Mr Spencer disputed that he had said anything to this effect, but I am persuaded Mr Dyson's recollection is accurate. In the end, the size of the area Mr Spencer planned to clear is of marginal relevance, but it is also broadly consistent with what occurred in 2007, those events being more central to the issues in this proceeding. 157 Mr Dyson was adamant, and I accept, that Mr Spencer never formally lodged an application to clear native vegetation on Saarahnlee at this time. In this sense, all these meetings and discussions were mostly information gathering, although as I have observed there is some consistency with what occurred almost a decade later. 158 As the State's submissions (at [57]-[64]) describe, between approximately 2000 and 2006 Mr Spencer undertook something of an experimental project on Saarahnlee involving ultra-fine merino sheep. To the extent it is necessary, I say more about the sheep project in the part of these reasons dealing with Mr Spencer's damages claims. The project was unsuccessful - the reasons for this need not be the subject of any findings but I note Mr Spencer's explanations differ somewhat from those suggested by the State in its final submissions. 159 By 2006, the NSW Government had an exit assistance scheme in place for farmers affected by drought, and a specific exit assistance scheme for those farmers adversely affected by the State's native vegetation clearance laws. 160 In cross-examination, Mr Spencer admitted that he decided to make an application for exit assistance to "see if the government was sincere in going through with" assisting farmers, and he wanted to "test" the way the scheme operated. He admitted that he "may have accepted" what he thought was a good price but also admitted that it was highly unlikely the Nature Conservation Trust (which was administering the exit assistance scheme) could make him an offer high enough to induce him to sell, because of how valuable Saarahnlee was to him. He went as far as to assert that "I had no intentions of accepting an offer that they would make". I am inclined to see this is an example of Mr Spencer's tendency to exaggerate. Looking at his contemporaneous communications with Mr Willis, it seems to me his motives were mixed. 161 Following discussions between Mr Spencer and officers of the Murrumbidgee Catchment Management Authority, on 12 February 2007 Mr Willis from the Murrumbidgee Catchment Management Authority (whom I have described above as one of the State's witnesses) wrote to Mr Spencer on behalf of the Authority inviting him to indicate the areas he wished to clear. The letter stated: Following from our recent discussions, please find enclosed copies of relevant maps to consider prior to our site visit on the 19 February 2007. Could you please consider what your clearing proposal is likely to be in order for the Murrumbidgee CMA to assess the proposal to ascertain whether it may be approved or not. As discussed, if it is not approved then you may be eligible to proceed to the Farmer Exit package that is handled by the Nature Conservation Trust's Nigel Strutt. We will advise more on this upon our visit. Could you please indicate on the map the area of interest in terms of proposed clearing and the proposed offset areas, being areas that may be retained and managed for their environmental values. Should you require any further clarification you can contact me at Wagga Wagga on … . 162 Despite that request, Mr Willis deposed, and Mr Spencer did not dispute, that prior to the visit on 19 February 2007 Mr Spencer did not provide any identification of the area he proposed to clear. After some communications between Mr Spencer and Mr Willis, Mr Willis and two other staff members from the Murrumbidgee Catchment Management Authority went to Saarahnlee on 19 February 2007. They drove around the property. Mr Spencer admitted that the officers had explained to him that in order to access the exit assistance program, he had to make an application for the clearing of native vegetation and have it refused. Mr Willis described this as a "red light" although that terminology was not used by Mr Spencer. 163 There was some time spent at trial on the details of conversations which occurred during this visit. In particular whether Mr Spencer said, on being asked what area he wanted to clear, words to the effect "Well I don't know I just want to access the Farmers Exit Assistance Program"; and whether Mr Spencer agreed with a suggestion from one of the other officers during the visit that lines the officer drew on the map he had with him would represent the area Mr Spencer wished to clear. The map bearing the hatching said to represent what occurred during the visit in terms of an indicative area Mr Spencer wished to clear was produced in evidence through Mr Willis. 164 The hatched area shown on the map as the area which Mr Willis deposed Mr Spencer had agreed was a representation of what he wished to clear was a very large area indeed, approximately 1,402 hectares, including many heavily wooded parts of Saarahnlee. When it was suggested to him in cross-examination that the hatching represented what he had agreed he wanted to clear, Mr Spencer's evidence was: But I would not have agreed - if you're saying it was shown to me - considering how that is part of our best natural land, we would never touch it. 165 The State's final submissions urged the Court to accept Mr Willis' account, and conclude that Mr Spencer had intended to make a clearing application that would fail "in order to trigger his access to the [Farmers Exit Assistance Program]". It submitted Mr Spencer offered no other explanation as to how the map produced by Mr Willis came to exist. 166 Mr Willis produced his working notes from the visit as annexures to his affidavit. He deposed to a method employed when he and other members of his team visited properties for the purposes of assessing whether vegetation clearance would be permitted, or whether a farmer would be able to access the exit assistance program. There is no reason to doubt the reliability of his evidence, aided by these contemporaneous documents. There is no reason to doubt his evidence that the map with the hatched proposed clearing area was completed at the time of the visit, after a conversation with Mr Spencer. In that general sense, I accept Mr Willis' evidence. 167 I find the areas hatched on the map exhibited to Mr Willis' affidavit do represent the areas marked on the map during the site visit to Mr Spencer's property on 19 February 2007. I find the hatched areas were marked as those proposed for clearance. I am not satisfied Mr Spencer positively endorsed these drawings as an accurate reflection of what he proposed to clear. Although he had, as I find elsewhere, various specific plans or projects in mind, he was also testing through the exit assistance process what his property was worth given the native vegetation clearance laws, and trying to see how badly affected he was by those laws. 168 I find that it is likely Mr Spencer paid scant attention to any precise delineation of the areas which were marked down as those he wanted to clear. Mr Spencer considered it unlikely, but not impossible, that depending on that valuation, he might accept the exit assistance package and leave Saarahnlee. It is probable, in my opinion, that Mr Spencer was intent on his general plans and projects and paying no attention to the detail of the marked areas during this visit. As I find below, since he never submitted any more formal application for clearing but rather was treated by the Rural Assistance Authority and the Nature Conservation Trust as if he had applied, he had no occasion to revisit what had been recorded by the Murrumbidgee Catchment Management Authority officers as the area intended to be cleared. It is unsurprising that, when confronted with the map during this proceeding, he expressed alarm at the areas marked and gave the evidence he did. I find he simply did not pay attention to these kinds of details during Mr Willis' visit in February 2007, and was more intent on getting the officers to understand the uniqueness and beauty of the property, together with its potential, at a large scale, which in his view was all at risk of being lost because of the vegetation clearance laws. Mr Spencer, it seems to me, is a "big picture" kind of person. 169 Mr Spencer admitted, and I find, that he never filled out a vegetation clearance application form. Despite this, there is no dispute on the evidence that the Murrumbidgee Catchment Management Authority, the NSW Rural Assistance Authority and then the Nature Conservation Trust continued to treat Saarahnlee as if it was subject to such an application which had been refused, and acted on that basis right through to the making of an exit assistance offer. 170 Mr Willis' conclusion after the site visit and assessment was: Mr Spencer's Land Clearing Assessment PAMS case 3766 red lighted at the biometric assessment stage and the threatened species stage. Carbon emissions or greenhouse gas issues did not factor into those assessments, nor did it factor into the assessment process generally. 171 This conclusion was conveyed to Mr Spencer by way of a letter dated 6 March 2007. I set the contents of the letter out in full because it gives a summary of not only the assessment but the stages of the exit assistance process, which, as I set out below, I find Mr Spencer then undertook. On 19 February 2007, the Murrumbidgee Catchment Management Authority (CMA) conducted a field assessment of your proposal to clear 1402 hectares of native vegetation on your property. The Murrumbidgee CMA is required to assess proposals to clear native vegetation according to the 'maintain or improve' test as detailed in the Native Vegetation Regulation 2005. After analysis of field data collected, your current proposal fails to meet the 'maintain or improve' test and therefore the proposal cannot be approved. The Murrumbidgee CMA has since assessed a number of alternative, smaller clearing sizes but these also failed to meet the 'maintain or improve' test. I understand that you have expressed an interest in Farmer Exit Assistance. Through the PVP process you have been assessed as having satisfied the initial test of eligibility for the Farmer Exit Assistance known as the Relative Hardship Test. The next stage of assessment process requires an assessment of financial eligibility. The Rural Assistance Authority (RAA) will carry out this assessment. To be financially eligible for assistance you will need to show that clearing of the area of land that satisfied the Relative Hardship Test was required to allow your farm business enterprise to meet some or all of the following factors: • The operating costs of the farm business enterprise; • The living costs of the farm family; • Servicing of the farm enterprise debts; • Future capital requirements, for plant and improvements; and, • Investment in sustainable farming systems. In addition, you will need to demonstrate that you contribute the majority of your labour to the farm business enterprise and generate the majority (or have the potential to generate the majority) of your income from that enterprise. If you wish to proceed with an application for Framer Exist Assistance [sic] you will need to provide the RAA with your last three years financial records along with a 1 page letter detailing the difference that approval to clear would have made to your business. You should contact Mr. Bob Waterson, Assessment Officer with the RAA on … If your application meets the RAA's financial eligibility criteria it will be passed on to the Nature Conservation Trust (NTC). The NCT will commission an independent valuation of your property and provide an offer to purchase based on this valuation. For your information, I am enclosing a copy of the NSW Government's Native Vegetation Assistance Package fact sheet that outlines the Farmer Exit Assistance package and processes. Please feel free to contact Ray Willis, Catchment Co-ordinator at the Murrumbidgee CMA on … or Nigel Strutt, Farmer Exit Assistance Program Manager at the Nature Conservation Trust on … for more information. 172 Mr Spencer wrote to Mr Waterson of the NSW Rural Assistance Authority, the authority responsible for administering the exit assistance program, on 13 April 2007. I find this letter was Mr Spencer's attempt to comply, in his own way and on his own terms, with the request for information from Mr Waterson. In that letter, he asserts that "[t]he farm is not able to be used for agriculture except for a small section - 10% which is not sufficient to be viable". He then sets out nine projects he either had started, or intended to start on the farm. These are some of the projects to which Mr Spencer has referred in evidence in this proceeding - merino sheep, the trout farm, the wind farm project. He volunteers a number of explanations as to why these projects have not been successful: not all of those explanations concern the presence of excess native vegetation on his land. For example, he asserts the recreation park plan was thwarted by zoning restrictions, and that the bottled water project could not go ahead because "we have no capital left to install the plant and no cash flow to market the product". 173 Mr Spencer states "[w]e have sold most of the none fixed [sic] capital assets to keep going. Hence we have no funds to go on." Then, in a reference to what would become the platform of this proceeding, he says: We have no legal rights as evidently the State can make what ever laws it likes … even to take away your freehold rights - on other then "Just Terms". (Emphasis in original.) 174 Having then made a number of statements hostile to the New South Wales and Federal Governments, he concludes: The environment has nothing to do with it. Our farm was always been blessed with an abundance of being at least 50% forested - being environmentally sustainable was our tradition. Otherwise how else would our farm boast such huge timber resources? Give me back MY land and I will not ask for, nor will I need, the States help. … (Emphasis in original.) 175 He adds: In regards the matter of Carbon Credits as accrued under the Federal Governments Commitment to the "Australia Clause" negotiated by the Australian Government which is in effect between the years 1990 and 2020 - 30 years - this represents an asset of "Saarahnlee" - being that it has effect on the forests of "Saarahnlee" and further does not allow for the increasing dollar and timber growth value (appreciating the forest has its greatest carbon value between the age of 30 and 90 years) after that 30 years and the fact the harvesting of Carbon is ongoing - perpetually, past that date indefinitely - so to speak and is additional to this estimate. For this report this asset, currently and only for the "Australia Clause" period, is worth approximately $32,000,000.00, (a little over 1 Million dollars per annum - interest to be added.) valued and in fact is the property of "Saarahnlee" taken by the Federal Government. As this property take over - being Freehold land, "locked up" was funded by the Federal Government through the Heritage Trust Fund as is public knowledge, is fundamentally a takings and this act is un-Constitutional under Section 51 ss xxxi of the Australian Constitution. (Emphasis in original.) 176 Mr Spencer deposes to a number of conversations and communications between himself and the Rural Assistance Authority between approximately April and August 2007. 177 On 5 July 2007, the Rural Assistance Authority wrote back to Mr Spencer. That correspondence notified Mr Spencer that he was eligible for exit assistance, and did not otherwise address the contents of Mr Spencer's letter, to which I have referred. The letter is relied on by Mr Spencer in these proceedings, and is the subject of competing contentions by the parties, so it is as well to set it out in full: I refer to your application for assistance under the NSW Government's Native Vegetation Assistance Package. The Authority has now finalised its assessment of your financial information and position. The Authority was satisfied that your farming enterprise is not commercially viable and that this position is a result of the inability to clear native vegetation under the Native Vegetation Act 2003. I have, in accordance with the requirements of the Farmer Exit Assistance component of this Package, forwarded advice of the Authority's assessment to the Nature Conservation Trust of NSW. 178 Also on 5 July 2007, as indicated to Mr Spencer, the Rural Assistance Authority wrote to the Nature Conservation Trust forwarding the above letter and referring Mr Spencer and his property for further consideration under the exit assistance program. That letter to the Nature Conservation Trust stated: The Authority has completed the financial eligibility assessment of this application for assistance under the Farmer Exit component of the NSW Government's Native Vegetation Assistance Package. The clients were previously advised by the Murrumbidgee Catchment Management Authority that they had been refused approval to clear native vegetation under the Native Vegetation Act 2003 and that they had been assessed as having satisfied the initial test of eligibility for the Package (the Relative Hardship Test). The Authority has now completed the required assessment of financial eligibility under the Farmer Exit component of the Package. The Authority was satisfied that the farming property is not commercially viable and that this position is a result of the inability to clear native vegetation, under the Native Vegetation Act 2003. Under the assessment process, the Authority therefore has determined that the property is eligible for purchase under the Farmer Exit Assistance measure. I am required to advise you of this outcome. I have also advised Mr Spencer of the outcome of the Authority's assessment, and am enclosing a copy of this advice for your information. 179 In addition, a copy of the Murrumbidgee Catchment Management Area's briefing note to the NSW Department of Environment and Climate Change, also dated 5 July 2007, was in evidence before me. It is convenient to set out the contents of that briefing note in full. Background: In 2006 Mr. Peter Spencer contacted the office of the then Natural Resources Minister, Mr. Ian MacDonald to enquire about possible assistance under the Government's Native Vegetation Socio-Economic Assistance package. Mr. Spencer was advised to liaise directly with the Murrumbidgee CMA so that a property inspection could be arranged. Mr. Spencer contacted the Murrumbidgee CMA in late 2006 and was advised that a clearing application needed to be submitted and that if the clearing was not approved, then he could possibly be eligible for the Governments' Farmer Exit package. At the time Mr. Spencer indicated he was interested in obtaining such a result. Clearing Proposal: A property inspection was carried out at 'Saarahnlee' on February 19, 2007 by officers of the Murrumbidgee CMA. Mr. Spencer advised the officers that he wished to clear the lower portions of native woodland - forest on his property. The area Mr. Spencer wished to clear totalled 1402 hectares. The Vegetation Type for this area is Montane Moist Forest and the dominant vegetation consists of a mix of Eucalyptus dives (Broad-leaf Peppermint) - Eucalyptus rubida (Candlebark) - Eucalyptus pauciflora (Snow Gum) woodland / forest. The vegetation and land capability at four locations within the clearing proposal was assessed / sampled using standard methodology developed for the Property Vegetation Plan (PVP) process. Results: After assessing the collected data Mr. Spencer's proposal to clear 1402 hectares could not be approved as it failed the 'maintain or improve' test, as identified in the Native Vegetation Regulations, 2005. Specifically, the proposal was not approved because: 1. The loss of native vegetation could not be offset. A total of 3433 hectares was available on the property as potential offset but this proved inadequate to offset the original clearing (1402 ha.) 1. The loss of habitat for several threatened species could not be offset. A total of sixteen threatened fauna species were identified as likely to utilise the vegetation proposed for clearing. For all sixteen species the size of offsets was insufficient to offset the original clearing. Mr. Spencer was advised in writing on the 6 March 2007 that his clearing proposal was not approved because it failed to meet the 'maintain or improve' test. Mr. Spencer was also informed that he had passed the initial test of eligibility for the Farmer Exit Assistance package. The process for applying for this package was summarised for him. The Murrumbidgee CMA has not had any contact with Mr. Spencer since sending this letter to him. 180 In and from mid-July 2007, assessments commenced to complete the process by which an offer of exit assistance would be made to Mr Spencer. By late July 2007, Mr Nigel Strutt from the NSW Farmers Exit Assistance Program (a program being operated from within the Nature Conservation Trust of NSW) had arranged to visit Mr Spencer on Saarahnlee to look at the property as a step in the exit assistance process. 181 A key step in that assessment process was the instructing of Mr Sullivan, by the Nature Conservation Trust of NSW, to prepare a valuation of Saarahnlee. According to his report, Mr Sullivan was instructed on 3 August 2007 "to assess the current market value of the Freehold and Leasehold interests in the rural property known as 'Saarahnlee'… for purchase purposes". Again, according to his report Mr Sullivan inspected the property on 14 and 30 August 2007. 182 Mr Sullivan's report was in evidence as part of the materials provided by the State to its expert valuer Mr Connolly. As I have set out above, there was a wholly unnecessary process undertaken during the trial to compel Mr Sullivan to attend to give evidence. 183 Mr Sullivan placed Saarahnlee's market value at $2.17 million, as at 30 August 2007. In evidence, Mr Spencer accepted this represented market value at the time, although he maintained it did not represent its value to him, nor its value in terms of its potential if he had been able to undertake all the projects he had in mind for the property. This valuation was the subject of litigation by Mr Spencer in the Supreme Court of New South Wales, which I deal with elsewhere in these reasons. 184 By a letter dated 6 November 2007 from Mr Strutt, the NSW Nature Conservation Trust made an offer to purchase Saarahnlee at the valuation given by Mr Sullivan: namely, $2.17 million. Mr Spencer was given 60 days to accept or decline the offer. The Trust offered him up to $5,500 reimbursement for legal expenses, relocation and advisory services. Mr Spencer objected to the fact the letter was unsigned, and received a signed version on 22 November 2007. In a letter dated 26 November 2007, Mr Spencer then asked for an extension to the 60-day deadline, until 31 January 2008 (instead of 4 January 2008). In that letter, Mr Spencer also protested about the valuation arrived at by Mr Sullivan, in the following terms: I also object to the brinkmanship adopted by your organization towards the "purchase" of my land. When Mr. Griffith the General Manager of the NSW Rural Assistance Authority wrote to me on 5 July this year, after I had provided evidence of the several valuable strategies substantially planned for the land, he conceded that the farming enterprise was unviable and that the "position is a result of the inability to clear vegetation under Native Vegetation Act 2003". I would like to point out even in the event I had voluntarily agreed to grow vegetation for a crop, as being the use of my land by choice, then I would have had the right to collect and be paid the full value of the Carbon Capture incorporated in that crop. However you and the offer has unconscionably denied me that right in my property which in fact is the end result of these numerous State actions. Your take it or leave it offer states that it is prepared on the basis of what is called the "market value" in clause 7.1 of the valuation supplied with your letter. However this assumes that every prospective buyer knows the land is locked up and unusable by reason of the Native Vegetation laws of New South Wales. This assumptive knowledge is not borne out in the issue of Section 149 Certificate, which accompanies each freehold land sale and where the information provided parallels the Zoning Provisions as set out in the relevant Zone … here 1A Rural. To be specific, and to make my point, on one issue alone, I refer to the very substantial building improvements - capital assets on "Saarahnlee", as they are now targeted and valued at a very substantial discount as apparently they are recognized as being an unnecessary over capitalization, due the impact of the Native Vegetation Legislation. Is this my fault? Hence, even with out all the lost projects, presented to The Rural Assistance Authority, the resulting impacting lost value, of the Guest Cottage - Trout lodge, Homestead and attached Court Yard, previously valued for insurance purposes at replacement value at over 2.23 million dollars, are in fact, worth more then your entire property offer. Mr. Strutt is this fair? I believe, that is a very unfair and an unreasonable position for you to take. It is also inconsistent with the document you provided to me when this process commenced on 19 January and the CMA provided to me on 6 March this year, namely the Farmer Exit Assistance Program Fact Sheet. It clearly states that the independent valuation will be done on the basis that the Native Vegetation Act 2003 does not apply [emphasis provided]. I have therefore proceeded on the misconception generated by the Government. Mr. Strutt, I suggest your current offer is far too low. The broad farming enterprise - "Saarahnlee", incorporating the ecosystem services in the comprehensive farming business plan as presented, is way ahead of its time in conceptualization and as a business, is worth many more times than what you have offered, even at market value, without the burden of the Native Vegetation Act. In the circumstances I would ask you to prepare a fresh valuation and make another offer this time one that is reasonable, based on the value of the comprehensive farming enterprise as a going concern - pre the Native Vegetation Act. (Emphasis in original.) 185 The Nature Conservation Trust replied on 10 December 2007, informing Mr Spencer that any acceptance of its offer must be received by 11 January 2008, and any contract of sale from Mr Spencer's solicitor needed to be received by 18 January 2008. As to Mr Spencer's protests about the valuation itself, Mr Strutt replied: The valuation and subsequent offer has been made in accordance with the guidelines of the program and will not change. These guidelines are not decided by the Trust and must be applied consistently to all applicants. The valuation process in the guidelines was changed by the NSW Minister for the Environment on 23rd of January 2007 from "current market value assuming the NVA 2003 does not apply" to "current market value". You were given the current fact sheet at the time, and were subsequently informed of the change by telephone and were also given a new fact sheet when Rob Dunn and I visited your property on Wednesday 25th of July 2007. The offer made by the Trust remains unchanged in accordance with the guidelines of the program. I look forward to receiving a letter from you regarding your decision. 186 On 3 January 2008, Mr Strutt sent an email reminding Mr Spencer of the deadline, and noted he had tried to call him as well. 187 Apparently still dissatisfied with Mr Sullivan's valuation and the Nature Conservation Trust offer, in early March 2008, Mr Spencer retained Mr Davies to prepare a valuation of Saarahnlee. This was the valuation which was over $9 million, and to which I refer elsewhere in these reasons. 188 In his evidence, Mr Spencer deposed to feeling "cheated" by the Nature Conservation Trust offer of $2.17 million. It appears from the evidence that Mr Spencer simply provided no further responses to the Nature Conservation Trust about their offer, and the offer lapsed. 189 The sequence of events I have set out above is consistent in all material respects with Mr Willis' evidence in this proceeding and with the documentary evidence setting out the process for exit assistance that was laid out in the NSW Vegetation Assistance Package. I propose to set this out in some detail because later in these reasons I reject the respondents' submissions that the evidence does not justify a finding that there was a "taking" of Mr Spencer's bundle of rights in Saarahnlee. That does not, as I find, amount to an acquisition of property for the purposes of s 51(xxxi), but this sequence of events is important nonetheless. 190 Mr Willis deposed in his evidence that landholders were "only eligible to access the Farmer's Exit Assistance Program if their application to clear land was refused". Irrespective of whether there was a formal "application" that is how Mr Spencer's proposal was treated by all officers of the State involved in the process. 191 Also in evidence was one of the "Business Plans" for the Native Vegetation Assistance Package. It was on this document that the Commonwealth relied to make the submission that the funds for the farmers' exit assistance did not come from the Commonwealth, but rather from the NSW Government's "City and Country Environment Restoration Program". That is indeed what the Business Plan states on p 3. There is no evidence about the source of funds for that program. Further, this proposition appears contrary to the findings of Rothman J in the NSW Supreme Court, to which I refer below. 192 The Business Plan contains a number of statements which confirm in my opinion the seriousness which should be attached to an offer being made to Mr Spencer under this program. I note that from Rothman J's reasons in the NSW Supreme Court there does not appear to have been any argument from the State to the effect that Mr Spencer did not make an application to clear land, did not have it refused and therefore in effect there was no foundation for the exit assistance offer. 193 The Business Plan notes that the exit assistance scheme arose out of recommendation 28 of the Native Vegetation Reform Implementation Group (the Sinclair Group) which it describes as follows: 'The Government establish a revolving fund to purchase properties that as a result of the ending of broadscale clearing are no longer commercially viable' and 'provide structural adjustment to landholders who have suffered real financial loss as a direct result of the ending of broadscale clearing'. Broadscale clearing is defined under the Native Vegetation Act 2003 as meaning the clearing of any remnant native vegetation or protected regrowth. (Emphasis in original.) 194 The program was described in the following terms: Farmer Exit Assistance ($12 million) - a revolving fund to assist those landholders whose farm enterprises are no longer commercially viable as a result of the new legislation adjust out of primary production or relocate their farm business. NOTE: the fundamental purpose of this component of the package is to purchase properties that have been rendered unviable as a result of native vegetation reforms, not for conservation value (although significant overlap is expected). … Eligibility for the components of the package is restricted to landholders able to demonstrate hardship resulting from implementation of the native vegetation reforms, as outlined in Section 4 below. … 4 Eligibility for the $37m Native Vegetation Assistance Package The Native Vegetation Assistance Package provides financial assistance to those landholders who suffer adverse impacts as a consequence of native vegetation reforms. Eligibility to the program directly reflects any financial disadvantage as a consequence of being unable to clear land under the NV Act. To be eligible for Native Vegetation Assistance a farmer must: i. have been unable to gain approval to clear native vegetation on an area of their property, assessed by a. the CMA for clearing applications through the PVP Developer, or b. the Department of Environment and Climate Change (DECC) for clearing for private native forestry (where a PNF PVP includes identified exclusion areas). ii. meet the Rural Assistance Authority's criteria for assessing the financial impact as a direct result of being unable to clear the proposed land; and iii. meet any additional criteria specific to the type of assistance for which the farmer is applying. 4.1 NVAP Assessment Criteria 4.1.1 Unable to gain approval to clear To be eligible for access to the Farmer Exit Assistance or Sustainable Farming Grants components of the NVAP, the landholder must be unable to gain approval to clear native vegetation on an area of their property assessed through the PVP Developer assessment process undertaken by the relevant CMA, or the PNF PVP assessment process undertaken by DECC. … 4.1.2 Assessment of financial eligibility To be eligible to access Farmer Exit Assistance, a landholder must demonstrate, to the satisfaction of the NSW Rural Assistance Authority, loss of commercial viability. To demonstrate loss of commercial viability, or real financial loss, the applicant must show that clearing of the area of land proposed was / is required to allow the farm business enterprise to meet the following factors: • the operating costs of the Farm Business; • the living costs of the farm family; • servicing of the Farm Business debts; • future capital requirements for plant and improvements; and • investment in sustainable farming systems. (Emphasis in original.) 195 The document also describes the 60-day offer period, and its withdrawal after that time, all of which were borne out in the way the scheme was applied to Mr Spencer. 196 In Spencer v NSW Minister for Climate Change, Environment and Water [2008] NSWSC 1059, Rothman J made the following findings, which would seem, at least, to bind Mr Spencer and the State. That proceeding was a judicial review application brought by Mr Spencer to challenge Mr Sullivan's valuation incorporated in the exit assistance package offer to him. It was unsuccessful. Having referred to the intergovernmental agreements which are the subject of this proceeding, Rothman J said at [9]: The funds provided by the Commonwealth to New South Wales find their way into a program administered by the Nature Conservation Trust. One of the programs administered by the Nature Conservation Trust is the Farmer Exit Assistance Program. 197 Having recited the history of Mr Spencer's application, based on evidence which seems generally in accordance with the evidence in this proceeding, Rothman J found (at [20]-[24]): Pursuant to the process necessary for the Farmer Exit Assistance Program to be utilised, Mr Spencer applied to the Murrumbidgee Catchment Management Authority as to whether Saarahnlee was a property that ceased to be viable by virtue of the operation of the State Vegetation Acts. The application to the Murrumbidgee Catchment Management Authority applied for exemption from the operation of some or all of the strictures in the 2003 Vegetation Act. The Catchment Management Authority rejected Mr Spencer's proposal to clear parts of his property, for which clearance an exemption was required, but indicated to him that he satisfied the hardship test. This was done on 6 March 2007. On 13 April 2007, Mr Spencer sent to the Rural Assistance Authority, material relating to the Murrumbidgee Catchment Management Authority decisions, which material, Mr Spencer submitted to them, disclosed that Saarahnlee was no longer viable. On 25 May 2007, Mr Spencer and Mr Strutt discussed the Farmer Exit Assistance Program and, according to Mr Spencer, who on this issue I accept, Mr Strutt said that the valuation of the farm would be "on current value". On 5 July 2007, Mr Spencer received advice from the Rural Assistance Authority that Saarahnlee was "no longer commercially viable", as a consequence of which Mr Spencer was eligible for the Farmer Exit Assistance Program. Further discussions occurred between Mr Spencer and Mr Strutt relating to the Program. 198 On the evidence before me, I find that an assessment of Saarahnlee was carried out under the Farmers Exit Assistance Program in a way which accorded with the regular operation of that program. It was a clear precondition to an offer of exit assistance that a farmer was unable to gain approval to clear native vegetation (as I set out at [194] above), and that the farmer demonstrated to the satisfaction of the NSW Rural Assistance Authority "loss of commercial viability". Mr Spencer was assessed as meeting these preconditions and an offer of exit assistance was made in accordance with the program's terms and conditions. In its terms, the offer ascribed the cause of loss of commercial viability to the NSW vegetation clearance laws, as was necessary for the funds to be available. 199 There is no basis to discount or diminish the centrality of these events to Mr Spencer's claims and insofar as the respondents' submissions invited me to do so, I reject them. The approach I take is also consistent with the terms of Rothman J's decision. 200 At this point in the chronology of what occurred in relation to Saarahnlee and vegetation clearance controls, one other category of facts and events should be noted. In or around October 2003, and I infer due to his then financial difficulties with the farm, Mr Spencer borrowed about $1 million from relatives, Mrs and Mr Bamber. The loan was secured by a registered mortgage over all of Saarahnlee except Lot 50. It was the Bambers who eventually forced a mortgagee sale of most of the land comprising Saarahnlee in July 2010. 201 However, in November 2007, when Mr Spencer received the offer from the Nature Conservation Trust, his evidence was that once he had repaid the Bambers and other debts of over $300,000, he would have cleared about less than $700,000. While hindsight always places choices and events in a very different light, given Mr Spencer's evidence of his current somewhat desperate and strained circumstances, his refusal to take up the exit assistance package could be characterised as unfortunate, to say the least. Had I reached the point of needing to calculate damages payable to Mr Spencer in this proceeding (which I do not), his decision to refuse the farmers exit assistance offer in the circumstances then facing him would no doubt have been one of the many examples of causation problems adversely affecting his damages claims. 202 I note that Mr Spencer had commenced this proceeding (on 12 June 2007) before he had been notified (in July 2007) of his eligibility for assistance under the Farmers Exit Assistance Program, and before an offer to purchase was made (in November 2007). I do not consider this aspect of the chronology affects the findings I have made. By that stage, Mr Spencer was well advanced through the exit assistance program process. He had made his claim in April 2007 to the Rural Assistance Authority that his farm was not viable under the 2003 Native Vegetation Act regime and that is, I find, what he genuinely believed. Some months later, the Rural Assistance Authority agreed with him.

REGULATORY HISTORY OF LAND CLEARING IN NEW SOUTH WALES AND THE APPLICABLE LEGISLATIVE REGIME 203 It was a significant aspect of the respondents' case in this proceeding that the clearing of native vegetation on Mr Spencer's land, like all land in New South Wales, was regulated well before the enactment of the Native Vegetation Conservation Act in 1997. These regimes had always been implemented for a variety of environmental and planning purposes, and what occurred after 1997 was no different in nature, although the regimes may have been stricter. 204 The regulatory history of land clearing in New South Wales demonstrated, the respondents submitted, that controls were not always uniform, and varied in their intensity, but did not change so much in 1997 or thereafter as to constitute any acquisition for the purposes of s 51(xxxi): rather the history of the regulation of clearing showed that by the 1997 legislation, the State was exercising progressively more intensive controls over land clearing but not gaining any new or different rights than it already had. The Commonwealth relied by analogy on the situation in ICM [2009] HCA 51; 240 CLR 140, as set out at [84] per French CJ, Gummow and Crennan JJ and [150] per Hayne, Kiefel and Bell JJ. The State submitted that the history of land clearing, which it explored in great detail in its evidence and submissions, might well demonstrate some kind of "taking" by the State (but not an acquisition) although if that was so, the taking occurred (the State contended) well before the 1997 state legislation which the applicant seeks to impugn. 205 Both respondents then submitted that there was not, in any event, any acquisition in a constitutional sense by either the Commonwealth or the State. I deal with those legal submissions in more detail below. In this part of my reasons, I propose to set out the essential characteristics of the legislative regimes in New South Wales concerning land clearing. It is not necessary, in my opinion, to make findings at the level of detail set out in the submissions of the State, although I was much assisted in terms of context and background by the detail in those submissions. 206 I accept the State's submission that the practical and legal operation of the impugned federal and state laws, and the four impugned intergovernmental agreements, should be understood in the full context of the regulation of land clearing in New South Wales, which assists the identification of the nature of the property rights in question.

Regulation prior to State Environmental Planning Policy 46 207 Prior state regulation might be grouped into a number of categories. I accept the State's submissions that forms of state regulation over clearing have been in existence since at least 1972. 208 There were controls intended to advance conservation or environmental interests, and objectives of this nature have continued to dominate the regulation of land clearing as applicable to Saarahnlee. 209 From 1972, through amendments introduced by the Forestry, Soil Conservation and Other Acts (Amendment) Act 1972 (NSW), s 21C of the Soil Conservation Act made it an offence to clear ("ringbark, cut down, fell, poison or otherwise destroy") trees on land that was "protected land", as that term was defined in ss 21A and 21B, except in accordance with an "authority" issued under s 21D of the Soil Conservation Act. In its Preamble, the Soil Conservation Act was described as "[a]n Act to make provision for the conservation of soil resources and for the mitigation of erosion". One of the principal mechanisms used was the concept of "protected land", which included pursuant to s 21B land which in the opinion of the Catchment Areas Protection Board had a slope of more than 18 degrees from horizontal; that is, steeply sloping land. 210 The restrictions extended to privately held land, and through the definition of "owner" in s 3, extended to land held under forms of Crown tenure. As the respondents' submissions noted (and I refer to below in more detail) a large proportion of Saarahnlee was "protected land" within the meaning of the Soil Conservation Act, a fact which Mr Spencer did not dispute. 211 Although it was not suggested these restrictions applied to a great deal of Saarahnlee, ss 22A to 22C of the Rivers and Foreshores Improvement Act 1948 (NSW) prohibited clearing of land within 40 metres of a riverbank. 212 Several different pieces of state legislation sought to protect threatened species found in New South Wales, and the habitat on which they depended. From 1 January 1996 onwards, ss 118A to 118D of the National Parks and Wildlife Act 1974 (NSW) made it an offence to harm or pick any animal or plant that is part of a threatened species, endangered population or endangered ecological community or to damage the habitat of any animal or plant that is part of a threatened species, endangered population or endangered ecological community. Reference could be made in a similar way to the provisions of the Threatened Species Conservation Act 1995 (NSW) and the Endangered Fauna (Interim Protection) Act 1991 (NSW). 213 The State also referred to controls intended to regulate activities on land affecting natural resources such as the Clean Air Act 1961 (NSW), the Clean Waters Act 1970 (NSW), and the Environmental Offences and Penalties Act 1989 (NSW). These controls appear directed at different kinds of activities (waste disposal, fuel burning and the like) and appear less relevant. 214 There were planning restrictions, the most important being the State Environmental Planning Policy 46 - Protection and Management of Native Vegetation (10 August 1995) (SEPP 46) made under the Environmental Planning and Assessment Act 1979 (NSW). SEPP 46 was an important pre-1997 control on the clearing of native vegetation and a significant example relied on by the respondents to make good their submissions about the extensive regulation of land clearing in New South Wales prior to the 1997 state and federal legislation. In its submissions, the State made a general point about the effect of planning regimes, which I accept: [I]t is significant that the effect of both of the impugned State Acts was to impose a requirement that development consent be obtained for certain types of land-clearing, where such consent was regulated by the Environmental Planning and Assessment Act 1979 (EPA Act). That Act, together with the environmental planning instruments made and preserved thereunder, constitutes the State's main planning regime. There were predecessor regimes, going back many decades. For all of that time land in NSW has been subject to actual or potential restrictions on what uses may be made of, and what developments may occur on, land. Those restrictions may be very significant. The economic value of land may, for instance, vary enormously depending on how the land is zoned, or on whether or not a development consent has been granted for a particular type of development. 215 Finally, there were conditions imposed on tenures held over Crown land, designed to subjugate those tenures to land controls imposed by the State. 216 From at least 1972, s 27(1) of the Forestry Act 1916 (NSW) made it an offence to cut, remove or destroy any timber on Crown-timber lands, without a clearing licence or other authority from the Forestry Commission. The need to obtain permission extended to the Crown lessees of the land on which the timber was located. The State submitted and I accept that similar prohibitions were in force under earlier legislation. 217 On and from 1 May 1990, those holding Crown leases or what were called "incomplete purchases" had their tenure made subject to a number of statutory conditions through the Crown Lands (Continued Tenures) Act 1989 (NSW). As I have noted Lots 48 and 50 of Saarahnlee were Crown leases. Lot 47 of Saarahnlee was a "conditional purchase" from the Crown, and was within the definition of an "incomplete purchase" in s 3 of the Crown Lands (Continued Tenures) Act. The statutory conditions introduced by this legislation included the requirement to "comply with the requirements of any law relating to the use or management of the land" (as to incomplete purchases, cl 6(2)(b) of Sch 2; as to Crown leases, cl 2(2)(b) of Sch 6) and not to "do, permit or suffer anything that will materially degrade the land" (as to incomplete purchases see cl 6(3) of Sch 2; as to Crown leases see cl 2(3)(a) of Sch 6). 218 Based on the evidence, the State made the following submissions about the application of these pre-1997 restrictions (outside SEPP 46) to Saarahnlee (footnotes and emphasis omitted): (a) From 17 January 1974, Protected Land in the Burrinjuck Catchment Area has been designated on the "Map of Protected Land" maintained under the SCA. Approximately 3213ha of the total area of 5128ha the Land, or 63% of the total area of the Land, covering around ½ of Lots 47 and 48, parts of Lots 28, 33, 35, 36, 37, 38, 49, 55 of DP750539 and most of Lot 50, was subject to this prohibition on land clearing. (b) From 1972, the whole of Lots 48 and 50 were at all relevant times subject to s.27 of the Forestry Act, such that the then owner of the leases (who was not the applicant) was prohibited from clearing native vegetation without a licence; that the owner would be committing a criminal offence if he/she did so (and indeed would have been liable to pay royalties and/or compensation to the Crown). (c) Lot 47 was subject to a profit a prendre in favour of the Forestry Commission under s.25F of the Forestry Act, for 10 years from 30 May 1974 to 30 May 1984. (d) Particular historical conditions on Crown leases and incomplete purchases were preserved under the [Crown Lands (Continued Tenures) Act]. The "provisions, conditions or covenants recorded in the folio of the Register" included, for each of Lot 47, Lot 48 and Lot 50, special conditions prohibiting the cutting or removing of timber for the purposes of sale, a limited right to take timber for domestic building needs, and an obligation that "the lessee shall carefully preserve all timber within a strip of land at least 1 chain wide along each bank of all defined watercourses … creeks and gullies … and across the lowest part of flats where such gullies discharge water and there are no defined watercourses". Lot 48 and Lot 50 are also subject to clause 7 of Memorandum 7300000D, which provides that "no timber shall be cut or removed from the land for the purposes of sale, except subject to the provisions of the Forestry Act 1916, and Regulations thereunder at the time in force". Thus, cumulatively, until 30 May 1984, a total of approximately 4611ha, or 88% of the Land, was subject to a prohibition or restriction upon clearing. Thereafter, Lot 47 ceased to be "Crown-timber lands" within the meaning of the Forestry Act, but remained expressly subject to the [Crown Lands (Continued Tenures) Act] and to other laws concerning the use and management of land. Those restrictions were in place even before the promulgation of SEPP 46, which warrants separate consideration. 219 The State contended that statutory conditions such as those found in the Crown Lands (Continued Tenures) Act that Crown tenures were subject to "any law relating to the use or management of the land" comprehended the yet to be enacted native vegetation laws such as SEPP 46 and the 1997 state legislation. The State submitted this was a "powerful indicator" that Mr Spencer's proprietary interests in Lots 47, 48 and 50 were "inherently susceptible to variation" under state law, because (it seemed implicit in the State's submissions) these statutory conditions contemplated the ambulatory application of state law to this land. The State relied on Attorney-General (NT) v Chaffey [2007] HCA 34; 231 CLR 651 at [18] and [30], which it submitted dealt with analogous statutory language.

SEPP 46 220 SEPP 46 is the shorthand reference for the State Environmental Planning Policy 46 - Protection and Management of Native Vegetation, a scheme regulating vegetation clearance in New South Wales enacted in August 1995 under Div 2 of Pt 3 of the Environmental Planning and Assessment Act 1979 (NSW). 221 As originally enacted cl 6(1) of SEPP 46 provided: Clearing of native vegetation must not be carried out on land to which this Policy applies except with the development consent of the Director-General of Land and Water Conservation granted with the concurrence of the Director-General of National Parks and Wildlife. 222 Clause 2 of SEPP 46 set out the objectives of the policy: (1) The aim of this policy is to prevent inappropriate native vegetation clearance in New South Wales. This Policy requires the assessment of proposals to clear native vegetation for the purpose of ensuring that native vegetation is protected and managed in the environmental, social and economic interests of the State. (2) The strategy adopted by this Policy to achieve its aim is to allow the clearing of native vegetation to be carried out only with the development consent of the Director-General of the Department of Land and Water Conservation. Such a consent will be subject to the concurrence of the Director-General of National Parks and Wildlife. 223 The term "clearing" was defined in cl 5 in the following way: "Clearing" of native vegetation means directly or indirectly: (a) killing, destroying or burning native vegetation; or (b) removing native vegetation; or (c) severing or lopping branches, limbs, stems or trunks of native vegetation; or (d) substantially damaging native vegetation in any other way, but does not include sustainable grazing. 224 The term "native vegetation" was also defined in cl 5: "Native vegetation" means vegetation that is indigenous to the State, including trees, shrubs, understorey plants and specified native grasslands, but not including seagrasses and other marine vegetation. For the purposes of this definition, indigenous vegetation is that of a species which existed in the State before European settlement. 225 The regime established by the Soil Conservation Act over "protected land" was excluded from the operation of SEPP 46, and regulation under the Soil Conservation Act of areas prone to erosion was thus intended to continue: see cl 3(e). Likewise, land regulated under the Forestry Act was excluded: see cl 3(d). There were a series of further exclusions in cl 11, read with Sch 3, including "minimal clearing" of land up to two hectares per annum, "minimal tree cutting" of up to seven trees per hectare in one year for "on-farm uses", selective and sustainable logging of private native forest and clearing for farm structures. 226 There was no dispute that SEPP 46 applied to Saarahnlee, which is located within the Cooma-Monaro Shire, one of the areas listed in Sch 1 of SEPP 46, as originally enacted. 227 Clause 7 set out the parameters of any grant of development consent. It is worth setting out the entire clause, so that its strictness can be fully appreciated: Such a consent may be granted to allow the clearing of native vegetation from an area of land only if the consent authority is satisfied that: (a) the vegetation is not remnant vegetation in a region which has been extensively cleared; and (b) the area does not have a high biological diversity; and (c) the area does not contain: • an endangered plant species or community; or • habitat for rare and endangered fauna; or • disjunct populations of a native species or a species which is near the limit of its geographic range; or • riparian vegetation; or • vegetation associated with wetlands; and (d) the area does not have connective importance as, or as part of, a corridor of native vegetation (meaning native vegetation forming a connection which allows for the potential passage of species of flora or fauna between two or more other patches of vegetation); and (e) the area is not, and is not part of, land identified as wilderness in a wilderness assessment report prepared by the Director-General of National Parks and Wildlife; and (f) the area does not contain, or drain into, a karst system; and (g) the vegetation is adequately represented in a conservation reserve system; and (h) the area is not, and is not part of, land which is significant as wildlife habitat; and (i) the area is not an "inholding" situated within land reserved or dedicated under the National Parks and Wildlife Act 1974; and (j) the area is not important as a site along a migratory route for wildlife; and (k) the area does not function as an important drought refuge for wildlife; and (l) clearance would not be likely to contribute significantly to any of the following problems: soil erosion; salinisation of soil and water; acidification of soil; land slip; deterioration in quality of surface or ground water; increased flooding. 228 There was some not inconsiderable reaction against the strictness of SEPP 46. By December 1995 SEPP 46 was amended, so that the matters which had, by cl 7, precluded the grant of development consent became mandatory considerations but would not preclude development consent (see cl 7 of the December 1995 amending policy, State Environmental Planning Policy No 46 - Protection and Management of Native Vegetation (Amendment No 1)). A further set of mandatory considerations was added, seemingly to balance some of the environmental factors: namely, the likely social and economic consequences of granting or refusing to grant the development consent for the applicant for the development consent, and for the locality, region and State. 229 The point made by the State in its written submissions, which I accept, is that SEPP 46 applied to the remaining 1,915 hectares of Saarahnlee which were not already protected land under the Soil Conservation Act. In that way, the whole of Saarahnlee was burdened with objectively restrictive state controls over native vegetation clearance, for some time before the enactment of the impugned state and federal legislation, and before the intergovernmental agreements from 1997 onwards.

The significance of earlier controls over Mr Spencer's land 230 The 1997 and 2003 NSW native vegetation clearance laws continued this regulation, and I accept that debates could be had at some length about which form of regulation could be seen as the most restrictive. I do not consider it necessary to reach a concluded view on that, if such a view could be reached in the abstract and outside a specific clearing application, which I doubt. However, the State is obviously correct to submit that the nature of the regulation was not new. The way the State employed the history of vegetation clearance controls can be seen from the following passage in its reply submissions: the State's submission is that it is necessary to look at the bundle of rights actually held at the time of the purported acquisition, and whether that bundle was limited by laws of the kind now impugned. As set out in the State's Opening Submissions, and the State's Closing Submissions, the bundle of rights actually held by the applicant immediately prior to 1998 and 2003 was significantly limited in respect of clearing. By 1995, all of Saarahnlee was subject to clearing restrictions in one or more of the Soil Conservation Act 1938, Crown Lands legislation, the Forestry Act 1916, the National Parks and Wildlife Act 1974, the Endangered Fauna Interim Protection Act 1991, the Threatened Species Conservation Act 1995, and SEPP 46. Indeed the applicant appears to concede that SEPP 46 detrimentally affected his property rights. The consequence is that, as pleaded by the State, the rights were inherently susceptible to regulation of this kind - or to put the matter another way, any acquisition of property rights had occurred at least by 1995. (References omitted.) 231 The State's contention has considerable force, although the nature of the proprietary interest here involved is ownership and possession of land, and to say that this kind of proprietary interest is "inherently susceptible" to regulation in the sense that phrase is used in the authorities on s 51(xxxi) may take the proposition too far. It is accurate, in my opinion, to say that controls which fall short of acquisition have historically and continuously been exercised over Saarahnlee. 232 The Commonwealth puts the contention this way (referring to the observations of Kiefel J in JT International SA v Commonwealth [2012] HCA 43; 250 CLR 1 (Plain Packaging Case) at [363]): The restrictions on the applicants' land identified in para [36A] of the FASOC fall squarely within her Honour's example of matters that will not usually result in an acquisition of land by a governmental authority. That is further supported by the approach of the Queensland Court of Appeal in Bone v Mothershaw (2003) 2 Qd R 600, applying the reasoning in Tasmanian Dam case to a council ordinance in similar terms to the operative provisions of the 1997 and 2003 Acts and concluding (on that basis) that there was no acquisition (per McPherson JA at 613 [26], Williams and Byrne JJA agreeing). There is also a useful parallel to be drawn with the facts of ICM. As submitted above, control over the clearing of native vegetation is a power the State has exercised for some considerable time, under various legislative regimes. Understood in that light, the restrictions effected by the 1997 Act and the 2003 Act of which the applicant complains are simply the more recent steps along a path of exercising progressively greater control over the clearing of vegetation on land within NSW (recognising that that natural resource has importance to the public beyond the private interests of those whose land it grows upon). And it follows that it may also be said (as in ICM) that the State thereby gained no larger or different right to that it already had: see, for example, per French CJ, Gummow and Crennan JJ at [84] and per Hayne, Kiefel and Bell JJ at [150]. 233 That submission should be accepted, insofar as it bears on my findings below that there has been no acquisition of an interest which is proprietary in nature. Both the respondents' submissions on this point diminish the events of July 2007 in a way I do not accept. This means, contrary to the respondents' position, I find there was a "taking" but I agree there was no acquisition.

THE IMPUGNED LEGISLATION AND THE INTERGOVERNMENTAL AGREEMENTS 234 I turn now to describe the two federal laws, the two state laws and the four intergovernmental agreements which Mr Spencer seeks to impugn. In doing so, some attention must also be paid to the international obligations assumed by Australia under the Kyoto Protocol, and steps taken to comply with those obligations.

The Kyoto Protocol 235 Mr Sturgiss gave evidence about the negotiation and conclusion of the Kyoto Protocol, and the consequent steps taken by Australia to implement and comply with its obligations under the Protocol. Aside from matters arising from international law, the following findings are based on his evidence. 236 It is as well to note, and adopt, his description in evidence about key terminology. A "greenhouse gas emission" is a flow of a greenhouse gas into the atmosphere as a result of human activity. A "removal" is a sequestration or absorption of carbon dioxide from the atmosphere as a result of human activity. As is apparent, the international instruments use the term "anthropogenic emissions by sources and removals by sinks" but I did not understand Mr Sturgiss' evidence to indicate that the difference in terminology resulted in any difference in meaning, at least, not at the level of generality with which these issues arise in the context of the present proceeding. 237 The Kyoto Protocol was negotiated in December 1997 as a protocol to the earlier United Nations Framework Convention on Climate Change of 9 May 1992 (UNFCCC). Australia signed the UNFCCC on 4 June 1992 and ratified it on 30 December 1992. It entered into force for Australia, in accordance with Art 23 of the UNFCCC, on 21 March 1994. 238 The UNFCCC was one of the three "Rio Conventions" adopted at the United Nations Conference on Environment and Development, or Earth Summit, in Rio de Janeiro in 1992, the other two being the United Nations Convention on Biological Diversity and the United Nations Convention to Combat Desertification. Despite recognising the scientific uncertainties surrounding climate change, parties to the UNFCCC, acknowledging the larger contribution of developed countries to greenhouse gas emissions and recognising the need for the widest possible international cooperation to respond to the challenges posed by climate change, committed to the following objective (at Art 2): The ultimate objective of this Convention and any related legal instruments that the Conference of the Parties may adopt is to achieve, in accordance with the relevant provisions of the Convention, stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner. 239 Article 4(1)(a) committed parties to developing, updating and publishing "national inventories of anthropogenic emissions by sources and removals by sinks of all greenhouse gases not controlled by the Montreal Protocol, using comparable methodologies to be agreed upon by the Conference of the Parties". Commitments to reporting were also established by Art 12. 240 Binding commitments to limit greenhouse emissions, however, came through the Kyoto Protocol, developed in accordance with Art 17 of the UNFCCC. Although adopted in Japan on 11 December 1997, the Kyoto Protocol did not enter into force until 16 February 2005. The first "commitment period" under the Protocol (relating to emissions) started in 2008 and ended in 2012. Australia ratified the Protocol in December 2007, and in accordance with Art 25(3) it came into force for Australia three months after ratification. 241 Articles 3(1) and (2) of the Kyoto Protocol provide: 1. The Parties included in Annex I shall, individually or jointly, ensure that their aggregate anthropogenic carbon dioxide equivalent emissions of the greenhouse gases listed in Annex A do not exceed their assigned amounts, calculated pursuant to their quantified emission limitation and reduction commitments inscribed in Annex B and in accordance with the provisions of this Article, with a view to reducing their overall emissions of such gases by at least 5 per cent below 1990 levels in the commitment period 2008 to 2012. 2. Each Party included in Annex I shall, by 2005, have made demonstrable progress in achieving its commitments under this Protocol. 242 Australia's emissions commitment in Annex B was to limit emissions to 108% of 1990 levels for the period 2008 to 2012. By Arts 5 and 7 of the Protocol, Australia committed to establishing a system for national reporting of greenhouse gas emissions and removals, and reporting its progress towards its targets to the Conference of the Parties to the Kyoto Protocol, including (through a process set out in Art 8) review by an international expert panel. 243 As Mr Sturgiss deposed, the practical effect of this was that the Australian Government submitted each year an inventory of greenhouse gas emissions and removals of carbon dioxide from the atmosphere for Australia, to demonstrate compliance with the commitments it made under the Protocol. Australia submitted its first report under the Kyoto Protocol in 2008 and its last in 2014. The key gases reported include carbon dioxide, methane, nitrous oxide, perfluorocarbons, hydrofluorocarbons and sulphur hexafluoride. 244 Mr Sturgiss explained that the estimates recorded in the inventory rarely rely on direct measurement of emissions because of the cost and sometimes uncertainty attached to the estimates that might be obtained in that way. Rather, most estimates are prepared on the basis of models of emissions processes that link observable activity data with an estimate of emissions. The simplest example relates to the estimation of emissions from fuel combustion, where estimates are derived by obtaining data on the amount of fuel combusted nationally and an estimate of the average carbon content of the fuel and multiplying the two together. He explained that most of the models used in the inventory are more complex than that, including what is called the "FullCAM model", which is used to estimate emissions in the land sector. 245 The FullCAM model, which is publicly available on the Department of the Environment's website, is run through custom-built IT software. In the case of deforestation, it is used to combine data on the changes in the forest extent across Australia. That data is obtained from Landsat satellite imagery with localised climate and soil data. FullCAM then estimates the amount of emissions that would arise following a deforestation event (such as the clearance of native vegetation). Mr Sturgiss did concede in his expert report that FullCAM could be used to measure stored carbon, which is what Dr Evans sought to use it to do, in valuing the cost of the offsetting of emissions obtained by, on this hypothesis, the prevention of any clearing of native vegetation on Mr Spencer's land. However, as Mr Sturgiss stated, FullCAM's principal purpose (relevantly to the issues in this proceeding) is to estimate emissions from land clearing as those emissions occur. It does so most reliably at a national level and less reliably, according to Mr Sturgiss, at a local or regional level. 246 Given that what is measured are clearing events as they occur, any clearing event prior to 2008 would not, according to Mr Sturgiss, have been counted in Australia's inventory as reported to the Kyoto Protocol Conference of Parties. That conclusion flows, I accept, from Mr Sturgiss' evidence. The Commonwealth sought to make something of that conclusion, given the events around the assessment of proposed clearing of Mr Spencer's land that occurred in 2007. 247 I do not accept the Commonwealth's submission, based on Mr Sturgiss' evidence, that there is no connection in fact between the impact of the vegetation clearance laws on Australia's Kyoto Protocol targets, and the restrictions as they affected Mr Spencer and his ability to clear his land because emissions were counted only on and from March 2008. The whole point of Mr Spencer's claim is that he was prevented from clearing his land - not only in 2007, but on an ongoing basis. Absent the stricter vegetation clearance laws, he claims, he could have pursued his projects and development plans throughout the later 2000s and onwards. Emissions from his clearing of land would then have been counted in Australia's inventory and would have contributed to an increase in emissions reported. At this level of generality it seems to me that contention is correct, and the Commonwealth has previously accepted as much, and did so in final submissions at [98]-[99], where it stated: It may be accepted that if the trees on the applicant's land remained in place during the commitment period, there would have been no "deforestation" event contributing to further emissions (greenhouse gases released from decaying trees). It may also be accepted that if widespread land clearing constituting "deforestation" had taken place, the resulting emissions of greenhouse gases produced by decaying trees during 2008-2012 would have been included in Australia's aggregate amount of greenhouse gas emissions (see Articles 3(3) and 3(1)). Preventing or reducing that possible source of emissions during 2008-2012 therefore assisted in meeting Australia's obligations under the Kyoto Protocol. If such emissions were reduced below the level of emissions of greenhouse gases produced by land clearing constituting deforestation in the base year (1990), then that source of emissions will be counted as a net reduction for the purposes of determining whether Australia met its obligations under Article 3(1). The Commonwealth further accepts that, if Australia had been unable to include any net reduction resulting from prevention of deforestation, other measures would have been necessary if the Commonwealth was to meet its commitments under the Kyoto Protocol. 248 As the Commonwealth's submissions then observe, acceptance of those factual realities does not engage s 51(xxxi). And there remain difficulties of chronology in terms of the detail of Mr Spencer's allegations, which I consider further below. Nevertheless, the factual realities at the broad level expressed above were clearly part of the impetus for the intergovernmental agreements and the increase in regulation over the clearing of native vegetation, in New South Wales and in other parts of Australia.

The Commonwealth legislation 249 The objects of the Natural Resources Management (Financial Assistance) Act 1992, as set out in s 3, are expressed in the following way: (2) This Act's primary object is to facilitate the development and implementation of integrated approaches to natural resources management in Australia that are: (a) for the purpose of achieving efficient, sustainable and equitable management of natural resources in Australia; and (b) consistent with the principles of ecologically sustainable development. (3) This Act also has the following objects: (a) to promote community, industry and governmental partnership in the management of natural resources in Australia; (b) to assist in establishing institutional arrangements to develop and implement policies, programs and practices that will encourage sustainable use of natural resources in Australia; (c) to assist in enhancing the long term productivity of natural resources in Australia; (d) to assist in developing approaches to help resolve conflicts over access to natural resources in Australia. 250 "Natural resources management" is defined in s 4 to mean: (a) any activity relating to the management of the use, development or conservation of one or more of the following natural resources: (i) soil; (ii) water; (iii) vegetation; or (b) any activity relating to the management of the use, development or conservation of any other natural resources for the purposes of an activity mentioned in paragraph (a). 251 Section 5 of the Act authorises agreements between the Commonwealth and a State on financial assistance for projects either approved by the responsible Minister under the Natural Resources Management (Financial Assistance) Act or specified in an agreement entered into pursuant to s 5. 252 The terms of the 1997 NHT Agreement suggest that s 5 is at least one source of power for the project- or activity-based financial agreements it contemplates will be concluded. I say that because in Attachment B to the 1997 NHT Agreement there is a pro forma "Financial Agreement" which expressly refers to s 5 of the Natural Resources Management (Financial Assistance) Act as well as s 19 of the Natural Heritage Trust Act as authorising provisions. The 2003 NHT Agreement is expressed (in cl M of its Preamble) to be made pursuant to both s 19(2) of the Natural Heritage Trust Act and s 5 of the Natural Resources Management (Financial Assistance) Act. 253 As the more detailed of the two federal laws, the Natural Heritage Trust Act 1997 appears more central to the conclusion of the 1997 NHT Agreement, in particular. 254 As s 3 of the Natural Heritage Trust Act outlines, the fund through which the Natural Heritage Trust operates - called the "Natural Heritage Trust of Australia Account" - was in large part sourced from the partial sale of Telstra. Section 3 describes the main objective of the establishment of the Account as to "conserve, repair and replenish Australia's natural capital infrastructure". The somewhat unusual phrase - "natural capital infrastructure" - is not a defined term, but appears from the extrinsic material to refer to the value inherent in Australia's natural environment. Section 3 also lists the environment, sustainable agriculture and natural resources management to be the three identified targets for expenditure from the Account. 255 The Account was to be administered by the Natural Heritage Ministerial Board, established by s 40 of the Natural Heritage Trust Act and consisting of the responsible Minister and the Agriculture Minister. The decision, amongst other things, about spending amounts standing to the credit of the Account is to be made by these two Ministers: see s 40(3). A body called the Natural Heritage Trust Advisory Committee, established by s 30 of the Natural Heritage Trust Act, provides advice to the Ministers, including advice about the effectiveness of agreements entered into pursuant to s 19(2) of the Natural Heritage Trust Act: s 31(b). 256 Section 8 of the Natural Heritage Trust Act specifies a number of matters as the "purposes" of the Account. The first specified purpose is the "National Vegetation Initiative". Section 10 then sets out the primary objective of the National Vegetation Initiative: For the purposes of this Act, the primary objective of the National Vegetation Initiative is to reverse the long-term decline in the extent and quality of Australia's native vegetation cover by: (a) conserving remnant native vegetation; and (b) conserving Australia's biodiversity; and (c) restoring, by means of revegetation, the environmental values and productive capacity of Australia's degraded land and water. 257 Section 19 applies if an amount is to be debited from the Account for the purposes of making a grant of financial assistance to a State: s 19(1). The terms and conditions on which that financial assistance is granted are to be set out in a written agreement between the Commonwealth and the State: s 19(2). By subs (3), the agreement is to be entered into by the respective Ministers on behalf of the Commonwealth and the State. It is of some importance to the respondents' arguments that s 19 does not, in and of itself, impose any terms and conditions on grants under the Natural Heritage Trust Act. I return to this issue below, in the context of s 51(xxxi) of the Constitution.

The first intergovernmental agreement: the 1997 NHT Agreement 258 The 1997 NHT Agreement, entered into on 31 October 1997, described the Natural Heritage Trust as a "major capital initiative aimed at conserving and managing Australia's biodiversity, land, water, vegetation and sea on an ecologically sustainable basis". It describes the 1997 NHT Agreement as "set[ting] out the roles and responsibilities of the Commonwealth and New South Wales for the delivery of the objectives of the Natural Heritage Trust and any associated programs". There were various figures given in the evidence about the amount allocated to the Natural Heritage Trust - the Wentworth Group report at one point indicated it was $2.5 billion. However, the explanatory memorandum to the Natural Heritage Trust Act identifies a $1 billion allocation. Whatever the figure, it was considerable. 259 The section of the Agreement headed "Background" notes, in suitably aspirational language, that the parties: (a) recognise the need for urgent action to enhance and improve the condition and management of Australia's natural heritage; (b) recognise that the Natural Heritage Trust provides a basis for further cooperative and integrated approaches to dealing with Australia's environmental problems; … (d) note that the Commonwealth's aim for the Natural Heritage Trust is to accelerate activities in the national interest directed towards achieving the conservation, sustainable use and repair of Australia's natural environment; (e) note that the Commonwealth's objectives for the Natural Heritage Trust are to: (i) provide a framework for strategic capital investment, to stimulate additional investment in the natural environment; (ii) achieve complementary environmental protection, (including biodiversity conservation), sustainable agriculture and natural resources management outcomes consistent with agreed national strategies; and (iii) provide a framework for cooperative partnerships between communities, industry and all levels of government. … (g) agree that this Agreement establishes a framework within which the parties will work cooperatively towards common and complementary environmental protection, (including biodiversity conservation), sustainable agriculture and natural resources management outcomes, acknowledging that these outcomes can best be achieved through strategic planning, streamlined administration and integrated implementation. 260 The scope of the Agreement is relevantly expressed, in cll 4.1 and 4.2, to be: 4.1 This Agreement establishes a framework under which the parties will work cooperatively for the purposes of section 19 of the Natural Heritage Trust of Australia Act 1997. 4.2 This Agreement applies to those Reserve funds provided to the State for programs set out in the Natural Heritage Trust of Australia Act 1997, and any additional State or Commonwealth programs which are included from time to time in Attachments to this Agreement, as agreed by the parties. 261 Particular programs are to be conducted and funded under arrangements set out in the Attachments to the 1997 NHT Agreement: see cl 5. 262 In cl 6.2 the roles of the Commonwealth under the Agreement are set out. Clause 6.2(d) describes one of its roles in the following terms: establish priorities, fund programs and approve expenditure for the Natural Heritage Trust. 263 Relevantly, the roles of the State are expressed to include (in cl 6.3): (a) develop and implement national and State program objectives, priorities and standards and desired outcomes for the Natural Heritage Trust in consultation with the Commonwealth; … (c) coordinate State programs and ensure the efficient and effective delivery of projects funded through the Natural Heritage Trust programs and other activities covered by this Agreement; (d) give appropriate regard to the objectives of the Natural Heritage Trust in the management of State owned lands, waters and natural resources; … 264 Financial arrangements are dealt with by cl 7. Clause 7.2 relevantly provides: To ensure the maximum flexibility in the administration of the Natural Heritage Trust, and to take fully into account different circumstances across jurisdictions, financial arrangements will be determined in accordance with the following principles: (a) expenditure of Commonwealth funds under this Agreement is not contingent on a matching contribution from the States. The parties agree to use the Natural Heritage Trust to enhance the total government and community effort applied to the pursuit of its objectives. The Commonwealth allocation of funds will, in part, be influenced by the contribution of effort by the State and/or the alignment of programs, policies and regulations with Natural Heritage Trust objectives; (b) the provision of funding by the Commonwealth from the Natural Heritage Trust is subject to the agreed objectives, outcomes and milestones described in Attachment A to this Agreement being progressively met; (c) the Commonwealth and the States will agree which types of costs are included or excluded in identifying the level of effort applied to Natural Heritage Trust programs; … (Emphasis added.) 265 Attachment A lists 11 programs which are the subject matter of the Agreement. The first, and relevant program, is "Bushcare: The National Vegetation Initiative". Attachment A provides the details for each of the 11 programs, including Bushcare. 266 The national goal of the Bushcare program is expressed in Attachment A to be "[t]o reverse the long-term decline in the quality and extent of Australia's native vegetation cover". That goal is to be achieved, the Agreement records, by, amongst other objectives, conservation of "remnant native vegetation". The primary outcomes of the Bushcare program are expressed as follows (in cl 3.1): The primary outcomes of Bushcare relate to on-ground increases in the quality and extent of native vegetation and associated improvements to management of biodiversity and land and water quality (landscape outcomes). These require changes in the attitudes and action of people, and improved decision-making and institutional frameworks (including information, planning, incentives and regulation). 267 The reference in this paragraph to "improved decision-making and institutional frameworks (including information, planning, incentives and regulation)" is the first of two references to the method of implementation chosen by the State which is in issue here - namely, changes to state regulation of native vegetation clearance. The second, and more specific reference, appears in cl 4.3(a), which I set out below. 268 Under the heading "Environmental Outcomes", the description of the Bushcare program includes the two relevant specified outcomes (at cl 3.2): (c) Effective measures in place to retain and manage native vegetation, including controls on clearing. (d) Avoid or limit any further broad-scale clearance of native vegetation consistent with ecologically sustainable management and bioregional planning, to those instances in which regional biological diversity objectives are not compromised. 269 The steps to be taken by the State under the Bushcare program are more specifically expressed. Clauses 4.1 and 4.2 of the Bushcare Program in Attachment A relevantly provide: 4.1 New South Wales will adopt a state-wide "whole of government" approach to the conservation and sustainable management of native vegetation in the social, economic and environmental interests of the State. There will be a shift from the current situation where there are a range of different existing permit and licensing procedures, to a situation whereby clearing is allowed without a permit if it conforms to a Regional Vegetation Management Plan which has been prepared by stakeholders and approved by the Government. These Plans will be specific to regions, but underpinned by state-wide thresholds, consistent with the approach outlined in Objective 1.2 of the National Strategy for the Conservation of Australia's Biological Diversity and section 4.2 below. 4.2 Consistent with relevant legislation and strategies including the national strategies for ecologically sustainable development and biological diversity, New South Wales will: … (b) protect remnant native vegetation of high conservation value; … (e) prevent inappropriate native vegetation clearance. 270 To achieve the aims in cl 4.2 the State agreed, as set out in cl 4.3: Measures to be undertaken to achieve the aims of 4.2 include: (a) enactment of native vegetation conservation legislation which will repeal/rationalise existing native vegetation controls and provide for a coordinated State-wide approach; (b) promotion of regional vegetation management plans with a biogeographic basis which have legislation status; (c) consultation with the legislative authority regarding threatened species, populations or ecological communities or their habitats; (d) ongoing state-wide monitoring program using satellite technology and supplemented by strategic on-ground, assessments which will provide information for monitoring and compliance; (e) encouragement of a whole property planning approach where native vegetation management is integrated with all relevant aspects of property management; (f) consideration of property agreements (voluntary) with covenants to qualify landholders for incentive schemes; (g) assessment and consent for clearing under native vegetation legislation consistent with that proposed in the Integrated Development Assessment system; and (h) promotion of codes of practice to undertake clearing for particular land uses which specify environmental, social and economic criteria consistent with the aims and principles of State native vegetation legislation. (Emphasis added.) 271 The significance of the changes intended to be achieved under the Bushcare program can be seen from some of the (rather absolute) performance indicators for environmental outcomes listed in cl 5.1 of the Bushcare program: (a) The rate of native vegetation establishment in Australia exceeds the rate of vegetation clearance. (b) Identification of endangered and other threatened ecological communities in regions which may be subject to clearing. (c) No clearing of endangered ecological communities. (d) No activities that adversely affect the conservation threat category of ecological communities. … (g) Annual increases in the area of native vegetation under conservation management and in land subject to conservation covenants. 272 The "lead agency" was expressed to be the NSW Department of Land and Water Conservation (cl 8). The program was to be delivered in accordance with the "Natural Heritage Trust Guidelines" (cl 6.1). 273 Those Guidelines do not appear to be in evidence. 274 I note there is nothing in the performance indicators for the outcomes expressed to relate to "environment", "integration and institutions", nor "people" which refers to an adjustment package, or buyout program, for farmers affected by the increased regulation of native vegetation clearance. Nor do there appear to be any references elsewhere in the program, or in Attachment A, or in the 1997 NHT Agreement itself, to this as an outcome or aspect of the Bushcare program, on which Commonwealth funding was contingent. 275 I note also, as the State submitted, that there is nothing in the Bushcare initiative - in particular, in the identified Environmental Outcomes - which is expressed to relate to climate change, or greenhouse gas emissions, as an outcome on which Commonwealth funding was contingent.

The two Salinity Agreements 276 In 2000 and in 2002 the Commonwealth and New South Wales concluded intergovernmental agreements designed to address the rise in salinity levels. The 2000 Salinity Agreement was concluded between the Commonwealth and all States and Territories, and the 2002 Salinity Agreement was the bilateral agreement with New South Wales contemplated by cl 31 of the 2000 Salinity Agreement. 277 The 2000 Salinity Agreement is intended to provide a framework for the improvement of salinity issues across Australia, together with improvement of water quality more generally. The purposes are expressed in cl 5: The purpose of this Agreement is to establish the arrangements between governments, in accordance with the National Action Plan on Salinity and Water Quality, that are necessary to motivate and enable regional communities to use coordinated and targeted action to: i) prevent, stabilise and reverse trends in salinity, particularly dryland salinity, affecting the sustainability of production, conservation of biological diversity and the viability of our infrastructure; and ii) improve water quality and secure reliable allocations for human uses, industry and the environment. 278 The Commonwealth agreed to contribute $700 million over seven years towards this purpose, to be matched by state and territory contributions (see cl 37). "Priority regions" were identified in cl 10 of the Agreement, and the Lachlan-Murrumbidgee area appears from the evidence to include Saarahnlee. 279 The parties agreed (at cl 25) on the need for an improved policy framework around land use, so as to "motivate best practice in land and water resource management". To that end, the parties also agreed in cl 27: States and Territories agree to institute controls on land clearing by June 2002 or as otherwise agreed in Bilateral Agreements, which at minimum prohibit land clearing in the priority catchments/regions where it would lead to unacceptable land or water degradation. For the purpose of this clause 'unacceptable land and water degradation' will be defined in conjunction with the development of the interim standards to be developed under clause 20. 280 Unlike the 1997 NHT Agreement, the 2000 Salinity Agreement did contemplate payments by way of compensation. Clause 47 provided: The Parties agree that compensation to assist adjustment where property rights are lost will be addressed in developing catchment/regional plans noting that, while such compensation is the responsibility of the States and Territories, the Commonwealth is prepared to consider making an additional contribution, separate from the $700 million mentioned above. 281 I note there was a similar compensation clause in cl 21 of the 2002 Salinity Agreement. These clauses recognise the potential level of impact on landholders which could arise from reforms to the management of salinity in rural areas. Although no such clauses appear in either of the 1997 or 2003 NHT Agreements, as the facts of this case show, at the state level there was a detailed structural adjustment package available for affected landholders. 282 The bilateral 2002 Salinity Agreement implemented more detailed initiatives for New South Wales. The State and the Commonwealth each committed $198 million over the life of the 2002 Salinity Agreement: cl 5.1. In cll 4.12 and 4.14, the State and the Commonwealth recognised the continuing effect of the State's Native Vegetation Conservation Act 1997: 4.12 The Parties recognise that the State has in place a legislative and regulatory framework under the Native Vegetation Conservation Act 1997 that meets the requirements of Clause 27 of the IGA. The Parties recognise the State's commitment to implement this framework thereby prohibiting the clearance of the native vegetation where this would lead to unacceptable land and water degradation. Specifically the Act: (a) controls the clearance of native vegetation; (b) provides an integrated and adaptive approach to vegetation management enabling new and emerging information to be taken into account; (c) provides a monitoring, extension and enforcement program to promote the significance of native vegetation and prevent its inappropriate clearance; and (d) promotes the multiple benefits of revegetation for biodiversity, salinity and water quality. 4.14 The Parties recognise that the regulatory and planning framework, established by the Native Vegetation Conservation Act 1997 forms an appropriate mechanism for assessing applications to clear land in New South Wales. Under this framework: (a) the regulation of native vegetation clearing operates through an application, assessment and approval process which takes into account the regional context; (b) the regulation of native vegetation clearance and broader management of native vegetation within a regional context also occurs through the application of Regional Vegetation Management Plans; (c) the clearing application and assessment process operates whether or not a Regional Vegetation Management Plan is in force; (d) assessment of applications is based on the best available information, including accurate updated mapping of all land clearing, and considers potential adverse impacts of clearing, including salinity and other types of land and water degradation; and (e) the guidelines and criteria by which clearing applications are assessed are public documents. 283 The outcomes of community consultations designed to address concerns about the impact of the clearing restrictions (criticised, I might observe, by Mr Spencer during the course of this proceeding) were recognised and incorporated into the 2002 Salinity Agreement by cl 4.18: The Commonwealth notes that the State has endorsed, and agreed to implement, the agreed outcomes of a Community Reference Panel review of vegetation clearance exemption categories under the Native Vegetation Conservation Act 1997. The State agrees to implement the recommendations of the review by June 2002. The State will also continue to consult with the Commonwealth prior to finalising threshold limits for clearing and conservation of native vegetation. 284 There is nothing else of particular relevance to Mr Spencer's claims in the 2000 and 2002 Salinity Agreements.

The 2003 NHT Agreement 285 This agreement was made on 14 August 2003 between the Commonwealth and the State, for the purpose of allocating the monies the Commonwealth agreed to provide through the Natural Heritage Trust, and doing so over four programs: Landcare, Bushcare, Rivercare and Coastcare. Bushcare was to receive the largest proportion of funding: see cl 7.2. The 2003 NHT Agreement was expressed to be made pursuant to s 19(2) of the Natural Heritage Trust Act and s 5 of the Natural Resources Management (Financial Assistance) Act. It builds on the 1997 NHT Agreement, and on the two Salinity Agreements. 286 The Commonwealth's proposed expenditure on the programs was set out in cl 2.6: The Commonwealth proposes to allocate $65.2 million to New South Wales comprising $64.13 million for regional investments from the Trust over the financial years 2002-03, 2003-04 and 2004-05 and $1.072 million for State-level and within State investments for the 2002-03 financial year. The Commonwealth will advise New South Wales of investments for remaining financial years 2005-06 and 2006-07 in advance of those years. There will be access to an Australia wide competitive regional component for the implementation of the Trust extension. 287 The State's freedom to pursue the policy developments agreed with the Commonwealth through its own legislative framework was expressly recognised in cl 4.1: The Parties acknowledge that the State is significantly advanced in land, water and biodiversity reforms, and has natural resource management and biodiversity conservation priorities and strategies that are consistent with the overall national policy approach outlined in the Trust. Implementation of this Agreement will occur within the existing framework of State legislation, policies and strategies. The Parties recognise that the State framework, key elements of which are set out in Attachment 6, will be refined and updated from time to time by the New South Wales Government and Parliament. Nothing in this Agreement purports to inhibit or affect the capacity of the State to amend existing legislation or introduce new legislation. 288 The strength of the targets to which the State committed can be seen from the terms of the 2003 NHT Agreement relating to vegetation management and biodiversity conservation: 4.4 New South Wales is committed to the conservation, rehabilitation and protection of significant native vegetation and ecological communities against land clearance and resource degradation. 4.5 New South Wales is committed to improved quality and quantity of native vegetation, as well as protection of wildlife habitats and threatened species, populations and ecological communities on private land. 4.6 New South Wales agrees to pursue measures, consistent with the National Objectives and Targets for Biodiversity Conservation 2001-2005: (a) to prevent clearance of ecological communities with an extent below 30 per cent of that present pre-1750; (b) to assess native vegetation condition; and (c) to contribute to reducing the national net rate of land clearance to zero. The Parties will review progress of the implementation of measures arising from the above periodically, but no later than June 2004. 4.7 The Parties recognise the need to accelerate the development of an integrated native vegetation information system that will improve the ability of government agencies, catchment boards, landholders, and the community to make informed vegetation management decisions. 4.8 The Parties agree that investment continues to be accorded a high priority to ensure that the New South Wales Vegetation Information System integrates new and existing native vegetation information from all New South Wales agencies, and is consistent with the standards for the development of the National Vegetation Information System. New South Wales will ensure that the information is available to the community over the Internet. 289 The 2003 NHT Agreement looks to the funding of three kinds of activities, as set out in cl 5.2: Commonwealth activities; Commonwealth and State multilateral activities; and State-level and within-State activities. 290 The delivery of funding was agreed to be managed in the following way (see cl 6.2): The delivery mechanism for regional investments for the Natural Heritage Trust will follow, as far as practical, the model developed for the National Action Plan for Salinity and Water Quality. Under this model, investment is made on the basis of accredited, integrated Catchment Blueprints and investment strategies developed by the Catchment Management Boards. 291 Clause 6 generally sets out in some detail the way funding arrangements are to operate as between the State and the Commonwealth. None of that detail is relevant to Mr Spencer's claims. 292 Attachment 1 to the 2003 NHT Agreement sets out the Natural Heritage Trust programs. In the description of the Bushcare program, the parties agree to pursue the following specific outcomes: • development and implementation of recovery plans and threat abatement plans for nationally listed terrestrial threatened species and ecological communities; • identification and conservation of terrestrial biodiversity hotspots; • implementation of effective measures to control the clearing of native vegetation, specifically including [sic]; • prevention of clearing of endangered and vulnerable vegetation communities and critical habitat for threatened species; • limitation of broadscale clearing to those instances where regional biodiversity objectives are not compromised; • a substantial increase in the area and quality of the national reserve system; • enhanced engagement with indigenous communities, leading to an expansion of the Indigenous Protected Area network; • integration of biodiversity conservation as part of the core business of regional/catchment organisations; • development and application of appropriate economic and market-based measures to support the conservation of terrestrial native biodiversity; • improved protection and management of World Heritage properties; • conservation and enhancement of remnant native vegetation; • more sustainable management of rangeland ecosystems through measures including identification and protection of areas of high conservation significance, improved fire management and implementation of total grazing management practices to conserve biodiversity; • increased revegetation, integrating multiple objectives including biodiversity conservation, salinity mitigation, greenhouse gas abatement, improved land stability and enhanced water quality; • reduction in the impact on terrestrial biodiversity of feral animals and weeds, focussing on weeds of national significance and "sleeper" weeds; • improved quarantine controls and enhanced risk assessment procedures to eliminate the introduction of new live organisms harmful to native biodiversity; • the commitment, skill and knowledge of land managers to manage terrestrial native biodiversity sustainably; and • understanding and appreciation by communities of the role of terrestrial native biodiversity in Australia's rural and urban landscapes. 293 It can be seen that limits on clearing through vegetation clearance controls are but one of a long list of environmental outcomes the parties commit to pursue. 294 Attachment 4 sets out the standard terms and conditions for Commonwealth funding. There is nothing in this attachment relevant to Mr Spencer's claims. 295 Attachment 6 sets out the legislative and planning framework for land and water management in New South Wales. There is a section in Attachment 6 dealing with Native Vegetation Management: • Management of native vegetation in New South Wales is provided principally through the Native Vegetation Conservation Act 1997. The operation of this Act is linked to a number of other pieces of legislation, including the Environmental Planning and Assessment Act 1979. • The Native Vegetation Conservation Act 1997 provides for the management of native vegetation on a regional basis and encourages native vegetation management in the social, economic and environmental interests of the State. • Important regulatory functions include the assessment of clearing applications, monitoring of compliance with conditions that might be imposed on consents issued, and investigation and prosecution of alleged breaches of legislation. • The Native Vegetation Conservation Act 1997 provides that Regional Vegetation Management Plans (RVMPs) have the status of planning instruments under the Environmental Planning and Assessment Act 1979. Consequently, the plans may contain regulatory provisions relating to native vegetation clearing that control development and land use. Applications to clear native vegetation are applications for development consent under Part IV of the EP&A Act, but the Minister for Infrastructure, Planning and Natural Resources is the consent authority. A RVMP may: • contain provisions specifying whether or not development consent is required to clear native vegetation or regional protected land; • contain provisions relating to the manner in which native vegetation or regional protected land may be cleared without development consent; • adopt or incorporate the provisions of a native vegetation code of practice as part of the plan; • identify certain land to which the plan applies as regional protected land; and • include strategies that are designed to achieve the objects of this Act. • When the statewide bioregional goals and targets are finalised, RVMPs will determine the time frame for meeting the goals and targets, relevant development controls and priorities for revegetation and retention. • The Department of Infrastructure, Planning and Natural Resources has developed a compliance strategy framework in relation to vegetation management under the Native Vegetation Conservation Act 1997. This includes the progressive development of policies, plans, manuals and guidelines, training of staff .and management systems for compliance. • Revised guidelines for assessing applications for clearing native vegetation will incorporate recent policies relating to no net loss, the NSW Salinity Strategy and regional vegetation planning. 296 In neither of the two Salinity Agreements are there any references to climate change, or greenhouse gas emissions, nor measures designed to address those issues specifically. In contrast, in the 2003 NHT Agreement, one of the expressly identified outcomes is "greenhouse gas abatement". Given the subject matter of the Bushcare initiative, that is hardly surprising.

The state legislation 297 In August 1996, the NSW Vegetation Forum, which was a body set up by the NSW Government with representatives of various governmental and non-governmental agencies and stakeholders, delivered a report to the NSW Government about the future regulation and management of native vegetation in New South Wales. I note this predates the enactment of the federal Natural Resources Management (Financial Assistance) Act, however substantially similar issues regarding the importance of native vegetation conservation and revegetation were canvassed in the extrinsic material in June 1996 regarding the federal Natural Heritage Trust of Australia Bill 1996 (Cth). 298 In its report entitled "Report on Native Vegetation Management in New South Wales" the Forum recommended a regional approach to the regulation of vegetation clearing and an incentive scheme, to be effected by the enactment of new legislation. At p 17 of the report the Forum summarised the then existing state of knowledge about vegetation loss: To date a systematic and comprehensive NSW monitor of the status of native vegetation has not been conducted. Rather the extent of clearing has been the subject of case studies and, more recently, national remote sensing. Results to date indicate:* • The Resource Assessment Commission (RAC 1992) estimated that prior to European settlement, forest and woodland probably covered 52 million hectares or two thirds of NSW. The remaining one third was covered with open-woodland and native grassland. Of the original 52 million hectares of forest and woodland only 21 million remain. • The Australian Bureau of Statistics calculated that between 1972 and 1980 an average of 430,000 ha were cleared in NSW per annum, or 1,100 ha per day. • In the Western Division area north of Lake Cargelligo, over a 20 year period to 1991, there was a net increase of 86% in the cleared area, concentrated in land systems that will accept cropping. (EPA, NSW Agriculture, DLWC: Western Division Resource Monitor) • Sivertsen (1994) found in the northern part of the wheat belt (Goondiwindi area), between 1977 and 1984, some 67 per cent of all remaining native vegetation was cleared and only 19 per cent of the original vegetation cover remained. • A number of broad estimates have been made of the current rate of clearing in NSW, yielding a figure of 150,000 ha per year. (National Greenhouse Gas Inventory Committee) • Between 1983 and 1993 it has been estimated that approximately 500,000 ha/year have been cleared Australia wide. Queensland accounted for 300,000 ha and NSW for 150,000 ha (National Greenhouse Gas Inventory Committee). * Some Forum Members question the accuracy of the above estimates. 299 The report referred to the 1992 National Strategy for Ecologically Sustainable Development and a number of other initiatives adopted nationally, such as the National Greenhouse Response Strategy and the Intergovernmental Agreement of the Environment, the National Forest Policy Statement and the draft National Strategy for the Conservation of Biological Diversity. After examining the approaches in other States and Territories, the report set out (at p 20) the four phases undertaken, or to be undertaken in New South Wales: State Environmental Planning Policy (SEPP 46) was introduced on 10 August 1995 as part of a phased approach to achieve sustainable native vegetation management through co-operative programs such as Total Catchment Management. Phase 1 has been the introduction of SEPP 46. The Policy's aim is to prevent inappropriate native vegetation clearance in NSW. The policy requires assessment of clearing proposals to ensure native vegetation is protected and managed in the environmental, social and economic interests of the State. A number of exemptions allow for on-going farm management. The environmental, social and economic benefits are described in the section 4.2 'Benefits of Conservation', pp 17-18. Phase 2 is the community consultation and SEPP 46 performance review stage that are further described below. Phase 2 began on 10 August 1995 and continued until July 1996. During this time the views of the community and of the NSW Vegetation Forum, together with the Forum's recommendations, have and will continue to be conveyed to the Minister for Land and Water Conservation for consideration. During Phase 3 the Government will consider further amendments, options and alternatives for SEPP 46. This phase will date from July 1996 onwards. A long-term management regime directed to sustainable native vegetation management through the co-operative processes of Total Catchment Management will be Phase 4. 300 The Forum had noted in its Executive Summary (at p 8) that the submission of its report marked the commencement of Phase 3. 301 At pp 7-8 of its report, in the Executive Summary, the Forum summarised its principal recommendations in the following terms: The Forum favours the adoption of a legislative reform, covering a 'whole state' approach, with either a new Native Vegetation Management Act or a new Native Vegetation and Soil Conservation/Management Act which is based on the existing Soil Conservation Act as well as amending any other legislation such as the Crown Lands legislation and the Western Lands Act. DLWC [the Department of Land and Water Conservation] should be the consent authority with an obligation to consult where required with other relevant authorities in the administration of the new Act. A tiered approach with State Guidelines, (bio)regional/catchment management plans, local plans/agreements and a permit system is the preferred option (see sections 3.6-3.9). There should be generic exemptions on a statewide basis with specific exemptions incorporated into Regional Plans which recognise that circumstances vary greatly across regions. Incentives should be based on the concept of stewardship and be provided to assist in the achievement of vegetation management outcomes. They could be operated in a number of ways rather than being strictly applied to one activity. Regional Plans should be used to assist in the equitable setting of priorities for incentives. Accountabilities for incentives should be achieved either through the use of Local/Property Agreements or leases, and be for a defined term. 302 About a year later, a White Paper entitled "A proposed model for native vegetation conservation in New South Wales" was released by the NSW Department of Land and Water Conservation. In its Executive Summary, it described the proposal by the NSW Government in the following terms: This White Paper details a statewide 'whole of government' approach to the conservation and sustainable management of native vegetation in the social, economic and environmental interests of NSW. This approach is built around a proposal for a Native Vegetation Conservation Act. The Act will repeal State Environmental Planning Policy No.46 and provisions relating to native vegetation conservation and management in various other Acts, including the Soil Conservation Act and the Western Lands Act, and therefore provide a coordinated approach to native vegetation conservation across NSW. 303 The Executive Summary went on to state that the legislation would provide for regional vegetation management plans, a single system for obtaining development consent, a range of exemptions to allow clearing for day-to-day land management, property agreements with landholders to manage native vegetation, a Native Vegetation Advisory Council and a $15 million Native Vegetation Management Fund to provide incentives to landholders over three years to manage native vegetation on their land. 304 Many of the proposals made by the NSW Vegetation Forum and in the White Paper were adopted in the Native Vegetation Conservation Act 1997. As the White Paper had recommended, the controls under SEPP 46 and the Soil Conservation Act were incorporated into one regime, while retaining the concept of "protected land" from the Soil Conservation Act. 305 The Native Vegetation Conservation Act 1997 came into force on 1 January 1998. Its objects, as set out in s 3, were: (a) to provide for the conservation and management of native vegetation on a regional basis, and (b) to encourage and promote native vegetation management in the social, economic and environmental interests of the State, and (c) to protect native vegetation of high conservation value, and (d) to improve the condition of existing native vegetation, and (e) to encourage the revegetation of land, and the rehabilitation of land, with appropriate native vegetation, and (f) to prevent the inappropriate clearing of vegetation, and (g) to promote the significance of native vegetation, in accordance with the principles of ecologically sustainable development. 306 By s 7, the Native Vegetation Conservation Act 1997 maintained the concept, and the basic definition, of "protected land" from the Soil Conservation Act. It also introduced, as had been recommended, schemes for the preparation of regional vegetation management plans (see Pt 3), property agreements (see Pt 5) and codes of practice for vegetation clearance (see Pt 4). 307 The definition of "native vegetation" in s 6 of the Native Vegetation Conservation Act 1997 was wide, as it had been in SEPP 46. Section 6 provided: (1) In this Act, native vegetation means any of the following types of indigenous vegetation: (a) trees (b) understorey plants, (c) groundcover, (d) plants occurring in a wetland. (2) For the purposes of this definition, groundcover means any type of herbaceous vegetation, but it is only to be regarded as native vegetation for the purposes of this Act if it occurs in an area where not less than 50% of the herbaceous vegetation covering the area comprises indigenous species. In determining that percentage, not less than 10% of the area concerned must be covered with herbaceous vegetation (whether dead or alive). 308 Similarly, in s 5, what was comprehended by "clearing" was broadly defined: (1) In this Act, clearing native vegetation means any one or more of the following: (a) cutting down, felling, thinning, logging or removing native vegetation, (b) killing, destroying, poisoning, ringbarking, uprooting or burning native vegetation, (c) severing, topping or lopping branches, limbs, stems or trunks of native vegetation, (d) substantially damaging or injuring native vegetation in any other way. (2) In this Act, clearing protected land means any one or more of the following: (a) cutting down, felling, thinning, logging or removing any vegetation on protected land, (b) killing, destroying, poisoning, ringbarking, uprooting or burning any vegetation on protected land, (c) severing, topping or lopping branches, limbs, stems or trunks of any vegetation on protected land, (d) substantially damaging or injuring any vegetation on protected land in any other way. 309 Subject to a series of exemptions and exclusions in ss 9 to 12, Pt 2 of the Native Vegetation Conservation Act 1997 imposed prohibitions on the clearing of native vegetation unless certain consents, plans or practices were in place, with the responsible Minister identified as the consent authority (see s 14). On land subject to a regional vegetation management plan made under Pt 3, the plan itself could specify whether a development consent was or was not needed for clearing (see s 18). On land not subject to regional vegetation management plans, either a development consent must be obtained, or the clearing must occur in accordance with an applicable code of practice made under Pt 4 of the Native Vegetation Conservation Act 1997 (s 21). 310 Progress on the preparation of regional vegetation management plans - intended to be one of the principal regulatory tools under the Native Vegetation Conservation Act 1997 - was slow. By 2002, the NSW Auditor-General found that only one of the 22 Regional Vegetation Committees, established under the Native Vegetation Conservation Act 1997 and tasked with the preparation of draft regional vegetation management plans (see Pt 7, Div 1 of the Native Vegetation Conservation Act 1997, read with s 24) had prepared a plan in a form suitable for Ministerial approval. The Auditor-General's report became an occasion for comment by the Commonwealth to the State, as I set out later in these reasons. 311 In November 2002, the Wentworth Group, convened by the World Wide Fund for Nature and comprising experts drawn from the natural and environmental sciences, economics, regulatory and farming sectors, produced a national report on soil conservation management and native vegetation clearing, entitled "Blueprint for a living continent: a way forward from the Wentworth Group of concerned scientists". 312 In the face of the drought which extended across much of Australia in 2002, the Group stated in the foreword to the report: As a nation we have grown wealthy on the food and fibre produced by extraordinarily hard working and innovative farmers. We have all shared in that wealth and we expect to continue to benefit from it. Yet it is time to give something back to the landscape and to the people who manage it. Our land management practices over the past 200 years have left a landscape in which freshwater rivers are choking with sand, where topsoil is being blown into the Tasman Sea, where salt is destroying rivers and land like a cancer, and where many of our native plants and animals are heading for extinction. On the 23rd October 2002 one dust-storm crossed the Australian continent and blew away an estimated 7 million tonnes of irreplaceable topsoil. We are taking more resources from our continent than its natural systems can replenish. That, by any definition, is unsustainable. The current crisis is an opportunity to design a new way of doing business to build resilience into rural and regional communities, enabling them to cope with the variability of our climate. This paper is about providing a new direction. We have sufficient knowledge now to set a new direction that will involve a change in land use towards practices that are in harmony with the highly variable climate that is intrinsic to Australia. Such a direction could see the farming community walking in partnership with science. If we get it right, Australia will continue to produce food and fibre for us and for the rest of the world. If we fail to act, history will judge us harshly. Considerable change is needed - and Australian farmers have demonstrated an extraordinary capacity to change. Further, our governments have, in recent years, supported three important foundations for this change: • Landcare was established in 1990 by Prime Minister Hawke, and has captivated rural and urban Australians alike; • the $2.5 billion Natural Heritage Trust was established in 1997 by Prime Minister Howard, which provided a huge financial boost; and • in 2000, the Prime Minister, Premiers and Chief Ministers signed the National Action Plan for Salinity and Water Quality, aimed at reforming the institutional arrangements for managing the Australian landscape. A fourth foundation is needed that protects and rebuilds our landscapes. We need a delivery mechanism that will transform Australia's landscapes, rivers and the communities that depend on them. There are real opportunities for corporate Australia to invest in this process and to contribute to landscape scale transformation. 313 The report then proposed that key changes needed to be made, in five areas: 1. Clarify water property rights and the obligations associated with those rights to give farmers some certainty and to enable water to be recovered for the environment. 2. Restore environmental flows to stressed rivers, such as the River Murray and its tributaries. 3. Immediately end broadscale landclearing of remnant native vegetation and assist rural communities with adjustment. This provides fundamental benefits to water quality, prevention of salinity, prevention of soil loss and conservation of biodiversity. 4. Pay farmers for environmental services (clean water, fresh air, healthy soils). Where we expect farmers to maintain land in a certain way that is above their duty of care, we should pay them to provide those services on behalf of the rest of Australia. 5. Incorporate into the cost of food, fibre and water the hidden subsidies currently borne by the environment, to assist farmers to farm sustainably and profitably in this country. 314 The Wentworth Group then observed: The Council of Australian Governments (CoAG) has the opportunity to make three significant changes immediately, by ending broadscale clearing of remnant vegetation, by requiring the clarification of water property rights, and by agreeing to purchase urgently needed environmental flows for the Murray River and its tributaries. 315 The Wentworth Group subsequently produced, at the request of the NSW Government, a report focusing on New South Wales. It also recommended the establishment of a Native Vegetation Reform Implementation Group, which was established and reported to the NSW Government in October 2003. Membership of the Native Vegetation Reform Implementation Group included people from the Wentworth Group, State Government, the NSW Farmers' Association, and the World Wide Fund for Nature. 316 The Native Vegetation Reform Implementation Group made 48 recommendations, which it is not necessary to set out in detail. It proposed regional Catchment Management Authorities as the principal mechanism. It made several recommendations about the provision of incentives to be used to support the management and protection of native vegetation on privately owned or leased land where this results in broader public benefits. 317 Evident in the report are differences of opinion between different members of the group, depending on their perspectives about how to define "native vegetation" and "clearing", what should be specified as constituting "broadscale clearing" and the nature and breadth of exemptions or exclusions from the regulation of clearing. 318 Recommendation 28 is especially relevant: It is recommended that the Government establish a revolving fund to: • Purchase those properties that as a result of the ending of broadscale land clearing are no longer commercially viable; and • Compensate17 farmers who have suffered real financial loss as a direct result of the ending of broadscale land clearing. 17 The Environmental Group's view is that "structural adjustment" is the preferred terminology. 319 I note also that Recommendation 46 was to the effect that: It is recommended that the Government examine the potential to seek additional Commonwealth and private funding that recognises the greenhouse benefits to be derived from ending broadscale land clearing. 320 Broadly in accordance with the recommendations of the Native Vegetation Reform Implementation Group, the State enacted the Native Vegetation Act 2003, which repealed the Native Vegetation Conservation Act 1997 and simplified the scheme established under it. These provisions remained in effect at the time of trial in this proceeding and were the applicable provisions to the events in 2007. 321 In s 3, the expression of the objects of the Native Vegetation Act 2003 reveals the different emphasis on broadscale clearing with adverse impacts: The objects of this Act are: (a) to provide for, encourage and promote the management of native vegetation on a regional basis in the social, economic and environmental interests of the State, and (b) to prevent broadscale clearing unless it improves or maintains environmental outcomes, and (c) to protect native vegetation of high conservation value having regard to its contribution to such matters as water quality, biodiversity, or the prevention of salinity or land degradation, and (d) to improve the condition of existing native vegetation, particularly where it has high conservation value and, (e) to encourage the revegetation of land, and the rehabilitation of land, with appropriate native vegetation, in accordance with the principles of ecologically sustainable development. (Emphasis added.) 322 Section 12 imposes a general prohibition on clearing native vegetation without a development consent, or otherwise than in accordance with a "property vegetation plan" approved by the Minister under Pt 4 of the Native Vegetation Act 2003. Section 29 does not authorise the Minister to approve a property vegetation plan unless the proposed clearing will improve or maintain environmental outcomes. In turn, that standard - whether clearing "will improve or maintain environmental outcomes" - was given content by regulations made pursuant to s 32(b) of the Native Vegetation Act 2003. Property vegetation plans can, under Pt 4, be specific to property owned by one landholder or a group of landholders, and provided a mechanism for planning for the use and development of properties at a more individual level than had been available under previous legislative schemes. Relevant parts of the Environmental Planning and Assessment Act were made applicable to the process of determining whether to grant consent. Clearing of regrowth other than "protected regrowth" (s 19) and native groundcover with low percentages of indigenous species (s 20) is permitted, as are activities comprehended by the statutory definition of "routine agricultural management activities" (s 22) and, in some circumstances, the continuation of existing farming activities (s 23). 323 The text and context of the state legislation after SEPP 46, and in particular the Native Vegetation Act 2003, reveals a considerable shift in emphasis. 324 That shift is consistent with the aims and objectives of the two federal laws, and the four intergovernmental agreements. Clearing of native vegetation was assessed as having serious adverse consequences and as needing increased prominence in terms of environmental reform. There was a joint federal and state determination, albeit arrived at through different and independent processes and inquiries, to halt native vegetation clearance and encourage revegetation. Effects on landholders were recognised, and the need to bring landholders on board with reforms formed part of the delivery of these reforms. The likelihood of adverse impacts on some farmers being sufficiently serious to warrant "structural adjustment", or compensation by way of the State purchasing properties, was recognised expressly in the two Salinity Agreements and by the reports leading to the state legislative reforms. It seems an obvious inference to draw from the terms and context of the 1997 and 2003 NHT Agreements that the Commonwealth recognised the State may choose to put such structural adjustments programs in place. 325 It can be seen that the legislative scheme under the Native Vegetation Act 2003 may have provided scope for Mr Spencer to use and develop Saarahnlee, albeit in a way which was closely regulated and required him to subject his projects to scrutiny by decision-makers under that scheme. This seems in particular to have been so in relation to the provision in Pt 4 for property vegetation plans, to which Mr Willis attempted to alert Mr Spencer in 2007. A staged approach, dependent on close bureaucratic supervision, was clearly not to Mr Spencer's liking and he continued to insist on being able to clear on a grander scale if he so chose.

THE ALLEGED "INFORMAL ARRANGEMENT" 326 This brings me to the final category of impugned conduct identified by Mr Spencer, the so-called "informal arrangement". 327 The informal arrangement is pleaded in the FASOC as having been made "in or prior to November 1997" and "extended or amended in or about 2003". These dates broadly correlate to the conclusion of the 1997 NHT Agreement and the 2003 NHT Agreement. 328 The terms of this informal arrangement were alleged to be as follows: i. The first respondent would propose to the Kyoto conference of parties to the UNFCCC that the target of emission reduction by Australia by 2010 be 108% of the 1990 level; ii. that the first respondent's proposed reduction in emissions would be contingent on it being able to count as a credit any reduction in levels of emissions attributable to levels of land clearing being lower than in 1990; iii. The second respondent would ensure that land clearing on private land in its territory was restricted to an extent which would enable the overwhelming component of the reduction in carbon emissions necessary to meet the target of 108% of 1990 emissions be achieved by the prevention of land clearing; iv. The second respondent would comply with National Monitoring conditions imposed by the UNFCCC Compliance Committee; v. The first respondent would provide the second respondent with funds through the Natural Heritage Trust fund to enable it to prevent land clearing; vi. The question of compensation for affected land holders in the territory of the second respondent was the concern of the second respondent and not the first respondent; vii. In the event that the first respondent achieved the outcomes in (i) and (ii) hereof and the second respondent met the requirement in (iii) hereof, the second respondent would not be otherwise required by the first respondent to achieve reductions in carbon emissions to meet the first respondents commitment under the Kyoto protocol. 329 The informal arrangement is alleged to be "evidenced by" Council of Australian Governments (COAG) ministerial committee minutes of the National Environmental Protection Council from 1993 to 2005, and the special minutes of COAG in a series of meetings convened in November 1997 leading up to and during the Kyoto Protocol conference commencing in December 1997. It is also alleged to be evidenced by a letter between the Prime Minister or the Minister for Environment and the NSW Premier dated in or about 2003. 330 Despite these allegations, it is fair to say that Mr Spencer's case as presented at trial relied very little on the existence or nature of this informal arrangement. He did persist at trial with his allegations, made on his behalf as I understand the history of this proceeding at various stages beforehand, that there must be further minutes or records of the discussions had between the State and the Commonwealth on these issues, or at least in federal Cabinet, shortly before the Kyoto Protocol was concluded in December 1997. 331 Mr Spencer referred to a document in evidence which is headed "Council of Australian Governments' Meeting 7 November 1997, National Greenhouse Strategy and International Negotiations: Talking Points". It was this kind of document which Mr Spencer used as a basis for his allegation that there must be more minutes of these COAG meetings, recording discussions about vegetation clearance, than had been discovered. The Commonwealth maintained it had complied with its discovery obligations and there is no reason in the material before me to doubt this is so. 332 This document appears to have been created for the COAG meeting in November 1997, shortly after the signing of the 1997 NHT Agreement. On its face the document does not indicate for whom the "talking points" are prepared but the obvious inference is the document was prepared for a senior Minister or the Prime Minister, given its content. There is no mention in these "talking points" of vegetation clearance controls. There is some reference to a subject called "Sink Enhancement" and a project called "Plantations 2020", together with the following sentence: the facilitation of corporate funding of Natural Heritage Trust vegetation projects through Bushcare which will act as carbon dioxide sinks. Companies or investors will obtain recognition for the stored carbon reservoir created, thereby creating an offset for their emissions created elsewhere. 333 The document also refers to the need for State cooperation, to the significant Commonwealth funding to be applied to the initiatives concerning greenhouse gas emissions and to advice received by the Commonwealth that it had the necessary legislative power to implement greenhouse measures, in the event that State cooperation was not forthcoming. In the talking points, as one of the options to respond if the COAG meeting refused to endorse a uniform mandatory approach across the country, the following statement appears: in many of these areas, the voluntary approach is not giving satisfactory results. Clearly, the Commonwealth would prefer a voluntary approach to these issues, however we cannot allow action to slip unnecessarily. 334 These are the kinds of comments which Mr Spencer sought to seize upon in his submissions, and more generally in the presentation of his case at trial. The problem is that they have little if any probative value. The author of the document might be guessed at from a name on the bottom of the document, but there is no evidence about this. The recipient of the document is unknown. More importantly, whether the talking points were ever delivered, and whether they were delivered in this form, is unknown. 335 Although one can understand the forensic difficulties which have confronted Mr Spencer in proving aspects of what he sees as a plan, driven by the Commonwealth, to deprive farmers of their rights to treat their land as their own, it is not possible for the Court to rely on documents such as the "talking points" document to prove, or contribute to proving, the existence of such a plan. 336 Such a document is not probative of any agreement or arrangement in or around 1997 that the Commonwealth would seek to achieve its Kyoto Protocol emissions targets (or those to which it was then contemplating committing) through state vegetation clearance controls. 337 As the Commonwealth submitted, in some of the submissions made on Mr Spencer's behalf, the focus in terms of the chronology on when this informal arrangement arose appears to be more in 2002-2003, when Dr Kemp was the federal Minister for the Environment and Heritage. That is certainly the focus of the Applicant's "Profile of Case" submissions provided in May 2014, and the submissions made on Mr Spencer's behalf on 16 May 2013. 338 In Mr Spencer's final submissions however, there is no attempt to drill down into any of the documentary evidence to make good the submissions foreshadowed in these earlier documents. Although Mr Spencer did rely on both his "Profile of Case" and on the 16 May 2013 submissions, it was incumbent on him to make good those submissions by reference to the evidence. That task was made clear to him, and he has sought to undertake it in his final submissions in relation to other issues. 339 In this respect - the issue of the alleged informal arrangement - he has not undertaken the task at all in final submissions. Instead, in the part of his final submissions headed "Arrangements to get around the Constitution" he focuses on the 1997 NHT Agreement. He makes a somewhat sweeping submission to the effect that: This analysis can then be largely repeated for all the [intergovernmental agreements], and indeed most of the documents in evidence, which basically just prove the same thing over and over and over again. 340 He does not, however, refer to any of the documents he seeks to include in this statement. In any event, the import of the submissions is that the Court can observe the "arrangements to get around the Constitution" in the 1997 NHT Agreement. Mr Spencer is not submitting there is any different, or separate, arrangement to found elsewhere. 341 Dr Kemp was called as a witness in this proceeding, in circumstances I have described at [96] above. None of the allegations in the "Profile of Case" or in the 16 May 2013 submissions was put to Dr Kemp, despite me explaining to Mr Spencer the need for him to confront Dr Kemp with evidence and documents he was relying on, or proposed to rely on, especially about the informal arrangement. 342 However the Commonwealth took the opportunity of Dr Kemp being called to adduce evidence from him about Mr Spencer's allegation of the existence of an informal arrangement between the Commonwealth and the State, and the alleged existence of an implied term in one of the intergovernmental agreements, that the State would enact laws to acquire Mr Spencer's property other than on just terms. Dr Kemp gave the following evidence: Well, my reaction to that is that all the arrangements that involved the payment of money between New South Wales and the Commonwealth were arrangements in writing, and they were written agreements or letters exchanged between the Commonwealth and the State, and there were no other agreements or arrangements that one might call informal. Informal arrangements, to my knowledge, didn't exist in this context. … The Commonwealth's concern was that whatever legislation the New South Wales Government introduced, it should be legislation which was supportive of the strategies and programs that the Commonwealth were seeking to implement. But whatever other elements there were in the New South Wales legislation were matters for New South Wales. The Commonwealth was certainly, I think, in general concerned to see that where just compensation was legally required, that that was done. But it was not up to the Commonwealth to write the legislation for New South Wales or to determine ultimately or to specify the New South Wales Government's behaviour, other than under the formal agreements that had been entered into. 343 The series of documents which had been identified by Mr Spencer's then counsel in the "Profile of Case" consist of communications between various members of the then State and Federal Governments (including Dr Kemp), at various level of seniority, although Mr Spencer on many occasions expressed a view that he had not received all the documents he considered relevant. 344 He expressed frustration with the discovery process, and submitted: Numerous attempts to obtain evidence regarding the details of the informal arrangement have only produced the evidence as submitted in hard copy. However the numerous agreements enforced with threats of funds being restrictions in the event vegetation retention was not enhanced and the expressions of frustration regarding efforts being ignored were too frequent and far too urgent to not appreciate there was arrangements within arrangements. (CD) 212 Numerous references to the evidence in the evidence through innuendo and the collective urgency through the entire structure trying to steer the vessel called Kyoto away from the rocks of not meeting the commitment. These cries for increased efforts boom louder and more blatant as seen in the letter to Premier Beattie from Prime Minister Howard requesting the need for Beattie to assist the Commonwealth and contribute 25mm tonnes of carbon reduction per year in a way where Prime Minister Howard did not want Premier Beattie to be prescriptive. Or Premier Bob Carr on the ABC - Late line with Philip Adams and in Federal Parliament delivering his maiden speech admitted he and Premier Beattie had stopped Land clearing in NSW and Queensland by so had enabled Prime Minister Howard to meet his Kyoto targets. (CD) 180 Furthermore Document held as privilege or redacted could have been viewed by the Judge or Registrar. With Cabinet Former PM Kevin Rudd requested Cabinet Documents to assist himself to clear his name and was granted access. With these privileges possible to some and not to others it is so easy to have material suppressed by justifying being selective. We believe documents could have been screened by the Judge or Registrar without the respondent's clients being exposed under secrecy concerns especially as the material is now generally over 20 years old. The point is if the material has nothing detrimental to the Respondent's clients positioning = then what all the fuss was about. In addition the appalling overall delay in these proceedings - 8 years and the difficulty to have it move faster and in obtaining evidence and the many skills used to frustrate the actual access to the evidence indicates there has been information with held that is of a compromising nature. Put quite simply, the ability to obtain the required material working in isolation outside the Government facility if persons do not want me to have certain material it makes the task simply impossible and if there is a question a shadow of immorality then the sky is the limit. (CD) 180 (Redacted) (CD) D 7 345 As the respondents point out there are some references to documents in this submission (such as to the Phillip Adams interview) which are not in evidence, or are not admissible (parliamentary proceedings). The references to previous decisions made by Justices of this Court during the discovery process, or negotiations during the discovery process, are not matters to be revisited in a final judgment. 346 However, there are also references by Mr Spencer to documents which are in evidence, and it is instructive to turn to some of those, as well as to some of those relied on in Mr Spencer's "Profile of Case" document, which contains the most detailed exposition of how the informal arrangement argument has been put on his behalf. 347 It is not necessary to work through exhaustively every single document tendered by Mr Spencer or the respondents in order to address the competing submissions on what these documents show. Not surprisingly, since the subject matter of the documents are communications between State and Federal Governments or within each of those branches of Government, about reform proposals on a number of environmental issues and principally native vegetation retention, one sees a wide range of policy positions suggested and adopted. There is positioning as between the Commonwealth and the State in terms of each entity attempting to pursue its own policy objectives in the way it sees fit, and, from time to time, some exasperation and annoyance at the nature of reforms, their slowness, or other kinds of public statements or activities by one party of which the other disapproves. 348 Mr Spencer is correct that one can find in these documents the use by the Commonwealth of its financial assistance and grant powers to encourage reforms that it saw as desirable, especially in terms of a view held at various times within the Commonwealth that reform on halting vegetation clearance in New South Wales was too slow, or too ineffective, or both. 349 For example, the 2003 document to which Mr Spencer refers in the first paragraph of his submissions I have extracted above is a minute from the Assistant Secretary to the Commonwealth Regional NRM Team in Environment Australia and the General Manager for Natural Resource Management in the Department of Agriculture, Fisheries and Forestry to Dr Kemp, who was the then responsible Minister for the Environment and Heritage, and Warren Truss, the then Minister for Agriculture, Fisheries and Forestry. It is referred to also in paragraph [28] of the Profile of Case document. In terms of chronology, it appears to be a document prepared before the conclusion of the 2003 NHT Agreement. In one paragraph there is a reference to a "strategy" in delaying payment of funds to New South Wales so as to "retain leverage" over New South Wales to extract agreement to institutional reforms. However when the context of that document is considered, it is apparent that what is being discussed is not obviously vegetation clearance, but a much wider range of environmental reforms, including conservation of threatened species, as well as a concern that not enough funding was flowing through to communities for environmental projects, as opposed to government agencies. 350 A selection of the other documents in evidence reveals similar tone and content in communications between the Commonwealth and NSW Governments, over the whole period with which Mr Spencer's challenge is concerned. 351 In mid-1998, when Senator Hill was the responsible federal Minister, Senator Hill wrote to his NSW counterpart, as part of what was obviously an ongoing series of communications about vegetation management initiatives in New South Wales. In terms of chronology, this correspondence post-dates the first 1997 NHT Agreement, the terms of which (as I have set out elsewhere) did require New South Wales to enact legislation further controlling native vegetation clearance as a specified outcome for the provision of Commonwealth funding. First, Senator Hill makes the kind of links which form part of Mr Spencer's case theory between native vegetation retention and Australia's greenhouse gas emissions: The Bushcare national goal, agreed by our Governments, of reversing the long term decline in the quality and extent of Australia's native vegetation cover by June 2001 is ambitious and historic. It will represent a major contribution to the conservation of Australia's unique and priceless biodiversity, the amelioration of significant land degradation problems, and the reduction of our net greenhouse gas emissions in line with Australia's commitment to the Kyoto protocol. 352 The Senator goes on to state further improvements are needed and mentions two specific areas: Two of the agreed environmental outcomes of the Bushcare program as described in the Partnership Agreement will particularly help Australia meet our goal. These are: limiting clearing to those instances where regional biodiversity objectives are not compromised; and commitments to introduce effective measures to reduce broadscale clearing and thus increase overall retention of native vegetation [New South Wales Bushcare Attachment clauses 3.2 (c) and (d)]. 353 He expresses concern about rates of land clearing in New South Wales and queries what the NSW Government is doing about it: Achieving the national goal of reversing the decline in the quality and extent of Australia's native vegetation cover will require a substantial reduction in the rate of land clearing in New South Wales, which I am sure you agree remains too high. I am pleased that there has been progress in the development of legislation to control land clearing. However, I am concerned about the effectiveness of these initiatives in ensuring that clearing is consistent with regional biodiversity objectives, and that the extent of clearing is substantially reduced. I am also looking for further development of non-regulatory approaches to reduce land clearing [clauses 4.3 (a), (b), (e), (f), (g)]. I am concerned that there is no set of State-wide criteria for clearing controls which are required to be incorporated in Regional Vegetation Management Plans. What guidance does this legislation provide to Regional Vegetation Management Committees regarding which ecosystems are not to be cleared? Minimum threshold retention rates at both the property and regional level need to be informed by biodiversity conservation requirements. They should be set at precautionary levels, particularly those relating to endangered or threatened ecological communities. It is important that your Government provide the State-wide context and minimum standards for the preparation of the Regional Vegetation Management Plans. Please advise me of the nature of the support and guidance being provided to Regional Committees in this task. The Natural Heritage Trust project Regional Planning for Clearing and Cultivation in the southern Mallee is producing results that are an example of the positive outcomes that can be achieved through well-facilitated regional planning. In large part, the effectiveness of these policies will depend on adequate monitoring and enforcement. I would be grateful if you would advise me of measures adopted to ensure compliance with existing regulations, and how these could be improved, in line with any reforms to the overall vegetation management policies of the State. 354 Senator Hill then makes the link between the provision of funding and satisfactory progress by New South Wales on these matters: I look forward to receiving your advice on the proposed actions and timetable to implement the matters addressed in this letter. You will appreciate that in considering your State's further bids for Natural Heritage Trust funding, I am required to consider progress on these matters, particularly that there be no clearing of endangered regional ecosystems, no clearing that would change the conservation status of regional ecosystems, and that controls are put in place, across all land tenures to avoid unsustainable land clearing. Further to this letter, officials from my Department will be writing to your Department regarding the first Annual Report across all Natural Heritage Trust program areas as required by the Natural Heritage Trust of Australia Act 1997. This first Annual Report will focus on progress for each program against the four key national outcomes or key result areas. I consider our Natural Heritage Trust partnership to be very important. I remain confident that, together with other Trust outcomes, our Governments can deliver an historic improvement in the extent, condition and management of Australia's native vegetation. 355 I note that this linkage between vegetation clearance reforms and Commonwealth funding is the same kind of linkage said to have been present in the letter from Senator Hill, about which Mr Plummer gave evidence. The consistency between the theme in this document and Mr Plummer's account of the letter he saw from Senator Hill leaves me comfortably satisfied that the contents of that letter were as Mr Plummer recollected. I address Mr Plummer's evidence below. 356 Senator Hill's inquiry prompted a detailed reply from the then NSW Minister for the Environment, Ms Pam Allan. The letter set out the progress made by New South Wales and what was intended to be done in the near future, including the regime under the then relatively new Native Vegetation Conservation Act 1997. The letter ended with the expected request from the State's perspective for Commonwealth funding, if the Commonwealth wanted all these targets to be achieved: The NSW Government has previously pointed out to the Commonwealth Government a number of key priorities for the State under the Bushcare Targeted Investment scheme. These priorities include: • the development of an appropriate vegetation resource database; • the development and operationalisation of tools for vegetation planning; • the development of best practice guidelines for specific vegetation communities, for example native grasslands; • implementation of best practice incentives schemes utilising the comprehensive range of tools. While the NSW Government is making significant progress and investing significant resources in these priorities we believe that the maximum conservation outcome will be achieved by the Commonwealth Government providing assistance through the Bushcare program to these priority areas. In this regard, an early confirmation from the Commonwealth Government about support for regional Bushcare facilitation in rural and urban areas would be appreciated. I trust that this information will demonstrate the commitment of NSW Government to its obligations under the Partnership Agreement. We have made considerable progress in implementing our native vegetation reforms and look forward to continuing the close Commonwealth/State partnership in delivering the Native Vegetation Initiative. 357 These kinds of communications are not evidence of any "informal arrangement"; they are evidence of the working out of the financial and policy commitments provided for in the 1997 NHT Agreement and the negotiations preceding the conclusion of the 2003 NHT Agreement, with each side doing its best to advance the policy interests it sees as most important. There are many other examples in the evidence of communications from the Commonwealth where statements are made to the effect that the Commonwealth will consider progress towards identified outcomes in determining New South Wales' bids for monies from the Natural Heritage Trust. That is, it seems to me, exactly what the 1997 NHT Agreement contemplates will occur. 358 Moving forward in time another example provides evidence of the ongoing tension between New South Wales and the Commonwealth over the former's progress on native vegetation management, and the way in which the Commonwealth can use its spending powers to try and achieve improvements on that issue, which was obviously of some considerable policy importance to the Commonwealth. In October 2002, the following memo was sent to Dr Kemp from Environment Australia, headed "Land clearing reform in New South Wales", with a view to having the Minister endorse some priorities for further vegetation management reform in New South Wales occurring in the context of the negotiations for what was to become the 2003 NHT Agreement. It set out the longstanding concerns at Commonwealth level with slow progress on land clearing reform in New South Wales: Background Over the past two years the Commonwealth has raised numerous concerns with NSW about the management of native vegetation. These primarily relate to inadequate information about native vegetation available for regional planning; the need to develop statewide targets for native vegetation retention that provide guidance for vegetation planners and are consistent with nationally agreed targets; and unconvincing compliance with regulations to protect native vegetation. In response to these concerns, the then NSW Minister for Land and Water Conservation, the Hon Richard Amery MP, assured the Commonwealth that action was being taken to address these issues. In August 2002 the NSW Auditor-General released a report examining the regulation of native vegetation clearing in NSW by the Department of Land and Water Conservation (DLWC). The report indicates that, despite earlier assurances from NSW to the Commonwealth, many of the issues of concern to the Commonwealth, landholders and conservation groups are still not being adequately addressed. The Auditor-General recommended that the NSW Native Vegetation Conservation Strategy and native vegetation targets be finalised, that a program for systematic monitoring and mapping of native vegetation be accelerated, and identified a series of areas where DLWC could improve compliance with the Native Vegetation Act. A summary of the NSW Auditor General's recommendations is at Attachment A. Key stakeholders agree with findings of the Auditor-General. Both the NSW Farmers' Association and the NSW Nature Conservation Council endorsed concerns about the absence of a state-wide strategy as required by the Native Vegetation Act; a confused and leaderless approach by the NSW government, where complying with one set of regulations could put landholders in breach of others; and a lack of adequate information about the status of or changes to native vegetation. A summary of stakeholder responses is at Attachment B. Issues While the NSW Government has made progress in some areas, it is apparent that many reforms have stalled or are being slowly implemented: • The current systems in NSW, whereby landholders are granted exemptions to clear native vegetation, are cumbersome, slow and in some cases motivate landholders to clear native vegetation. The recent agreement with NSW to implement the National Action Plan for Salinity and Water Quality, committed NSW to implement recommendations of a Community Reference Panel to reform vegetation clearance exemptions by June 2002. NSW have recently advised that proposed reforms will "soon" be released for public comment. Gazettal and implementation of the streamlined exemptions are clearly still some time away. • A draft Native Vegetation Conservation Strategy was prepared by the NSW Native Vegetation Advisory Council in November 2000. The NSW government has not released a final version. • Draft interim vegetation retention and revegetation targets based on bioregions were developed during 2001, however these are still not publicly available. The upcoming negotiation of the Natural Heritage Trust bilateral agreement with NSW provides the opportunity for the Commonwealth to reaffirm priorities for vegetation management reform before expenditure of Trust funds. 359 Again, these communications show the obvious consciousness of the influence the Commonwealth's spending powers might have on priorities within the legislative competence of New South Wales. That is the way the authorities have contemplated grants under s 96 of the Constitution might lawfully operate. 360 I turn to the allegations in paragraphs [24] and [25] of the Profile of Case, as they make a more particular allegation. 361 In those paragraphs, it is alleged: In March 2003 the NSW Government was seeking re-election. As part of its campaign it issued a press release. The Premier press release stated that the Government would allocate $120 mil over 4 years from existing Natural Resource Management expenditure for the purpose of compensating farmers for not clearing their land. The Commonwealth was not consulted prior to this press release. As part of the funding would come from the 2 bilateral agreements Commonwealth agreement was required. 362 The media release is in evidence, and is dated 15 March 2003. It makes no express link between the $120 million and the compensation of farmers for not clearing their land. The program eventually put in place by the NSW Government had two limbs, an incentive program to protect and plant new native vegetation, and an exit assistance scheme. This press release seems only to deal with the former. Some evidence suggests, and the Commonwealth submits, the exit assistance program was an entirely State-operated and funded program. Rothman J's findings in Spencer v NSW Minister for Climate Change, Environment and Water [2008] NSWSC 1059 may suggest otherwise. There is insufficient evidence before me to make a positive finding as to the source of funds for the exit assistance program. However the point to be made here is simply that the press release does not say what Mr Spencer asserts it does. Still less does it provide evidence of any informal arrangement of the kind pleaded. 363 Mr Spencer also relied on some evidence adduced from Mr Plummer, which I allowed over an objection from the respondents. Mr Plummer deposed in his affidavit that he was part of a group of farmers in the Fiveways area who had concerns about the problems faced by farmers as a result of the legislation of the Native Vegetation Conservation Act 1997 and how the scheme under that Act was subsequently managed by the State, and how that Act was making the problems for farmers worse. He recounted that initially a visit to the area was organised with Chris Guest, the then Assistant Director-General of the NSW Cabinet Office, in about March 2000. The visit was part of an ongoing education project coordinated by the local Landcare Group. This visit was also attended by John Cobb, the then President of the NSW Farmers' Association and was a precursor to organising a visit with the then NSW Premier Bob Carr, which eventually occurred on Saturday 12 August 2000. 364 Mr Plummer deposed that a letter, a copy of which he no longer has, was sent by Senator Robert Hill, the then federal Minister for the Environment and Heritage, to Premier Bob Carr about the Commonwealth's attitude to land clearing in New South Wales. I infer that the letter from Senator Hill was sent ahead of the NSW Farmers' Association meeting with Premier Carr in August 2000. Mr Plummer deposed that a copy of the letter was given to him on 24 March 2000 by John Cobb, at the meeting organised by Chris Guest. 365 Mr Plummer deposed that his recollection of the contents of the letter was that it was a single page of three paragraphs directly addressed from the Minister Robert Hill to the then NSW Premier Bob Carr. The letter stated that if the NSW Government did not halt land clearing within New South Wales then the Federal Government would withhold the State's share of the Natural Heritage Trust funding. Mr Plummer understood this funding to be the funding for the entire Bushcare program. Mr Plummer stated seeing this letter was the first time he realised the Federal Government's involvement and that it was pressuring the State. After realising this, Mr Plummer deposed that his Landcare Group organised a meeting with his Federal Member for Parkes, Tony Lawler, in April/May 2000. Mr Plummer deposed that Mr Lawler acknowledged the pressure from the Federal Government during this meeting, and repeated it in a letter he sent to Mr Plummer dated 21 June 2000, which he annexed to his affidavit and which relevantly stated: Following various representations from yourself and others, I have raised the clearing issue in the Joint Party meeting with Senator Hill and with various National Party figures in the Federal Parliament. I haven't had much success, but it has been clearly pointed out that though the Federal Government is putting pressure on the State Government by the threat to withhold National Heritage Trust [sic] money if they don't speed up their legislation on native vegetation; it is still in fact the State Government that actually determine how this will be done. To this end, I have written to the State Member for Murray Darling, Peter Black, and asked for his cooperation by making a joint statement, calling for a sensible resolution from both levels of government, to stop these crazy, unproductive, anti environment, anti business, anti harming [sic], rules from threatening the viability of both farmers and in some cases, communities in our regions. 366 Mr Plummer was cross-examined by senior counsel for the Commonwealth about his recollections, and about why he no longer had a copy of the letter said to be sent from the Minister Robert Hill to Premier Bob Carr. The Commonwealth invited the Court to disbelieve Mr Plummer and to find there was no such letter. 367 I found Mr Plummer to be an honest witness with a reliable recollection of the events to which he had deposed. Although he was tested in cross-examination about how he came to throw out the letter, I accept his evidence that with the passage of time, his other committee responsibilities and the fact he had collected a lot of documentation, as well as shifting house, he threw out a pile of papers when he had a clean-out and he assumes this letter was amongst them. 368 Mr Plummer was able to describe what occurred on that day with some detail - he recalled the letter being in an envelope. He recalled Roger Wilkins, the then Director-General of the NSW Cabinet Office standing next to him, he recalled where he was standing when it was handed to him and what Mr Cobb was wearing. 369 Further, I accept Mr Plummer's explanation that he brought up the letter from Senator Hill with Mr Lawler, the letter having come as Mr Plummer described it in cross-examination as "like getting hit in the forehead with a brick bat" about what he saw as the level of Federal Government pressure to end land clearing. Mr Plummer gave evidence that this is the explanation for the content of Mr Lawler's letter. I accept that what is in Mr Lawler's letter appears to corroborate Mr Plummer's account. 370 My acceptance of Mr Plummer's evidence does not take Mr Spencer's case about the informal arrangement any further. Essentially what Mr Plummer recalls as the contents of Senator Hill's letter is reflected in some of the other Commonwealth documents to which I have referred. What they reveal is the Commonwealth relying on its grants power as a way to influence policy and reform initiatives over which it does not have exclusive legislative competence. That is the working out of the federal system. 371 Mr Spencer has not discharged his burden of proof that there was an "informal arrangement" of the kind he has pleaded. Rather, the evidence on which he relies reveals an ongoing (and sometimes tense) working out between Federal and State Governments, and their agencies, about how best to achieve the various environmental goals to which they were each committed, and who should bear the costs of those goals. That process occurred within the context of the four intergovernmental agreements. It is nothing more than the process of government at work in a federation. There is no evidence of any improper or inappropriate, let alone unlawful, collusion or conspiracy of the kind Mr Spencer foreshadowed, nor of any plan to "get around" s 51(xxxi). 372 The kind of arrangements and agreements for which Mr Spencer contends - in terms of their effects - are those contained in the 1997 and 2003 NHT Agreements. By his final submissions, his focus on what he alleges is unlawful had shifted almost exclusively to the terms of those agreements. Insofar as he maintained his claim of an informal arrangement by final submissions, he has not established any such arrangement existed at all, let alone what its terms might have been.

Jurisdiction and the Commonwealth's argument that there is nothing but a hypothetical claim against the Commonwealth 373 Somewhat ironically after a proceeding of this length and procedural complexity, the Commonwealth makes a final submission to the effect that the Court need not deal with issues arising under s 51(xxxi) at all. 374 It submits that whatever invalidity or infirmity might be said to attach to the two federal laws and the intergovernmental agreements, Mr Spencer's land was still subject to valid regulation by the NSW legislation, including (but not limited to) the Native Vegetation Conservation Act 1997 and the Native Vegetation Act 2003. This legislation, even after 1997, was never "coupled" to any federal law, nor to any intergovernmental agreement or federal action. This is the argument based on Pye v Renshaw [1951] HCA 8; 84 CLR 58, which I consider below. However, the Commonwealth submits two consequences follow: (1) First, there can be no tenable claim for damages or compensation as against the Commonwealth; and (2) Second, if there is no viable claim for declaratory relief in respect of the state enactments or for damages or compensation, then Mr Spencer's claim does not raise for determination any immediate right, duty or liability as between the applicant and the Commonwealth. That should lead the Court, the Commonwealth submits, to refuse to consider the validity of the Commonwealth statutes or the intergovernmental agreements as against the terms of s 51(xxxi), on the basis that such consideration would be an entirely hypothetical exercise. 375 The Commonwealth relies on Kuczborski v Queensland [2014] HCA 46; 314 ALR 528 at [17]-[19] per French CJ, [96]-[100] per Hayne J, [182] per Crennan, Kiefel, Gageler and Keane JJ and [278] per Bell J in support of this submission. Kuczborski concerned a challenge to a package of new and amending Queensland legislation directed at disrupting the operations of motorcycle clubs such as the Hells Angels Motorcycle Club, of which the plaintiff was a member and former office bearer. The plaintiff's contention was that the legislation conferred functions on Queensland courts which, contrary to Ch III of the Constitution, were incompatible with their institutional integrity. Queensland challenged his standing to attack those parts of the legislative package which concerned additional or enhanced penalties and the new constraints on the grant of bail on the basis that the plaintiff had not been charged with any offences, and that challenge was upheld by the Court. His standing to challenge the creation of new offences under the Criminal Code (Qld) and the Liquor Act 1992 (Qld) was not contested and those challenges failed on their merits. 376 The passages from Kuczborski on which the Commonwealth relies are those in each of the judgments which deal with this issue of standing. Each judgment expresses the principles with different language and emphasis, but the underlying propositions are the same. For example (and taking a wider extract than that relied on by the Commonwealth), at [182]-[185] Crennan, Kiefel, Gageler and Keane JJ say: In Bateman's Bay, Gaudron, Gummow and Kirby JJ held that a plaintiff had standing where its interest was "as a matter of practical reality ... immediate, significant and peculiar to [it]." In the present case, it may be accepted that the avowed objective of the VLAD Act (whether considered alone or together with the other challenged laws) is to discourage membership of the HAMC and like associations by the threat of draconian punishment of those who break the law while a member of such an association. If the Act is effective in that regard, membership of the HAMC might be expected to decline. That might be disappointing for the plaintiff in a way which would be peculiar to him, in the sense that members of the general public would not be similarly affected. But to say that the VLAD Act is calculated to discourage membership of the HAMC is distinctly not to say that the legal position of the plaintiff is immediately or significantly affected by the VLAD Act. His liberty and other rights, duties, liabilities and obligations remain unaffected by the enactment of these provisions; and his legal position would not be materially advantaged if his challenge were to succeed. The power to declare a law to be invalid is confined by the boundaries of judicial power. In Robinson v Western Australian Museum, Mason J said that the requirement as to standing to invoke the exercise of judicial power: … reflects a natural reluctance on the part of the courts to exercise jurisdiction otherwise than at the instance of a person who has an interest in the subject matter of the litigation in conformity with the philosophy that it is for the courts to decide actual controversies between parties, not academic or hypothetical questions. The established requirements as to standing ensure that the work of the courts remains focused upon the determination of rights, duties, liabilities and obligations as the most concrete and specific expression of the law in its practical operation, rather than the writing of essays of essentially academic interest. To recognise that a person has a sufficient interest to seek the exercise of judicial power where that exercise is apt to affect "the legal situation of persons subject to the jurisdiction of the court" serves to maintain the ordinary characteristics of judicial power. It may be accepted that there is a general public interest that governments act in accordance with the law enforced by the courts; but to conclude that the plaintiff's sense of grievance at the injustice of these laws is not an interest which suffices to give him standing to challenge their validity is not to undermine this aspect of the rule of law. Any person actually in jeopardy of punishment under these laws will have standing to challenge their validity. (Citations omitted.) 377 When the wider extract is read, it is apparent that the circumstances in Kuczborski were quite different from Mr Spencer's challenge. The basis for Mr Spencer's challenge is that the increased regulation of native vegetation clearance directly and adversely affected what he could do with his property Saarahnlee. He puts squarely in issue the effect of that increased regulation on his property and financial interests. It is true that his constitutional arguments involve a series of steps in their reasoning, before the question of the validity of the state legislation which imposed the controls is reached. However, he is entitled to frame his case in that way, and to submit that the acquisition he alleges occurred through the NSW legislation is entirely derivative from, or dependent upon, the two federal laws and the intergovernmental agreements. As it has turned out, he has not persuaded the Court that contention is correct. But for the Commonwealth to invite the Court to equate his claims in this proceeding with the circumstances in Kuczborski is incorrect. 378 In those circumstances, I turn to consider Mr Spencer's claims in reliance on s 51(xxxi) of the Constitution.

The s 51(xxxi) claim 379 Mr Spencer put his s 51(xxxi) claim in the following way (at p 55 of his final submissions): The first respondent argues that prior State laws show the 'trajectory', as it were, of law and policy that the State was embarked on, and this supposedly shows that the impugned State laws were independent and irrespective of the Commonwealth. But it is submitted that that is not the proper question. The question is whether the impugned Commonwealth laws, in their operation on the intergovernmental agreements in issue, are to be characterised "in a real sense", or "directly or indirectly, explicitly or implicitly", as laws with respect to the acquisition of property which fail to comply with s.51(xxxi); • if they were not, whether the Inter-governmental Agreements were ultra vires their enabling federal Acts; and • whether the impugned State laws were made pursuant to the invalid Commonwealth Acts or actions; not whether prior State laws were valid. If the impugned Acts or actions were in breach of s.51(xxxi), then prior State laws are irrelevant. (Emphasis added; footnotes omitted.) 380 Although Mr Spencer's contention that "prior State laws" are irrelevant is not correct, his submissions also reflect an understanding that he needs to demonstrate an acquisition of his property through the Commonwealth laws and the terms and conditions in the intergovernmental agreements. He seeks to do so by relying on the implementation of the Native Vegetation Conservation Act 1997 and Native Vegetation Act 2003 of New South Wales as instruments for Commonwealth action, and Commonwealth purposes. 381 On the central question about the application of s 51(xxxi) to the events I have described in these reasons, the parties' submissions articulate a considerable range of contentions and counter-contentions, many expressed in the alternative or sequentially. It is not necessary to repeat them in all their permutations. Of their nature, the applicant's claims could be resolved in a number of ways, with the analysis stopping at various points. The approach I have taken is to determine the questions which have been the subject of substantial evidence and argument and are appropriately seen as key aspects of Mr Spencer's claims. I have not necessarily followed each and every permutation of each and every argument through to a determined conclusion. 382 I propose to consider Mr Spencer's claim about the application of s 51(xxxi) to the conduct of the Commonwealth and the State in the following way: (1) Accepting (as I take the respondents and in particular the Commonwealth to do) that the two federal laws (the Natural Resources Management (Financial Assistance) Act and the Natural Heritage Trust Act) are supported by s 96, (a) whether they should be characterised as laws with respect to the acquisition of property, and (b) if so, whether they effect an acquisition of property other than on just terms. (2) Involved in this is whether s 96 is conditioned by s 51(xxxi). (3) If the two federal laws are not, in and of themselves, to be characterised as laws with respect to the acquisition of property, then whether when they are considered together with the four impugned intergovernmental agreements and the state legislation as a whole scheme in its practical operation on Mr Spencer's interests they contravene s 51(xxxi). (4) Whether Mr Spencer has made good his claims about the alleged informal intergovernmental arrangement and its influence on the state legislation contrary to s 51(xxxi). 383 In summary, I conclude that the two federal laws are not to be characterised as laws with respect to the acquisition of property. It is therefore strictly unnecessary to determine whether they effect an acquisition other than on just terms but, in case I am wrong in my opinion on the first issue, I determine that the valuation regime put in place by New South Wales, and applied to Saarahnlee, meant that Mr Spencer was offered just terms for the "bundle of rights" he held in the property itself. If, contrary to my opinion, it could be established that Mr Spencer's "carbon rights" had been acquired as a result of the federal laws, then it is clear on the evidence that there was no compensation paid for these rights and therefore no just terms. 384 It appears to be common ground that it is appropriate to characterise the two federal laws as laws with respect to the grants of financial assistance to the States, and at least to that extent supported by s 96 of the Constitution. In my opinion the current weight of authority suggests s 96 is conditioned by s 51(xxxi). That being the case, if the two federal laws had authorised the making of grants of financial assistance, terms of which required the State to acquire property (for itself, or for another) other than on just terms, then the federal laws would be exposed to invalidity, and the intergovernmental agreements and the state legislation which carried through these conditions might be inoperative (at least). It is arguable that Magennis [1949] HCA 66; 80 CLR 382 supports this proposition. I conclude that while the 1997 NHT Agreement, concluded pursuant to the two federal laws, required New South Wales to enact legislation further restricting the clearing of native vegetation on land in New South Wales, this did not effect an acquisition of property. I conclude that the remaining three intergovernmental agreements on which Mr Spencer relies did not impose terms and conditions which required New South Wales to take any steps (whether through exercise of legislative or executive power) to acquire property. 385 As to the informal arrangement alleged to have been made between the Commonwealth and the State, I have found elsewhere (see [326] to [372]) that Mr Spencer has not proven any such arrangement existed. Had he proven such an arrangement, it is arguable on the basis of dicta in ICM [2009] HCA 51; 240 CLR 140 that such an arrangement would also be conditioned by s 51(xxxi). How this occurs without a connection to federal law is not something that is, with respect, clear from the judgments in ICM. If this kind of argument rests on the proposition that s 51(xxxi) conditions executive power exercised under s 61 of the Constitution, this was barely touched on in argument by the parties, and in particular by the respondents. However, even if I had reached this point in my reasoning favourable to Mr Spencer, I would then have concluded that the nature of the arrangement he alleges did not effect, or result in, the acquisition of property by the Commonwealth, the State, or anyone else, because its terms did not differ materially from what can be found in the four intergovernmental agreements themselves. 386 The impact of the state legislation in its 1997 and 2003 forms could be generally characterised as variations on the kind of regulation imposed on Saarahnlee under previous state regulatory regimes, although with a discernible shift in emphasis towards halting vegetation clearance that did not manifest positive environmental outcomes as I have explained earlier in these reasons. Once that impact crystallised in July 2007 with the Rural Assistance Authority's decision, then it could in my opinion appropriately be characterised as a "taking". It was not however a "taking" required or achieved by federal law, nor by intergovernmental agreements contemplated by those federal laws. The State chose the form and content of the laws, and chose to implement an exit assistance scheme to deal with the impact of its laws. It chose, it can be said, to respond at least to some extent, to the urging of the Commonwealth to tighten and enhance its control over native vegetation clearance. No doubt at some level, funding from the Commonwealth played a role in its decision-making and the Commonwealth recognised both expressly and implicitly in all four agreements that adverse impacts of clearing controls might require adjustment packages from the State. The Commonwealth did not require those adjustments to be made. The State was able to impose vegetation controls without the constraint imposed by s 51(xxxi). Finally, even if I am wrong in seeing the state legislation as legally independent of the two federal laws and the intergovernmental agreements, there may have been a "taking" in July 2007, but there was no acquisition. If Mr Spencer had accepted the offer and sold Saarahnlee, there would have been. I fail to see how it was an acquisition required for Commonwealth purposes. In any event, as I set out below, the terms of the acquisition were just.

Are the Natural Resources Management (Financial Assistance) and Natural Heritage Trust Acts laws with respect to the acquisition of property? 387 The task of determining whether a law should be characterised as a law with respect to the acquisition of property must be undertaken bearing in mind that s 51(xxxi) is a "very great constitutional safeguard" (see Trade Practices Commission (Cth) v Tooth & Co Ltd [1979] HCA 47; 142 CLR 397 at 403, per Barwick CJ), and therefore the concepts of "property" and "acquisition" in s 51(xxxi) are generally given a broad construction, and a wide application (and sometimes both). Balanced against this is, as the State submitted, the consideration that a large number of federal laws detrimentally affect property rights, and in some cases there would be an incongruity in characterising the law as one subject to s 51(xxxi): see Tooth at 408; Theophanous v Commonwealth [2006] HCA 18; 225 CLR 101 at [55]-[57]. Section 51(xxxi) is not to be construed so as to impede the effective exercise of legislative powers conferred on the Commonwealth Parliament by the Constitution: It is hardly necessary to say that when you have, as you do in par. (xxxi), an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular effect, it is in accordance with the soundest principles of interpretation to treat that as inconsistent with any construction of other powers conferred in the context which would mean that they included the same subject or produced the same effect and so authorized the same kind of legislation but without the safeguard, restriction or qualification. But two observations must be made. First, it is necessary to take care against an application of this doctrine to the various powers contained in s. 51 in a too sweeping and undiscriminating way. For it cannot have much to do with some of the subject matters of power upon the very terms in which they are conferred. The other observation is that the principle does not apply except with respect to the ground actually covered by par. (xxxi) of s. 51. For example, no one would doubt that, under the power to make laws with respect to bankruptcy, property of the bankrupt may be sequestrated and property of others which has been left in his order and disposition may be vested in the Official Receiver and that s. 51 (xxxi) has no bearing on the matter. At the same time, if a law was made under which a piece of land was acquired for a Bankruptcy Office, s. 51 (xxxi) would govern the legislation and not s. 51 (xvii). It must be borne in mind that s. 51 (xxxi) confers a legislative power and it is that power only which is subject to the condition that the acquisitions provided for must be on just terms. (Attorney-General (Cth) v Schmidt [1961] HCA 21; 105 CLR 361 at 371-372 per Dixon CJ). 388 Brennan CJ said in Commonwealth v WMC Resources Ltd [1998] HCA 8; 194 CLR 1, at [13]: Axiomatically, a law is not a law for the acquisition of property unless it effects an acquisition of property. A law does not fall within s 51(xxxi) by reason only that it has an adverse effect on property not amounting to acquisition. As I pointed out in The Commonwealth v Tasmania (the Tasmanian Dam Case): "Where neither the Commonwealth nor any other person acquires proprietary rights under a law of the Commonwealth, there is no acquisition upon which par (xxxi) may fasten." But where a law of the Commonwealth purports to extinguish the proprietary rights of a person or a State, the law may or may not effect an acquisition. Dawson and Toohey JJ pointed out in Australian Tape Manufacturers Association Ltd v The Commonwealth that "[t]he mere extinction or diminution of a proprietary right residing in one person does not necessarily result in the acquisition of a proprietary right by another". However, s 51(xxxi) would be a "hollow facade" if a law of the Commonwealth which extinguished proprietary rights in relief of the burden or liability which those rights imposed on the Commonwealth or a third party were not held to effect an acquisition of property by the Commonwealth or the third party. In Mutual Pools & Staff Pty Ltd v The Commonwealth, I observed that "[i]f rights against the Commonwealth are extinguished by statute and the rights are proprietary in nature, there is an acquisition of property by the Commonwealth". Thus the purported statutory extinguishment of a plaintiff's cause of action against the Commonwealth was held to be an acquisition of property in Georgiadis v Australian and Overseas Telecommunications Corporation and in The Commonwealth v Mewett. (Citations omitted.) 389 The approach to characterisation was set out by Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ in New South Wales v Commonwealth [2006] HCA 52; 229 CLR 1 (Work Choices Case), at [142]: The general principles to be applied in determining whether a law is with respect to a head of legislative power are well settled. It is necessary, always, to construe the constitutional text and to do that "with all the generality which the words used admit". The character of the law must then be determined by reference to the rights, powers, liabilities, duties and privileges which it creates. The practical as well as the legal operation of the law must be examined. If a law fairly answers the description of being a law with respect to two subject matters, one a subject matter within s 51 and the other not, it is valid notwithstanding there is no independent connection between the two subject matters. Finally, as remarked in Grain Pool (WA) v The Commonwealth, "if a sufficient connection with the head of power does exist, the justice and wisdom of the law, and the degree to which the means it adopts are necessary or desirable, are matters of legislative choice". (Citations omitted.) 390 It is necessary then, to examine how it might be said either or both of the federal laws effect an acquisition of Mr Spencer's property, other than on just terms. 391 What are, relevantly, the "rights, powers, liabilities, duties and privileges" created by the two federal laws? Each authorises the Commonwealth to enter into agreements with the States, and does so in different terms. 392 By s 5 of the Natural Resources Management (Financial Assistance) Act, the Commonwealth may enter into agreements with the States to provide financial assistance for "projects approved, or to be approved" by a Minister, or "projects specified in the agreement". Section 8 imposes a condition on payments made by the Commonwealth for which an agreement provides, that if a condition to which the agreement is subject is not fulfilled, the payee (including, for example, a State) may have to repay the whole or part of the payment. In this way, satisfaction of conditions imposed in an agreement (for example, as to steps a State must take using its own executive or legislative powers) is, one might say, encouraged, by the spectre of repayment obligations pursuant to s 8. 393 Whatever one might say about s 8, the imposition of a liability such as that occurs at the most general level, without regard to subject matter, and in particular without any reference, express or implied, to proprietary interests, let alone the acquisition of property. 394 Section 19 of the Natural Heritage Trust Act also requires the terms and conditions of financial assistance granted by the Commonwealth to a State to be set out in a written agreement. There is no equivalent provision to s 8 of the Natural Resources Management (Financial Assistance) Act. Section 19(4) contemplates the agreement may establish a "framework" to achieve what is described as "common and complementary outcomes" in relation to three broadly expressed areas: environmental protection, natural resources management, and sustainable agriculture. It is readily conceivable that each of those three broadly expressed areas may encompass activities related to, or affecting, proprietary interests: so much is apparent from the definition of these terms in ss 15 to 17. However the only power created by these provisions is a power to enter into agreements for the provision of financial assistance, in relation to those three broad subject matter areas. 395 It is true that the subject matter of the grants contemplated by s 19 is further identified by the specification of the purposes of the Natural Heritage Trust of Australia Account in s 8, including the National Vegetation Initiative (the primary objectives of which are set out in s 10). Again, it can be readily conceived activities affecting proprietary interests will be involved in conserving and restoring native vegetation, being two of the primary objectives of the National Vegetation Initiative as set out in s 10. However it is not possible in my opinion to see a sufficient connection between those objectives and any conduct amounting to an acquisition of property to characterise the Natural Heritage Trust Act as a law with respect to the acquisition of property. 396 Those conclusions are not however an end to the issue. Looking at the "practical operation and effect" of both the federal laws requires an examination of the relevant intergovernmental agreements made pursuant to them. If this step were not taken, so as to look at the scheme as a whole - from the empowering legislation through to the agreements which are the product of it and then through to the State's legislative conduct - s 51(xxxi) could be circumvented and frustrated in a way which would be inconsistent with its status as a constitutional guarantee. It is well established that the guarantee cannot be avoided by a circuitous device to acquire indirectly the substance of a proprietary interest: see Bank of NSW v Commonwealth [1948] HCA 7; 76 CLR 1 at 349; Tooth [1979] HCA 47; 142 CLR 397 at 407. 397 Before then examining how the intergovernmental agreements concluded pursuant to these two federal laws operate, given that the Commonwealth appeared to accept that the Natural Heritage Trust Act and the Natural Resources Management (Financial Assistance) Act were laws made pursuant to s 96 of the Constitution, it is necessary to deal with the question of whether s 51(xxxi) conditions s 96, as it conditions the legislative powers in s 51.

Is s 96 conditioned by s 51(xxxi)? 398 At [47]-[48] of the FASOC, the applicant alleges: Further or alternatively, the said unconstitutional agreements and/or the informal arrangement were made in the exercise of the executive power of the Commonwealth under Constitution section 96 and/or section 51(xxxvi), and/or section 61 and/or section 51(xxxix) or a combination of these powers. The exercise of the executive power of the Commonwealth by the First Respondent in the premises alleged herein was and remains subject to the Constitutional guarantee. 399 It can be seen that there is no allegation that the two federal laws - the Natural Resources Management (Financial Assistance) and Natural Heritage Trust Acts - are themselves unsupported by s 96, or otherwise not valid exercises of federal legislative power. Nor is there any independent challenge to the power of the Commonwealth to enter into the intergovernmental agreements. The challenges to the federal laws are confined to their alleged invalidity by reason of the operation of s 51(xxxi), on the assumption it conditions s 96.

Section 96 400 The ability to impose "terms and conditions" on a grant under s 96 and the consequent facilitation of Commonwealth involvement in a range of activities far broader than those conferred on it by the Constitution, has been described as a power "apparently … not foreseen by those who included the provision in the Constitution" (Saunders C, "Towards a Theory for Section 96: Part I" (1987) 16 MULR 1-31, at 7). Professor Saunders points out (at 11) that the power conferred by s 96 is unusual, in that a grants Act under s 96 "represents involvement by the Parliament, as a principal, in an arrangement between two levels of government which conceptually is consensual in nature". 401 The operation of s 96 has been accepted as legitimately available to facilitate the Commonwealth pursuing its own policy objectives in areas where it lacks legislative powers (see expressly both Deputy Federal Commissioner of Taxation (NSW) v WR Moran Pty Ltd [1939] HCA 27; 61 CLR 735 and Attorney-General (Vic) (Ex rel Black) v Commonwealth [1981] HCA 2; 146 CLR 559 (D.O.G.S. Case)). As to the considerable breadth of influence the Commonwealth can have, Dixon CJ said in Victoria v Commonwealth [1957] HCA 54; 99 CLR 575 (Second Uniform Tax Case) at 610: The interpretation flowing from these two decisions … is inconsistent with the view that the terms or conditions cannot require the exercise of governmental powers of the State to conform with the desires of the Commonwealth in the exercise of such powers. It seems a short step from this to saying that the condition may stipulate for the exercise or non-exercise of the State's general legislative power in some particular or specific respect. Once this step is taken it becomes easier to ask than to answer the question - "Why then does this not apply to the legislative power of imposing this or that form of taxation?" 402 Moran concerned the reallocation of proceeds of excise duty on flour under a s 96 arrangement to wheat growers in all States except Tasmania, where the proceeds were applied to relieve Tasmanian flour millers (because there were few wheat growers in Tasmania). The differential treatment for Tasmania was said to constitute discrimination. The arrangement meant the State could appropriately be described as nothing more than a "conduit", and there might be a question whether the payments were truly "financial assistance" to a State. Here, there is no doubt that the monies payable under the Natural Resources Management (Financial Assistance) and Natural Heritage Trust Acts to New South Wales were payable as "financial assistance" to New South Wales, albeit with specific Commonwealth objectives and purposes in mind. The manner in which New South Wales chose to apply the money for those purposes was (lawfully) left up to it, although the evidence does reveal some considerable debate between the Commonwealth and New South Wales about how monies were to be most appropriately applied. 403 Even if New South Wales were a mere conduit for moneys intended by the Commonwealth to be applied within New South Wales in certain ways (which is not borne out by the evidence) this circumstance would not on current authority invalidate an exercise of power under s 96. What is important, it seems, is the voluntary nature of a s 96 grant, as financial assistance pursuant to terms the State has elected to accept. It is true, as Professor Saunders notes (at 24) that where conditions on a s 96 grant are left to the general discretion of the Executive, or not mentioned at all in the empowering legislation, then even with a purposive approach, determining whether a s 96 grant Act has a purpose contrary to the Constitution, and specifically contrary to a constitutional guarantee, may be difficult. 404 Despite some judicial observations that s 96 is not conditioned by any other provisions in the Constitution and, in particular, not by the constitutional guarantees (see for example Moran at 771 per Starke J, citing Victoria v Commonwealth [1926] HCA 48; 38 CLR 399 (Roads Case)), the overwhelming trend in the authorities is to the opposite effect, at least where a purposive approach can be taken to both a s 96 grant Act and the relevant constitutional prohibition, as it could with both ss 116 and 51(xxxi). 405 The difficulties which inhere in the generality of federal laws authorising the grant of financial assistance is apparent here, in the generality with which s 5 of the Natural Resources Management (Financial Assistance) Act and s 19(4) of the Natural Heritage Trust Act are expressed, and then also by both the 1997 NHT Agreement and the 2003 NHT Agreement setting out frameworks for the making of more specific intergovernmental agreements on a project by project basis.

Early decisions on the relationship between ss 96 and 51(xxxi) 406 The two decisions which must be considered, and were given some considerable attention in the parties' submissions, are Pye v Renshaw [1951] HCA 8; 84 CLR 58 and Magennis [1949] HCA 66; 80 CLR 382. The third important decision (prior to ICM [2009] HCA 51; 240 CLR 140) is Gilbert v Western Australia [1962] HCA 7; 107 CLR 494, and I deal with that at [588]-[595] below. 407 Both Pye and Magennis concerned post-World War II soldier settlement schemes, designed to give veterans access to land and the opportunity to make a new livelihood after their war service. In 1945 an agreement was made between the Commonwealth and New South Wales to acquire parcels of land in New South Wales so as to give effect to the scheme. The agreement was purportedly authorised by the War Service Land Settlement Agreement Act 1945 (Cth). There were two schedules to the Commonwealth Act. One provided the form of intergovernmental agreement to be concluded between the Commonwealth and each of New South Wales, Victoria and Queensland. The second schedule contained the form of agreement to be concluded between the Commonwealth and each of South Australia, Western Australia and Tasmania. 408 What became the key impugned aspect of the arrangement was contained in the form of agreement in the first schedule; namely a clause that provided that land acquired by the State for the purposes of the agreement was to be acquired "compulsorily or by agreement and at a value not exceeding that ruling on the tenth day of February, One thousand nine hundred and forty-two". 409 It is worthwhile setting out the entire impugned clause, as its content illustrates the differences from the present intergovernmental agreements under consideration in this proceeding: 11. - (1.) The State shall - (a) set apart or resume, as the case may be, for settlement such land comprised in an approved plan of settlement as is Crown land; and (b) acquire compulsorily or by agreement and at a value not exceeding that ruling on the tenth day of February, One thousand nine hundred and forty-two, private land or lands held under lease from the Crown comprised in an approved plan of settlement. (2) The State shall subdivide develop and improve the land to a stage where it can be brought into production by a settler within a reasonable time having regard to the type of production proposed. 410 A corresponding authorising Act was passed by the NSW Parliament in early 1946. 411 Also in 1946, amendments were made to earlier NSW legislation, the Closer Settlement (Amendment) Act 1907 (NSW) so that land resumed pursuant to powers conferred by that Act, but for the purposes of the soldier settlement scheme, could be resumed at a value that did not exceed the value stipulated in the agreement in the first schedule to the federal legislation. The effect of the amendments to the NSW Closer Settlement Act was to give effect to the valuation date as agreed between the Commonwealth and New South Wales. 412 The plaintiff company in Magennis held profitable grazing lands in the Queanbeyan/Yass district of New South Wales which were exposed to acquisition for the purposes of the agreement, by reason of a proclamation made in August 1945. By that time, the plaintiff's land had significantly increased in value since 10 February 1942. 413 The plaintiff sought declarations that the Commonwealth and state legislation approving the agreements, the agreement itself and the NSW amendments to the Closer Settlement Act inserting the valuation date requirement were all invalid on the basis that the acquisition of the plaintiff's property would contravene s 51(xxxi). 414 A majority of the Court (Latham CJ, Rich, Williams and Webb JJ) held the legislation and agreement invalid. Dixon and McTiernan JJ dissented. Latham CJ emphasised that if an acquisition was achieved through an intergovernmental agreement and a state law this would not necessarily insulate the Commonwealth law, nor the other mechanisms employed from invalidity if the requirements of s 51(xxxi) were not met (at 401-402): The constitutional provision is not limited in terms to laws providing for the acquisition of property by the Commonwealth itself. The words are general - "with respect to the acquisition of property." It is obvious that the constitutional provision could readily be evaded if it did not apply to acquisition by a corporation constituted by the Commonwealth or by an individual person authorized by a Commonwealth statute to acquire property. Further, the present case shows that the constitutional provision would be quite ineffective if by making an agreement with a State for the acquisition of property upon terms which were not just the Commonwealth Parliament could validly provide for the acquisition of property from any person to whom State legislation could be applied upon terms which paid no attention to justice. … I agree that, as legislation with respect to the subject of the acquisition of property can be enacted by the Commonwealth Parliament only by virtue of the power conferred by s. 51 (xxxi.), all such Commonwealth legislation must affirmatively provide just terms for such acquisition whether the acquisition be by the Commonwealth or by a State or by any other person. 415 He did not see the fact that the Commonwealth law was a law for the giving of financial assistance to the States within s 96 as insulating it from the requirements of s 51(xxxi). As a matter of characterisation, Latham CJ saw the law as one for the acquisition of property, and rejected the argument that it was authorised only by s 96 which was not conditioned by s 51(xxxi) (at 402): The provisions in the schedule to the Commonwealth Act are provisions of an agreement and not of a statute. It is true that the Act is a law authorizing only the execution of the agreement, but the whole subject matter of the agreement is the acquisition of property upon certain terms and conditions for certain purposes. The provisions of the agreement are directed to the acquisition of property and the agreement becomes effective in achieving its objective of the settlement of discharged servicemen only when property has been acquired. I can see no reason whatever for holding that a law approving an agreement of such a character as this is not a law with respect to the acquisition of property. 416 On the argument that the acquisition was effected under state law, and the terms said to be unjust were contained in the amendments to the Closer Settlement Act (a NSW law), Latham CJ saw the references in the NSW legislation to the agreement, and to the valuation proceeding on the basis set out in the agreement, as fatal to the NSW legislation (at 405-406): There is in my opinion no doubt as to the power of the State Parliament to provide for compensation for land resumed upon any basis which it thinks proper. But in the present case the State proposes to resume the land, not under the general provisions of State statutes which provide for paying the value of the land, but "for the purposes of" the agreement with the Commonwealth and, at present at least, not otherwise: par. 14 of statement of claim. I have stated my reasons for the opinion that the State legislation is inoperative so far as it relates to, and purports to give powers to resume lands for the purposes of, the agreement. The result is that the State may proceed with the resumption of the plaintiff's land under the Closer Settlement Acts - but at a value assessed by a Board and subject to appeal to the Land and Valuation Court: Act of 1907, ss. 9, 10. The provisions which limit the amount of compensation for resumed land to the value as at 10th February 1942 (with a possible increase up to fifteen per cent more if the owner does not exercise his right of contesting the assessment) apply only to purchase or resumptions "made for the purpose of the scheme contained in the agreement approved and ratified by the War Service Land Settlement Agreement Act 1945": Act No. 14 of 1946, s. 3 (b) and (c). When a Board assesses or the court, upon appeal, determines the price or value for resumed land, the limitation to value as at 10th February 1942 applies to the assessment of the Board or the decision of the court "where any purchase or resumption is made for the purposes of the scheme" contained in the agreement: Act No. 14 of 1946, s. 3 (b), inserting a proviso to that effect in par. (f) of sub-s. (7) of s. 5 of the Closer Settlement (Amendment) Act 1907. As in my opinion there is no such agreement, the direction as to the limit of compensation has no operation in this or in any case. 417 Williams J saws the compensation as "obviously inequitable" (at 418), and also saw no need for the Commonwealth Act itself to effect the acquisition (at 423-424): In my opinion the paragraph applies to all Commonwealth legislation the object of which is to acquire property for a purpose in respect of which the Commonwealth Parliament has power to make laws. It is immaterial whether the acquisition is to be made by the Commonwealth or some body authorized to acquire property by the Commonwealth or by a State by agreement with the Commonwealth. The Commonwealth legislation is invalid unless it provides for the acquisition of the property on just terms by whatever machinery the acquisition is to be brought about. In order to be legislation with respect to the acquisition of property within the meaning of s. 51 (xxxi.) of the Constitution, the Commonwealth or some body authorized by the Commonwealth must no doubt have an interest in the acquisition of the property. Otherwise the acquisition could not be for a purpose in respect of which the Commonwealth Parliament has power to make laws. But the interest need not be a proprietary interest. Any legal interest including a contractual interest would be sufficient if it made the acquisition one for such a purpose. The present agreement confers on the Commonwealth a number of legal rights which are at least contractual rights with respect to the use and disposal of the land acquired by the State. When the land is so acquired it must be disposed of in accordance with the agreement and not otherwise. The land is acquired by the State on behalf of the Commonwealth and itself. Half the excess cost of acquiring, improving and developing the land, and more than half the other expenses incidental to carrying out the scheme are to be borne by the Commonwealth. The scheme would be in substance the same if the land was acquired jointly by the Commonwealth and the State. Under the scheme the State acquires the land solely but it is then dealt with on account of the Commonwealth and State jointly. The whole transaction is a joint venture entered into between the Commonwealth and the State to settle discharged members of the Forces on the land. The acquisition of the necessary land is of the essence of the scheme. The purpose of the Commonwealth is to settle discharged members of the Forces on this land. Commonwealth legislation authorizing the executive government of the Commonwealth to enter into such an agreement is, in my opinion, legislation with respect to the acquisition of land for a purpose in respect of which the Commonwealth Parliament has power to make laws. Section 3 (1) of the War Service Land Settlement Agreements Act is, therefore invalid. 418 At 424-425, he explained how the invalidity flowed through the intergovernmental agreement to the valuation provisions in the NSW Act: If this is an agreement which it is beyond the power of the Commonwealth Parliament to authorize, then it is not an agreement between the Commonwealth and the State, and there is no agreement which the State Act can approve and ratify. The State Act is therefore an Act which has in law no operation. It is the same with the proviso to s. 4 (b) of the Closer Settlement (Amendment) Act 1907 introduced by the War Service Land Settlement and Closer Settlement (Amendment) Act 1945 as amended by the War Service Land Settlement and Closer Settlement (Amendment) Act 1948. The proviso only operates where there is a resumption of land for the purposes of the scheme contained in the agreement approved and ratified by the War Service Land Settlement Agreement Act 1945. As there is no agreement, this Act approved and ratified nothing, and there could not be any resumption under the Closer Settlement (Amendment) Act to which the proviso could apply. 419 Rich J agreed with Williams J. 420 Webb J (at 429-430) also saw the scope of s 51(xxxi) as broad enough to encompass what had occurred: There is no substantive independent power in the Commonwealth Parliament to authorize agreements with the States. The power if it exists must be found in some section of the Constitution authorizing legislation to the effect of the agreement. I think the power is found in par. (vi.) of s. 51 and in s. 96. The agreement deals with matters with respect of which the Commonwealth Parliament has power to make laws: i.e. the settlement of discharged soldiers and financial assistance to the States. Further it is an agreement for the acquisition of property for such purposes. The question is whether the agreement and the Commonwealth statute authorizing it constitute a law with respect to the acquisition of property for such purposes. It is submitted for the defendants that it is not such a law because the acquisition is not made by the Commonwealth Parliament or by any body or person deriving the power of acquisition from that Parliament. In my opinion par. (xxxi.) of s. 51 is not so limited. It speaks of a law with respect to the acquisition of property. As the Commonwealth Parliament is a plenary legislature these words should be given their fullest meaning consistent with other provisions of the Constitution. They are broad enough to include an acquisition by the State exercising its powers of acquisition by agreement with the Commonwealth, and should, I think, be held to extend to such acquisition. (Citations omitted, emphasis in original.) 421 In dissent, Dixon J did not characterise the federal law as a law with respect to the acquisition of property at all. He saw it (at 410-411) as a law made pursuant to s 51(xxxix), in aid of the s 61 executive power. He then saw the agreements themselves as concerning acquisition of property, but by the States. His Honour dismissed shortly the s 51(xxxi) argument (at 411-412): Because it is provided that the State shall exercise its powers, legislative or executive, in this manner, it is said that the enactment authorizing the execution of the agreement on behalf of the Commonwealth is a law with respect to the acquisition of property. Thus, because the State undertakes to exercise its powers of acquisition, it is argued, apparently, that there is therefore an acquisition "with respect to" which the Commonwealth legislates when it passes a law authorizing the execution of the agreement containing the State's undertaking. It could hardly be more remote from the real purpose of s. 51 (xxxi.) which is to furnish the Commonwealth with a legislative power of acquiring property and providing for the acquisition of property by its agencies and instrumentalities and perhaps by persons standing in no such relation to the Commonwealth for purposes within its legislative competence, at the same time imposing the condition that it must be on just terms. The State is bound by no such condition and, however hard or unjust it may be considered, there is nothing in s. 51 (xxxi.) to restrain the power of the State and nothing to prevent the Commonwealth including such a provision as clause 11 in an agreement with the State. 422 McTiernan J also dissented. His Honour saw the asserted consequential invalidity flowing from the Commonwealth Act, to the agreements, and then to the state legislation as a flawed analysis (at 415): Every such State law remains in force irrespective of the question whether the Commonwealth Act is valid or not. The doctrine of frustration does not apply to a legislative Act: it is not repealed by reason of a change in the circumstances in which the Act was expected to operate. If the Commonwealth Parliament has no power to enter into the agreement, nevertheless the amendments made by the State Parliament to the Acts of New South Wales in consequence of its ratification remain in those Acts and lose nothing of their legal force on that account. 423 Like Dixon J, McTiernan J did not see the federal legislation as a law with respect to the acquisition of property. Rather (at 416): It is plain upon the terms of the agreement that the Commonwealth and State were co-operating in a scheme to settle on the land persons whom each Government has constitutional power to assist. [McTiernan J then referred to the remarks of Starke J in Moran [1939] HCA 27; 61 CLR 735, at 774.] The State of New South Wales used its constitutional power to play its part in the scheme by amending its Acts for the promotion of closer settlement. It would be surprising if by making this agreement with the Commonwealth the State restricted its legislative power, including its power to resume land within the State by importing into its own Constitution a condition in the Commonwealth Constitution restricting Commonwealth power only: it would be a novel result that a State power becomes less when a State agrees upon co-operation with the Commonwealth than it is when the State acts separately. In my opinion the State has lawful authority to proceed with the resumption of the subject land if it should think fit to do so. 424 By the time the High Court considered another resumption under the NSW legislation in Pye v Renshaw [1951] HCA 8; 84 CLR 58, the NSW legislation had been amended. References to the intergovernmental agreement as the basis for the restricted valuation of acquired land were removed. Instead, all land acquired for the purposes of grant to returned soldiers (or other "eligible persons") under the 1941 NSW legislation was to be acquired at the restricted valuation. All references to Commonwealth involvement were also removed, as were any remaining references to the intergovernmental agreement. 425 At 78-79, the Court described the decision in Magennis in the following terms: It was held by the majority in the Magennis Case (Dixon and McTiernan JJ. dissenting) that the Commonwealth Act No. 52 of 1945 was a law with respect to the acquisition of property, that it did not provide for just terms, and that it was therefore in excess of the power conferred by s. 51 (xxxi.) of the Constitution and void. It was said to follow that the agreement executed in pursuance of the Act was not binding on the Commonwealth, and, because the agreement was not binding on the Commonwealth, it was held that there was nothing upon which the State Act No. 6 of 1946, which purported to approve and ratify the agreement, could operate. That Act was treated as simply inoperative. The position thus reached could not, of course, affect the validity of any State legislation authorizing the acquisition of land, because State powers are in no way affected by s. 51 (xxxi.). As Latham C.J. said: "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". It was said, however, that, under the State legislation as it then stood, the provisions limiting the amount of compensation to the value as at 10th February 1942 applied only to resumptions "for the purpose of the scheme contained in the agreement", and there was in law no agreement. The State could, therefore, proceed with the resumption of the plaintiff's land, but only under the general provisions of s. 4 of the Closer Settlement (Amendment) Act 1907, that is, at a value assessed by a board and subject to appeal to the Land and Valuation Court, per Latham C.J.; per Williams J.; per Webb J. Webb J. put it thus: - "The State legislation is inoperative so far as it was enacted to give effect to the agreement: properly construed, it contemplates, I think, a valid agreement". 426 Having examined the changes, the Court held in Pye (at 80) that: 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. To adopt the language of Webb J., already quoted, it cannot now be correct to say that, properly construed, the State Acts contemplate the existence of a valid agreement or of any agreement or scheme. 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. 427 The Court looked at the three neutral preconditions to a valid acquisition under the NSW legislation - publication in the Gazette of notice the Governor was considering acquiring particular land; a report of the advisory board whether the land should be acquired; and finally approval of the resumption by both Houses of Parliament. If these conditions were met (and the Court held there was no challenge to them in Pye), then the resumption was lawful. The use to which acquired lands were to be put was determined through the War Service Land Settlement Act 1941 (NSW), but only once the lands were acquired under the Closer Settlement Act. 428 The Court then proceeded to dismiss the plaintiff's arguments. It held (at 81) it did not matter whether the Commonwealth had "approved" the acquisition of the plaintiff's land: it only mattered whether the statutory conditions were fulfilled. As to the plaintiff's allegation that the Commonwealth would decide (under the intergovernmental agreement) who would be settled and would finance the settling, the Court held (at 82): It is impossible to maintain that the validity of the resumption by the State can be affected if it chooses to co-operate with the Commonwealth in the matter of closer settlement or to accept financial assistance from the Commonwealth. 429 The change in the way land was to be acquired meant, the Court held (at 82), that it was now very clear that the power of acquisition was given by the NSW Parliament to the Executive "irrespective of the agreement or anything contained in it". 430 As to the plaintiff's claims that the valuations were made in conjunction with the Commonwealth, and that the Commonwealth "arranged" to make special capital contributions to acquiring, developing and improving the lands, again the Court held (at 82), whatever arrangements the State chose to make about valuations (with the Commonwealth or anyone else) were "matters equally irrelevant to the resumption". The Court also rejected the allegations of agency: namely, the allegation that the State was simply acting as the Commonwealth's agent. It held that the effect of the steps under the Closer Settlement Act rendered the State alone the legal and beneficial owner of the property. 431 With some relevance in particular to Mr Spencer's arguments, the Court rejected (at 82) the argument that the purposes of the acquisition were Commonwealth purposes: But the settlement of discharged soldiers on subdivided land, with or without the financial assistance and co-operation of the Commonwealth or of another State or country or of a banking institution or anybody else, is closer settlement within the meaning of the Acts, and for the purposes of this case that is all that matters. 432 The Court then turned to the final argument, which was that the Commonwealth and the Federal Treasurer were paying, and intended to continue paying, monies to New South Wales on the condition that New South Wales use them for acquiring land at less than its real value, and settling returned soldiers approved by the Commonwealth. This was the plaintiff's attack on the Commonwealth's appropriation of money for the purposes of the soldier settlement scheme. The Court dismissed it shortly as well (at 83): But, even if it be assumed (an assumption of doubtful validity) that the plaintiff has such an interest as would enable him to maintain an action founded on this proposition, the proposition itself cannot be supported. The argument really comes to this. The Commonwealth cannot itself acquire land except upon just terms. A State can resume land on any terms, just or unjust, authorized by its Parliament. But the Commonwealth is not authorized by s. 96 or any other provision of the Constitution to provide money for a State in order that the State may resume land otherwise than on just terms. This is the very argument which was rejected in Victoria v. The Commonwealth: see also South Australia v. The Commonwealth, where Latham C.J. said: - "The Commonwealth may properly induce a State to exercise its powers ... by offering a money grant". (Citations omitted.) 433 On the same day as Pye, the High Court also examined the Victorian soldier settlement scheme: Tunnock v Victoria [1951] HCA 55; 84 CLR 42. It found, as in Pye, that the Victorian legislation was not "mere machinery" for carrying into effect the intergovernmental agreement with the Commonwealth: at 56. 434 The decision in Pye was of course relied on heavily by the respondents in this proceeding. It takes a somewhat literal approach to the way in which limits on legislative power that might be characterised as guarantees, such as s 51(xxxi), can condition other federal powers, such as s 96. It looks only for direct interference by the Commonwealth through an intergovernmental agreement and which manifests itself clearly in the terms of the exercise of legislative power by the State. 435 No analysis was made by the respondents of how Pye sits with the High Court's recent decisions in Pape v Federal Commissioner of Taxation [2009] HCA 23; 238 CLR 1, and in Williams v Commonwealth (No 1) [2012] HCA 23; 248 CLR 156. For example, the Court's doubts about Mr Pye's standing may not sit easily with the High Court's decision in Pape. Since he was not legally represented, it is unsurprising Mr Spencer did not deal with these issues. Even when he was legally represented, Pape and Williams (No 1) having been decided by this stage, there were no references by his then legal representatives to those authorities and how they might affect the analysis in Pye or ICM [2009] HCA 51; 240 CLR 140. 436 The prospect of less direct, but nevertheless real, interference or influence by the Commonwealth, in a way which might be said to circumvent the guarantee in s 51(xxxi) was canvassed in ICM and in the s 31A decision in Spencer [2010] HCA 28; 241 CLR 118. I turn to those.

The current state of the law about the relationship between ss 96 and 51(xxxi): ICM [2009] HCA 51; 240 CLR 140 437 One can find a number of observations by Justices of the High Court to the effect that s 51(xxxi) should be taken to condition other powers in the Constitution. So much was acknowledged by Hayne and Bell JJ in the Plain Packaging Case [2012] HCA 43; 250 CLR 1 at 66-67, by reference to Dixon CJ in Schmidt [1961] HCA 21; 105 CLR 361 at 371-372: The decisions of this Court show that if para (xxxi) had been absent from the Constitution many of the paragraphs of s 51, either alone or with the aid of para (xxxix), would have been interpreted as extending to legislation for the acquisition of land or other property for use in carrying out or giving effect to legislation enacted under such powers. The same decisions, however, show that in the presence in s 51 of para (xxxi) those paragraphs should not be so interpreted but should be read as depending for the acquisition of property for such a purpose upon the legislative power conferred by para (xxxi) subject, as it is, to the condition that the acquisition must be on just terms … [W]hen you have, as you do in para (xxxi), an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular effect, it is in accordance with the soundest principles of interpretation to treat that as inconsistent with any construction of other powers conferred in the context which would mean that they included the same subject or produced the same effect and so authorised the same kind of legislation but without the safeguard, restriction or qualification. (Emphasis by Hayne and Bell JJ in Plain Packaging Case.) 438 In Wurridjal v Commonwealth [2009] HCA 2; 237 CLR 309 at [185]-[187] Gummow and Hayne JJ said: Next, for present purposes, the critical point to be derived from Schmidt is that the application of the principle of interpretation described there - that conferral of an express legislative power subject to a limitation is inconsistent with construction of other legislative powers in a way that would authorise the same kind of legislation but without the safeguard or restriction - cannot be confined to construction of the heads of power enumerated in s 51. The principle, the soundness of which is not disputed, must be applied to all heads of the power of the Parliament. The application of this principle of construction has been described as "abstracting" the power of acquisition from other heads of power. That description may readily be accepted if it is intended as no more than a shorthand description of the effect of applying the principle of construction identified by Dixon CJ in Schmidt. In the present case, however, the notion of "abstraction" was, at times during the argument for the Commonwealth, treated as leading to "incongruous" results in the construction of s 122. But when it is recognised that the task to be undertaken is the construction, as a whole, of the legislative powers of the Parliament, any supposed incongruity said to follow from reading s 122 as limited in relevant respects by s 51(xxxi) disappears. It disappears essentially for two reasons. In considering the validity of a law passed by the Parliament, it is neither necessary nor appropriate to seek to characterise that law as a law with respect to a single head of legislative power. The law may, and commonly will, find support in several heads of power. The present case, and the situation considered in Newcrest, are examples where s 122 is one of several heads. So also is Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Ame. Secondly, if, in addition to whatever other characters it may have, the law has the character of a law with respect to the acquisition of property, the law in that aspect must satisfy the safeguard, restriction or qualification provided by s 51(xxxi), namely, the provision of just terms. (Citations omitted.) 439 The matter was more squarely confronted in ICM [2009] HCA 51; 240 CLR 140, for the most part by reference to s 96, but also by reference to s 61. The decision exemplifies how the scope of s 51(xxxi), and its relationship with ss 96 and 61, are matters on which reasonable judicial minds still differ. Further, there are some parallels between the subject matter in ICM and the subject matter of this proceeding, in the sense of a tension between the private use of land and the achievement of environmental policy outcomes in cooperative federal schemes. 440 The plaintiffs in ICM held bore licences which had been issued under the Water Act 1912 (NSW), and which were integral to the farming activities undertaken by the plaintiffs in central New South Wales, in an area covered by the Lower Lachlan Groundwater System, which covered some 29,770 km². As in many agricultural areas of Australia demand for water was high, and there was tension between access to water for agricultural purposes, and the preservation of ground and surface water to ensure a healthy and sustainable environment. French CJ, Gummow and Crennan JJ described the situation which arose in ICM in the following way (at [3]): Successive governments of the State of New South Wales (the State) have long monitored, regulated and restricted access to and use of both groundwater and surface water. Policies have been formulated and pursued so as to achieve equitable access among water users, to mitigate adverse effects on the environment, and to ensure that water, as a finite and fluctuating natural resource, is able to be replenished for future use. The extraction and use of water has been regulated by statute since 1896, and, in particular, from 1912 principally by the Water Act 1912 (NSW) (the 1912 Act or the Water Act). The Water Management Act 2000 (NSW) (the 2000 Act) provided (s 401 and Sch 7) for the repeal of the 1912 Act. This litigation follows upon the replacement of the one statutory regime with the other. 441 The plaintiffs' bore licences were replaced on 1 February 2008 by a new system of licences issued under the Water Management Act 2000 (NSW) which were called "aquifer access licences". The plaintiffs were licensed to take significantly less (between 66% and 70%) water than they had been permitted to take under the bore licences. This decrease was one of the avowed outcomes of the cooperative scheme which brought about the changes. 442 Concern about decreasing groundwater levels and the resultant environmental effects led to an intergovernmental agreement in June 2004 relevantly between the Commonwealth and New South Wales, known as the National Water Initiative. The agreement described one of its objectives as to complete the return of all currently over-allocated or over-used water systems to environmentally sustainable levels of extraction. 443 Pursuant to the agreement, the Commonwealth was to establish a National Water Commission, and through the National Water Commission funding would be available to pursue the objectives of the National Water Initiative. The National Water Commission was established in December 2004 through the National Water Commission Act 2004 (Cth), which also created the Australian Water Fund Account, out of which financial assistance for particular projects relating to Australia's water resources could be funded. The projects were to be determined by the responsible Minister. 444 One such project agreed between New South Wales and the Commonwealth, on the basis of joint funding of $55 million each, was a project involving the Lower Lachlan Groundwater System. The project was formalised by a further intergovernmental funding agreement, pursuant to which the Commonwealth agreed to pay New South Wales $55 million, and in return New South Wales promised to fulfil the goals of the National Water Initiative. Two of the steps New South Wales agreed to undertake were to implement Water Sharing Plans so as to reduce the water entitlements of water licence holders in the Lower Lachlan by 56 percent, and to convert bore licences held under the Water Act 1912 to aquifer access licences under the Water Management Act 2000. Further reductions in water entitlements were subsequently made, to the levels to which I have referred at [441] above. 445 Water sharing plans were a form of subordinate legislation made under s 45 of the Water Management Act by the responsible Minister: the Lower Lachlan water sharing plan and regulations under the Act both commencing 1 February 2008 replaced the plaintiffs' bore licences with aquifer access licences, but the entitlements under those licences were set by the water sharing plan the Minister had made under s 45. 446 The plaintiffs' direct challenge was to the regulations which replaced their bore licences, but they contended that their validity depended on, amongst other things, the validity of the water sharing plan made under s 45 and the New South Wales/Commonwealth funding agreement which contemplated the water sharing plan would be made. In turn they challenged the National Water Commission Act 2004 itself in so far as it permitted the provision of financial assistance to New South Wales, which was given on the condition that New South Wales acquire the plaintiffs' property (their bore licences) in a manner contrary to s 51(xxxi). 447 A majority of the Court upheld the validity of the scheme, and its component parts. French CJ, Gummow and Crennan JJ held (at [69]) that when their bore licences were replaced, the plaintiffs had no common law rights with respect to the extraction from the land of groundwater for the purposes of their businesses, water being a common resource, always subject to the power of the State to limit the amount which could be taken for private use. Secondly, their Honours held that whatever proprietary characteristics the bore licences may have had, there was no acquisition of property within the meaning of s 51(xxxi), on the basis that even if the scheme imposed new limits on the use of water by the plaintiffs there was no new and identifiable benefit or advantage received by the State, since it always had the power to limit the volume of water which could be taken from that resource. Their Honours referred (at [85]) to a contrast with the situation in Newcrest Mining (WA) Ltd v Commonwealth [1997] HCA 38; 190 CLR 513: To acquire the substance of proprietary interests in the mining tenements considered in that case is one thing, to cancel licences to extract groundwater is another. The mining tenements were interests carved out of the radical title of the Commonwealth to the land in question, and the radical title was augmented by acquisition of the minerals released from the rights of another party to mine them. 448 Hayne, Kiefel and Bell JJ distinguished between the proprietary nature of the bore licences and the groundwater, the latter not being the subject of property rights, but rather a common or public resource. In controlling access to that common resource (albeit now by way of much greater restrictions on access) the State gained no identifiable or measurable advantage. 449 At [143] their Honours made the following observation about the nature of groundwater: The first point to recall is that, unlike minerals, if groundwater is extracted it will ordinarily be replaced, over time and at least to some extent, by natural processes. An important purpose for regulating access to groundwater is thus to ensure that the resource is neither depleted nor degraded. That is, control is directed not just to the use, consumption, or extraction of the resource, but to ensuring its continuing availability. 450 Later their Honours described groundwater as a "replaceable but fugitive resource" (at [145]). 451 Accepting that the 2008 regulations reduced the plaintiffs' entitlements to draw water, their Honours did not accept that any other person received a measurable or identifiable advantage. The State was the only possible candidate, and, unlike Newcrest, here the State's "title" was not enhanced or added to as it was in Newcrest, where the State acquired minerals (or, reacquired them) freed from the rights of Newcrest to mine them. In contrast (see [153]): the measure of control which the State has over the resource was unaltered by the cancellation of any particular entitlements to extract groundwater. The amount of water that the State could permit to be extracted was bounded only by the physical state and capacity of the aquifer, and such policy constraints as the State chose to apply. Neither the existence, nor the replacement or cancellation, of particular licences altered what was under the control of the State or could be made the subject of a licence to extract. If, as was hoped or expected, the amount of water in the aquifer would thereafter increase (or be reduced more slowly) the State would continue to control that resource. But any increase in the water in the ground would give the State no new, larger, or enhanced "interest in property, however slight or insubstantial", whether as a result of the cancellation of the plaintiffs' bore licences or otherwise. 452 Heydon J dissented. It is important to canvass his Honour's dissent in some detail, given it might assist in clarifying Mr Spencer's arguments, and it was relied on in some of Mr Spencer's submissions. For the most part, and subject to his Honour's observations which I note at [456] below, I do not understand Heydon J's approach to depend upon any particular feature of an exercise of legislative power under s 96 rather than under s 51. Rather, it is a generally distinct approach to s 51(xxxi) from that taken by the majority. 453 His Honour traced some of the history and context of s 51(xxxi), and observed (at [183]) that "[t]he age when the Constitution was drafted was the apogee of liberalism, and the protection of property rights was central to the liberal creed". His Honour took a broad approach to the construction of each of the components of s 51(xxxi) and, importantly for the present proceeding, of the concept of acquisition (at [190]): Termination of property is not enough to attract s 51(xxxi). Nor is destruction of property. Nor is interference with property. "[T]here must be an acquisition whereby the Commonwealth or another acquires an interest in property, however slight or insubstantial it may be." However, given that even a slight acquisition of property will suffice, if "there is a receipt, there is no reason why it should correspond precisely with what was taken." It has been said that this "is particularly so with 'innominate and anomalous interests'." "[T]here does not need to be correspondence either in appearance, value or characterisation between what has been lost and what may have been acquired. Indeed what has been acquired may often be without any analogue in the law of property and incapable of characterisation according to any established principles of property law." (Citations omitted, emphasis by Heydon J.) 454 On the acquisition issue, Heydon J was critical of what he described as the "doctrine" enunciated in Mutual Pools & Staff Pty Ltd v Commonwealth [1994] HCA 9; 179 CLR 155 at 189-190 by Deane and Gaudron JJ that there is no acquisition of property where federal laws provide for the creation, modification, extinguishment or transfer of rights and liabilities as an incident of, or a means for enforcing, some general regulation of the conduct, rights and obligations of citizens in relationships or areas which need to be regulated in the common interest. His Honour noted a number of other authorities supporting that proposition, on which the Commonwealth had relied, including Australian Tape Manufacturers Association Ltd v Commonwealth [1993] HCA 10; 176 CLR 480 at 510 per Mason CJ, Brennan, Deane and Gaudron JJ; Health Insurance Commission v Peverill [1994] HCA 8; 179 CLR 226 at 236-237; Georgiadis v Australian and Overseas Telecommunications Corporation [1994] HCA 6; 179 CLR 297 at 307; Nintendo Co Ltd v Centronics Systems Pty Ltd [1994] HCA 27; 181 CLR 134 at 161; and Airservices Australia v Canadian Airlines International Ltd [1999] HCA 62; 202 CLR 133 at [497]-[503] and [517]-[519]. 455 Noting the criticisms by Callinan J in particular of this doctrine (Heydon J referred to Callinan J's reasoning in Smith v ANL Ltd [2000] HCA 58; 204 CLR 493 at [178]-[181]), his Honour said (at [218]) that to give this doctrine too wide a scope would "erode" the constitutional guarantee "very deeply", since much of the "business of government" involves "the general regulation of the conduct, rights and obligations of citizens". His Honour saw (at [220]) no sustainable analogies with the cases where this doctrine had been applied: The relationship between one bore licensee and another has no analogy with the relationships between bankrupts and their creditors, or the Crown and the owners of prohibited goods which have been seized, or the Crown and those owning enemy property. Nor is there any analogy with the relationships over time between injured workers, employers and workers' compensation insurers, or between patients, medical practitioners, the government and taxpayers. There is no analogy with statutory liens on aircraft to secure the payment by owners, lessees or operators of aircraft of monies owing for services rendered which was necessary for commercial operations by the aircraft to take place. And there is no analogy with the primary case which the Solicitor-General relied on, Nintendo Co Ltd v Centronics Systems Pty Ltd. The legislation considered in that case was enacted pursuant to the power in s 51(xviii) of the Constitution to make laws with respect to copyrights. The legislation conferred an exclusive right of commercial exploitation of certain intellectual property in return for payment of a fee to the owner of the property. One ground assigned by six Justices for treating the legislation as being outside s 51(xxxi) was that it could not be: "characterized as a law with respect to the acquisition of property for the purposes of [s 51(xxxi)]. Its relevant character is that of a law for the adjustment and regulation of the competing claims, rights and liabilities of the designers or first makers of original circuit layouts and those who take advantage of, or benefit from, their work." The legislation under consideration created new rights. The Justices said that it is "of the nature" of laws made under s 51(xviii) that they confer intellectual property rights on "authors, inventors and designers, other originators and assignees and that they conversely limit and detract from the proprietary rights which would otherwise be enjoyed by the owners of affected property. Inevitably, such laws may, at their commencement, impact upon existing proprietary rights." The new rights created by the legislation necessarily had an impact on the interests and rights of others and this called for adjustments to minimise the resulting conflicts. (Citations omitted.) 456 In particular, Heydon J saw difficulties in applying this doctrine to an exercise of legislative power supported by s 96 of the Constitution: at [222]. Heydon J considered the correct approach to be whether the acquisition of property without just terms was a necessary or characteristic feature of the means prescribed. In the situation in ICM, his Honour held it was not: If licences constitute property rights, there is no inconsistency between acquiring them and paying just terms in the form of fair compensation. Another inquiry which this approach calls for is whether the legislative means selected by New South Wales, which involve non-payment of compensation as of right, are appropriate and adapted to the achievement of its objective in securing the future of a scarce resource. It is convenient from the point of view of New South Wales and its financial backer, the Commonwealth, not to pay compensation, but that does not render the means "appropriate and adapted". The scheme in question can proceed just as efficiently, though more expensively, if compensation is paid. There was no submission, and it is not the case, that applying s 51(xxxi) to the current circumstances precludes the enactment of the legislation. 457 Nor was the "expropriation" of the bore licences a mere "incident" or "consequence" or "subservient" feature of the legislative scheme (at [223]). 458 His Honour did recognise (at [225]) that a change in zoning laws "normally effects no acquisition", but saw the decrease in entitlements under the bore licences as quite distinct from zoning law changes. 459 Heydon J saw what occurred with the plaintiffs' bore licences as an acquisition for three reasons (see [231]-[235]). First, New South Wales obtained more control over water resources. Second, the change in 2008 extinguished the liability of New South Wales not to interfere with the previous water allocations available to the plaintiffs. Third, New South Wales gained the possibility that in the future it will itself be able to take more water, or issue new rights to others, without damaging sustainability and this is an identifiable advantage. 460 In the majority judgments, it was only French CJ, Gummow and Crennan JJ who expressed a view about the relationship between ss 96 and 51(xxxi). Hayne, Kiefel and Bell JJ accepted (at [103]) it was one of the main steps in the plaintiffs' argument that the National Water Commission Act permits or requires the fixing of terms and conditions upon which a grant of financial assistance to a State is to be made under s 96 and that the power given by s 96 to the Parliament does not extend to fixing, directly or indirectly, as a term or condition of a grant, a requirement that a State acquire property otherwise than on just terms. Their Honours also accepted that the fourth important step in the plaintiffs' argument was that the funding agreement provided for an acquisition of the plaintiffs' property otherwise than on just terms, and was therefore not authorised by the National Water Commission Act, and invalid. However their Honours determined the case against the plaintiffs on the basis that there was no acquisition of property within the meaning of s 51(xxxi) and, for that reason, it was unnecessary to decide the contentions about s 96, and the status of the Court's previous decision in Magennis [1949] HCA 66; 80 CLR 382, which the Commonwealth, the National Water Commission, New South Wales and the Minister administering the Act as well as two of the intervening States contended was wrongly decided and should be overruled. 461 Whether the proposition that s 51(xxxi) conditions the exercise of power under s 96 is part of the ratio decidendi in ICM is a nice question, given that reliance would need to be placed on the dissenting judgment of Heydon J: cf Noone v Operation Smile (Australia) Inc [2012] VSCA 91; 38 VR 569 at [28]-[29] per Warren CJ and Cavanough AJA and the cases there cited. Given the matters to which I now refer that question can be left for another day. 462 In this proceeding, both of the respondents appear to accept that there is a majority of Justices in ICM supporting the proposition that s 51(xxxi) conditions an exercise of power under s 96. 463 Further obiter to the same effect can be found in Williams (No 1) [2012] HCA 23; 248 CLR 156 at [147] per Gummow and Bell JJ: Section 96 of the Constitution gives to the Parliament a means for the provision, upon conditions, of financial assistance by grant to Queensland and to any other State. This is subject to the qualification stated in ICM Agriculture that the legislative power conferred by ss 96 and 51(xxxvi) does not extend to the grant of financial assistance to a State on terms and conditions requiring the State to acquire property on other than just terms. (Citations omitted.) 464 In ICM there was also a concession by the Commonwealth (accepted by both French CJ, Gummow and Crennan JJ and Heydon J to be plainly correct (see [29] and [174])), to the effect that if s 51(xxxi) did condition s 96 then it would also condition any intergovernmental agreement made in reliance on s 61 of the Constitution as part of the scheme for the grant of financial assistance under s 96. 465 Accordingly, I proceed to determine the issues in this case on the basis that s 51(xxxi) does condition s 96. How it does so is still developing, which leads me to the reasons of French CJ, Gummow and Crennan JJ in ICM. 466 At [29] French CJ, Gummow and Crennan JJ noted that the Commonwealth had properly recognised it needed to confront the statement of Mason J in R v Hughes [2000] HCA 22; 202 CLR 535: It is beyond question that [the executive power] extends to entry into governmental agreements between Commonwealth and State on matters of joint interest, including matters which require for their implementation joint legislative action, so long at any rate as the end to be achieved and the means by which it is to be achieved are consistent with and do not contravene the Constitution. Emphasis by French CJ, Gummow and Crennan JJ.) 467 The Commonwealth's argument (see ICM at [30]) was that s 96 was a "non-coercive" legislative power and the "terms and conditions" aspect of s 96 meant that there may be an exercise of state legislative power in a coercive way, supported by a s 96 grant, and this will be outside the reach of s 51(xxxi). This characterisation, as their Honours pointed out at [31], may have its antecedents in the judgment of Dixon CJ in the Second Uniform Tax Case [1957] HCA 54; 99 CLR 575 at 605, where Dixon CJ said there was nothing coercive about s 96, because there was no power to compel acceptance of the grant and thus acceptance of the terms and conditions which accompany the grant. 468 Their Honours returned to the approach of Latham CJ in Magennis, which I have extracted at [414]-[416] above, noting that Latham CJ's approach meant that a federal law granting financial assistance (purportedly relying on s 96) could still be characterised as a law with respect of the acquisition of property. This led their Honours to express some doubt about the way earlier decisions about s 96 (namely, Roads Case [1926] HCA 48; 38 CLR 399 and South Australia v Commonwealth [1942] HCA 14; 65 CLR 373 (First Uniform Tax Case)) had been used by the Court in Pye v Renshaw [1951] HCA 8; 84 CLR 58. 469 However the principal point made about Pye was, as their Honours acknowledged, originally made by Professor Saunders ("Intergovernmental Agreements and the Executive Power" (2005) 16 PLR 294-313, at 301): namely, that by the time Pye was decided, amendments to the Closer Settlement Act had "decoupled" the NSW legislation from the intergovernmental agreements or arrangements. That was critical in their Honours' view at [36] because s 96 "says nothing about purpose"; rather the question of constitutional validity is directed towards the range of permissible terms and conditions that may be imposed, which in turn seek to control the exercise of legislative power by the State. 470 In other words a purpose shared by the Commonwealth and the State, that the State should acquire property on other than just terms, will not invalidate federal grants made under s 96 which may assist a State in achieving that purpose, so long as the terms and conditions on the grant do not purport to require or enforce that outcome. 471 From [41] onwards in ICM, French CJ, Gummow and Crennan JJ examine developments since Pye which, in their Honours' opinion, have tended to support the view taken by the majority in Magennis about the relationship between ss 96 and 51(xxxi). Here, their Honours noted the decision in Pape [2009] HCA 23; 238 CLR 1 about the Commonwealth's spending powers (and the need for authority to spend money to be found not in ss 81 or 83 of the Constitution, but elsewhere in the Constitution or a law of the Commonwealth); the confirmation that an acquisition of property for the purposes of s 51(xxxi) need not be by the Commonwealth itself (Tooth [1979] HCA 47; 142 CLR 397 at 403, 407-408, 426, 451-452); the status of s 51(xxxi) as a constitutional guarantee (Tooth at 403), to be given a liberal construction (Clunies-Ross v Commonwealth [1984] HCA 65; 155 CLR 193 at 201-202); and therefore the need to look at the "practical effect" of the law in question (Tooth at 433; Newcrest [1997] HCA 38; 190 CLR 513 at 633-635). Finally their Honours then noted what had been said in the D.O.G.S. Case, concerning the relationship between s 96 and the constitutional guarantee in s 116. 472 Their Honours concluded (at [46]): The result is that the legislative power of the Commonwealth conferred by ss 96 and 51(xxxvi) does not extend to the grant of financial assistance to a State on terms and conditions requiring the State to acquire property on other than just terms. The plaintiffs' case, to that extent, should be accepted. 473 It was from this point onwards, however, that the plaintiffs' arguments broke down, because French CJ, Gummow and Crennan JJ went on to find, as with the other three majority judges, that there had been no acquisitions of property, so the constitutional guarantee was not in any event to be triggered.

The effect of the High Court's decision in Spencer [2010] HCA 28; 241 CLR 118 474 In Spencer [2010] HCA 28; 241 CLR 118, the High Court allowed for the propositions it had outlined in ICM to apply to Mr Spencer's claims. 475 Relevantly, the aspect of ICM on which some members of the Court focused was the possibility of an informal arrangement or agreement, by reference to Gilbert [1962] HCA 7; 107 CLR 494. 476 I do not read either of the plurality judgments in Spencer [2010] HCA 28; 241 CLR 118 as casting doubt on the authority of Magennis and Pye, nor the Second Uniform Tax Case [1957] HCA 54; 99 CLR 575, in the sense that where federal laws contemplate the grant of financial assistance through intergovernmental agreements, and where either those laws or the intergovernmental agreements impose terms and conditions on the grant of financial assistance, if the laws and agreements leave a choice to the State as to whether to take up the financial assistance, and enact its own legislation so as to receive the benefit of the financial assistance, without dictating the terms of the state legislation then even if those state laws effect an acquisition of property other than on just terms, the federal law and the intergovernmental agreements will not be invalid. 477 French CJ and Gummow J (from [28]-[34]) focused on the allegation by Mr Spencer of a "scheme or device" designed to avoid the "just terms" constraint of s 51(xxxi). Their Honours cited that part of the reasons for judgment of French CJ, Gummow and Crennan JJ in ICM that discussed Gilbert. Then at [31], French CJ and Gummow J said: The question that arises is whether Mr Spencer's pleading left open the possibility, requiring factual exploration and possible amendment, of an informal arrangement between the Commonwealth and the State of New South Wales conditioning the relevant Commonwealth funding upon acquisition by the State of Mr Spencer's property rights on other than just terms. 478 The focus in the reasons of Hayne, Crennan, Kiefel and Bell JJ was the same. At [40] their Honours said (with reference to ICM): Whether, or how, ss 51(xxxi), 61 and 96 intersect where there is an informal arrangement or understanding between the Commonwealth and a State, falling short of an intergovernmental agreement, was expressly left as an open question by three members of the majority in ICM. (Citation omitted.) 479 As it has turned out, in my opinion Mr Spencer has not proven there was any such informal arrangement, and the arguments contemplated in Spencer [2010] HCA 28; 241 CLR 118 do not arise for determination. That leaves an examination of the scheme as a whole, involving the two federal laws, the intergovernmental agreements and the state legislation.

The practical operation and effect of the two federal laws, and the state legislation 480 I begin this section of my reasons by recalling that, on current authority, even if the scheme as a whole might be seen as contrary to s 51(xxxi), Magennis [1949] HCA 66; 80 CLR 382 goes only as far as deciding that the intergovernmental agreements and state law would be inoperative. The conclusions I reach mean I do not need to determine the claim in some of Mr Spencer's submissions that the state laws themselves could be held invalid. 481 I have already described the four intergovernmental agreements above. There is no doubt that each of them proposed a series of measures to be carried out principally by the State, to reduce the clearance of native vegetation and indeed to increase the total cover of native vegetation across New South Wales. They did so in the context of much broader measures to promote natural resources management and ecologically sustainable development, those purposes and objectives being shared (at least to a significant extent) by the Commonwealth and the State. 482 In relation to the Natural Resources Management (Financial Assistance) Act, it is true that ss 7 to 9 set out some matters which were mandatory in terms of the content of intergovernmental agreements under which the Commonwealth would pay financial assistance to the States. The example on which the applicant placed some reliance was s 8, which required repayment of financial assistance if there was a failure to fulfil a condition of the agreement, or if a project (or part of it) was undertaken otherwise than in accordance with the agreement. 483 None of these provisions contemplates, let alone requires, the State will acquire property, nor do they say anything about the terms on which that will occur. None of the provisions induces the State to do so. The State may accept the financial assistance on the terms offered, and if it does, then it will be subject to conditions concerning repayment. 484 In relation to the Natural Heritage Trust Act, again its purposes are much broader than vegetation preservation, extending to water conservation, coastal and sea conservation, sustainable agriculture and the Murray-Darling Basin project. There is nothing in s 19 of the Natural Heritage Trust Act which is indicative of invalidity: the provision uses permissive language about the conclusion of an agreement and describes the establishment of a framework to be filled out by subsequent and more specific project-based intergovernmental agreements. 485 The 1997 NHT Agreement gives effect to the objectives of the Natural Heritage Trust Act, but not in a way which can lead to its characterisation as requiring or effecting an acquisition of property. The principles in cl 3 set out how choices will be made about programs and projects to be funded, and the Agreement concentrates in cl 6 on the roles and responsibilities of each party, while filling out the content of proposed programs and activities. It is not surprising that there are clauses which condition the provision of funding by the Commonwealth against the achievement of outcomes and milestones set out in Attachment A to the 1997 NHT Agreement for each of the nominated programs: see in particular cl 7.2(b), which I have set out earlier in my reasons. 486 It is true that in Attachment A, the Bushcare program describes outcomes which involve not only the maintenance, but the increase of native vegetation cover in New South Wales. The Commonwealth submits that cl 4 in the Bushcare program does not suggest the enactment of the Native Vegetation Conservation Act 1997 was a condition of the provision of funding. The Commonwealth points to how well advanced planning was at state level for reform proposals that led to the 1997 Act. It submits it is "inapt" to describe the process as the fulfilment of some form of requirement imposed by the Commonwealth. 487 That submission may be too broad. The clause did seek to describe, in some detail, how the State was to regulate native vegetation clearance. On pain of repayment if the conditions were not complied with (see cl 7.2(b) of the Agreement) New South Wales agreed to "prevent inappropriate native vegetation clearing" (cl 4.2(e) of the Bushcare program), and it was expressly contemplated this would be done by legislation to "repeal/rationalise existing native vegetation controls" (cl 4.3(a) of the Bushcare program), assessment and consent for clearing under native vegetation legislation to be consistent with what was proposed in the "Integrated Development Assessment system" (cl 4.3(g) of the Bushcare program). 488 In my opinion the 1997 NHT Agreement does impose terms and conditions on New South Wales, requiring it to enact legislation to decrease vegetation clearance, and increase retention of native vegetation. However, unlike Magennis, the agreement says nothing about the content of the legislation, and certainly nothing about New South Wales having to acquire property as part of any native vegetation clearance legislative regime. 489 There are no such requirements in the 2000 and 2002 Salinity Agreements. 490 Although, as the Commonwealth submits, there are in the attachments to the 2003 NHT Agreement specific terms and conditions for funding to flow, there is no equivalent to cl 7.2(b) in the 1997 NHT Agreement. In Attachment 4 to the 2003 NHT Agreement, which sets out the general terms and conditions of funding agreements under the 2003 NHT Agreement, cl 8 deals with "Termination and/or Non-performance" and does provide a mechanism for termination of an "activity" (defined in cl 2.1 of Attachment 4 as "a task agreed by the parties as specified in the funding agreement to be undertaken and for which funds are paid under this agreement"), but it is clear this term is directed at ongoing and mutual evaluation by the parties of the successes of various tasks undertaken in accordance with the agreement, rather than some kind of coercive term imposed by the Commonwealth on New South Wales. 491 The terms of the 2003 NHT Agreement are, in that sense, more aspirational and general. In cl 4, commitments are expressed at a high level of generality, consistently with the title of that clause as "Policy Directions". Clause 4.6 provides: New South Wales agrees to pursue measures, consistent with the National Objectives and Targets for Biodiversity Conservation 2001-2005: (a) to prevent clearance of ecological communities with an extent below 30 per cent of that present pre-1750; (b) to assess native vegetation condition; and (c) to contribute to reducing the national net rate of land clearance to zero. 492 There is a set of "national objectives", but they are intended to be "pursued", and there is no repayment clause of the kind found in the 1997 NHT Agreement. Clause 6.5 does express a "principle" that financial arrangements will be determined in accordance with, amongst other things, that "the provision of matching funding by the Parties is dependent on each meeting its obligations under this agreement". However, the obligations are, as I have said, general and aspirational. 493 Although I have concluded that there was a requirement in the 1997 NHT Agreement for New South Wales to enact native vegetation clearance legislation but no requirements concerning acquisition, I nevertheless accept I should consider whether the NSW legislation, both in its 1997 form and in the Native Vegetation Act 2003, had the effect of acquiring Mr Spencer's property. For the reasons I set out below I conclude neither piece of legislation had that effect. 494 In considering the effect of the 1997 and 2003 native vegetation clearance legislation, it is necessary to identify what "property" might be said to have been acquired. At this point it is worth recalling that if there is an acquisition, so long as the acquisition can be said to be for a Commonwealth purpose (hence the connection to the exercise of Commonwealth power, usually legislative) then it need not be an acquisition by the Commonwealth: Tooth [1979] HCA 47; 142 CLR 397 at 403, 407-408, 426, 451-452; Mutual Pools [1994] HCA 9; 179 CLR 155 at 199; ICM [2009] HCA 51; 240 CLR 140 at [42], [133]. 495 Having identified the proprietary interest or interests in issue, it is then necessary to determine whether there has been an "acquisition", as the authorities explain that term, and its distinction from a "taking". 496 On the question of "taking" it is appropriate to deal first with the respondents' submissions that the state of the evidence does not support a finding that Mr Spencer ever intended to clear his land in the way he now suggests, and that there was no rejection of a clearing application. From that proposition, the respondents submit there was not even a "taking" under the NSW legislation of any proprietary interests held by Mr Spencer.

Whether there was, at a practical level, a "taking" for the purposes of s 51(xxxi): the issue of whether Mr Spencer intended to clear his land and the events in July 2007 497 The State submitted the evidence showed that through the 1980s and 1990s such investigations as Mr Spencer conducted about clearing did not lead to any clearing applications. That submission can be accepted. However, this evidence, in common with a great deal of other evidence, shows Mr Spencer's ongoing interests in clearing large portions of his land at times he considered appropriate, taking into account various projects he wished to pursue. The evidence does not in that sense negate the general proposition on which Mr Spencer relies: that as the owner of a very large rural property, he wanted to be able to clear tracts of land as and when he saw it appropriate to do so, in order to pursue projects that required land cleared of native vegetation. 498 As to the events in 2007, the State submits: As for the application submitted in 2007, Mr Spencer sought to emphasise that he had not in fact submitted a clearing application or an application for a PVP, and disavowed knowledge of the detailed area considered for the purposes of the clearing application. It is clear that he went along with this process in order to facilitate access to the FEAP. His dominant purpose in doing so was as an exercise to test out the program for broader political purposes. Further, he accepted that what was offered represented market value. In these circumstances, in fact the impugned laws have not restricted any activity or conduct of the applicant. In practice, there has been no taking at anything other than a hypothetical level. That renders the claimed acquisition theoretical - subject, perhaps, to consideration of any established loss of value of the Land. 499 The Commonwealth's submissions adopt a similar approach: the amended form of the applicant's pleaded case again seeks to deploy that correspondence, which he alleged to constitute a refusal 'of development consent to clear 1,402 acres of native vegetation on his property': para [32] of the FASOC. But during the current hearing the applicant candidly accepted that he never in fact made any 'proposal' to clear particular areas of vegetation in 1997. It does not appear to be disputed that that 'proposal' was in fact generated in the manner described in the evidence of Mr Willis - that is, it was an essentially theoretical proposal for the clearing of a very large area that the applicant said he had no intention of clearing (indeed, being the area shown on the map prepared by Mr Muyt that the applicant said he did not even see). The point of undertaking that process was, the applicant accepted, to allow him to access the Farmer Exit Assistance program, which required that he first be refused permission to clear under a PVP or clearing application. The applicant also accepted that his objects in applying for the Exit Assistance Program were to bolster the constitutional argument agitated in this case and to test whether the NSW government was sincere in its 'offer to pay … farmers' (under the Farmer Exit Assistance program). 500 I do not accept these submissions. Insofar as they rely on Mr Spencer's concession that one (and indeed, one principal) motive in accessing the exit assistance program was to test out what he would be offered by way of compensation, realising it would likely not equate to what he thought his land was worth (to him), I accept that this accurately reflects Mr Spencer's evidence, although he did say that he "may" have accepted an offer he thought was commensurate with what he saw as the value of Saarahnlee. Further, his contemporaneous statements show pursuit of an appropriate valuation, but do not suggest an entirely false approach under the exit assistance program. 501 The evidence of Mr Spencer said by the Commonwealth to support these submissions came from his cross-examination, which in part involved putting back to him some statements he had made in opening his case at trial. In describing events leading to the issuing of this proceeding, and other aspects of the campaign by him and other farmers against the native vegetation clearance laws, Mr Spencer had said during his opening submissions that: Secondly, we wanted to know if the offer to pay these farmers was sincere or not. So we decided, as I was one who had not broken the law - most other farmers had cleared something - that I would apply to get the exit strategy effected against my farm to see what they would offer me, and we were right; the offer was not even as much as the house was insured for. The house was insured for $2.5 million; the offer was $2.13. It meant the project's potential - my dreams and all my land went up the tube for nothing. So we did that as an exercise, and I don't know how many people obtained that letter. It has been said to me that I probably was the only one that got one. Now, as to whether it is a sign of - sorry. [There was a momentary pause here while Mr Spencer composed himself, and then moved on to other submissions.] 502 He was cross-examined about these submissions when he gave evidence: And you say some other things about the offer. So is it fair to say that when you were seeking what offer you would get, first, you're referring to the offer from the Farm Exit Assistance program?---Yes. And, secondly, you were doing that as a kind of test exercise to see if the government was sincere in going through with this process?---Well, they only had thirty-one or two million. And we thought if you're going to compensate farmers, the number of farmers that were affected, that was not even enough to pay five farms out. But that doesn't matter. They may have - going to replenish it. I'm just saying we didn't know as to whether it was a fire sale or it was genuine. Okay. And so you wanted to test the program out and see, for you, if - - -?---If they were sincere - - - - - - they were sincere, including by seeing what they would offer you?---Yes. Yes. So the point of the exercise, in seeking an offer - sorry, let me start that again. When we're talking about an offer here, we're meaning an offer of purchase for the land?---Well, no, not just the land, as in, a purchase - you may notice in the book - in the court book, there's a document in relation to just terms. It was as to whether they would offer a farmer what he wanted for something which he didn't want to sell, anyway, or whether they would just - it was just a whole lot of things as to how do they go about valuing this so that I would be prepared to leave my farm. But the offer you were seeking to test was an offer of purchase from - - -?---Yes, for the whole thing, not just the land, but the whole farm, as far as what it could do. Yes. Okay. And that was the point of engaging with the Exit Assistance program, just to see what the offer would be?---Well, I say that, but I'm not to say that if they offered just terms, that were just, that it may - wouldn't - may be an - no. It may have been considered. I don't know. It depends how appropriate it was. So is it fair to say that if they had offered you what you thought was a good price, you may have considered accepting the offer?---I don't think - I don't think I could say no to that, in the sense that I don't know what it would have had to have been to be that, to get me off my land. But I cannot say that - if they wanted me off and the offer was within that range, I may have accepted it. Yes, but is it also fair to say the primary purpose of the exercise in seeking an offer was to test it?---Yes, to work out if it was genuine, as I've said twice. Yes. 503 Mr Spencer's mixed motivations in placing himself, and Saarahnlee, into the exit assistance process, are obvious from this evidence. I accept his evidence that he was open to considering taking up an offer to buy Saarahnlee, depending on what was offered. It should be recalled the property had been suffering from the severe drought, Mr Spencer was in a precarious financial position and his sheep project had all but failed by this point. 504 Whatever his motives (including, as is clear, a desire to "test" the genuineness of the government's offers to assist farmers), the fact is that Saarahnlee was subjected to an assessment for the purposes of the exit assistance process, and it was found to be commercially unviable by reason of the application of the native vegetation clearance laws. To make the latter statement is not to find, as a fact, that it was unviable. No attempt was made to prove such a fact by Mr Spencer. It is correct to say however, that the NSW Rural Assistance Authority formed the view, for the purposes of the exit assistance scheme, that Saarahnlee had that character. It also formed that view on the basis of the application of the 2003 Native Vegetation Act to Saarahnlee, having proceeded as though a clearing application had been made by Mr Spencer and refused. 505 No officer of the State decided that Mr Spencer had made a false or deceptive application (or proposal) to clear his land, or a false application for exit assistance. No officer of the State refused to allow Mr Spencer to participate in the exit assistance program on that, or any related basis. This is despite the somewhat cavalier attitude demonstrated by Mr Spencer to identifying what parts of his land he wanted to clear during the site inspections conducted by Mr Willis and others in 2007. 506 The State was prepared to pay out $2.17 million in public funds to Mr Spencer. The State had informed Mr Spencer that it accepted Saarahnlee was not commercially viable and that this lack of commercial viability was "a result of the inability to clear native vegetation, under the Native Vegetation Act 2003". 507 On the evidence before me, there is no doubt Mr Spencer had plans, of varying certainty, to clear parts of Saarahnlee. No person from the various State agencies who engaged with Mr Spencer ever disputed that in correspondence or in evidence. No witness called on behalf of the State disputed this. Mr Spencer's own evidence made the number and scale of his plans quite clear. He embarked on a good number of them, to varying stages. However those plans were characterised, they were likely to fall foul of the vegetation clearance laws to some extent. 508 The extent to which the State, at least, was prepared to accept in 2007 that Mr Spencer's ability to farm Saarahnlee in a way which was commercially viable was adversely affected by the native vegetation laws was considerable. 509 Insofar as it is relevant to Mr Spencer's claims in this proceeding, I consider the evidence of the assessment of Saarahnlee undertaken for the purposes of the Farmers Exit Assistance Program proves that it was considered, by those administering the scheme, not to be commercially viable by reason of the operation and application of the native vegetation clearance laws. There was, in that sense, and in the view of the State, a sterilisation of Mr Spencer's property, in terms of the uses to which it could be put. The sterilisation was ascribed expressly to restrictions on native vegetation clearance. 510 I do not consider that the respondents can now seek to minimise the nature and effect of that designation. It was the basis upon which public monies were to be offered to Mr Spencer and, had he accepted them, would have been expended. It should be taken to be a reflection of the impact of the state native vegetation laws on Mr Spencer's property, as assessed by the State. 511 It is true that the regimes established under both the 1997 and 2003 state native vegetation laws were permission-based regimes, and I accept in the authorities concerning s 51(xxxi) this may be a factor tending against a conclusion there has been an acquisition: see for example Waterhouse v Minister for the Arts and Territories [1993] FCA 548; 43 FCR 175 at 185 per Black CJ and Gummow J. For the reasons I have set out above, I find Mr Spencer was treated by the State as having accessed that permission regime, and as having been denied permission. 512 It is also correct that the evidence suggests Mr Spencer could have sought to develop his land incrementally, and Mr Spencer's own evidence recognised that he could do this, and at times he conceded that was what he had in mind. His evidence ranged far and wide about the nature and extent of the clearing that might have been required to implement or continue the various projects he had in mind for Saarahnlee. Whether or not he would have received permission to clear had he adopted a less "all or nothing" approach than he took in early 2007 remains in the realm of speculation. The evidence goes no higher than an untested and really unverified opinion from Mr Willis that Mr Spencer's prospects of gaining consent might have been better. Again, the Rural Assistance Authority's decision is certain and undisputed evidence that the native vegetation laws had made Saarahnlee, in its opinion (and one can infer the opinion of the Nature Conservation Trust) commercially unviable. It is probative of the extent of the impact from these laws on Mr Spencer's land. 513 The practical impact of a law is a key consideration for s 51(xxxi): Plain Packaging Case [2012] HCA 43; 250 CLR 1 at [119] per Gummow J. In determining whether there is a "taking", the question is whether as a matter of substance, if not form, Mr Spencer's proprietary interests were "denuded of their value and thus of their utility": Plain Packaging Case at [138] per Gummow J; see also Newcrest [1997] HCA 38; 190 CLR 513 at 635 per Gummow J; Smith v ANL [2000] HCA 58; 204 CLR 493 at [7] per Gleeson CJ and [22]-[23] per Gaudron and Gummow JJ. 514 Whether the recognition by the Rural Assistance Authority and the Nature Conservation Trust, on behalf of the State, that the native vegetation laws had made Saarahnlee not commercially viable means that his bundle of rights in Saarahnlee was "acquired" in the s 51(xxxi) sense is a matter I consider below. But the effect of the laws on Mr Spencer's land, as the State's own assessment characterised them, should not be understated.

The "property" said to be acquired: bundle of rights in Saarahnlee 515 All of the authorities to which I turn below illustrate that it is critical to identify, and characterise, the nature of the property right said to be affected either directly by Commonwealth legislation or indirectly by Commonwealth action so as to engage the guarantee aspect of s 51(xxxi): see Gummow J in Plain Packaging Case [2012] HCA 43; 250 CLR 1 at [108]. In Minister of State for the Army v Dalziel [1944] HCA 4; 68 CLR 261 at 276, Latham CJ said: It has often been explained by writers upon jurisprudence that the term "property" is ambiguous. As applied to land it may mean the land itself in relation to which rights of ownership exist, or it may refer to the rights of ownership which exist in relation to the land. See Williams, Real Property, Introductory Chapter - in the 23rd ed. (1920), at pp. 3, 4; Salmond, Jurisprudence, 9th ed. (1937), p.342. In the former sense a man may say that his property consists of land. In the latter sense a man's property would consist not of land, but of rights in respect of land which were rights of ownership. I can see no reason why, so far as land is concerned, "property" in s. 51(xxxi.) of the Constitution should not be interpreted so as to include land itself and also proprietary rights in respect of land. The provision in the Constitution is plainly intended for the protection of the subject, and should be liberally interpreted. 516 Although in dissent on outcome, I do not consider that affects the force of his Honour's observation on legal principle, and the Chief Justice's description has been frequently cited. 517 The authorities on s 51(xxxi) repeatedly emphasise the breadth of proprietary interests it protects. Included are property rights created by statute: Telstra Corporation Ltd v Commonwealth [2008] HCA 7; 234 CLR 210 at [49] (citing with approval Chaffey [2007] HCA 34; 231 CLR 651 at [23]-[25]), Wurridjal [2009] HCA 2; 237 CLR 309 at [363]-[364] per Crennan J (referred to with approval by Gummow J in Plain Packaging Case at [102]) and also at [92]-[93] per French CJ; Plain Packaging Case at [103]-[105] per Gummow J, at [29] per French CJ and at [263] per Crennan J; WMC [1998] HCA 8; 194 CLR 1 at [16] per Brennan CJ, at [78]-[79] per Gaudron J, at [182]-[184] per Gummow J and at [237] per Kirby J. In the Plain Packaging Case at [104]-[105], Gummow J observes that there are differences in character between proprietary rights created by statute which are created in the context of legislative regimes imposing prohibitions on conduct and coupled with permissions (such as licensing schemes), and proprietary rights created by statute which, although not rights "in an existing physical thing" (see Pacific Film Laboratories Pty Ltd v Federal Commissioner of Taxation [1970] HCA 36; 121 CLR 154 at 167 per Windeyer J), involve rights to control and exclude and are clearly proprietary in nature. Those considerations may have some relevance to Mr Spencer's claims about his carbon rights. 518 It seems to me to flow from what was found in Dalziel that for the purposes of the protection afforded by s 51(xxxi) and while persons continue to hold title to land under either freehold or leasehold arrangements, the "bundle of rights" enjoyed by a person in freehold or leasehold interest in land is substantially similar. That would not be the case if the alleged interference was with the ability to assign or sell, or to continue to hold the title at all, but otherwise the "bundle of rights" held by Mr Spencer in all his parcels of land can be considered together. Being rights in real property, these are not the kind of rights that are inherently susceptible to variation: cf Wurridjal at [363]-[364] per Crennan J, cited with approval by Gummow J in Plain Packaging Case at [102]. 519 As I outline at [34] above, Mr Spencer's fundamental contention is that the property which has been acquired is Saarahnlee itself, being those parts Mr Spencer held under Crown leases (Lots 48 and 50), Crown conditional purchase (Lot 47) and in fee simple (the remainder of the lots). Of course, he does not suggest Saarahnlee was acquired in the sense of purchased. He accepts the reality that he lost his proprietary interest in Saarahnlee by virtue of a mortgagee sale (apparently, except for Lot 50) when he was unable to repay the loan to the Bambers in July 2010. 520 Rather, he contends that what has been acquired is the substance of the "bundle of rights" that accompanies the possession of fee simple, or the secure leasehold interests he has. What has been acquired, he submits, are his rights to choose how to manage his land, and how to use it for the purposes he wished to use it for: his own agricultural pursuits, his own projects, the way he wished to develop his land. Instead, through the two federal laws, the intergovernmental agreements and the implementation of what he contends are the Commonwealth's priorities through the Native Vegetation Conservation Act 1997 and Native Vegetation Act 2003 in New South Wales, Saarahnlee was managed to accord with the environmental objectives embodied in the two federal laws, the intergovernmental agreements and the Native Vegetation Conservation Act 1997 and Native Vegetation Act 2003. Mr Spencer articulates this at various points in his final submissions: However unlike in the Tasmanian Dams case, under the Native Vegetation Act, consent to clear is granted, if it is granted, subject to a very wide variety of thoroughgoing arbitrary operative restrictions. These are intruded into the landholder's operative control of the land, and go to the core of many farming and other rural practices, including: (a) proposals for clearing native vegetation on the land, (b) the identification of native vegetation on the land as regrowth, as referred to in section 9 (2), (c) proposals relating to the thinning of native vegetation in the central area of the State that has regrown between 1 January 1983 and 1 January 1990, (d) proposals to enable landholders to obtain financial incentives for the management of natural resources, being proposals relating to the carrying out or funding of native vegetation management activities by Local Land Services or other bodies, (e) proposals relating to the continuation of existing farming or other rural practices, (f) provisions excluding clearing for routine agricultural management or other activities from being permitted clearing, (g) such other provisions as are prescribed by the regulations. And that last clause "such other provisions as are prescribed by the regulations" includes: • routine agricultural management activities • cultivation • grazing • rotational farming practices • forestry • rural infrastructure • obtaining construction timber • fences • sheds • trails • tracks • feral species • invasive species • paddock trees • mulga • dwellings • clearing for powerlines. It is in other words, a thoroughgoing take-over of active decision-making discretion on the land. In practice, the thicket of conditions is so impenetrable as to make the landholder's rights unknowable but in the arbitrary discretion of the deciding officer whose considerations include: salinity, aspect, slope, clearing history, vegetation types, vegetation condition, vegetation benchmarks, rare species, effect on the forest canopy, soil type, soil acidity, soil erosion, invasive native scrub, water quality, catchment hazards, habitat components, habitat, wind erosion hazard, and so on and on and on in mind-boggling detail down to the most onerous and protean minutiae. That is why they also variably grant permission to clear native vegetation: they consider in those cases that the best thing for that land to produce is not-native-vegetation. This means that, both in cases where consent is granted, and in cases where it is not, the government has not effected a termination, extinguishment or modification of use-rights; but has by compulsion acquired the use-rights to the land, regards itself as the best and rightful manager, consider that they are deciding the best use and mix of relevant productive factors, consider that they are deciding the best balance of present versus future interests in the resources in question literally into the indefinite future, and regard themselves as running production of what they think best on the land. That's why it's called natural resource management for ecologically sustainable development. In purpose, in logic, in law, in economics, in political philosophy, in social theory, in effect, in detailed terms and conditions, in practice, this case is quite distinct from the blanket prohibition or veto as in the Tasmanian Dams case. (Footnotes omitted; emphasis in original.)

The "property" said to be acquired: carbon rights 521 The second principal way in which Mr Spencer alleges his property has been acquired is by reference to what he describes variously as "carbon rights" in relation to the trees on his land, or sometimes as a "profit à prendre" to take and use the carbon stored in trees on his land. In the FASOC the description is run together in the following way (omitting the second part of the pleading which relates to financial benefits to the Commonwealth): The First Respondent has received a substantial benefit from the passage of the State measures being firstly, a profit a prendre in the land in respect of carbon sequestration and abatement rights as evidenced by the national greenhouse accounts and the carbon emissions returns made to the UNFCCC secretariat by the First Respondent from time to time. … 522 In his final submissions, Mr Spencer put this aspect of his claim in the following way: The Conveyancing Act "deems" carbon sequestration rights to be profits à prendre, which are an incorporeal hereditament and thus real property. Thus profits à prendre have the status of real property whether we say so at common law, or whether we say profits à prendre are deemed to be real property under the Conveyancing Act. Both are true. 523 Having observed that because a person has a "profit", it does not necessarily mean the person must "take" the profit off his land, Mr Spencer's submissions continued: Nothing in this analysis changes when we apply it to a profit à prendre to hold carbon out of the atmosphere. The fact that the owner of carbon sequestration rights does not take the carbon off the land by removing the trees, or perhaps even may not take the carbon off the land by removing the trees, in no way negates the fact that the profit à prendre of the carbon sequestration rights is an incorporeal hereditament, and thus real property. Despite their new-fangled name, the carbon sequestration rights the benefits of which were taken from me and acquired by the respondents, were old-fashioned common law real property. NSW pleaded that the common law recognised no property right or other right to any benefit of carbon sequestration by a tree or forest. This is not correct. Nor is the suggestion that the carbon sequestration rights could be valuable if only a trading mechanism were established. A trading mechanism has already been established for many hundreds of years. It is the market for real property. As I have just shown, common law recognition of profits à prendre has existed for centuries, and at all times was available and valid for keeping carbon out of the atmosphere if only people wanted to. The reason that no-one ever talked about a market for profits à prendre specifically for the purpose of sequestering carbon until recently, is not because people couldn't buy and sell a profit à prendre for carbon sequestration if they wanted to create one. And it's not because the common law would not recognise such profit à prendre as property. It's because in reality people don't value carbon or carbon sequestration per se. In reality carbon sequestration rights are entirely a creation of the political class, not the productive class. It's hot air. People evidently do not value using the land to supply trees holding carbon from the atmosphere, higher than they value using the land to supply food, wool, shelter and so on. If they did, the entire political scheme would not have been necessary; no Commonwealth or State action would have been necessary. The advocates of this whole unjust scheme would just have put their money where their mouth is, and voluntarily either bought the land or paid the landholders to sequester carbon, instead of trying to force the issue by the legislative confiscation of the landholders' property without compensation. (Emphasis in original.) 524 The provisions in the Conveyancing Act 1919 (NSW) on which Mr Spencer appears to rely are those currently contained in Div 4 of Pt 6 of that Act. They were introduced by the Carbon Rights Legislation Amendment Act 1998 (NSW), which commenced on 5 March 1999. At this time, they applied only to private land. Then, in 2006, by the Crown Lands Legislation Amendment (Carbon Sequestration) Act 2006 (NSW), the ability to create and register carbon sequestration rights was extended to Crown tenures. Whether that included conditional purchase blocks such as Lot 47 was not explored by the parties. Mr Spencer did not explain, by way of evidence or submission, how it was that the 2006 amendments applied to all of Saarahnlee, and the conditional purchase block (Lot 47) in particular. 525 Part 6 of the Conveyancing Act deals with covenants and powers over both freehold and leasehold land. It creates a registration system (by instrument) designed to regulate the operation and enforcement of covenants and like restrictions over real property. Division 4 of Pt 6 deals with easements and restrictive and positive covenants, including profits à prendre. That term is not defined in the Act. 526 In Australian Softwood Forests Pty Ltd v Attorney-General (NSW), Ex rel Corporate Affairs Commission [1981] HCA 49; 148 CLR 121 at 130-131, Mason J, delivering the lead judgment, discussed the nature of profits à prendre, in the context of determining the nature of a grower's rights in an agreement with a corporation promoting investment in pine plantations in New South Wales as part of an investment scheme. Although not dealing with carbon rights, Mason J was dealing with the rights to take timber off land. His Honour's reasons (at 130-132) make it clear that a sale involving timber which was to remain on the land after the sale was a sale of a proprietary interest, in the nature of a right to take something off the land of another: A profit à prendre is generally described as a right to take something off another person's land (Duke of Sutherland v. Heathcote), or to take something out of the soil, including portion of the soil itself (In re Refund of Dues under Timber Regulations). The right to take timber off another person's land has given rise to a problem of classification. The general rule was that in the case of fructus naturales (which included growing timber) if the property was to pass to the purchaser before severance from the soil, but the thing was to remain in the land for further growth, an agreement for the sale of the timber was a contract for the sale of an interest in land; aliter if property was to pass after severance - then it was a contract for the sale of goods (Voumard, Sale of Land in Victoria, 3rd ed. (1978), pp. 54-55; Marshall v. Green). Accordingly, if the trees were to be left on the land for the advantage of the purchaser so that he would derive benefit from further growth, then the contract was for the sale of an interest in land. If, on the other hand, the purchaser was to enter and take the timber immediately, he would derive no benefit from the land and the contract was one for the sale of goods. This was the criterion stated by Lord Coleridge C.J. in Marshall v. Green. (Citations omitted.) 527 His Honour noted (at 131) that in most of the cases the right to cut and remove timber was not created by a deed or formal instrument appropriate to the creation of a profit à prendre, and therefore, the right of the purchaser to enter upon the land to cut and remove timber was classified as an equitable profit à prendre, something of the nature of a profit à prendre or as an irrevocable licence coupled with an interest. 528 Section 88EA(1) of the Conveyancing Act provides: A restriction on the use of land, or a forestry covenant, may be imposed on land the subject of a forestry right by an instrument (whether the same instrument as that by which the forestry right is created or by another instrument) that: (a) describes the land in a manner enabling it to be identified, and (b) specifies the particulars of the restriction or covenant. 529 The restriction on the land does not take effect until registration (s 88EA(2)), and then becomes enforceable by the person for whose benefit the covenant is imposed (s 88EA(4)). 530 A "forestry right" is defined in s 87A as: (a) an interest in the land pursuant to which a person having the benefit of the interest is entitled: (i) to enter the land and establish, maintain and harvest (or to maintain and harvest) a crop of trees on the land, or (ii) to enter the land and establish, maintain and harvest (or to maintain and harvest) a crop of trees on the land and to construct and use such buildings, works and facilities as may be necessary or convenient to enable the person to establish, maintain and harvest the crop, or (b) a carbon sequestration right in respect of the land, or (c) a combination of the interest and right referred to in paragraphs (a) and (b). 531 In turn, a "carbon sequestration right", and the term "carbon sequestration", are also defined in s 87A: carbon sequestration by a tree or forest means the process by which the tree or forest absorbs carbon dioxide from the atmosphere. carbon sequestration right, in relation to land, means a right conferred on a person by agreement or otherwise to the legal, commercial or other benefit (whether present or future) of carbon sequestration by any existing or future tree or forest on the land after 1990. 532 By s 88AB, a carbon sequestration right is deemed to be a profit à prendre. The nature of the profit à prendre is further amplified in s 88AB(2), which provides that: (a) the profit from the land is taken to be the legal, commercial or other benefit (whether present or future) of carbon sequestration by any existing or future tree or forest on the land that is the subject of the carbon sequestration right, (b) the right to take something from the land is taken to be the right to the benefit conferred by the carbon sequestration right. 533 Thus, it can be seen that the scheme required at least two basic steps for the creation of the proprietary interests described in the scheme as a carbon sequestration right: first the grant of the right from a landowner to a person, and second the registration of that right. 534 The respondents made a number of submissions about the difficulties for Mr Spencer in relying on the Conveyancing Act provisions. The following submissions should be accepted. (1) Bearing in mind that the time of acquisition of Mr Spencer's property is said by him to be when the Native Vegetation Conservation Act 1997 commenced on 1 January 1998, alternatively when he was unable to clear his land and was offered an exit assistance package in 2007, the statutory proprietary rights in carbon sequestration did not exist. There was nothing to be "acquired" by the Native Vegetation Conservation Act 1997, or by its effect on his ability to clear his land. (2) The proprietary right alleged by Mr Spencer did not automatically exist "by force of law" (as New South Wales puts it). Rather, carbon sequestration rights were interests Mr Spencer had to create (by agreement or otherwise) in another person, and then the right had to be registered to be recognised and enforceable. Until those events occurred, the proprietary interest was hypothetical. Contrary to Mr Spencer's submission, there is a no parallel with the circumstances in Dalziel [1944] HCA 4; 68 CLR 261. In Dalziel, the resumption for defence purposes of land rented by Mr Dalziel and which he used as a parking station was held to be an acquisition contrary to s 51(xxxi) and Mr Dalziel was found by a majority of the High Court to be entitled to compensation assessed according to ordinary principles of compulsory acquisition (see, e.g., McTiernan J at 296; Williams J at 309); rather than by reference to a capping of compensation as the impugned regulations contemplated (see Dalziel at 307). The majority held that the "bundle of rights" held by a tenant such as Mr Dalziel, flowing principally from his right to exclusive possession, meant that he could be compensated for losses greater than simply the wasted rental payments. That kind of argument might flow from what Mr Spencer contends about the "bundle of rights" he had in Saarahnlee (as to which see below), but it cannot flow from a proprietary interest which did not exist at the relevant time. 535 There is also, it seems to me, something of a logical flaw in Mr Spencer's argument about the federal laws (and their implementation through the intergovernmental agreements and the 1997 and 2003 native vegetation clearance legislation) effecting an acquisition of his carbon sequestration rights. If, as Mr Spencer contends, the ultimate effect of the scheme was to prevent him clearing Saarahnlee, then the consequence so far as his carbon sequestration rights were concerned (assuming for the purpose of this analysis they existed) would be to enhance and preserve his rights, not diminish or remove them, let alone acquire them. The trees and vegetation storing the carbon on Saarahnlee were, on this hypothesis, preserved: that was Mr Spencer's complaint. That being the case, his ability to grant to others the carbon sequestration rights would also be preserved. What, if anything, has prevented this, is the loss of Saarahnlee in the mortgagee sale which, as I have observed elsewhere in these reasons, has no proven relevant causal relationship to the enactment of the NSW native vegetation clearance laws. 536 It is unnecessary to determine a further submission put by New South Wales: namely, that rights created under the Div 4 of Pt 6 of the Conveyancing Act had a "congenital infirmity" (referring, it is to be assumed to the distinction drawn in WMC [1998] HCA 8; 194 CLR 1 at [203]) because they would always be subject to regulation of clearing of native vegetation under the 1997 and 2003 native vegetation clearance laws. For that reason, New South Wales submits that the statutory carbon sequestration rights granted under the Conveyancing Act would not be protected by s 51(xxxi). That argument could have consequences beyond this case, and since I have determined Mr Spencer's claim to have these rights suffers from the difficulties I have identified above, there is no need to go further. 537 The respondents noted that Mr Spencer's invocation of the common law as the source of his profit à prendre rights in carbon had not formed part of his pleaded case. Whether or not that is strictly correct (given [37] of the FASOC does not refer to the source of the right alleged), the respondents are correct in their further submission that there is an incongruity in the contention by Mr Spencer that the common law recognises a profit à prendre of this nature. As the extracts from the judgment of Mason J in Australian Softwood [1981] HCA 49; 148 CLR 121 make clear, the common law right is of the nature of a right to enter onto another's land and take something from it. To that extent, the use of the term "profit à prendre" in the Conveyancing Act might be seen to fit uneasily with the common law concept. 538 In addition to the incongruity of a claim of this kind, Mr Spencer provides no authority, and I am satisfied there is none, to support the proposition that the common law recognises a profit à prendre of this kind.

Whether the proprietary rights identified were acquired: the bundle of rights in Saarahnlee 539 In this sense, and as he goes on to develop in more detail, Mr Spencer seeks to differentiate the circumstances in relation to Saarahnlee from those in Commonwealth v Tasmania [1983] HCA 21; 158 CLR 1 (Tasmanian Dam Case), and those discussed more recently in the Plain Packaging Case [2012] HCA 43; 250 CLR 1. Some further examples of the way Mr Spencer describes the effect of the State's native vegetation laws on his property can be seen from the following extracts. 540 At p 38 of his final written submissions, Mr Spencer states (references omitted): We can prove that the Native Vegetation Act effected an acquisition, not an extinguishment, from the following. A landholder can ask the government for permission to plough a property comprising a single paddock that has native grasses on it. And the second respondent can grant permission to plough it. Therefore the second respondent has not extinguished, terminated or modified the use-rights. It has appropriated to itself the full measure of the use-rights in question, to grant or withhold permission to exercise them, from nought to a hundred percent, in the second respondent's own discretion, for a purpose determined unilaterally by their own conception of their own management of my property for their own preferred development as defined by them, to effect any result from preservation on the one hand to total extirpation of native vegetation in favour of agriculture on the other, and everything in between, and to arbitrarily benefit whatever political favourites they choose to benefit, and impose the costs by unequally discriminating against any minority target group they choose, which was farmers; subject only to the Environmental Outcomes Assessment Methodology. So unless the respondents are going to argue that the Environmental Outcomes Assessment Methodology ranks higher than the Constitution, therefore the use-rights have been acquired, not extinguished. (Emphasis in original.) 541 At p 42, referring to the judgment of Deane J in the Tasmanian Dam Case at [70], he makes a similar submission: Translating that quote to this case, since the effect of the impugned actions is to make "a law prohibiting any presence upon land of a particular [thing other than what the government wants to be on the land e.g. crops] and "thereby obtain the benefit of [what the government wanted to use the land for e.g. native vegetation]", that would, in Deane J's view "be an effective confiscation or acquisition of the benefit of use of the land in its unoccupied state [i.e. translated to this case, the land in its state unoccupied by compulsory native vegetation] notwithstanding that neither the owner nor the Commonwealth possessed any right to go upon or actively to use the land affected". And therefore the judgments of all the justices who considered the question in Tasmanian Dams are further authority for the proposition that this was acquisition, not extinguishment. 542 Then, in seeking to answer the submission from the State that the regime under the Native Vegetation Conservation Act 1997 and Native Vegetation Act 2003 is quite differently characterised from that regime in the Tasmanian Dam Case, Mr Spencer submits: First, both cases have in common that executive consent was required. However in Tasmanian Dams the chance that the Minister would grant it was considered so slim as to be negligible. In this case, it is part of an active regime of 'management' of State-wide agriculture for purposes of a kind of development. The fact it was a 'lesser diminishment' only begs the question why the government themselves would detract from a full prohibition if it was really an extinguishment or a preservation. The reason is, because they want variable discretion in how to use the land for the same reason farmers do: to use the land to produce what they want. It's not an extinguishment or termination; it's an acquisition for an active regime of alternative discretion for alternative use for alternative ends, so as to produce alternative "assets"; to use the second respondent's own terminology for what it's doing. Secondly, if I say the legislation stops me from doing something, the respondents argue that it's not as though anyone else can. This ignores the fact that the respondents' own conception of a successful outcome is that the land should be used to grow native vegetation. The fact I am stopped from doing something, doesn't mean the respondents are stopped from doing something: they are using my land to grow native vegetation. (Footnotes omitted.) 543 The authorities to which I have referred about what comprises the "bundle of rights" held by the owner (or lessee) of real property provide some support for Mr Spencer's submissions, to a point. At least, to the point of recognising that the regimes established under the Native Vegetation Conservation Act 1997 and Native Vegetation Act 2003 place considerable controls around how land subject to those regimes may be used. They were avowedly, as Mr Spencer submits, controls implemented to "manage" the use of land, and to manage it in accordance with priorities set by both State and Federal Government. 544 It is correct, as the respondents have submitted and I have set out earlier in these reasons, that there were a range of controls over Saarahnlee dating from well before 1997. SEPP 46 was one such significant control, but the limits imposed by the Soil Conservation Act are also important. There can be no dispute that there was considerable state legislation over land management, and native vegetation clearing. 545 However there can also be no dispute that both the Native Vegetation Conservation Act 1997 and the Native Vegetation Act 2003 were intended to continue, and increase, that control. The Commonwealth was insistent that occur, if New South Wales wished to continue to receive federal funding for environmental reforms. 546 The key difference, for the analysis in this proceeding, is what occurred in July 2007. The extent of the "control and "regulation" over Saarahnlee, specifically, crystallised in an assessment on behalf of the State that those controls had rendered that particular property not commercially viable. 547 As I have explained elsewhere in these reasons, I do not consider that the respondents can now seek to minimise the nature and effect of that designation. It was the basis upon which public monies were to be offered to Mr Spencer and, had he accepted them, would have been expended. It should be taken to be a true and accurate reflection of the impact of the 2003 Native Vegetation Act on Mr Spencer's property. 548 The approach of Rich J in Dalziel [1944] HCA 4; 68 CLR 261 has some application to the circumstances facing Mr Spencer - "the Minister has seized and taken away … everything that made his weekly tenancy worth having, and has left him with the empty husk of tenancy" (at 286). It would be to engage in hyperbole to describe Mr Spencer as left with a "husk", when speaking of a high country property of some 5,205 hectares, but the respondents should not be permitted to detract from the description given by the Rural Assistance Authority as to the effect of the State's native vegetation laws. Just as in the Tasmanian Dam Case, the effect of the World Heritage (Western Tasmania Wilderness) Regulations 1983 (Cth) on the area known as the Western Tasmania Wilderness and the effect of the World Heritage Properties Conservation Act 1983 (Cth) was to dedicate or devote the 14,125 hectares of that wilderness to public uses of protection and conservation, so the effect on Saarahnlee was to give priority to the public uses of protection and conservation of native vegetation over the suite of discretionary uses to which Mr Spencer as the landowner wished to put his land. 549 To that extent also descriptions from the authorities such as "sterilisation" and "termination" have some resonance. There will be a need to examine the "bundle of rights" held and determine to what kinds of regulation the bundle might always have been subject: Telstra [2008] HCA 7; 234 CLR 210 at [52]. That exercise having been undertaken, there is no reason in principle why proprietary interests which have always been subject to some level of regulation (as interests in land in New South Wales clearly have been, in relation to the clearing of native vegetation) cannot be impaired by new legislation or government action to a greater degree so that regulation becomes "taking". Descriptions such as "sterilisation" and "termination" do not however answer the constitutional question. They may answer the first of the two steps in the constitutional question - that of "taking": see Plain Packaging Case per Gummow J at [100]. The "taking" is to be ascertained by an examination of the level and nature of impairment of the bundle of rights which inhere in the property: Plain Packaging Case at [119] per Gummow J. 550 In my opinion, there was a "taking" recognised in the offer made by the Rural Assistance Authority in July 2007. The bundle of rights held by Mr Spencer in Saarahnlee was recognised as fundamentally altered, and impaired. 551 However proprietary rights may be extinguished and "taken" without being acquired: see Plain Packaging Case at [100], Gummow J, referring to R v Ludeke; Ex parte Australian Building Construction Employees' and Builders Labourers' Federation [1985] HCA 84; 159 CLR 636 at 653 per Gibbs CJ, Wilson, Brennan, Deane and Dawson JJ. See also Kiefel J in the Plain Packaging Case at [355]-[357], and the authorities to which her Honour there refers. As both Gummow and Kiefel JJ explained in the Plain Packaging Case, this distinction illustrates one of the principal differences in the scope of s 51(xxxi) from the takings clause of the Fifth Amendment to the United States Constitution. The following extract from Lingle v Chevron USA Inc 544 US 528 (2005) at 537-540 illustrates the different approach in the United States: Beginning with Mahon, however, the Court recognized that government regulation of private property may, in some instances, be so onerous that its effect is tantamount to a direct appropriation or ouster - and that such "regulatory takings" may be compensable under the Fifth Amendment. In Justice Holmes' storied but cryptic formulation, "while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." The rub, of course, has been - and remains - how to discern how far is "too far." In answering that question, we must remain cognizant that "government regulation - by definition - involves the adjustment of rights for the public good," Andrus v. Allard, and that "Government hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law," Mahon, at 413. Our precedents stake out two categories of regulatory action that generally will be deemed per se takings for Fifth Amendment purposes. First, where government requires an owner to suffer a permanent physical invasion of her property - however minor - it must provide just compensation. See Loretto v. Teleprompter Manhattan CATV Corp. (state law requiring landlords to permit cable companies to install cable facilities in apartment buildings effected a taking). A second categorical rule applies to regulations that completely deprive an owner of "all economically beneficial us[e]" of her property. Lucas (emphasis in original). We held in Lucas that the government must pay just compensation for such "total regulatory takings," except to the extent that "background principles of nuisance and property law" independently restrict the owner's intended use of the property. Id., at 1026-1032. Outside these two relatively narrow categories (and the special context of land-use exactions discussed below, see infra, at 2086-2087), regulatory takings challenges are governed by the standards set forth in Penn Central Transp. Co. v. New York City. The Court in Penn Central acknowledged that it had hitherto been "unable to develop any 'set formula'" for evaluating regulatory takings claims, but identified "several factors that have particular significance." Id., at 124. Primary among those factors are "[t]he economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations." Ibid. In addition, the "character of the governmental action" - for instance whether it amounts to a physical invasion or instead merely affects property interests through "some public program adjusting the benefits and burdens of economic life to promote the common good" - may be relevant in discerning whether a taking has occurred. Ibid. The Penn Central factors - though each has given rise to vexing subsidiary questions - have served as the principal guidelines for resolving regulatory takings claims that do not fall within the physical takings or Lucas rules. See, e.g., Palazzolo v. Rhode Island. Although our regulatory takings jurisprudence cannot be characterized as unified, these three inquiries (reflected in Loretto, Lucas, and Penn Central) share a common touchstone. Each aims to identify regulatory actions that are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain. Accordingly, each of these tests focuses directly upon the severity of the burden that government imposes upon private property rights. The Court has held that physical takings require compensation because of the unique burden they impose: A permanent physical invasion, however minimal the economic cost it entails, eviscerates the owner's right to exclude others from entering and using her property - perhaps the most fundamental of all property interests. See Dolan v. City of Tigard; Nollan v. California Coastal Comm'n; Loretto; Kaiser Aetna v. United States. In the Lucas context, of course, the complete elimination of a property's value is the determinative factor. See Lucas at 1017 (positing that "total deprivation of beneficial use is, from the landowner's point of view, the equivalent of a physical appropriation"). And the Penn Central inquiry turns in large part, albeit not exclusively, upon the magnitude of a regulation's economic impact and the degree to which it interferes with legitimate property interests. (Citations omitted.) 552 In Australia, government regulation which extinguishes a proprietary interest, will not, on current authority, contravene the guarantee in s 51(xxxi). 553 As the extracts from his submissions demonstrate, Mr Spencer confronts this problem by submitting that the control exercisable by the State after 1997 over the uses to which Saarahnlee could be put, including the control given to the State to ensure that Mr Spencer's land remained, if the State saw fit, covered in native vegetation, should be seen as crossing the line into an acquisition by the State. 554 "Control" is an opaque concept. It is the essence of both ownership of property on the one hand and its regulation on the other. One can find references in the authorities to the assumption of control as an indicator of acquisition - see Dixon J in Bank of NSW [1948] HCA 7; 76 CLR 1 at 349 (although there, Dixon J spoke of the assumption of "exclusive possession and control"). Where the level of control equates to a deprivation of the "reality of proprietorship", this may be sufficient to constitute an acquisition: see Newcrest [1997] HCA 38; 190 CLR 513 at 633 per Gummow J. 555 The line between control by way of regulation and acquisition will be heavily dependent on the subject matter of the impugned laws or Commonwealth action. 556 The description by Deane and Gaudron JJ in Mutual Pools [1994] HCA 9; 179 CLR 155 at 185 is often cited as articulating the content of the concept of acquisition in s 51(xxxi): 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. (Footnotes omitted.) 557 This description was adopted by French CJ, Gummow and Crennan JJ in ICM [2009] HCA 51; 240 CLR 140 at [82]. In ICM at [147], Hayne, Kiefel and Bell JJ adopted slightly different language but not, in my respectful opinion, so as to suggest any substantively different content from the concept as described by Deane and Gaudron JJ in Mutual Pools: But there can be no acquisition of property unless some identifiable and measureable advantage is derived by another from, or in consequence of, the replacement of the plaintiffs' licences or reduction of entitlements. That is, another must acquire "an interest in property, however slight or insubstantial it may be" [citing Mason J in the Tasmanian Dam Case at 145]. (Emphasis in original; footnotes omitted.) 558 As their Honours noted, this was the formulation adopted by Gummow J in Newcrest [1997] HCA 38; 190 CLR 513 at 634 (with whom Toohey and Gaudron JJ agreed), which also referred back to Deane and Gaudron JJ's judgment in Mutual Pools. There is no necessary minimum degree of proprietary interest that must be acquired - this being the matter to which Mason J's observation in the Tasmanian Dam Case at 145 is directed. 559 A characteristic of regulation is that it establishes (and then enforces) norms of conduct for the future, thus operating prospectively on its subject matter, dependent for its effect on the actions and decisions of those subject to regulation, and of those regulating. Invariably, regulation is undertaken so as to achieve public purposes thought by government to be desirable; the benefit or advantage conferred is, as Kiefel J pointed out in the Plain Packaging Case at [368], the Commonwealth's ability to pursue and perhaps achieve the legislative policy objectives which sit behind the regulatory scheme. 560 Kiefel J illustrated the distinction her Honour sought to make at [363]: A closer analogy to the level of restriction placed upon the plaintiffs' use of the trade marks and other property is with restrictions which may be placed upon land for the purposes of town planning and other public purposes. Such restrictions, or even prohibitions, would not usually be said to result in an acquisition of land by a local authority. Even the sterilisation of land by regulation has not been said to have this effect [citing the Tasmanian Dam Case at 145-146 per Mason J; at 181 per Murphy J; and referring also to Brennan J at 247-248]. 561 In the Plain Packaging Case, the plaintiffs' arguments were to the effect that the regulation of packaging meant the Commonwealth had secured to itself control of the exploitation of their "property" - including their trade marks, "get-up" and the space on the packaging - even if it chose not to exploit that property for itself. A majority of the Court (with Heydon J dissenting) rejected this argument. 562 At [150] Gummow J said: 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. (Citations omitted.) 563 It may be, as Heydon J observed in the Plain Packaging Case at [231], and as Mason J said in Tooth [1979] HCA 47; 142 CLR 397 at 428, that the existence of a regulatory goal is not decisive of the question whether pursuit of that goal involves a s 51(xxxi) acquisition. 564 Nevertheless, what must be identified in the circumstances is the legal interest said to have been created between another party and Mr Spencer's land. Although the "other party" who acquires a proprietary interest need not be the Commonwealth, in practice it often will be, because what is usually in issue is the direct operation of a Commonwealth law. Here, of course, the steps in the argument from the effect of the two federal laws are somewhat less straightforward, to say the least. 565 In the Plain Packaging Case at [182]-[183] Hayne and Bell JJ said: When the seller or the maker of a product puts a warning on the packaging, the seller or maker cannot "exploit" that part of the packaging by putting something else where the warning appears. And as the tobacco companies pointed out, the TPP Act greatly restricts, even eliminates, their ability to use their packaging as they would wish. In the terms the tobacco companies used, they cannot exploit their packaging. But contrary to the central proposition that underpinned these arguments, no-one other than the tobacco company that is making or selling the product obtains any use of or control over the packaging. The tobacco companies use the packaging to sell the product; they own the packaging; they decide what the packaging will look like. Of course their choice about appearance is determined by the need to obey the law. But no-one other than the tobacco company makes the decision to sell and to sell in accordance with law. By prescribing what can and cannot appear on retail packaging the TPP Act affects that packaging and those who produce and sell the tobacco products. But to characterise this effect as "control" diverts attention from the fundamental question: does the TPP Act give the Commonwealth a legal interest in the packaging or create a legal relation between the Commonwealth and the packaging that the law describes as "property"? Compliance with the TPP Act creates no proprietary interest. 566 The reasoning in the Plain Packaging Case, especially that of Hayne and Bell JJ to which I have just referred, is applicable to Mr Spencer's claims. Even if one accepts the premise of his argument that the Native Vegetation Conservation Act 1997 and Native Vegetation Act 2003 introduced more comprehensive and tighter regulation, the control which was exercised through that regulation on the clearing of native vegetation on Mr Spencer's land did not lead to the creation of any legal relationship of a proprietary character between the Commonwealth, or the State, and Saarahnlee. Mr Spencer's ability to occupy Saarahnlee, or sell it, and to use it, continued; no other person took over a relationship of that kind with Saarahnlee. The choices Mr Spencer made about how to use Saarahnlee were determined by the need for him to obey the native vegetation laws, but that is a negative effect on his proprietary interest, rather than a positive reallocation of it, or part of it, to another. 567 Nor did the "sterilisation" or "taking" which occurred in July 2007 give the Commonwealth or the State, or anyone else, a legal interest in Saarahnlee, or create any legal relationship between Saarahnlee and another person which the law describes as proprietary. To the contrary, those events presented Mr Spencer with an opportunity to recover what was, as I find elsewhere, the market value of Saarahnlee. Rejecting that offer as he did illustrates that he, and not anyone else, continued to be the person with a proprietary relationship over Saarahnlee. 568 The evidence shows the property was assessed as no longer "commercially viable", but loss of value does not equal acquisition: Australian Capital Television Pty Ltd v Commonwealth [1992] HCA 45; 177 CLR 106 at 166; Bank of NSW [1948] HCA 7; 76 CLR 1 at 348; Dalziel [1944] HCA 4; 68 CLR 261; Tasmanian Dam Case [1983] HCA 21; 158 CLR 1 at 145-146, 181, 247, 286-288; Georgiadis [1994] HCA 6; 179 CLR 297; Newcrest [1997] HCA 38; 190 CLR 513 at 634-635; and WMC [1998] HCA 8; 194 CLR 1 at 71-73. 569 If all that were required for s 51(xxxi) were a "taking", or a "sterilisation", then Mr Spencer's arguments would have had considerably better prospects, although he would still have faced the hurdle of establishing on current authorities the necessary connection with the two federal laws and the intergovernmental agreements. For completeness, I now consider the terms offered by the State as part of its decision about the impact of its native vegetation laws on Saarahnlee. 570 At [120]-[123] of its final submissions, the State submitted: The Court should make a finding that Mr Connolly's and Mr Sullivan's valuations of Saarahnlee as at 2007-2008 are correct. (a) They are supported by clear and unchallenged reasoning. (b) They are in the same ballpark as each other. (c) They are consistent with Mr Spencer's rough estimates of market value in his two drought assistance applications in 2004 and 2006. (d) Mr Spencer also accepted in oral evidence that he did not dispute Mr Sullivan's assessment of market value. (e) The assessments are also higher than the amount recorded as the dutiable value of all of the Land except Lot 50 when it was transferred to the Bambers, being $1.3m. As to the value of the other projects, for millable timber, firewood and carbon, and so forth, it appears that even Mr Davies does not purport to include these in the value of the land per se. The Court should find that in the circumstances of this case, these projects have no role to play and should be disregarded. That is so because, as explained by Mr Connolly, the market can be taken to have factored in such potential uses. For the same reasons, the Court should find that the Connolly and Sullivan valuations correctly incorporate the value of potential grazing activities in the elevated price per hectare of improved grazing land. Finally on this topic, and importantly, there is no objective evidence upon which it can be found that either of the impugned State Acts had any impact upon the market value of Saarahnlee, and Mr Connolly's unchallenged and reasoned conclusion is to the contrary. The Court should accept that conclusion. That conclusion is supported by the further, inter-related conclusion that in the case of this land, it was simply not economic to clear it, and to do so would have occasioned a loss. In those circumstances, contrary to the applicant's claim it is by no means apparent that he was never offered "just terms". It may be accepted that "just terms" means adequate or reasonable compensation for value (Telstra v Commonwealth (2008) 243 CLR 210 at [41]-[42]; Minister for Primary Industry v Davey (1993) 47 FCR 151 at 167; Wurridjal v Commonwealth (2009) 237 CLR 309 at [108], [190], [197]-[198], [324]). But that means reasonable market value, ie, the notional bargain struck by a willing but not anxious vendor and purchaser. It does not involve a large premium payable to an unwilling seller, yet that seems to have been the starting point of Mr Davies' analysis. More generally, the free market hypothesis does not require the assumption of a "legislative void," and even the necessity of paying compensation and giving just terms does not require the community "to submit to the exaction of the uttermost farthing" (Nelungaloo v Commonwealth (1948) 75 CLR 495 at 540-541, see also 596, 587, and 569). (References omitted.) 571 If, contrary to the view I have reached, what occurred in 2007 (up to and including Mr Spencer's rejection of the exit assistance package) should be characterised as an "acquisition" for the purposes of s 51(xxxi), what was offered by the State was, I find, just terms. 572 The State's submissions in these paragraphs should be accepted.

Whether the proprietary rights identified were acquired: the carbon rights 573 I have concluded at [534]-[535] above that Mr Spencer has not established he ever held, at the requisite time, any carbon sequestration rights under the Conveyancing Act, and that no such rights existed as a profit à prendre at common law. Nevertheless, to complete consideration of the way Mr Spencer puts what was, I accept, a key aspect of his claim, I have assumed contrary to my finding that those rights could be seen as proprietary interests of a relevant kind, in 1997, for the purposes of s 51(xxxi). The next question is: were they "acquired"? 574 This issue assumed considerable prominence in Mr Spencer's contentions, because it was on this issue that he based his analysis about the benefits he says the Commonwealth received, in terms of meeting its emissions targets under the Kyoto Protocol. In his final submissions, he put the contention in the following way: The benefit to the Commonwealth was in two kind's money or money's worth, financial advantage, costs saving from other measures to reduce emissions which would otherwise need to be expended to achieve the same Commonwealth policy Proprietary advantage of carbon sequestered in native vegetation as a result of banning clearing. Authority that these were benefits for purposes of establishing acquisition of property in terms of s.51(xxxi), is shown in the later section: Constitution. s.51 (xxxi) - principles. 575 The last sentence is a cross-reference to the following passages further on in Mr Spencer's written submissions (omitting footnotes): There is no requirement that a benefit be a benefit of a real and proprietary nature: 'some identifiable and measurable advantage' is sufficient. This lack of rigidity in the test is jurisprudential common sense given the High Court's reference to notions of 'property' as not absolute but relative and changing and as including environmental rights. Examples of the protean recognition of property both taken and acquired include: Dalziel: possible future use of a carpark by another. Therefore the respondent's possible future use of carbon rights qualifies. Newcrest: removal of restriction on use by freeing up the land from that possible prohibition of mining. Therefore the value of restrictions of use in this case qualify. Magennis: lesser amount of money needed under to fund policy objective. Therefore the respondent's cost saving in this case qualifies. Bank Nationalisation: the benefit acquired was the right to take up position of control including declaration of dividends. Therefore the respondent's acquisition of decision-making control whether land could be used profitably or not qualifies. Smith: the benefit obtained by the Commonwealth was the entirely speculative and insubstantial right to defend the case on the basis of a limitation defence if that was needed: it was of a future and financial character namely that the Commonwealth might be saved funds. Therefore even the speculative value of carbon rights - especially in context that the Commonwealth expected to set up a valuable compulsory mechanism - qualifies. (Emphasis in original.) 576 It can be seen that at least two kinds of benefits or material advantages are contended by Mr Spencer to have flowed to the Commonwealth: first, the meeting of its international obligations under the Kyoto Protocol in a way which meant costs savings by not having to find other ways to reduce carbon emissions; and second, the retention of sequestered carbon in the vegetation on Mr Spencer's land. 577 As the Commonwealth notes in its submissions the mere presence of trees on Mr Spencer's land did not assist the Commonwealth to meet its emissions targets, because only emissions or removals by one of the activities referred to in Art 3(3) of the Kyoto Protocol (afforestation, reforestation or deforestation) were counted to determine whether Australia met its target. Mr Spencer did not suggest he did anything by way of planting which would be included, so to speak, on the positive side of the Kyoto Protocol ledger. It is correct that the strictness of the native vegetation clearance laws meant he was unable to clear land he wished to, so that there was less deforestation and, therefore, fewer emissions for Kyoto Protocol target purposes (as there would have been across New South Wales). As the Commonwealth submitted: If such emissions were reduced below the level of emissions of greenhouse gases produced by land clearing constituting deforestation in the base year (1990), then that source of emissions will be counted as a net reduction for the purposes of determining whether Australia met its obligations under Article 3(1). 578 Accordingly, the Commonwealth did not dispute that if Australia had been unable to include any net reduction resulting from prevention of deforestation (including on land such as Mr Spencer's through state native vegetation clearance restrictions), other measures would have been necessary if the Commonwealth was to meet its commitments under the Kyoto Protocol. 579 The Kyoto Protocol Conference of the Parties also adopted definitions of "afforestation", "reforestation" and "deforestation" in its Decision 16/CMP.1, "Land Use, Land-Use Change and Forestry" (UN Doc FCC/KP/CMP/2005/8/Add.3, 30 March 2006). Importantly, the applicant has not alleged that he did anything in the nature of "planting, seeding and/or the human-induced promotion of natural seed sources" so as to constitute afforestation or reforestation. His case is simply that vegetation grew upon his land because he was prevented from clearing it. 580 The problem for Mr Spencer is that although there is little difficulty in characterising this as a "benefit" to the Commonwealth, as one might usually understand that term, and a material one, it has no proprietary character. 581 I accept the respondents' submissions that the current state of authority on s 51(xxxi) requires the benefit or advantage secured or derived to be of a proprietary character: see Plain Packaging Case at [147]-[148] and [172]. 582 Some Justices have seen the observations of Deane J in the Tasmanian Dam Case at 286-287 as reflecting a more expansive view: namely, that the absence of a material "benefit" in a proprietary sense is not necessarily determinative (see for example the discussion by Heydon J in dissent in the Plain Packaging Case (at [195] ff) and the authorities to which his Honour refers). If that is the case, those views do not command a majority of the Court and I do not propose to adopt that approach. In any event, in the Plain Packaging Case both Crennan J (at [302]-[305]) and Kiefel J (at [365]) read those passages in the Tasmanian Dam Case and the passages to like effect by Deane and Gaudron JJ in Mutual Pools at 184-185 as not extending the orthodox views of s 51(xxxi). With respect, there is force in those observations. It may be incongruous with the concept of acquisition to allow a shift in the nature of the interest from proprietary to non-proprietary. 583 The implementation and pursuit of policy objectives (including environmental policy objectives), although securing not only to government, but to the broader community perceived benefits and advantages, is not an acquisition for the purposes of s 51(xxxi): see ICM [2009] HCA 51; 240 CLR 140 at [84]; Plain Packaging Case at [147], [177], [353]-[372]. 584 There are two further submissions made by the Commonwealth which should be noted, and accepted. These are evidence-based submissions, and well made. 585 As in other areas of his overall argument, Mr Spencer faces some difficulties with the chronology he needs to rely on. On one view, he alleges his property was acquired on and from 1 January 1998, when the NSW Native Vegetation Conservation Act 1997 commenced. On another, it was at the refusal of the clearing "application" and conclusion of non-viability in July 2007. The "material advantage" which he says accrued to the Commonwealth - of meeting its Kyoto Protocol targets - accrued in 2012 (on one view, at the end of Australia's first commitment period) or, at the earliest from 2008 when Australia assumed its obligations under the Protocol and was required, at least as a matter of international obligation, to start trying to meet the target to which it had agreed. Unless Mr Spencer's proposed large-scale clearing (4,881 hectares, as assumed by Dr Evans in his report) was assumed to have been undertaken in the Kyoto Protocol commitment period, the emissions from such a clearing would not be relevant to the calculation of Australia's Kyoto Protocol commitments. So far as the evidence is concerned, the chronology makes this impossible to accept, especially given Mr Spencer's evidence that he would not have cleared his land in such a wholesale way, all at once, and given the absence of any evidence from him about how much he would have cleared, and when. What the clearing of Saarahnlee would, or would not, have contributed to in terms of increasing Australia's emissions is entirely speculative. 586 Further, the experts Dr Evans and Mr Sturgiss agreed, in concurrent session, that Dr Evans' calculations of the carbon that would be released if all vegetation was cleared and burnt on Saarahnlee were fair calculations, given the assumptions made by Dr Evans in his report. Accepting those calculations, Dr Evans' evidence was that even if all the 4,881 hectares had been cleared with the carbon emissions during the Kyoto Protocol commitment period Dr Evans calculated (and Mr Sturgiss accepted were fair), Australia would still have met its target commitment under the Kyoto Protocol, because Australia had exceeded its target commitment by approximately 131 million tonnes. In other words, it is not possible to identify the assumed prevention of the clearing and burning of all of Mr Spencer's 4,881 hectares as, in fact, securing even a material benefit or advantage to the Commonwealth, assuming as one must, that all other things were equal. 587 For those reasons, no material advantage or benefit of a proprietary character was acquired by another person, even if one assumes the carbon sequestration rights existed. Nor, even if it were the law (and I am satisfied it is not), was there a material benefit or advantage of a non-proprietary character to the Commonwealth of the kind alleged by Mr Spencer, in relation to the Commonwealth's Kyoto Protocol targets.

The alleged informal arrangement: could it be invalid by reason of s 51(xxxi)? 588 The identification of an argument based on an informal arrangement seems to stem from what was said by some of the High Court in ICM, by reference to the third High Court case about the post-World War II soldier settlement scheme, Gilbert [1962] HCA 7; 107 CLR 494, although it concerned different consequences of the scheme to those considered in Magennis [1949] HCA 66; 80 CLR 382 and Pye [1951] HCA 8; 84 CLR 58. 589 I have found Mr Spencer has failed to prove any such arrangement. In any event, what was decided in Gilbert is not the "magic bullet" Mr Spencer (or those responsible for the drafting of some of his pleadings) appears to consider it to be. 590 The appellant was a soldier settler, who obtained a farm of 1,430 acres in May 1948 under the soldier settlement scheme. He was given a lease over that land, with no option of purchase. In 1948 perpetual leasehold was the only form of tenure that the scheme then provided for and there was no mechanism for soldier settlers to obtain freehold title. He made a claim that he had a statutory right under s 7 of the War Service Land Settlement Scheme Act 1954 (WA) to convert his perpetual leasehold into a fee simple upon payment to the Crown of a certain sum, which the appellant claimed should have been £5,836, being the adjusted value of the land and non-structural improvements (£5,568) at the time the land was granted to him in May 1948, and not the sum fixed by the Minister of £12,761. 591 As with the scheme considered in Magennis and Pye, there were schedules attached to the federal legislation (the War Service Land Settlement Agreements Act 1945 (Cth)) that set out the form of the intergovernmental agreements pursuant to which the Federal Parliament had authorised the Commonwealth to grant financial assistance to the States as part of the soldier settlement scheme. The Western Australian Parliament enacted legislation approving an agreement entered into between the Commonwealth and the State of Western Australia on 9 November 1945. This legislation was the War Service Land Settlement Agreement Act 1945 (WA), although there were two further Acts (in 1951 and 1954) which were relevant to the appellant's claims, the former having been passed in response to the High Court's decision in Magennis. The latter made provision for soldier settlers to have their properties converted to freehold, but the appellant's dispute was over the price fixed by the Minister. Ultimately the High Court held the Minister's fixing of the price had miscarried, for reasons not presently material. However, in the course of considering the rather complex factual history around the administration of the scheme in Western Australia, both before but more critically after Magennis, the Court did refer to how the arrangements between the Commonwealth and Western Australia altered, because of Magennis. 592 The Court referred (at 504) to evidence about the arrangement between the Commonwealth and Western Australia: Correspondence passing between Ministers of State, of the Commonwealth and of Western Australia, was tendered in evidence. But it seems to be largely irrelevant to the issues in the case. When we allude to it, we do so only because, the scheme being in essence an arrangement between governments, these communications are explanatory of the course of events. They do not define the legal rights of the appellant. 593 The Court described (at 505) how these arrangements had been made: Conferences were therefore held between representatives of the Commonwealth and the States with a view to enabling the war service settlement schemes to be carried on without the legal impediments that had been created by the decision of this Court. On 16th March 1951 the Prime Minister wrote to the Premier of Western Australia stating that, as the State was continuing to settle ex-servicemen on the land, he felt that an arrangement could and should be made between the two governments "by which the Commonwealth Government co-operates in your scheme of settlement by providing financial assistance". He sent with this letter a memorandum setting out the conditions of an arrangement which would be acceptable to the Commonwealth. The proposal was, in essence, that the Commonwealth should provide financial assistance, not as previously for the purposes of the 1945 Agreement and under the Re-Establishment and Employment Act, but by direct grant to the States pursuant to s. 96 of the Constitution - the grants to be for the purposes of war service land settlement, and to be on such conditions as the Commonwealth Minister for the Interior should determine. An arrangement on the conditions thus envisaged was to take the place of the 1945 Agreement. Further correspondence took place concerning details of the proposal. In one letter (dated 19th December 1951) the Prime Minister, having in mind that the decision in Magennis's Case was regarded as having struck down Commonwealth participation in the 1945 Agreement, said: "The Commonwealth wished to avoid, for constitutional reasons disclosed by the Magennis Case, any arrangement of a formal character." ... And "In all the circumstances we feel strongly that the best legal foundation for future action can be provided by means of a grant of financial assistance pursuant to s. 96 of the Constitution supplemented by an informal arrangement (in the form say of an exchange of letters) between governments setting out the conditions to be observed." This proposal was adopted. (Citations omitted.) 594 At 505-509, the Court describes the communications between the Commonwealth and Western Australia, during which negotiations on various aspects of the s 96 grants were undertaken. As the Court's reasons make clear however, Gilbert was not an example of an informal arrangement. That is because the culmination of those negotiations by letter was, as the Court described it (at 508-510): The final result of the discussions between the Commonwealth and State authorities, which went on during 1951 and 1952, appears in the final formulation of the conditions on which it was agreed that the Commonwealth would make grants of financial assistance. A statement of these was printed and sent to the State on 31st July 1953. This statement, as it describes itself, was thereafter generally referred to as "the conditions". These conditions were, in terms, framed to operate prospectively. They state the principles on which in the future the scheme should be administered and moneys received by the State applied. They dictate the terms on which the State should grant leases in the future. … The matters in controversy between the State and Commonwealth authorities had thus been determined. The State was prepared to accept grants on the conditions as promulgated, and, in transactions between itself and settlers, to administer the scheme thereafter on the basis of those conditions. To this end the State Parliament passed the 1954 Act, which came into operation on 28th January 1955. Its purpose, according to the long title, was "to enable the State to carry out and give effect to war service land settlement and to accept appropriations mentioned in the States Grants (War Service Land Settlement) Act 1952 of the Commonwealth Parliament for the purpose of financial assistance in connexion with war service land settlement in such amount and subject to such conditions as the Minister (scil. the Commonwealth Minister) determines under that Act". The conditions so determined were those printed and promulgated in 1953. From then on those conditions were, it seems, regarded by the officials concerned with the administration of the scheme as superseding the 1945 Agreement, the original statutory authority for it having been repealed. The provisions of the conditions thus became really the terms of an agreement which the parties to the 1945 Agreement had substituted for it. So that, so far as the scheme was to be found embodied in any document, it was after 1954 to be found in the 1954 Act and the conditions. The conditions were, as we have said, in strict point of law the conditions on which the Commonwealth made moneys available to the State; and they were to apply prospectively, that is to the scheme as it was to be carried on under the new arrangement. 595 The Commonwealth submits that there was no "new principle" being articulated in ICM, by reference to the factual circumstances of Gilbert. I accept that submission. Indeed, the facts of Gilbert illustrate that what occurred, in the end, was a "formal" agreement or arrangement in any event. It is also correct that the kind of arrangement made in Gilbert did not have the invalidating features of the agreement in Magennis.

Has Mr Spencer established an informal arrangement about Kyoto Protocol targets existed? 596 At [326] to [372] above I have dealt with how I understand the allegation about the informal arrangement to be put by Mr Spencer, and I have dealt with the kind of evidence upon which he relies to find he has not proven the existence of such an arrangement. In this part of my reasons, I explain why I reject the connection he asserts existed between such an arrangement and the Kyoto Protocol. 597 It is apparent from the pleadings, and the submissions made by Mr Spencer, that a principal connection he seeks to draw in relation to the informal arrangement is between the Commonwealth needing to meet the targets to which it had committed under the Kyoto Protocol and an arrangement with New South Wales that, in return for funding assistance, New South Wales would preserve additional amounts of native vegetation cover in New South Wales to help the Commonwealth meet those targets. 598 The nature of the informal arrangement alleged is thus not simply one that, for general environmental policy purposes, the Commonwealth would provide financial assistance to New South Wales in return for New South Wales further restricting clearing of native vegetation. I consider the distinction important, because it affects the analysis of the evidence said to support the alleged informal arrangement, especially as to the chronology of events. 599 This aspect of Mr Spencer's informal arrangement allegations has at least the following difficulties: (1) The evidence of Mr Plummer does not support any informal arrangement concerning Kyoto Protocol targets, but tends to confirm the contents of the 1997 NHT Agreement, and cl 7.2(b) in particular. (2) The documents in evidence surrounding the November 1997 COAG meeting disclose a variety of policy considerations about the nature and extent of Australia's commitment to the Kyoto Protocol, the apprehended role for the States in decisions about that commitment and about meeting targets Australia might commit to, but all in terms one would expect to see on such an important national issue: namely, the need for the Commonwealth and the States to work cooperatively within their respective areas of legislative and executive power. (3) The allegations about a second period - 2002 to 2003 (prior to the Native Vegetation Act 2003) - as a possible period during which some kind of informal arrangement was concluded are not supported by the documentary evidence (see my findings earlier in these reasons at [358] to [362]). (4) The oral evidence of Dr Kemp establishes there was no informal arrangement, certainly during the period when he was the responsible Minister, and gives no support to any connection with Kyoto Protocol targets. It was this period that was prominent in the submissions prepared by the applicant's former legal representatives, and set out in the "Profile of Case" document. 600 There are problems of chronology with Mr Spencer's contentions. Australia's ratification of the Kyoto Protocol did not occur until December 2007: that is, a decade after the Natural Heritage Trust Act, and 15 years after the Natural Resources Management (Financial Assistance) Act. Australia did not commit to any targets until 2007. By this time, all the events on which the applicant wished to rely to support his allegation of an informal arrangement had well and truly passed. If, as Mr Spencer contends, the Commonwealth was intent on coercing New South Wales into greater rates of native vegetation preservation to meet its targets, then the time at which one would expect to see that pressure exerted is at or after the time at which Australia committed itself under international law to meet those targets: that is, post-December 2007. However there is nothing in the evidence relied on by Mr Spencer which dates from that time. Indeed, by that time, Mr Spencer had already commenced this proceeding. 601 The Natural Resources Management (Financial Assistance) Act had its origins, and derives its objectives from, policies and priorities formulated well before the concerns which led to the UNFCCC and Kyoto Protocol. That is not to deny a connection between such environmental issues, which is obvious. Rather, it is to make clear that the domestic policy motivations for the two federal laws are to be found in broader concerns about environmental protection for a wide range of reasons, without the very particular focus on climate change and the effects of greenhouse gas emissions with which the Kyoto Protocol is concerned. 602 I accept that there is evidence, and many documents adduced by the applicant in this proceeding, which demonstrate consideration at both federal and state level of the problems arising from climate change and greenhouse gas emissions as far back as the early 1990s. I do not suggest that these were not environmental concerns evident to both Federal and State Government, and about which those Governments were formulating policy positions. Clearly they were. 603 However it seems to me it is this difficulty in the chronology, and the lack of prominence of matters related to climate change in the four intergovernmental agreements, which has prompted the applicant to rely on an allegation about an "informal" arrangement as the source of what he contends is the intended acquisition of his property by the Commonwealth in order to contribute to meeting its Kyoto Protocol targets. 604 Whether as to an informal arrangement to give effect to general Commonwealth environmental concerns about native vegetation clearance (for example, biodiversity and salinity concerns), or to give effect to the Commonwealth's need to meet its Kyoto Protocol targets, I am not satisfied Mr Spencer has established on the evidence that any such arrangement existed.

Other decisions 605 For completeness, in concluding this aspect of Mr Spencer's claims, I deal with some more recent decisions referred to by the parties, where similar s 51(xxxi) arguments have been considered. The approach taken in those cases is not inconsistent with the approach I have taken. 606 In Scriven v Sargent [2014] QCA 133; 309 ALR 191, Mr Scriven sought leave to appeal from an interlocutory judgment refusing leave to rely on new grounds of appeal. Amendments to the Vegetation Management Act 1999 (Qld) and the Integrated Planning Act 1997 (Qld) had had the effect of making the clearing of native vegetation assessable development under the Integrated Planning Act. Mr Scriven was fined $118,000 for clearing native vegetation on 1,819 hectares of his freehold land without the appropriate permit, in breach of the Integrated Planning Act. On appeal, the District Court refused Mr Scriven leave to amend his notice of appeal in order to challenge the Queensland legislation as invalid under s 51(xxxi), finding the proposed challenge would be futile in light of the decisions in Magennis [1949] HCA 66; 80 CLR 382, Pye [1951] HCA 8; 84 CLR 58 and Bone v Mothershaw [2002] QCA 120; [2003] 2 Qd R 600, discussed below. The Court of Appeal, refusing leave to appeal, acknowledged it was not "so manifestly untenable" that the Commonwealth had acquired a proprietary interest as to justify a conclusion that the constitutional challenge was futile (per Fraser JA at [25], Morrison JA agreeing). However, the Court held "[t]he short point is that s 51(xxxi) imposes a condition and limitation only upon Commonwealth legislative power and it is established beyond argument in this court that state legislative power is not limited in any similar way" (per Fraser JA at [29], Morrison JA and Mullins J agreeing), referring extensively to Magennis as well as the subsequent decisions in Pye, ICM and Alcock v Commonwealth [2013] FCAFC 36; 210 FCR 454. 607 Alcock concerned a challenge to legislation enacted by Victoria, the National Parks (Marine National Parks and Marine Sanctuaries) Act 2002 (Vic), which prohibited the taking of abalone from protected marine areas without making provision for compensation to abalone fishers. Mr Alcock, who held a licence to take abalone under the Fisheries Act 1995 (Vic), relied on s 51(xxxi) to contend he had unlawfully been denied access to abalone fishing grounds without compensation for the losses thereby suffered. The Full Court of this Court applied the principles enunciated in the plurality judgments in ICM to find that, although Mr Alcock's ability to take abalone had been removed, there was no corresponding acquisition by another (at [50], see also [83]). Further, none of the consequences suffered by Mr Alcock occurred as the result of a Commonwealth law as contemplated by s 51(xxxi), but were rather "the result of the exercise of legislative power by Victoria in an area where it has title, property and full legislative authority independently of the arrangement for management of the fishery by Victoria" (at [51]). As to alleged arrangements reached between the Commonwealth and Victoria for the management of fisheries, the Full Court held (at [82]): The postulation of an arrangement of some sort between the Commonwealth and Victoria did not supply any factor which might engage the operation of s 51(xxxi) in a way which would affect the authority of the Victorian Parliament or the validity of the Marine Parks Act. Even if there was some arrangement (formal or informal) between the Commonwealth and Victoria which was reflected in the Marine Parks Act, that would not signify that Victorian legislation, dealing with areas where Victoria had title, property and full legislative capacity, was invalid, as s 51(xxxi) of the Constitution is not addressed directly to the power of a State Parliament. 608 The facts in Bone v Mothershaw were not dissimilar to those in Scriven, and involved a challenge to the regulation of vegetation clearance. Mr Bone, a farmer, had been convicted of clearing vegetation in breach of a vegetation protection order made under the local laws of the Brisbane City Council, and sought to appeal his conviction. McPherson JA described (at [23]) Mr Bone's "fundamental complaint" to be that "his land has been struck with sterility in relation to the uses he can now lawfully make of it. Except with Council approval, there is practically nothing he can do with it except to grow vegetation and perhaps walk on it." Although there was no challenge under s 51(xxxi) of the Constitution, the Court did consider whether the regulation of vegetation clearance could be said involve an acquisition. McPherson JA held (at [25]-[26], Byrne J agreeing) that it did not: The Council has not taken any interest of Mr Bone's, so as to attract the operation of the Acquisition of Land Act 1967 or otherwise. He retains unimpaired, for what it is worth, his estate in fee simple absolute in the land. He has been stripped of virtually all the powers which make ownership of land of any practical utility or value. There is, as is attested by an affidavit from the valuer provided at the hearing, no doubt that the value of the land has been greatly reduced. But the law provides no remedy for this action or its consequences when it is the result of legislation validly passed under law-making authority that by its terms or nature authorises or permits such an outcome. … … it in no sense involves acquisition of Mr Bone's property in the land. Both in purpose and effect, ch. 22 resembles the legislation in the Tasmanian Dam Case, from which it may have taken some of its inspiration, in prohibiting damage to and use of the subject land, without amounting to an "acquisition", by the Commonwealth or anyone else, within the terms of s. 51(xxxi) of the Constitution. Legislation enacted by or under Parliamentary authority may, without providing compensation, prohibit and deprive or expropriate without involving acquisition … (Citations omitted.) 609 Esposito v Commonwealth [2014] FCA 1440 concerned a decision by the federal Minister for the Environment, Water, Heritage and the Arts to override a rezoning of land by a local council, with the override decision having serious effects for the landholders involved. 610 The applicants, like a number of other people, purchased vacant land in the Shoalhaven area of the south coast of New South Wales, known as the Heritage Estates at Worrowing Heights near Jervis Bay. The land was zoned Rural 1(a) under the Shoalhaven Local Environmental Plan 1985 made under the Environmental Planning and Assessment Act 1979 (NSW). The zoning meant owners were not permitted to build on the land. That land is still vacant land and remains subject to a prohibition on construction. All purchasers were, Foster J found, led to believe by representatives of the vendor development company that the land would be rezoned in the not too distant future so as to permit construction of houses. Nevertheless, his Honour found that the restriction on the use of the land was made very plain in the Agreements for Sale entered into by the applicants. 611 There was continued agitation to change the zoning to permit construction, and eventually the Shoalhaven City Council proposed an appropriate rezoning to allow this to occur. 612 Since the early 1990s, the applicants and other landowners within the Heritage Estates had persistently agitated for their land to be rezoned so as to permit the erection of dwelling houses on that land. However on 13 March 2009 the federal Minister for the Environment, Water, Heritage and the Arts made a decision under s 130 of the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) to refuse approval of the Council's proposal to rezone the land. His Honour found (at [7]) that the Minister's decision "put paid once and for all to the possibility that the land … would be rezoned so as to permit the erection of dwelling houses". A voluntary acquisition scheme was instituted in a cooperative arrangement between the Commonwealth Department of the Environment, Water, Heritage and the Arts and the State Government of New South Wales through the Office of Environment and Heritage and the scheme ran for about a year. The applicants challenged the federal Minister's decision. 613 One of the grounds was the Commonwealth effected an acquisition of the applicants' property other than on just terms in contravention of s 51(xxxi), effectively imposing a national park over their developable land. But for the federal Minister's decision, the applicants alleged the land would have been rezoned as residential land giving each landowner significant development potential and a corresponding market value as developable land. 614 In somewhat familiar terms, his Honour recites an aspect of the applicants' claim at [122] of the reasons: from about September 2009, the respondents entered into an informal arrangement the essential features of which were that the Commonwealth, acting in concert with the other respondents, conceived and implemented a device for circumventing the Constitutional guarantee by making the EPBC Act decision, forcing the Council to proceed with the E2 zoning and providing funds in the manner which it did to acquire the lots in the Heritage Estates. The essence of this allegation was that, from about September 2009, there was a plan in place to which each of the respondents had decided to adhere and that all steps subsequently taken were taken in furtherance of and execution of that plan. Acceptance of the applicants' case in this regard requires the Court to conclude that all of the relevant steps taken after September 2009 were linked. 615 Foster J rejected the claim of an informal arrangement, on the basis there was no evidence of any such arrangement. At [132] his Honour noted the need for an acquisition, and not simply an extinguishment of rights. However his Honour found (at [137]) that there could not be said even to be such an extinguishment, because when the applicants purchased the land, they did so in full knowledge of the current zoning and the fact they could not build on the land. His Honour said: While it is true that, by 2007, the Council had taken steps to rezone the land in order to permit the construction of dwelling houses on that land, its rezoning proposal had to pass through a number of processes including consideration by the Minister under the EPBC Act. The EPBC Act decision did not alter the zoning of the land in the Heritage Estates. The effect of that decision was to destroy any hope or expectation which the landowners might have had as at mid 2007 and afterwards that their land might be rezoned. The decision did not impose new constraints or restrictions upon the use of the land. All that it did was to remove from consideration, at least into the foreseeable future, the potential for the land to be rezoned so as to permit the construction of dwelling houses thereon. 616 His Honour also found (at [140]) that, in any event, the buyback offered to the applicants was one which fixed the market value of the land prior to the federal Minister's decision and was in that sense "just terms". 617 No assistance for Mr Spencer's claims can be derived from these decisions.

MR SPENCER'S "ACTION ON THE CASE" 618 As I have described it at [24] above, Mr Spencer's claim in this respect is based on a series of torts cases - James [1939] HCA 9; 62 CLR 339, Beaudesert [1966] HCA 49; 120 CLR 145 and Mengel [1995] HCA 65; 185 CLR 307 - from which he derived the proposition that if he could show the Commonwealth was "motivated by an intention to cause harm to the plaintiff by an act which was unlawful", he was able to make a claim in tort for damages against the Commonwealth. 619 The unlawful act he relies on is the acquisition of his property, contrary to the terms of s 51(xxxi) of the Constitution. He claims in addition that there was a conscious decision by the Commonwealth to deprive farmers (including him) of their rights to use their land in the way they chose, and to allow the farmers' lands (including his own) to be used for the Commonwealth's own ends: namely, to further its environmental targets in relation to land clearing, including for the purpose of meeting the emissions reduction targets to which it had committed through the Kyoto Protocol.

The respondents' position 620 The Commonwealth responds to this claim in a number of ways. It submits on the evidence and as a matter of fact Mr Spencer has failed to prove the elements of the torts, even as he asserts them to be. It submits also at the level of fact and proof, Mr Spencer has failed to prove that he suffered an economic loss as a result of any conduct by or on behalf of the Commonwealth. It then also submits that there is no cause of action of the kind alleged known to law, and no analogy at all with any of the three cases on which Mr Spencer relies. 621 The State submitted the Court should find that there is no cause of action for damages for infringement of s 51(xxxi), referring to James [1939] HCA 9; 62 CLR 339, and to the endorsement of Dixon J's proposition from James in Kruger v Commonwealth [1997] HCA 27; 190 CLR 1 at 46 per Brennan CJ. Any private right of action (which the State, like the Commonwealth, denies exists) could not, it accepts, be answered by reliance on statutory power which was invalid. In that sense, as the Commonwealth does, the State submits that the success of this claim is dependent on a finding that the impugned state laws are invalid either because they are in direct contravention of s 51(xxxi) (a novel proposition) or because they have some kind of derivative invalidity as flowing from an invalid exercise of power under s 96 of the Constitution by the Commonwealth in making the intergovernmental agreements whose objectives the state laws sought to advance (still also a novel proposition). The State pointed to a number of difficulties with these propositions as expressed, with which I deal below. 622 The State also submitted that however the cause of action might be expressed, it was likely to cut across the field of operation of the established tort of misfeasance in public office, and would be likely to destroy the coherence attaching to that area of the law in a way which would make the creation of any such new tort inappropriate. It referred in this context to Sullivan v Moody [2001] HCA 59; 207 CLR 562 at [54]-[63]; Stuart v Kirkland-Veenstra [2009] HCA 15; 237 CLR 215; and Precision Products (NSW) Pty Ltd v Hawkesbury City Council [2008] NSWCA 278; 74 NSWLR 102 at [112]-[120] per Allsop P.

The relevant authorities 623 James v Commonwealth [1939] HCA 9; 62 CLR 339 is a judgment of Dixon J sitting alone. Mr James was a farmer and fruit merchant, producing dried fruit, and apparently very successfully. Dixon J's reasons trace the development of the regulation of the dried fruit industry, initially pursuant to federal/state arrangements between the Commonwealth, South Australia, Victoria, New South Wales and Western Australia, which led first to state legislation, an important objective of which was to restrict the amount of dried fruit available in the Australian domestic market so as to avoid the domestic market being flooded with dried fruit and prices to producers falling. 624 Mr James registered as a producer under the relevant South Australian legislation, but did not observe the limits imposed on the amount of dried fruit he could sell domestically, and he was prosecuted. In answer, he sought to impugn the validity of the regulatory scheme, initially as contrary to s 92 of the Constitution. He was successful: James v South Australia [1927] HCA 32; 40 CLR 1. His success entitled him to sell dried fruit without restriction interstate. The Commonwealth reacted by relying on the trade and commerce power to enact its own legislation: the Dried Fruits Act 1928 (Cth), which introduced a licence scheme for the sale of dried fruit and attached to the licence a quota on the amount that could be sold. There were seizure provisions enacted to enforce the scheme. Mr James launched another challenge to this scheme, which was successful insofar as the High Court invalidated regulations made under the scheme as contrary to s 99 of the Constitution, but upheld the validity of the Act itself: James v Commonwealth [1928] HCA 45; 41 CLR 442. New regulations were promulgated after this decision. As Dixon J noted ([1939] HCA 9; 62 CLR 339 at 347), "[s]o long as the Federal Act and regulations were treated as valid and enforceable they formed a complement to the legislation of the States; that is to say, the latter covered intra-State trade in dried fruits and the former covered inter-State trade, so that the whole Australian trade was regulated by the same system of control". Eventually, Mr James triumphed again and the federal legislation and regulations (the Dried Fruits Act 1928-1935 (Cth) and the Dried Fruits (Inter-State Trade) Regulations (Cth)) were declared invalid by the Privy Council: James v Commonwealth [1936] AC 578; 55 CLR 1. 625 In the meantime, he had significant amounts of his dried fruit seized under the legislative scheme. He sought to recover damages not only for what was seized, but for the adverse effect the federal and state scheme had on the profitability of his dried fruit business. As Dixon J observed, there were some real difficulties in how any such damages might be calculated, and what assumptions should be made in calculating damages about the existence or non-existence of any regulation, and the effects of that existence or non-existence, but I can pass over those issues for present purposes. 626 As to Mr James' contention that conduct (through the invalid federal/state legislation) contrary to s 92 of the Constitution gave him a private right to damages against the Commonwealth, Dixon J said ([1939] HCA 9; 62 CLR 339 at 362): Standing in the Constitution as it does, the provision should not, I think, be construed as dealing with the private rights of individuals under the civil law. Although, in point of grammar, it is expressed in the affirmative, it amounts to a negative in universal terms denying power, authority and competence, denying them to governments. I do not think that sec. 92 affords the plaintiff a cause of action sounding in damages. It would be ridiculous to apply to the provisions of a Constitution any of the considerations disclosed by the authorities dealing with the spelling-out of statutory causes of action, authorities collected and discussed by Jordan C.J. in his judgments in Martin v. Western District of the Australasian Coal and Shale Employees' Federation Workers' Industrial Union of Australia (Mining Department) and Whittaker v. Rozelle Wood Products Ltd. Prima facie a constitution is concerned with the powers and functions of government and the restraints upon their exercise. There is, in my opinion, no sufficient reason to regard sec. 92 as including among its purposes the creation of private rights sounding in damages. It gives to all an immunity from the exercise of governmental power. But to find whether a governmental act be wrongful the general law must be applied. Sec. 92 will do no more than nullify an alleged justification. The plaintiff cannot, therefore, recover damages under sec. 92 independently of any tort by the Commonwealth. (Citations omitted.) 627 Mr James also sought damages against the Commonwealth for inducing transport companies to refuse to carry his fruit because of the regulatory scheme in place (and Mr James' non-compliance with it). He based this on a broad assertion that there was a cause of action in tort for unlawful interference with the trade or employment of a person. Dixon J did not consider such a tort existed. Dixon J did acknowledge there may be an action for inducing another to commit an actionable wrong (in James, the Government through its scheme induced the carriers to refuse to carry Mr James' fruit), but only where there was some kind of conspiracy: the purpose of doing harm would not be a sufficient or, indeed, a material element in the cause of action. His Honour continued (at 366): It follows that the mere fact that the Commonwealth in the course of administering the invalid regulations, without committing or threatening an illegality, procured the shipowners and other carriers to refuse to carry the plaintiff's goods and thereby injured his trade, would not suffice to give him a cause of action. It is necessary that some unlawful or wrongful means should have been used or threatened. Then, did the course taken include any unlawful means or threat of unlawful means? 628 His Honour found there was no such threat. While he was prepared to allow for the possibility of a common law claim against the Commonwealth for inducement, Dixon J did not agree that any cause of action arose in the circumstances alleged by Mr James (at 372-373): In every instance where goods offered for inter-State carriage were refused by the carrier, the inducement consisted in a reminder that the plaintiff was not licensed and that under the Act and regulations, including the conditions prescribed for a carrier's licence, the carriage of his dried fruit was inhibited. Sometimes less was expressed or implied, but I do not think that any greater persuasion or inducement took place. There was, in other words, an appeal to the law as it was conceived to exist. The threat or inducement consisted in a tacit or implied intimation that the claims of the Government might be enforced by resort to legal process. I think it would be an extension of the principle upon which the procurement of breach of duty is made a tort to hold that it covers a mistaken assertion on the part of the Executive Government or its officers that under the law, as they understood it, it is the third party's duty to refrain from compliance with the obligation upon which the plaintiff insists. The ground upon which I decide this part of the case against the plaintiff is that the Commonwealth incurs no liability for tort merely because A is induced to refuse performance of what turns out to be in fact a civil duty to B by an intimation made to A by the officers of the Commonwealth that, under the law of the Commonwealth, A is not merely absolved from the performance of the duty but is forbidden under penalties to do what would amount to performance and, by doing it, would expose himself to prosecution; provided that the officers act honestly in the purported execution of their duty to maintain and enforce the laws of the Commonwealth and, perhaps reasonably, as, for instance, on the faith of a statute not yet held to be invalid. Even if the plaintiff overcame the other difficulties I have mentioned, this ground would be fatal to his claim for wrongful procurement of breaches of duty by common carriers. I do not think that a bona-fide assertion as to the state of the law and an intention to resort to the courts made known to the third party can be considered a wrongful inducement or procurement. The situation is simply that the Executive, charged with the execution of the law, under a bona-fide mistake as to the state of the law, proposes to proceed by judicial process. The courts are established by and under the Constitution for the purpose, among others, of determining whether the Executive is or is not mistaken in its view of the law which it seeks to enforce against the individual, and judicial process is the appointed means for bringing the question up for decision. To treat a proposal or threat to institute proceedings as a wrongful procurement of a breach of duty is to ignore the fact that, assuming bona fides, the law always countenances resort to the courts, whether by criminal or civil process, as the proper means of determining any assertion of right. In all other cases of procurement to be found there has been an element of impropriety, or of reliance upon some power or influence independent of lawful authority. An intention to put the law in motion cannot be considered a wrongful procurement or inducement, simply because it turns out that the legal position maintained was ill founded. (Emphasis added.) 629 In 1966, the High Court decided Beaudesert [1966] HCA 49; 120 CLR 145. Mr Smith held a licence under the Water Acts 1926 (Qld) to pump water out of the Albert River, on his farm. The Beaudesert Shire Council carried out some road works nearby, during which it removed a large quantity of gravel out of the river, which so altered the flow of the river that Mr Smith could no longer pump water out of the river as he was licensed to do using the pump which he had installed. The Council did not obtain any permits under the relevant Queensland regulations to remove the gravel, so the removal of the gravel was unlawful. Mr Smith brought an action of damages against the Council, and was successful at trial, being awarded £5,000. The Council appealed to the High Court. The Court held there was no private right to damages for breach of the regulations, nor was there any private cause of action against the Council. 630 However the Court did find the Council liable to Mr Smith for an intentional tort, or an action on the case. The Court held the Council intentionally did a positive act forbidden by law which inevitably caused damage to Mr Smith by preventing him continuing to exercise his lawful access rights to draw water from the river. 631 Noting by reference to historical studies on action on the case its close links to the cause of action in trespass, the Court set out a number of old cases dealing with causes of action of this kind. The following passage (at 155) gives sufficient flavour of the Court's approach: Two other old cases, Carrington v. Taylor and Keeble v. Hickeringill, may be referred to, not so much for the actual decisions, which do not depend upon the principle under discussion, as for what Holt C.J. said in Keeble v. Hickeringill. In Carrington v. Taylor it was held that an action lay by the owner of an ancient decoy for wild fowl against one who, without firing into the decoy, was guilty of a wilful disturbance of, and damage to, it by firing near it. Keeble v. Hickeringill, which was there referred to, was an earlier case of the same character and in that case Holt C.J. said: "... where a violent or malicious act is done to a man's occupation, profession, or way of getting a livelihood; there an action lies in all cases. But if a man doth him damage by using the same employment; as if Mr. Hickeringill had set up another decoy on his own ground near the plaintiff's and that had spoiled the custom of the plaintiff, no action would lie, because he had as much liberty to make and use a decoy as the plaintiff. This is like the case of 11 H.4, 47. One schoolmaster sets up a new school to the damage of an antient school, and thereby the scholars are allured from the old school to come to his new. (The action was held there not to lie.) But suppose Mr. Hickeringill should lie in the way with his guns, and fright the boys from going to school, and their parents would not let them go thither; sure that schoolmaster might have an action for the loss of his scholars. 29 E. 3, 18. A man hath a market, to which he hath toll for horses sold: a man is bringing his horse to market to sell: a stranger hinders and obstructs him from going thither to market: an action lies, because it imports damage. Action upon the case lies against one that shall by threats fright away his tenants at will." This case was referred to favourably in both the Court of Appeal and the House of Lords in Mogul Steamship Company v. McGregor, Gow & Co., where it was assumed that, had the acts of the defendants been unlawful - even in relation to third persons - and the economic loss to the plaintiffs sprung from such unlawful acts, the plaintiffs would have had their remedy. See especially Bowen L.J. and Fry L.J. (Citations omitted.) 632 At 156, the Court concluded the older cases stood for the following proposition: it appears that the authorities cited do justify a proposition that, independently of trespass, negligence or nuisance but by an action for damages upon the case, a person who suffers harm or loss as the inevitable consequence of the unlawful, intentional and positive acts of another is entitled to recover damages from that other. It may be that a wider proposition could be justified, but the proposition we have stated covers this case and leads us to the conclusion that the appellant is liable to the respondents for loss occasioned by its unlawful trespass in removing gravel from the river-bed. 633 As the majority in Mengel [1995] HCA 65; 185 CLR 307 were to note (at 338), Beaudesert was not applied in any reported decision between 1966 and 1995. 634 In 1995, the High Court overruled Beaudesert in Mengel, but approved James [1939] HCA 9; 62 CLR 339. Cattle from two cattle stations in the Northern Territory owned by the Mengels were tested for brucellosis, and returned some positive test reactions. Officers from the Northern Territory's Department of Primary Industry and Fisheries advised the Mengels that all the Mengels' breeder cattle herd were subject to movement restrictions because of those test results. This meant the Mengels were unable to sell their breeder cattle, had to import extra feed and sell extra stock to meet other financial obligations. The NT officers had no power to impose the movement restrictions. 635 The plurality (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ; Brennan and Deane JJ delivering separate judgments but both concurring in overruling Beaudesert) took a particular view of what could constitute "an act forbidden by law which caused harm", saying (at 337): It is not possible to discern from the facts of this case an act forbidden by law which caused harm to the Mengels. Nor is it easy to discern an unauthorised act. At first instance, Asche CJ proceeded on the basis that the act which caused harm was the unauthorised imposition of movement restrictions, but what happened was that the Inspectors told the Mengels that there were movement restrictions when, in fact and in law, there were none. That did not involve an act forbidden by law in any relevant sense. Nor did it require authority in a way justifying its description as "unauthorized". 636 Their Honours disagreed (at 339-341) with the characterisation by the plurality in Beaudesert of the authorities on which the plurality relied, noting in particular that all the cases relied on in Beaudesert concerned circumstances where a defendant had "purposely directed" conduct at a plaintiff, or at a plaintiff's activities. They criticised the concept of "inevitability" of harm, on which the principle in Beaudesert depended. They noted (at 341) the most troublesome aspect of Beaudesert was the intentional element - which did not require an intention to inflict harm, nor negligence, being quite contrary to the trend in tort law. Their Honours observed (at 343): The Beaudesert principle allows, at least as a matter of legal theory, that there may be liability notwithstanding that, in the circumstances, the plaintiff is under no duty of care to avoid harm to the plaintiff. And liability does not depend on an intention to harm. There may be cases involving breach of a duty of care which fall within the Beaudesert principle but, to that extent, the principle serves no useful purpose. And if there is no duty of care, it is anomalous, to say the least, to hold a person liable for harm which is not intentional and which he or she is under no duty to avoid. 637 Nor did the plurality consider (at 351) that anything in James [1939] HCA 9; 62 CLR 339 assisted the Mengels: The considerations that led Dixon J to conclude in James v. The Commonwealth that the "intimation that the claims of the Government might be enforced by resort to legal process" did not amount to procurement or inducement also lead to the conclusion that the mistaken assertion by government officers that, as a matter of law, certain consequences will or might attend a particular course of action does not constitute a threat for the purposes of the principle stated in Salmond's Law of Torts and adopted by Dixon J. At least that is so if the assertion is made bona fide. And it is clear from the written submissions of the parties and the arguments of counsel before this Court that the Mengels did not advance at trial a cause of action based on any threat by the Inspectors to seize the Mengels' cattle nor was there evidence to support any claim based on a threat in relation to the movement restrictions. (Citations omitted.) 638 The plurality confirmed the existence of the tort of misfeasance in public office occurs where there is a public act which the repository of that power knows is beyond power and which involves a foreseeable risk of harm: [1995] HCA 65; 185 CLR 307 at 347. 639 These various other actions foundered on the facts in Mengel, since there had been a finding by the trial judge that the NT officers did not intend to cause the Mengels harm: see [1995] HCA 65; 185 CLR 307 at 352. 640 Mengel remains a reflection of Australian law today.

Application to Mr Spencer's claims 641 There is no correspondence between these three cases and the circumstances in this proceeding as reflected in the evidence. 642 Mr Spencer has never alleged a duty of care was owed to him by officers of the Commonwealth, or the State, nor that there was a breach of any such duty. He has not alleged that particular officers exercised powers against him in a way which they knew exceeded those powers and which caused him foreseeable harm (Mengel). 643 Rather, the "unlawful act" he identifies is the taking of his property (his bundle of rights in Saarahnlee, and his carbon rights) contrary to s 51(xxxi) of the Constitution. If he fails to prove an unlawful act, his claim in tort fails at the first hurdle. I have found that none of the federal or state legislation is invalid on the basis that it infringes the protection of s 51(xxxi), and I have found there is no invalidity in the intergovernmental agreements for the same reason. There is, accordingly, no unlawful act. 644 Even if there were some invalidity, neither James [1939] HCA 9; 62 CLR 339, nor any other authority, entitles Mr Spencer to rely on acts (whether legislative or executive) held invalid under s 51(xxxi) as giving rise to any private cause of action. 645 Although Mr Spencer relies on the "intentional infliction of harm" by the Commonwealth (in enacting the two federal laws, in entering into the intergovernmental agreements, and in encouraging - or "inducing" - New South Wales to pass its native vegetation clearance laws), there is no relevant parallel with any of the three cases above, including Beaudesert [1966] HCA 49; 120 CLR 145, even if it were still good law, which it is not. In each of those cases, there were specific actions taken by identifiable office holders exercising a power which they purported to have against the plaintiff and the plaintiff's activities on an individual level. It was those actions which could be identified as the actions said to inflict harm, and there was then an actor of whom it could be asked whether there was an intention to inflict harm. 646 Here, there is no such action alleged. Somewhat inconsistently and ironically, much of Mr Spencer's evidence and his focus was on the broad-based effects of the implementation of federal and state policies: he made it a positive and prominent part of his case to emphasise how many farmers were affected. That feature tells against his claim in damages. Unlike Mr James, he does not point to conduct by individual officers of the Commonwealth said to be aimed directly at the economic activities on his farm, and which caused his activities particular harm. Unlike the Mengels, he does not allege that identifiable officers of the Commonwealth (or the State) made decisions about what he could and could not do on his farm that were responsible for his inability to engage in certain activities. At best on the evidence for Mr Spencer, as I have found, he was taken by the Rural Assistance Authority and the Nature Conservation Trust to have made and had refused a clearing application for the purpose of accessing the farmers' exit assistance package. Mr Spencer does not impugn the lawfulness of the decision to offer him the exit assistance package. In any event, he rejected the package, actually or constructively. 647 The kind of "intention" to which Mr Spencer points is, at the very best for him, a recognition or knowledge within Federal and State Governments generally (no knowledge or recognition at the level of any individual has been established on the evidence) that tighter native vegetation clearance laws in New South Wales would be likely to impose additional hardships on farmers, and therefore farmers should be given an opportunity to exit the industry if they wished to. Even taking a generous view of the authorities, this is far removed from the kind of intention to inflict harm to which they are directed. 648 I accept the respondents' submissions that the State's native vegetation laws were the result of independent legislative choices and action by the Parliament of New South Wales. No doubt the choices made were made knowing the fiscal consequences for New South Wales which may flow from the enactment of a legislative scheme that met the Commonwealth's environmental aims as set out in the Natural Resources Management (Financial Assistance) and Natural Heritage Trust Acts and which were contemplated in the intergovernmental agreements, including (as I have found) that the 1997 NHT Agreement required such legislation as one of the outcomes to be achieved for financial assistance to be provided by the Commonwealth. 649 I accept that both Federal and State Governments could be taken to recognise, in entering into the intergovernmental agreements and in proposing or agreeing that the State's legislative regulation of native vegetation clearances should reflect the aims of those agreements, there may have been adverse effects on landholders from increased restrictions on the clearing of native vegetation. Although the Commonwealth submits that the two federal laws and the intergovernmental agreements were directed to the preservation of native vegetation and environmental protection generally, and not at the applicant (and the same can be said of the state laws and State's objectives in entering the intergovernmental agreements), the evidence reveals that the increased level of restrictions on the clearing of native vegetation was recognised as having likely adverse consequences for landholders. This much was recognised in the policy documentation surrounding the introduction of the legislative schemes, in the two intergovernmental agreements on salinity, and in the farmers' exit assistance packages that were offered. To say that is far removed from the proposition that these exercises of executive and, or alternatively, legislative power can give rise to a private right of action in tort by persons affected. 650 Pursuit of environmental objectives, including increasing the preservation, and regeneration, of native vegetation, while recognising adverse impacts on the interests of some sectors of the community (relevantly, but not solely, farmers) cannot be translated into an intention to do harm as that concept is understood in tort law. 651 There are then also a multitude of other difficulties in the way of this claim by Mr Spencer, chief of which is his failure to prove, in the way the law requires, any damage caused by the federal and state conduct which he seeks to impugn. I turn to those matters.

THE DAMAGES CLAIM 652 The damages claim stems, on Mr Spencer's case, from conduct of the Commonwealth and, by inducement and complicity, the State, conduct which is said to be contrary to s 51(xxxi) of the Constitution. That conduct is partly legislative, and partly executive. 653 Mr Spencer's final submissions are somewhat equivocal whether he accepts that acts (whether legislative or executive) contrary to s 51(xxxi) cannot give rise to a private right to claim damages. He submits (at p 78 of his final written submissions): Therefore either the reasoning against the Constitution itself providing a remedy sounding in damages does not hold; or Dixon J [in James [1939] HCA 9; 62 CLR 339] was implying that tort law does allow of proving and claiming damages for breach of the Constitution. In any event, that case concerns Section 92 and is not precedent in this case. It is submitted with respect that the Court should hold that s.51(xxxi)'s requirement of just terms includes the requirement to pay damages in cases of unconstitutional unjust acquisitions, even if it has to be proved in tort. The point is that the elements of the tort cannot be construed in such a way as to make it impossible for the applicant to prove against the respondent's legislative arm in relation to the Constitution, because the legislative arm in relation to the Constitution is necessarily implicated. To deny this is, in effect, to deny that governmental action can be proved wrongful. In practice it would mean a doctrine that government can do no wrong, even while they do what is a crime or tort for anyone else. 654 It is clear that there is no private cause of action available for the passing of legislation which is alleged to contravene s 51(xxxi) and is alleged to have caused damage to an individual: see Kruger [1997] HCA 27; 190 CLR 1 at 46 per Brennan CJ, referring to Dixon J in James [1939] HCA 9; 62 CLR 339, which I deal with below. See also Lee v Commonwealth [2014] FCAFC 174; 315 ALR 427 at [185] and the cases there cited including British American Tobacco v Commonwealth [2003] HCA 47; 217 CLR 30 at [40] ff. 655 Similarly, if there is a claim arising from executive action said to be unlawful because it contravenes s 51(xxxi) to the extent that provision provides a constitutional "guarantee" in relation to federal action, being action taken against an individual, a cause of action will arise if at all, in accordance with the general law: Kruger at 46. However, for the reasons I have outlined above, no such claim arises. 656 However, in order to resolve the substantive issues between the parties it is appropriate for me to determine Mr Spencer's claims for damages if, contrary to my opinion, Mr Spencer has a private right of action against either or both of the respondents. In summary, I do not consider that Mr Spencer has proven on the balance of probabilities that the respondents' conduct in the scheme said to comprise the two federal laws, the intergovernmental agreements and the state legislation has caused any of the loss and damage he claims. Further, even if I had been satisfied as to causation, I do not consider Mr Spencer has established on the balance of probabilities losses in the amounts he claims, or in any other amount. 657 I note also that matters I consider below as to the valuation of Saarahnlee are relevant to the s 51(xxxi) claim itself, in that even if there has been an acquisition of Mr Spencer's bundle of rights in Saarahnlee, it was by the State and in my opinion he was offered just terms in November 2007, which he rejected. My findings below on the valuation evidence should be taken as informing in that sense my conclusion at [571] above on this aspect of the s 51(xxxi) claim.

Saarahnlee 658 The principal damages claim by Mr Spencer relates to the value of Saarahnlee. 659 In his final submissions, Mr Spencer spoke of the "restitution" of Saarahnlee. This option seems to involve a repurchase of Saarahnlee by Mr Spencer based, at least on the face of his submissions rather than on any evidence admitted, on the asserted fact that the property is currently for sale and could be purchased for approximately the value ascribed to it by Mr Connolly. Even if Mr Spencer's claims had been successful, there is no legal or factual basis on which the Court could order restitution of Saarahnlee. The current owners of Saarahnlee (whoever they might be) have no part in this proceeding. Mr Spencer's "restitution" submission can only be understood as indicating what Mr Spencer might wish to do with any monetary compensation he received. 660 It is useful here also to recall that compensation for non-economic loss is attended by a recognition that the remedies the law can provide are often blunt, and not intended to be "perfect" compensation. 661 In Sharman v Evans [1977] HCA 8; 138 CLR 563 at 584-585, Gibbs and Stephen JJ said (in the context of a claim for damages for personal injury, but in my opinion their Honours' remarks are still apposite): It remains only to say something about damages for loss of the enjoyment and amenities of life. It is in this field that there exists the need to recall what has often been said about fairness, moderation and the undesirability of striving to provide an injured plaintiff with "perfect" compensation. The warning against attempting perfectly to compensate means, we think, in the case of pecuniary loss, no more than the need to make allowance for contingencies, for the vicissitudes of life, compensating for probable rather than for merely speculative detriments. But when a non-pecuniary detriment is in question the injunction against "perfect" compensation means rather more … rather is it designed to remind that the maiming of a plaintiff and its consequences cannot wholly be made good by an award of damages … many consequences of injury are not capable of remedy by the receipt of damages, particularly those of the most personal character … 662 Even putting the "restitution" contention to one side, the way Mr Spencer put this claim to the value of Saarahnlee varied considerably: indeed, there were inconsistent statements about whether he claimed damages representing the value of Saarahnlee at all. 663 For example, at pp 89-90 of his final submissions, Mr Spencer stated: The loss of my home, is not and was not about one of the Respondents taking it, they did not take my home or land. I was of the opinion I was acting responsibly in not breaking the law, in not clearing my land and appealing to the court for a decision, as to the legal position regarding the impact of the lock up, the Kyoto carbon usage - the takings. - The 3 years passed and no action - proceedings were not even underway. When I started the action I was of the opinion 3 years was ample time to have the case heard and the decision handed down. The sheriff took possession in March 2010 and extended the offer to me right up until then to redeem my home. The reason this is now part of the damages claim is that the HCA full not correct, this delay was not contemplated as was the constant procrastination even following the HCA decision this frustration of progress was referred to by Cowdroy bench handed down, that the 1st Respondents in pursuing 31A of the FCA ACT for those many years was J REF Transcript date 30th May page 24, 25, 26, 27, 28, (Emphasis added.) 664 In this passage it seems Mr Spencer himself identifies this litigation as the reason he lost Saarahnlee. Whilst the litigation has a subject matter connection with native vegetation clearance policies and regimes, it is not a causal connection. Mr Spencer's own evidence shows that his decision to commence the litigation, and then how to run it, including his decision to bring other litigation (e.g., Spencer v NSW Minister for Climate Change, Environment and Water [2008] NSWSC 1059) have all had serious financial consequences for him. In the passage quoted above, that is what he identifies as the reason for the sale of Saarahnlee. That is, Mr Spencer himself identifies the cause of his loss of Saarahnlee as the monies he had expended on this and earlier litigation, which left him unable to fund the mortgage repayments on the property. That would be sufficient (subject to what he says about the respondents' delay in this proceeding, which I address below at [784]-[786]) to determine against Mr Spencer any claim for damages based on the value of Saarahnlee (however measured). 665 However, it is obvious from the amount of time spent both in his evidence and in his submissions on the issue, that Mr Spencer does make a claim for the value of Saarahnlee as part of the economic loss he claims to have suffered as a result of the respondents' conduct in enacting and implementing an intergovernmental scheme for native vegetation clearance. 666 The evidence and submissions about the value to be ascribed to Saarahnlee took two, or possibly three forms. The first used the conventional approach of market value: this was the approach taken in the exit assistance process (see Mr Sullivan's report) and in the expert evidence of Mr Connolly called by the State. The second used a valuation that was enhanced by the "improvements" on the property, whether carried out by Mr Spencer, or by previous owners. This was the approach taken by Mr Davies. The third involves Mr Spencer's own claims that Saarahnlee should be given a higher monetary value because of what it meant to him, and what he had planned for the property. 667 It appears to be common ground that the time at which Saarahnlee should be valued is approximately August 2007. The letter from the Rural Assistance Authority to Mr Spencer describing Saarahnlee as "not commercially viable" and offering Mr Spencer access to the farmers' exit assistance process is dated 5 July 2007. Following receipt of that letter, arrangements were made for Mr Sullivan to attend Saarahnlee and to prepare a valuation, the valuation date being identified in Mr Sullivan's report as 30 August 2007, presumably a date the State accepted as sufficiently proximate to any purchase offer it would make. 668 It therefore seems to have been assumed by the parties before me that, for the purposes of the s 51(xxxi) argument, and for any damages assessment, August 2007 is the appropriate date.

Other economic and non-economic loss claims 669 There are then at least two other heads of damage identified by Mr Spencer. 670 He claims non-economic loss damages for personal distress, and what he describes as "disappointment and pain" caused by the respondents' conduct. Under this head, Mr Spencer refers to the dislocation of moving off Saarahnlee, the splitting up of his family and the loss flowing from "putting my life on hold", the fact he had never owned another house, and that the one he built on Saarahnlee took years and was full of complicated and unique features. 671 Mr Spencer also claims damages for destruction of personal belongings, and storage fees for plant and equipment moved off Saarahnlee.

The market value approach to Saarahnlee 672 As I have noted above, the witnesses who gave expert valuation evidence were Mr Connolly (called by the State), and Mr Davies (called by Mr Spencer). Both these gentlemen had given valuation evidence in the NSW Supreme Court in Mr Spencer's earlier proceeding. Mr Connolly updated his evidence with a new valuation report; Mr Davies used his 2008 report. Mr Connolly's report also annexed, as part of the materials received from his instructors, the valuation by Mr Sullivan as part of the exit assistance scheme process - the production of that report and Mr Sullivan's attendance at this trial have already been recounted. 673 Mr Connolly took the orthodox approach to the valuation of Saarahnlee, using the traditional meaning of "market value" consistently with authority (see Spencer v Commonwealth (1907) 5 CLR 418). In his report, he indicated that he applied the International Valuation Standards Council's definition of "market value", as adopted by the Australian Property Institute: The estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm's-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion. 674 In his report, Mr Connolly divided Saarahnlee essentially into two components - the "bush block" parts, and the improved pasture parts. His opinion, which I accept, was that there were considerable variations in value between these two components. By the mid-2000s, bush blocks in the area were selling for between $170 and $250 per hectare, with what he called a "lump sum" tendency: that is, larger blocks tended to achieve a lower rate per hectare. In contrast, improved pasture on undulating slopes which was fenced and watered was selling in the mid-2000s for $1,500 to $1,800 per hectare. Mr Connolly's opinion, which I accept, was that these components were responsible for the main differences in valuation, rather than the nature of the tenure of various parts of Saarahnlee, as between leasehold and freehold. 675 There was no real debate as between Mr Connolly and Mr Davies about the size of the land (putting to one side Mr Spencer's contentions about how changes in topography increased the hectares). Saarahnlee as valued by Mr Connolly was taken to consist of 5,205 hectares, of which 2,785 approximately was freehold land (including Lot 47, the conditional purchase block) and 2,420 was leasehold. 676 Critical to the relevance of valuation in this proceeding, Mr Connolly's opinion was that neither the Native Vegetation Conservation Act 1997 nor the Native Vegetation Act 2003 had any adverse impact upon the market value of Saarahnlee. 677 His review of sales showed no dip, or deterioration in sales of bush blocks after the introduction of the state laws. In his opinion buyers doing their due diligence would have been aware of the pre-existing clearing controls upon land, including SEPP 46 and the Soil Conservation Act 1938, but in any event those buying bush blocks did so for other reasons and were not interested in clearing the blocks, but rather in preserving the bush. He also took into account the economics of clearing sloping land, although his estimates about the cost of doing so were different from those of Mr Davies (Mr Connolly's opinion was approximately $2,000 per hectare to convert the bushland into pasture, whereas Mr Davies estimated $20,000-$25,000 per hectare). Even at $2,000 per hectare, as Mr Connolly said, and I accept, the cost of clearing land of the kind found on Saarahnlee would make pasture conversion uneconomic, given the value of improved pasture, in his opinion, was between $1,500 and $1,800 per hectare. 678 Mr Spencer contended that this was not the correct comparison. He focused more on the effect of the vegetation clearance controls on activities other than wholesale clearing to make pasture. 679 Mr Connolly's conclusion was that his valuation given in 2008 of $2.36 million for Saarahnlee as at August 2007 was still the appropriate one. He had various differences of opinions with the method, assumptions and conclusions of Mr Davies, and I deal with those below.

The enhanced/improved value approach to Saarahnlee 680 Mr Davies assigned a value to Saarahnlee as at March 2008 of approximately $9 million. He accepted in cross-examination that despite the difference in the dates of valuation, the market value of the property would not have varied much as between August 2007 and March 2008. This was made up of a valuation of $1 million for the freehold, $2 million for the leasehold, $4.922 million for "timber treatment" and $1.129 million for pasture, water and fencing. The last two items were improvements to the property which, for reasons I set out in more detail below, Mr Davies considered should be included in the valuation of Saarahnlee. 681 Mr Davies did this, as he accepted in cross-examination, on the basis that even if the state vegetation clearance laws did not apply, or had not applied, Mr Spencer would not have been able to sell the property on the market for $9 million. He maintained that in a "just terms" context, which like a compulsory acquisition was an involuntary deprivation of property, the market value was not necessarily the correct measure, especially as he had been instructed Mr Spencer did not wish to sell the property, but felt he was being forced to. 682 Breaking this valuation down, the first substantive difference between Mr Davies and Mr Connolly was that Mr Davies placed a value on all of the freehold land in Saarahnlee (594 hectares - Lots 1, 8, 25, 28, 33, 35-38, 49 and 55) which equated to the local market value for improved pasture, giving him approximately $1 million in his valuation for these 594 hectares. The State challenged Mr Davies' opinion on this, especially his use of a comparison sale of a local property, Coul Park. Mr Davies defended his approach, essentially by his opinion that Saarahnlee's pasture was of better quality than Coul Park, and could carry an increased stocking rate. 683 One difficulty with Mr Davies' evidence was, as the State submitted, that Mr Spencer himself identified only 346 hectares of Saarahnlee as improved pasture. The clearest example is this piece of evidence under cross-examination: Yes. I understand, Mr Spencer. And the key point I'm just seeking to establish there is that you're pretty clear that the pasture land, the improved land, as you call it, was about 346 hectares?---Yes. 684 Mr Davies' defence of his approach (that is, based on a comparison of the quality of pasture) might be seen as quite reasonable. However, the discrepancy between his reliance on the whole of the 594 hectares, and Mr Spencer's own evidence is telling. Further and consistently with Mr Spencer's evidence, Mr Connolly put the improved pasture in his report at "about 300 hectares". 685 Given these discrepancies, I do not consider I can rely on Mr Davies' valuation of the freehold area of Saarahnlee at $1 million. 686 I prefer the calculations by Mr Connolly, which took about 300 hectares as improved pasture at a value between $1,500 and $1,800 per hectare. 687 As to the leasehold parts of the property, the method used by Mr Davies to reach a valuation far in excess of that arrived at by Mr Connolly substantially relied upon a special condition in the Crown leases. Special condition (c) (for Lots 47, 48 and 50) provided (leaving aside minor variations in the wording of that special condition as between Lots 47, 48 and 50 which are not material): Power will be reserved to the Crown to resume any portion of the lease which may be required for mining, mining purposes, or any other public purpose, upon giving notice in writing, and upon payment only of the value of improvements on the portion resumed (such value not to exceed their cost), and a reduction of rent proportionate to the area resumed. In the case of resumption for mining or mining purposes, not less than one month's notice, and in the case of resumption for any other purpose, not less than three months' notice in writing will be given to the lessee. (Emphasis added.) 688 It should be noted at once that this was a valuation on resumption (that is, without the consent of the lessee). Mr Davies' use of this condition appeared to proceed on the assumption that an acquisition of Saarahnlee contrary to s 51(xxxi) could be equated with a resumption of the leasehold by the State. That may or may not be a correct assumption, but for the purpose of assessing Mr Davies' opinion I will make it. 689 The State mounted many criticisms of Mr Davies' opinions, and his methodology, most of which are soundly based and should be accepted. It is sufficient to identify the principal ones, because whether taken singly or cumulatively, they are enough to persuade me that Mr Davies' opinion is unreliable and his valuation is excessive, and could not form the basis of any assessment of the value of the leasehold parts of Saarahnlee. 690 Referring to Kiddle v Deputy Federal Commissioner of Land Tax [1920] HCA 17; 27 CLR 316 at 320 and Commonwealth v Oldfield [1976] HCA 17; 133 CLR 612 at 618-620, the State submitted (as it had put to Mr Davies) that the appropriate measure of the "value of improvements" is the added value of the improvements to the market, assessed by reference to comparable sales. However, if comparable sales were not available, the State submitted, the task was (Kiddle at 320): to find the added value which the improvements gave to the land at the date of valuation irrespective of the cost of the improvement, but not exceeding the amount that should reasonably be involved in bringing the unimproved value of the land to its improved value as at the date of the assessment. 691 The actual cost of adding improvements may be excessive, and the State submitted the authorities were clear that "expenditure on an improvement does not necessarily result in an increment of the same amount to the value of the land": Barber v Valuer-General (1969) 17 LGRA 409 at 411; see also Collins v Livingstone Shire Council [1972] HCA 35; 127 CLR 477 at 484, 489 and 500. 692 The State submitted, and it was the case, that Mr Davies agreed he had not adopted this approach. The following extract from his cross-examination captures the approach he said he adopted: That is a purely mathematical exercise, you will agree with me, with no reference to evidence of sales comparisons or anything like that?---No, it's purely a cost less depreciation approach based on - on research you do - we do every day of the week. 693 Mr Davies admitted that he had made no attempt to assess whether Mr Spencer had overcapitalised in the improvements he had made to the land. A clear inference from Mr Davies' evidence (and indeed there were some concessions from him to this effect) is that he made no attempt to assess whether the cost was "excessive" in the way described in the authorities above. Rather, he depreciated the cost of each improvement (having in some cases simply estimated what that cost was rather than going on any actual costs identified in the evidence) and took the resulting figure, whatever it was. He also agreed that he had included improvements regardless of whether Mr Spencer, or a previous owner made them, and regardless of whether Mr Spencer had in fact expended money on them. He agreed that some of the figures he used for the value of improvements did not take into account the actual cost of the improvement. Mr Davies' cross-examination about the access roads on Saarahnlee is but one example of many: Roads: you've got a 7 kilometre forest road. The road is $100,000. I take it that's per kilometre?---Per kilometre, yes. Yes. For a total of $700,000 and you've depreciated that to $525,000?---Yes And, again, no attempt - sorry, let me start that again. You're not suggesting or even assuming here that Mr Spencer spent $700,000 on the road?---No, that is correct. Your assumption is regardless of who paid for it, it's an improvement - - -?---It's an improvement, yes. - - - and the benefit enures to Mr Spencer. And, again, no attempt has been made to see whether that 7 kilometre forest road adds some $525,000 worth of value in a market sense to the leasehold property?---No, this is - this is the leasehold improvement in terms of road access through the property, your Honour. So the answer to my question is yes, no such attempt has been made?---That is correct. 694 There were points in his evidence where it is difficult to reconcile statements made by Mr Davies. For example, he ventured the opinion that his calculations "should match up generally with market analysis of added value, if you like, of improvements". However, he later accepted that it was "probably right" that his valuation of a bit over $8 million for the leasehold property was "not within cooee of a market value if Lots 47, 48 and 50 … had been sold on the market". It is obvious there is no correlation of the sort Mr Davies described in relation to Saarahnlee. 695 When confronted by Mr Sullivan's valuation, including Mr Sullivan's methodology, Mr Davies eventually accepted Mr Sullivan had taken the same approach as Mr Connolly, and agreed that Mr Sullivan's reputation as a valuer was a good one. Aside from describing his own approach as more "holistic" Mr Davies did not give any real explanation, let alone a satisfactory one, for the enormous differences between his valuation and the other two. 696 Mr Sullivan, in 2007, had concluded that the valuation of Saarahnlee was "'as is' $2,170,000 (excluding GST)" or "'as if complete' $2,400,000 (excluding GST)". This valuation had been carried out on the instructions of the Nature Conservation Trust of NSW, but Mr Sullivan was instructed to decide what the current market value, for purchase, of the property was (as at August 2007).

Mr Spencer's projects and plans for Saarahnlee: the value of the property to him 697 The evidence reveals Mr Spencer has a great many plans for Saarahnlee, and had conceived of quite a list of projects he considered would be suitable to undertake at the property. He detailed most if not all of these in his correspondence in 2007 in relation to the farmers' exit assistance package. These projects reached various stages of implementation. The extent to which they were implemented did not necessarily reflect the prominence of the projects in the damages claim. The merino sheep project is a good example: this was a project Mr Spencer clearly did implement, and had some initial success with. However, as his claims for damages were ultimately put, he did not pursue any separate compensation for losses associated with this project. 698 There are two categories of projects relied on by Mr Spencer in his evidence, and in his submissions. The first category includes those projects for which he makes specific and quantified (at least, to some extent) claims for damages by way of economic loss occasioned by the projects not going ahead. He ascribes the reason they could not go ahead to the State's native vegetation clearing restrictions either directly, or indirectly in the sense that it was those restrictions he alleges caused him to lose the property on which the projects would have been seen through to fruition (and, he submits, profit). 699 In the first category are a wind farm project, a firewood project and a carbon project. This was the way in which he clarified his claims to the Court on the occasion of the respondents' objections to aspects of the evidence on which he sought to rely: see Spencer v Commonwealth [2014] FCA 1288, at [6]-[9]. I describe them in more detail below. 700 The second category of projects includes those projects which Mr Spencer alleges added value to Saarahnlee. As I understood his submissions (and perhaps contrary to the way they are characterised by the respondents) Mr Spencer puts this "added value" contention in two different ways. He contends (and this accords with the respondents' characterisation) that they contributed to the valuation of Saarahnlee. He contends that he relies on Mr Davies' expert evidence to support this contention. 701 However, I did understand Mr Spencer to use these projects and their "added value" in another way. He contended: This is not a claim for a set amount for each project but the effect of the value of the property as a whole if obtained on Just Terms as it would take into account its value to me and its inability to be replaced other than by way of restitution. The potential for the loss to me, of its unique qualities and my attachment to it by way of these attributes, which others do not recognise. (Emphasis in original.) 702 At another point, he stated: I am not adverse to have Mr Sackett [the expert Mr Spencer had proposed to call about his merino sheep project] merely refer to the sheep from a genetics point of view, not financial. I don't need him to go into that at all. We're not interested in that. We just wanted to let the court know what we achieved genetically and what that farm means to me, not financially, but as a project and that we achieved what we achieved in the genetic development of a strain of sheep. 703 The projects in this second category were projects involving trout, merino sheep, water bottling, furniture timber, eucalyptus oil, a recreation park, ginseng, horses, cattle and goats. Evidence was given about them to varying degrees. 704 The way Mr Spencer puts this claim can best be understood by reference to his own affidavit evidence: The property is located alongside the Murrumbidgee River to the east, the ACT boundary State line to the north, the Mount Roberts promontory to the south and the Shannon's Flat road to Canberra along the west. I always considered the potential emanating from the property was due to its tremendous altitude, being a mile high. The property had a drop on the eastern front, from the peak of 1,500 metres to 750 metres at the Murrumbidgee River. This drop was incorporated in the land acquisitions as a most unusual opportunity with a particular technology in mind. I always considered the future of the property was in the mountains across the landscape. The large cordillera runs direct from north to south. I was raised in the Australian Alps and saw this landscape and topography as having real potential for a range of unusual and diverse commercial and activities and industries, some very new technically, other than land being merely an agribusiness, and later what are termed eco-system services. The reason the property was selected in the first place was not only for personal reasons. My maternal family lived on the highest farm in Australia since the late 1820's. I spent a lot of my younger years roaming those mountains and it is where I was exposed to sheep farming and shearing and to the many aspects of high country farming life, including sheep flock care and husbandry, the annual mustering and yarding of bush cattle, blacksmithing, butchering, gardening, dairying, hunting, wild dog trapping, and wild horse mustering and yarding. I respectfully believe my economical losses following the introduction of the Native Vegetation Laws in 1997 and 2003 and the Native Vegetation Regulations in 2005 needs to be assessed having regard to how I personally saw my property, its assets and their value, which was based on my understanding that the laws and regulations have completely compromised my land and life so as to totally sterilise all potential of my most unusual business plan and its related technology. It was never to be sold as no just terms could have ever been negotiated. Over many years I had mapped out the property's future sustainable development to ensure a diverse approach to enable an economic balance. I had more than a business philosophy and my overall business plan did not necessarily mean only developing those business activities to achieve the highest return. Any approach taken regarding percentage return had to consider market fluctuation and as long as the site, climatic conditions, and raw materials were present and sustainable then the market returns increased and decreased and needed to be factored and acceptable as tolerable and if at one point the product was so reduced in market value to not at that time be viable, then that project would be discontinued until the market returned. I believed what was most important and in fact vital was the resource and technology involved as my business plan was very long term and geared around my family and family lifestyle selection. This was where I wanted to live and be buried. The Homestead with all its special engineering and unusual fittings took many years to construct and was never entirely finished and it was my first and only house of which I am very proud and I personally supervised the design and construction. As a result my relationship with this particular land was most unusual and little understood by others who saw land as a mere commodity, that was bought or sold whenever the market dictated by the rise and fall in price. 705 This aspect of Mr Spencer's case moved somewhat, even during the period close to trial in November 2014. It appears that, as one consequence of terminating the retainer of his lawyers, Mr Spencer decided to embark on a different approach to what he chose to claim in this proceeding. 706 One effect of this was that issues such as the economic loss caused by the failure of the fine merino project on Saarahnlee went from being a separate and significant claim for economic loss in its own right to simply an activity which was said to increase the market value, or the value, of Saarahnlee. 707 Out of an abundance of caution, especially given Mr Spencer was self-represented and in case he did not intend to abandon these projects as separate heads of economic loss, I have decided to approach these claims by making findings about whether any economic losses are established on the evidence, and what caused the losses. Taking this approach also provides some foundation for my conclusions about the impact, if any, of these various projects on the valuation of Saarahnlee. 708 The projects which Mr Spencer alleges should be factored into any valuation of Saarahnlee are as follows. As I have stated earlier, it appears the parties assumed the appropriate date was August 2007. 709 Mr Spencer had plans to build a flock of fine merino sheep, capitalising as he saw it on the altitude of Saarahnlee and the influence this would have on the micron levels of the sheep's wool. The evidence is clear that he had merino sheep on the property and to that extent was pursuing these plans. His evidence however was that the project had not progressed to the point where there was even a suitable design for his woolshed, let alone one built. Although Mr Spencer asserted in his evidence that the Native Vegetation Act in 2003 and the Native Vegetation Regulation in 2005 "affected the carrying capacity and ultimately the commercial viability of the project", there was no evidence given about carrying capacity at Saarahnlee at specific times, and so no evidentiary foundation for these assertions. While Mr Davies gave some estimates of the dry sheep equivalent values for cleared and uncleared land, in terms of how that might be incorporated into a valuation, the stocking rates at Saarahnlee itself were not, so far as I can see, the subject of any specific evidence. As I have noted, the proposed expert evidence about the fine merino project did not proceed once Mr Spencer abandoned that project as one for which he made a separate claim for economic loss. He did however give the following evidence, on which he was not cross-examined: As a result of the changes to the vegetation laws, in order to assist the herd to survive, all young dry livestock were shot and breeding ewes were then given every opportunity to forage any remaining feed through the winter. If the property and breeding ewes survived, the stud could be re-established using the surviving breeding ewes and the genetics could then be saved. This did not work out and my application to the Court for assistance failed. The program was long term and designed to have losses while establishing the very rare livestock core breeding flock of 1,250 stud ewes - this target was achieved. A professional team managed the program. The business plan was ahead of schedule due to the joining and lambing being far more successful than planned. The animals were now cutting 3 kilos of $200 per kilo wool and a bail of $20,000 topped the Sydney wool exchange seasonal price taking four of the top five bail positions. 710 The "application to the Court" to which Mr Spencer refers was an application made to Emmett J in March 2008 for what Mr Spencer described in his written submissions as an "interim order" for money to provide feed for his sheep, which application was unsuccessful. 711 Mr Spencer also had plans for a trout fishing operation on Saarahnlee. In his affidavit, he describes the establishment of "Rock Hut Creek Lodge", presumably to accommodate those who wished to go trout fishing, and identifies the effect of increased native vegetation on the river to be used for trout fishing as the reason the project did not continue. 712 He then referred to a Pump Storage Hydro Electricity System, noting that it would complement the wind farm project, but then noting that "the Pump Hydro component in the short term is not to be recognized as the current option being economically in need of verification other than to say the site is remarkable in itself and that is really all that is needed at this stage, as in the long term time frame of such projects it may well open as an opportunity as technology and markets develop." 713 This evidence was typical of the kind of evidence given by Mr Spencer about the large number of projects he had in mind for Saarahnlee - at a high level of generality, frequently speculative, and invariably optimistic about how profitable and successful the project would be. 714 The proposed eucalyptus oil plant involved the distillation of oil obtained from eucalyptus dives - the broad leaf peppermint tree. In his evidence, Mr Spencer recognised the adverse effect this tree had on local groundcover, and its contribution to erosion, as well as the fact that the production of similar oil in Africa and China was making its production in Australia uneconomic. Again, looking optimistically forward, his evidence was: However in the event the market falls as in other commodities it is a crop needing no husbandry and this allows the crop to be always there even if only offering a low return. In the event imports had difficulty or that my labour rates went up, the crop could well play a larger role in the property's economic business plan. 715 The proposed ginseng plantation had begun, it appears from Mr Spencer's evidence, at least to the point of importing seedlings from Korea, preparing the seed beds and purchasing the shade cloth, water tanks, sprinkler system, bore installation and piping, and nursery preparation. The seedling bed had not been prepared or planted out because, Mr Spencer claimed, the native vegetation covering the bed could not be cleared, and the seedlings died. 716 There was a plan to bottle water from the "pure snow" on Saarahnlee. Mr Spencer's evidence was that this project "was destroyed as I had no capital left to install the plant and no cash flow to market the product". 717 A number of other projects were mentioned by Mr Spencer in his affidavit evidence, and not otherwise expanded upon - "Wagyu Cattle, Boar Goats, Whaler Horses, Maple Syrup and others" is how they were described in Mr Spencer's affidavit, although the content of his evidence made it clear there were more projects than this. His evidence about them collectively was: These smaller projects have had funds expended for blood line purchases. Good blood stock was obtained and all have been decimated regarding stock, and all were advanced. I say enquiries were made about Maple Syrup products, farm stays in the main Homestead and riding lessons, horse schooling, garlic growing, tulip growing and extended outdoor survival courses. A range of considerations were given exposure until the activity was taken up or rejected for a range of reasons. Some may be re-evaluated and new ones would arise. 718 Finally, Mr Spencer gave evidence about a recreation park project he conceived on the basis of being required to maintain large areas of native vegetation cover on Saarahnlee. It included an "extreme adventure outdoor centre" with a range of 4WD activities, a cable car, Cobb & Co coaches running from a local town to the property, horse trails, motor bike and mountain bike trails, and bushwalking, all with accommodation and a variety of internet-based facilities to be supplied on the property. In other words, he put forward this project as a money-making venture predicated on the existence (and therefore, one assumes, beneficial effects) of the native vegetation clearance restrictions. 719 He explained the recreation park concept in his affidavit evidence, and also explained why it did not proceed: This concept was selected as a last resort due to the Government standing firm and not allowing me to clear any vegetation. I consider that I could use the property commercially winter and summer, without removing Native Vegetation. As the last project it was selected only after numerous other considerations were viewed and considered and the Recreation Park was selected as the best non-confrontational fall back position. The court action became all consuming before I could implement the project.

Findings on the value of Saarahnlee, and on the relevance of the projects Mr Spencer had commenced or planned to undertake 720 As with other aspects of this trial, the issue of the valuation of Saarahnlee was attended by some inconsistencies in the way Mr Spencer presented his case. I do not mean that disrespectfully to Mr Spencer, but rather by way of observing the difficulties that now attend the resolution of some of these questions. 721 It is appropriate to extract some passages of the transcript at the commencement of the valuation evidence which illustrate the point. They are quite lengthy passages but given Mr Spencer was self-represented, reproducing the entire extract is necessary to understand the context. MR SPENCER: Just in regard to my comments about Connolly's valuation, I have no comments to offer Mr Connolly. I don't disagree with his valuation. HER HONOUR: You don't wish to cross-examine Mr Connolly? MR SPENCER: I don't disagree with his valuation; that's right. I've said to the court on three occasions now, my offer in regard to my property is that Connolly's valuation is my lower point and Davies is my higher - somewhere between the two. I'm asking the court to make the decision itself. Not me. I want the court to make that decision. HER HONOUR: Well, Mr Spencer, the problem with that approach is that I'm not a qualified valuer. MR SPENCER: I understand that. HER HONOUR: And I can only act on the evidence. So if what I have is evidence of two really quite far apart valuations, there has to be something in the evidence - - - MR SPENCER: That's right. HER HONOUR: - - - for me to be able to even strike a figure in between them - - - MR SPENCER: What I am - - - HER HONOUR: - - - so that if that's what you say should occur, then you have to adduce some evidence, either through Mr Connolly or Mr Davies or both, about how that intermediate figure is to be struck, and on what basis. MR SPENCER: Well, all I am saying is the land, to me, was taken, and it has a certain value - a certain quality - that I can do certain things with it, and it's very unique, and that I anticipate the court will be able to see some sort of way of assessing that when I relay to the court as to what I could do with it and what I felt I would like to do with it. Now, I don't dispute it might go as low as Connolly, or it might go as high as Davies. But I don't know how to do that. The court has got to see what they're going to put as far as what they believe compensation would be for what the government is alleging I - I believe it did. HER HONOUR: Earlier in this trial, Mr Spencer, we - there were some discussions, or some statements, that I made about the need for you - if you wanted all these projects factored in - - - MR SPENCER: That's right. HER HONOUR: - - - to the valuation, that that was a matter that you had to take up with the valuers. Now, it seems to me that you're not proposing to do that; is that right? You're not proposing to say, for example, to Mr Connolly, well, I wanted to proceed with the fine Merino project, and there was an opportunity for me to do that, and I've lost that, and your valuation should change because of that. You're not proposing to ask them those kinds of questions? MR SPENCER: Your Honour, I know the contempt he has for my projects and my land. HER HONOUR: Mr Spencer, can you - - - MR SPENCER: I wouldn't consider it. HER HONOUR: Can you - is the answer to my question that you are not proposing to cross-examine Mr Connolly about those - - - MR SPENCER: Not Mr Connolly. No. Not about the projects at all. HER HONOUR: Well, that will have some consequences for what the court can do with your argument. MR SPENCER: Well, then, the court has to make that decision for itself. I know my stand with my land. I also know how the government and courts take it from me. HER HONOUR: One of the - - - MR SPENCER: I can only make my position clear. HER HONOUR: Mr Spencer, as I think you've now seen, in a trial process, one of the things that must occur, as a matter of fairness, is that one side confront the other side with its arguments, and that means that one side confronts the other side's witnesses - - - MR SPENCER: Your Honour, that is not true. HER HONOUR: - - - with its arguments. MR SPENCER: I have been told the last two days what I can't do. The other side stop me every time I bring evidence in. I'm told that's not applicable. HER HONOUR: That's a question of admissibility. What I'm - - - MR SPENCER: I understand that; it's all according to rules. HER HONOUR: Don't argue back to me, please, Mr Spencer, while I'm trying to explain something to you. Part of the trial process is, where there is a witness and that witness is giving evidence, that at the end of the case you're going to say that's not the way you should approach it, you need to confront that witness. Now, that is the process that we had set down to have occur this afternoon; that you would put your perspective on valuation to Mr Connolly. But it seems that you're now saying that that is not what you're proposing to do. MR SPENCER: What I'm saying is this. My witness, Mr Davies, has said to me he doesn't want to come in this court; that he will not participate, because he feels totally at a loss because he has not been able to look at the other side's valuation, and he feels that he cannot represent, in any way, what he has done as a valuation. Now, as far as Mr Connolly's concerned, I understand his position and the contempt and he sees me, and I just don't want to go there. Let him feel what he feels. I'm not disputing how he feels. I would like to deal with Davies on how he feels. 722 On one view, therefore, it could be said that Mr Spencer did not disagree with Mr Connolly's valuation. In my opinion that would not be a fair characterisation of his entire position. What Mr Spencer did accept, I find, is that the market value of Saarahnlee in a conventional valuation sense was, as Mr Connolly had said, approximately $2.36 million in August 2007, or the slightly lower figure given by Mr Sullivan of $2.17 million. 723 Indeed those figures broadly accorded with the ones Mr Spencer had relied on in two drought assistance applications in 2004 and 2006. In those applications, Mr Spencer put the value of Saarahnlee at $1.5 million and $2 million respectively. These figures appear to reflect Mr Spencer's estimate of Saarahnlee's market value. 724 What Mr Spencer did not accept was that method as the appropriate one to value Saarahnlee, and certainly not for an argument such as his about s 51(xxxi). He said, on many occasions, that "just terms" in s 51(xxxi) must import the concept of justice to him, in the sense of how much Saarahnlee meant to him, and what plans he had for it. Two examples from his affidavit evidence suffice. (1) At [10] of his affidavit sworn 6 June 2014, Mr Spencer stated: I respectfully believe my economical losses following the introduction of the Native Vegetation Laws in 1997 and 2003 and the Native Vegetation Regulations in 2005 needs to be assessed having regard to how I personally saw my property, its assets and their value, which was based on my understanding that the laws and regulations have completely compromised my land and life so as to totally sterilise all potential of my most unusual business plan and its related technology. It was never to be sold as no just terms could have ever been negotiated. (2) At [90]-[91] of his 6 June affidavit, Mr Spencer stated: I believe the terms can never be just if I did not want to part with the asset. … Accordingly I estimate the loss in value to the land or to the actual property, "Saarahnlee" as follows: Davies Valuation Timber Treatment $4,922,000 Pasture Water and Fencing $1,130,000 Regional Valuers $2,170,000 To this should be added the loss for the "Takings" being the taking of my property, which to me was priceless, against my wish to sell. (Emphasis in original.) 725 Mr Spencer relied on Mr Davies' valuation for this kind of purpose. The problem is that Mr Davies' valuation did not factor in any of the projects on which Mr Spencer wished to rely either as standalone projects (firewood, carbon, wind farm) or as enhancements to the value of Saarahnlee to Mr Spencer (ginseng, bottled water, merino sheep etc.). Indeed, in his executive summary Mr Davies states: We have excluded the potential value of projects planned for the property. 726 These do not appear in Mr Davies' valuation. Mr Davies looked only at "improvements" in the sense of structures (houses, bores etc.) and alterations (roads) to the land itself, as well as the value of the timber treatment on the land (which he put at over $4 million). On this latter issue, he appeared to assess the value of the timber treatment on the land by reference to the cost of clearing it (rather than, for example, to what it could be sold for). Initially he gave an estimate of $20,000-$25,000 per hectare, which was wildly more than Mr Connolly's estimate of $2,000 per hectare. Mr Davies based this estimate on a quotation to clear a particular kind of land in another part of NSW which, after cross-examination, he eventually accepted was not a good proxy to estimate the cost of clearing on Saarahnlee. He also accepted no rational farmer would clear Saarahnlee if it cost that much. Mr Davies' evidence on the "timber treatment" aspect of his valuation should be disregarded as unreliable. 727 Thus, there is in fact no expert evidence supporting the contention of Mr Spencer that the projects which he had commenced, and had planned, for Saarahnlee could be factored into the value of the property in any way. Not even Mr Davies did this. 728 In conclusion, there are two reliable and reasonable market valuations in evidence - that of Mr Connolly and that of Mr Sullivan. Mr Connolly's figure is marginally higher and therefore more generous to Mr Spencer and I adopt that. Mr Spencer in any event agreed this valuation reflected the market value. 729 There is no evidentiary basis on which Saarahnlee could be given any other value. No other valuation methodology has been established as applicable and appropriate. The "improvements" approach of Mr Davies has the flaws identified by the State, which are serious and render his opinion unreliable. 730 There is no basis on which the long list of projects Mr Spencer had planned, or had commenced to undertake on Saarahnlee, could be factored in to the value of Saarahnlee as a property to the extent that money had been spent which Mr Spencer claimed had been wasted or lost. If he claimed the cause of the loss was the respondents' conduct in acquiring his property contrary to s 51(xxxi), then he needed to prove his economic loss in the usual way. This he chose not to do. One inference is that his election recognised that there were many reasons these projects either failed, or could not be commenced, none of which could be sheeted home in any real sense to the native vegetation laws but had other causes such as drought, a general lack of financial resources, or the mortgagee sale of the property. 731 Mr Spencer's arguments that any compensation should reflect the value of Saarahnlee to him, and include components designed to compensate him for the plans and ideas he had without the need to prove economic loss in the ordinary way are not even supported by what might be seen as the most generous view of s 51(xxxi), namely that of Heydon J in ICM [2009] HCA 51; 240 CLR 140. At [193] his Honour said: In assessing whether terms are just, the courts will give the Parliament "a measure of latitude". But, at least on one line of authority, the legislation "must provide for the claimant receiving the full value of his property" - "adequate compensation" or "full value". "When a person is deprived of property, no terms can be regarded as just which do not provide for payment to him of the value of the property as at date of expropriation, together with the amount of any damage sustained by him by reason of the expropriation, over and above the loss of the value of the property taken. The amount so ascertained is no more than the just equivalent of the property of which he has been deprived." (Citations omitted.) 732 I have concluded at [779] below that in relation to the three projects where Mr Spencer did attempt to prove economic loss flowing from the respondents' alleged contraventions of s 51(xxxi), Mr Spencer has not made out a case for economic loss on any of them, assuming such a private right to damages was available, which I have concluded it is not.

The carbon project 733 Mr Spencer described the use to which he claimed he could have put his land, in terms of its carbon storage potential, in the following way in his affidavit evidence: The property is well wooded and a terrestrial ecosystem or carbon sinks with significant amounts of vegetation and soils that are available for immediate carbon sequestration. It has extensive forests of native hardwoods and open pasture and thickening is ongoing post 1919 clearing was a condition of acquisition and subsequent title transfer. Extensive grasslands both of improved and native grasses are on the property arising before and after 1990 of which native vegetation comprises more 50% or more of the herbaceous vegetation. The vegetation on the property retained significant amounts of carbon and were possible to be retained under voluntary covenants [assuming an absence of enforced retention by native vegetation laws]. …. My best estimate based on my knowledge and experience of the carbon content of the vegetation on Saarahnlee averages 550 tonnes of carbon per hectare of vegetation [timbered] per year. … The price of carbon at present is A$24.15 per tonne. The average price for the period of lock-up of carbon from 1990 to 2090 - ie on a 'perpetual' basis - is estimated at A$23, as a conservative figure. Being denied the use of the land I was deprived of the opportunity to trade on the voluntary market albeit a limited market as a result of the native vegetation laws affecting the land. The First Respondent did obtain the benefit of the carbon rights on the land by accounting to the UNFCCC under the Kyoto Protocol at the end of 2012 and meeting its tonnage obligations of 8% above the 1990 levels using the carbon on the land. 734 In his second affidavit, he described the claim in this way, and placed an estimated value on the claim. It can be seen that in this evidence, Mr Spencer also makes it clear that he considers the carbon rights to be property for the purposes of s 51(xxxi) and I consider this issue earlier in my reasons at [521]-[538]. I consider that the gravamen of my case regards the matter of Carbon Credits as accrued under the Federal Government's Commitment to the "Australia Clause" negotiated by the Australian Government which is in effect between the years 1990 and 2020, a period of 30 years. This commitment represents an asset of "Saarahnlee" - being that it has effect on the forests of "Saarahnlee" and further does not allow for the increasing dollar and timber growth value (appreciating the forest has its greatest carbon value between the age of 30 and 90 years) after that 30 years and the fact the harvesting of Carbon is ongoing - perpetually, past the date indefinitely so to speak and is additional to this estimate. Except for the intervention by Governments I would have had an asset to sell on the voluntary market, which represents a lost opportunity to me and a benefit to the Federal Government. I estimate the value and lost opportunity at $25-84 million, depending on the carbon price per tonne. 735 It does not appear from the evidence that Mr Spencer took any active steps to crystallise this asset. As I understood his oral evidence he accepted in cross-examination that was because there were no schemes established in Australia by which landowners could trade on the carbon market, but he nevertheless had this in mind as something he would do in the future. 736 The Commonwealth submits that during his cross-examination Mr Spencer "in substance abandoned this claim" and that his evidence in cross-examination "reflected poorly" on him. Indeed it was put to Mr Spencer that his affidavit was misleading, which he denied. 737 I do not consider Mr Spencer abandoned this claim, although his concessions in cross-examination do mean there is no basis in fact at all for the claim, and it is entirely speculative. However, so far as Mr Spencer was concerned in his evidence, he still saw this as a claim he wished to make. 738 I set out the relevant parts of his answers in cross-examination, which in my opinion make this clear: The market to trade carbon was established globally, but not in Australia. But numerous governments were going to open it up at any time. New South Wales has started, and other states and the Commonwealth made numerous public statements about papers they had written and dates they were going to start. So all of us were believing we would participate. … Well, the farmers did not know if they could or could not, because the debate with the Farmers Association - Parliament House - was still going on, as to whether we would be able to hold the ownership or not. So we kept on allowing for it, because it was our trees. But they couldn't work out if it would be our right to trade it. Even when the carbon market came out, we were still on the list as - would be able to do it. But then at the last minute they changed their mind. So I put it in because it is our right, and the market is there, yes and no. But at the last minute they've changed it. So I'm happy to pull it out. I'm happy to leave it. But it still was something which, for the last 15 years, has been a very big part of farmers' lives, to be able to trade their vegetation for carbon. It's just that it hasn't come about. [On being asked how he could maintain any claim for lost opportunity to trade something that he had accepted he didn't have]---That's - that's true; I don't have it. But if I got it back, I would want to trade it, and I still believe I have a right to it. It's my carbon. 739 I accept the respondents' submission, which flows inevitably from Mr Spencer's concession, and from the evidence of Ms Thompson, on whose affidavit affirmed on 15 May 2008 Mr Spencer relied, that at all material times there was no mechanism by which Mr Spencer had or could sell a carbon right. 740 Ms Thompson's evidence was: The Commonwealth is also yet to take decisions on whether forest related offsets would be allowed in the ETS. If offsets were allowed, in principle, land holders could receive credit for establishment of new forests or from maintaining or enhancing existing forests on their land. However rules for offsets are complex and whether or not existing forests on private land would be eligible to generate offsets for the ETS is also subject to future Commonwealth decision making. There is a small but currently growing market for voluntary credits both internationally and within Australia. Some voluntary schemes within Australia allow trading of carbon offsets from previously established forest sinks on private land. Nothing done by the Commonwealth impacts upon the applicant's capacity to participate in these voluntary schemes. 741 As I have found in more detail in the s 51(xxxi) section of these reasons, the scheme enacted by the State under the NSW Conveyancing Act could not apply to most of Mr Spencer's forested lands, which were on Lots 47, 48 and 50, until 2006 (if indeed it is correct to say it applied to all three lots, a matter on which I make an assumption in Mr Spencer's favour but no finding). More critically, the "carbon rights" to which the Conveyancing Act provisions could give effect only arose on their creation and registration on the title of a particular property - a process which was never undertaken by Mr Spencer. In that sense, this claim remains speculative, and cannot be sustained. 742 Finally, as the Commonwealth submitted this claim is somewhat counterintuitive in relation to Mr Spencer's attack on the native vegetation clearance regimes, as it presupposes there is no clearing undertaken, but rather that the vegetation is entirely preserved. In that sense, any loss would be caused only by Mr Spencer's own decision to clear his land.

The wind farm 743 This was probably the project that, in terms of Mr Spencer's evidence, was the most advanced and was on his case the most affected by the native vegetation laws, in particular the 2003 Native Vegetation Act. He gave evidence that he conceived of the project after a visit to Denmark, his wife's home country, and that he pursued the project through "extensive negotiations with a consortium lead [sic] by The ANZ Bank through ANZ Infrastructure Services providing the finance and EHN, the Spanish Wind Park Developer (now, Acciona, the world's largest wind farm operator)". 744 His evidence revealed that there were in fact two separate attempts at establishing this project - one between 2003 and 2006, and another in 2009. The evidence about those attempts should be considered separately. 745 It appears from the evidence that Mr Spencer had a site survey performed in 2003 by NEG Micon Australia. NEG Micon Australia reported in November 2003 that the site had good potential. 746 The report indicated there were no "obstacles" on the site, and concluded that "[t]he ridgeline that is proposed for the wind farm has a good location with room for a row of wind turbines along this main ridge". Further studies on issues such as wind direction and wind speed were recommended. 747 I infer that as a consequence of this reasonably positive report, some draft heads of agreement were proposed between Mr Spencer, ANZ Infrastructure Services Ltd and EHN (Oceania) Pty Ltd. There was some cross-examination of Mr Spencer by the Commonwealth on these documents. Mr Spencer eventually accepted that the only documents he had adduced were (despite his description in his affidavit) draft heads of agreement, not final and signed versions, although he maintained as part of his oral evidence that there were final heads of agreement signed. He accepted in cross-examination however that no development agreement (the next step) was concluded. 748 Some further progress was made by a development consent being sought from Cooma-Monaro Shire Council by EHN (Oceania) Pty Ltd over part of Lot 48 to facilitate the erection of a wind monitoring tower. This development consent was granted on 24 November 2004. 749 A further step, on the evidence, occurred with the production of a "Feasibility Study" in March 2006. Mr Spencer adduced a copy of this study in his evidence. Again, the study was based on the turbines being situated on the main ridgeline in part because this ridgeline had a configuration which would permit construction works and access. 750 This study was not optimistic. The overall recommendation was that the project "not proceed to the next stage". 751 Even using a turbine type with the greatest value to the project, the study concluded that "the equity investment returns do not meet the required cost of capital". The study noted that the financial analysis showed that an overall energy price of $97 per MWh would be required to achieve agreed equity rates of return, and stated that "[r]egrettably, prices at these levels have never been achieved in NSW and the current renewable environment does not suggest pricing at these levels in the foreseeable future". 752 In its conclusion, the feasibility study noted a number of factors which contributed to its overall recommendation. One was, as I have noted, the failure of the project to meet equity investment hurdle rates. Others were: the site not having sufficiently high average annual wind speeds at the selected hub height in comparison with other known viable wind farm developments in New South Wales; the high wind turbulence characteristics of the site which approach or were outside upper limits and the adverse effects this had on a range of necessary preconditions to the project continuing such as insurance, debt financing and lifetime operational performance. 753 The Commonwealth submits that these reasons for the study's conclusion on viability have nothing to do with the presence or condition of vegetation upon the land, or suggested restrictions on clearing that vegetation. I accept that submission. Indeed, Mr Spencer admitted as much in cross-examination. 754 In his affidavit, Mr Spencer asserted that "[t]his concept was scuttled in May 2004 when the Howard Government cancelled the MRTs on renewable energy and stepped away from support for renewable energy". I do not accept Mr Spencer's evidence that this was the reason the wind farm project proceeded no further in 2006. 755 Mr Spencer gave evidence however that he was approached by another developer (CBD Energy Pty Ltd) in 2009. He exhibited to his affidavit what he described as a "Wind Farm Development Agreement with CBD Energy Limited". Like his description of the 2004 heads of agreement document, this description was somewhat overstated. The document exhibited appears to be a template of an agreement. The document does not identify the parties or the land to which the agreement purports to relate, and the agreement is neither signed nor dated. 756 Mr Spencer admitted in cross-examination that he did not sign any final version of this agreement. 757 Nevertheless, it appears from other evidence given by Mr Spencer in cross-examination that GE Energy did commission what was described as a "Fatal Flaw Analysis" of the wind farm project. Mr Spencer was at pains in his evidence to make it clear this study was commissioned by GE Energy, and not by him. 758 This Fatal Flaw Analysis was prepared by consultants Parsons Brinckerhoff Australia and dated 31 August 2009. Importantly for the issues in this proceeding, this analysis records the consultants' opinion as being that they "did not find any environmental issues associated with developing the wind farm at the site which could be considered fatal flaws". 759 Mr Spencer accepted in cross-examination that, as the analysis states, this conclusion was based on an assumption that the project could proceed by avoiding impacts on areas of environmental significance (that is, with very limited clearing of native vegetation), and he also agreed that he did not test this assumption by any application for development consent for a wind farm. 760 The Commonwealth also submitted, and put to Mr Spencer in cross-examination, two relevant aspects of this analysis which were said to undermine Mr Spencer's position that the native vegetation clearance regimes had any impact on the wind farm project not going ahead. The first was that the Native Vegetation Act 2003 was said by Parsons Brinckerhoff Australia to be inapplicable as a development application could be made under Pt 3A of the Environmental Planning and Assessment Act 1979 (NSW) and any vegetation clearance issues dealt with as part of this development application process through direct Ministerial approval. Although that process no longer exists, it was, I find, operational in 2009. 761 The second aspect was that the Parsons Brinckerhoff Australia analysis stated that clearing all vegetation for 1 km around each turbine location was a "worst case scenario" and would result in the clearing of more than 1,900 hectares of native vegetation and could involve significant environmental impacts. Parsons Brinckerhoff Australia described this as a "fatal flaw" in the proposal if this had to occur. However there were more "pragmatic" alternatives, involving clearing of much smaller amounts of vegetation that were unlikely to be issues of significance. The report also noted in its conclusions that the nature and extent of existing access tracks on the property reduced the amount of vegetation required to be cleared for access, which in other developments could be a significant issue. 762 Finally, the Parsons Brinckerhoff Australia analysis noted that there were commercial issues arising from competition for electricity generation in the Cooma-Canberra area that were outside the scope of its analysis but would need to be considered. In cross-examination Mr Spencer expressed a different view about the import of this qualification in the report but conceded it had nothing to do with native vegetation issues. Mr Spencer also denied in cross-examination that the main reasons the wind farm project did not proceed in 2009 were commercial rather than environmental. He referred to Mr Stavnsbo's evidence in this regard, to which I will shortly turn. 763 In cross-examination Mr Spencer maintained his view that it was the native vegetation clearance restrictions which stopped the wind farm project "in its tracks" as he put it in his affidavit. He repeatedly denied the projects were not commercially viable and that was the reason he had not proceeded with them. He said: The stopping in its tracks was a combined issue of not just the Native Vegetation Act, but the fact that everything on the farm came to a stop. Nothing was going ahead, because the Native Vegetation Act had created a situation where everything was up in the air. And the Native Vegetation Act - sorry, the Native Vegetation Act and the - well, the two projects - the wind farm was two different projects. One started up. It stopped. The next one started up. And the Native Vegetation Act just compounded it all and put it into a position where, because of it, nothing could be seen clearly. Nothing could be determined accurately. So it stopped in its tracks. People that had gone so far with it lost money. And can I just say one more thing. The wind farms were never being developed by wind farm developers. They were selling them on to other people, retirement investors. And if they couldn't do that, with the EMRA scheme being suspended and opened again, it meant that the funding the government was provided was either on or off. So these complexities made it more difficult, and the Native Vegetation Act was just the cream on the cake. 764 I turn to Mr Stavnsbo's evidence. Mr Spencer had stated in cross-examination that Mr Stavnsbo's report addressed the commercial viability issues of the wind farm project, and answered the Commonwealth's allegation that the project was not commercially viable. 765 As I have noted above, after some to-ing and fro-ing, Mr Stavnsbo's evidence, and his report, was admitted into evidence without Mr Stavnsbo being subject to cross-examination. That does not mean it should be read uncritically, and accepted without reservation: it simply means what Mr Stavnsbo says had not been actively contradicted by the respondents. 766 I make that point because I have found the evidence from Mr Spencer about why the wind farm project did not proceed to be at such a level of generality as to be difficult to rely upon. On the one hand, there are quite clear statements in the documentary evidence to which I have referred which appear to suggest that restrictions on the clearance of native vegetation were assessed as having no necessary adverse effect on the wind farm proposals, either in 2003-2006 or in 2009. On the other hand, Mr Spencer is adamant the native vegetation clearance restrictions stopped the project in its tracks and he continued to adhere to this under cross-examination in a way which appeared quite deliberate. 767 Mr Stavnsbo's evidence could have provided some objective support one way or the other. However I accept the Commonwealth's submissions that it does not really address commercial viability as such and does not provide the support for Mr Spencer's contentions that Mr Spencer asserted it did. 768 Mr Stavnsbo visited Saarahnlee several times between 2003 and 2008. He deposed to seeing the 2003 NEG Micon feasibility study. He describes the two principal mechanisms by which a landowner might be remunerated for having wind turbines on his or her land - a land rental payment by reference to a flat fee per wind turbine installed, or a percentage of wind farm revenues (in Australia between 2005 and 2008 he deposed the figure was commonly between 2% and 5% of gross revenues). He calculated that on the evidence provided to him (which the respondents did not seek to impugn) there would have been a return to Mr Spencer of approximately $700,000 per annum in gross revenues. He deposed to the life of a wind farm usually being in the range of 20 to 25 years, at least in Europe and the United States. 769 It appears to me, and I am prepared to infer, that Mr Spencer's firm assertion that Mr Stavnsbo's evidence did go to the commercial viability of the wind farm project was based on the fact that Mr Stavnsbo deposed to very large sums of money being received by Mr Spencer on the assumptions Mr Stavnsbo had been presented with. What was missing of course from his report (although present in the 2003 study) were the costs and outgoings and how those would be met, together with how it was said that an investor would be sufficiently confident in the profit margin on the project to go ahead with it. 770 Mr Stavnsbo does not address any of these issues. I accept the Commonwealth's submissions that his evidence does not address whether a wind farm would have been viable, the likelihood that it would have been successfully established, or the relevance, if any, of the native vegetation legislation to its viability. 771 I also accept the Commonwealth's submissions that other aspects of Mr Spencer's evidence are consistent with the uncertainty which sits behind both the 2003 and 2009 reports. Mr Spencer gave evidence (some of which I have extracted above) about the problems created by changing government policy in the renewable energy sector and the hesitant attitude of investors in respect of such projects. As the Commonwealth correctly submitted none of these uncertainties could be said to be related to native vegetation clearance regimes, at least, not on the evidence before the Court. 772 In conclusion, I am not satisfied on the balance of probabilities on the evidence before me that the "vegetation issue" (as Mr Spencer describes it at points in his evidence) was the cause of the wind farm project on Saarahnlee not proceeding, either in 2003-2006, in 2009, or at all.

The firewood project 773 The principal hurdle facing Mr Spencer in this specific claim is his failure to take the necessary steps to ascertain what if any trees he would be permitted to harvest for firewood on his property. He did not make an application to clear native vegetation for such a purpose. Rather he went along with a proposal formulated as part of the farmers' exit assistance scheme assessment process to clear a large area and see whether his contention that his farm was not viable would be accepted, and if so, what he would be offered for it. The absence of an application for the purpose of harvesting firewood (and of any refusal of permission to clear for this purpose) deprives this claim of any factual foundation. 774 Mr Spencer outlined the firewood project in the following way in his affidavit: The firewood harvesting project was ongoing and possible right across the entire property and was estimated by me between 200 and 500 tonnes per acre. The going wholesale rate in royalties on this item is between $10 and $20 per ton. My best estimate is that between 7,000,000 and 10,000,000 tonnes of firewood on the property is now locked up as the Native Vegetation legislation makes commercial fire wood harvesting illegal. Thousands of tonnes were harvested and sold at the then market price. This price was obtainable from the wood yards from time to time. The timbers on the property in British Thermal Units (BTUs) order of listing are- E. Pauciflora, E. Dives, E Stellulata, E. Melliodora, E. Rubida. The tonne price is higher per BTU grading, but would average at Whole Sale $120.00. 775 His contention was put more forcefully in his 6 June affidavit: The Native Vegetation Act sterilized the firewood - expropriated. The asset of firewood is the property owner's largest renewable resource. Even if the firewood is all harvested the economics are worthy considering a plantation subdivision to always have the product available for a ready cash flow that adds to the diverse economics of the property and hence spreading the economic base. 776 The Commonwealth's contention that this claim is unsupported by any evidence to prove the assertions made by Mr Spencer is correct. The figures he refers to are no more than his own estimates, and even those estimates are given without reference to any source material: that is an insufficient probative basis for a claim of this kind. The level of speculation in which he engaged, and the breadth of his own estimates can be seen in the following exchange with senior counsel for the Commonwealth during his cross-examination: The estimate that you've put in your affidavit, as what you call your best estimate of between seven million and 10 million tonnes, is assumed or estimated by you to apply over what period of time?---What we did was, we estimate that it was about 1000 tonnes an acre, and that would - that would be the - you would just be on a permanent cycle. You would keep - as firewood became more rare, we would be shipping it to Canberra, putting it in a wood yard and a wood lot and just selling it as much as we could. That's just an estimate to tell you how much was there. Well, I thought you said in your affidavit you estimated it at between 200 and 500 tonnes an acre?---That - well, yes, that might be right. I'm saying - when I say 1000 tonnes an acre, I'm guessing. I haven't looked at that. I'm not reading it. I'm just thinking on my head. 777 By his own admission, Mr Spencer was guessing at his losses, and guessing at many levels. A damages claim is unsustainable on that kind of basis. 778 His evidence in cross-examination appeared to reveal a much more modest kind of approach in any event: harvesting of firewood would have continued on in the same way it always has done, because when you wanted to do it, you would sell it. When things got bad and poor you could sell some firewood. And that's - you would clear some of the regrowth, stack the timber up and sell it. 779 In conclusion, Mr Spencer has not proven on the balance of probabilities that he suffered economic loss in relation to any of these three projects, nor has he proven that any economic loss he suffered was caused by the respondents' conduct (being the scheme said to comprise the two federal laws, the intergovernmental agreements, and the state legislation), assuming against my own findings that such conduct was unlawful and gave rise to a private law action in tort.

The miscellaneous claims for damages 780 I consider in this section such matters as the boundary fence around Saarahnlee adjoining the Namadgi National Park, and Mr Spencer's claim for destruction of personal property he had at Saarahnlee, and storage fees for belongings, plant and equipment moved off Saarahnlee when he was evicted. 781 Mr Spencer has also included, in a long list of items he describes under his damages submissions, claims such as one for the cost of putting up a new boundary fence around Saarahnlee, where it borders on the Namadgi National Park. He describes litigation about the absence of an appropriate boundary fence which occurred in the NSW Supreme Court (and appears to be reported as Spencer v Australian Capital Territory [2007] NSWSC 303). Mr Spencer asserts as part of his submissions, although there does not seem to have been any evidence about this, that such a fence would cost $250,000. He states the "actual quote could be obtained at short notice". It is not, therefore, a past economic loss at all. I fail to see its connection to Mr Spencer's claims about native vegetation clearance. There are times at which Mr Spencer's submissions read as a catalogue of anything and everything which has gone wrong for him on or connected with Saarahnlee, all of which he seeks to sheet home to the respondents, with ever increasing, very significant yet broadbrush monetary demands attached to them. 782 There is simply no evidence capable of connecting this fence with the restrictions on the clearing of native vegetation. I do not consider it further. 783 As to the personal property claims and storage fees, in my opinion it is apparent from Mr Spencer's own evidence that these losses were occasioned by his eviction from Saarahnlee after the mortgagee sale. 784 In his evidence, Mr Spencer made a claim that, but for the s 31A application by the Commonwealth and the appeals which flowed from it, this proceeding would have been concluded before the end of 2007, and therefore before Mr Spencer was evicted from Saarahnlee after a mortgagee sale. He says, it seems, that the Commonwealth's conduct in that way increased his damages because, if there had been no s 31A application, the timing of the trial in this matter would have been such that Mr Spencer would have been the owner of Saarahnlee at the time of trial. 785 I do not accept the decision of the Commonwealth to pursue an application under s 31A of the Federal Court Act and the resulting appeals have any bearing on the nature or extent of damages which might, if I had reached a different conclusion, have been available to Mr Spencer. 786 If there is one proposition that can be stated with confidence about this proceeding, it is that it is not possible, even with the benefit of hindsight, confidently to reconstruct the course this proceeding would have taken without an application under s 31A of the Federal Court Act. There have been prolonged contests over discovery, amongst other matters: on the current evidence I do not accept that it could be said with any level of certainty (and certainly not on the balance of probabilities) that this matter would have gone to trial and judgment while Mr Spencer remained the owner of Saarahnlee, even if one assumes for the purposes of this exercise that all other events otherwise occurred at the time they in fact did occur. History cannot be rewritten to that extent. 787 There is a wholly insufficient basis in the evidence to attribute causes for the mortgagee sale of Saarahnlee. Obviously there was a fundamental solvency issue for Mr Spencer in 2010. As to what caused that lack of solvency, one might only speculate. The most cursory of examination of Mr Spencer's evidence and submissions in this proceeding demonstrates that Mr Spencer had, at any one time, a tremendous number of projects and activities underway whether here in Australia or (for example) overseas in places such as Papua New Guinea, and had a large family dispersed around the world. As the State submitted, there was evidence from Mr Spencer himself that until an unrelated misfortune struck, he had substantial assets of around $6 million available to him offshore. Mr Spencer explained that he made and lost a fortune offshore. He had had around or at least $6 million in assets in Papua New Guinea, but his investments apparently fell upon hard times due first to the destruction by fire of a major property investment owned by him; then to protracted disputes with the insurance company and finally to the catastrophic drop in exchange rate between the Papua New Guinean kina and the Australian dollar that wiped out his remaining assets. His evidence also discloses considerable legal debts, in excess of $300,000 in 2007. 788 There was no attempt in Mr Spencer's affidavit evidence (bearing in mind it was prepared at a time he was legally represented) to demonstrate in any sufficient way the course of Mr Spencer's finances and what led to the mortgagee sale of Saarahnlee.

Conclusion on economic loss 789 Contrary to my findings and the opinions I have expressed in these reasons, assuming Mr Spencer could have surmounted all the other considerable hurdles evident from these reasons about his claims against the respondents, and assuming he could have reached a point at which the law required an assessment whether he had suffered any economic and non-economic loss and if so what was recoverable, I am not satisfied on the balance of probabilities that Mr Spencer has established any of the past or future economic losses he claims. 790 In summary he has not established that: (1) the market value of Saarahnlee was adversely affected by the native vegetation clearance regimes, nor has he satisfactorily quantified any such adverse effect; (2) the monetary value of Saarahnlee should be calculated in some alternative way to market value; (3) the firewood project and the carbon project, as advanced by Mr Spencer, were likely to proceed on Saarahnlee; (4) the wind farm project would have gone ahead in the form proposed, or indeed in any other form contemplated by the evidence; (5) either of the respondents' conduct in the scheme comprising the two federal laws, the intergovernmental agreements and the state legislation (as identified by Mr Spencer) caused or contributed to any of the past alleged economic losses he suffered for the wind farm, the firewood project or the carbon project to the stage each of them had in fact reached; (6) either of the respondents' conduct in the scheme comprising the two federal laws, the intergovernmental agreements and the state legislation (as identified by Mr Spencer) caused or contributed to any of the future alleged economic losses he claimed for the wind farm, the firewood project or the carbon project; (7) he suffered past or future economic loss for any of the wind farm, the firewood project or the carbon project which could be precisely quantified so as to become the subject of a court order against either or both of the respondents; (8) either of the respondents' conduct in the scheme comprising the two federal laws, the intergovernmental agreements and the state legislation (as identified by Mr Spencer) caused or contributed to the demise, or the non-commencement, of any of the other projects for Saarahnlee about which he gave evidence (although he appeared to have abandoned this, out of an abundance of caution I nevertheless consider I should make a finding on this issue); (9) he suffered past or future economic loss for any of the other projects for Saarahnlee about which he gave evidence, which could be precisely quantified so as to become the subject of a court order against either or both of the respondents (although he appeared to have abandoned this, out of an abundance of caution I nevertheless consider I should make a finding on this issue); (10) any of the other miscellaneous claims (such as fencing along the boundary of Saarahnlee with the Namadgi National Park) have any connection with either of the respondents' conduct in the scheme comprising the two federal laws, the intergovernmental agreements and the state legislation (as identified by Mr Spencer), let alone any causal connection. 791 When one reads through all Mr Spencer's evidence and submissions about these projects, one cannot help but have the strong impression that Mr Spencer took decisions to abandon them that were motivated by a wide range of factors, as well as having so much money tied up in them that financially matters got out of hand quickly and disastrously. I note that nothing about Mr Spencer's financial position was explored at trial aside from his assertions about the expenditure of very large sums of money indeed. There was little or no indication in the evidence about where the income was derived to fund all this expenditure. Mr Spencer did not volunteer anything like a comprehensive account of his financial situation that could have provided a more secure evidentiary base for the majority of his economic loss claims. 792 This evidence was all prepared while he was legally represented and no attempt was made to include anything like the kind of source material about income and expenditure which would have been necessary to substantiate these claims. 793 The excessiveness of many of his claims, and lack of judgement in how they were put, is an impediment to the persuasive task he has to identify how the State's regulation of native vegetation clearance activities (and the Commonwealth's alleged participation in or encouragement of that regulation) caused or contributed to identifiable, quantifiable economic losses incurred by Mr Spencer.

Non-economic losses 794 I recall first the assumption on which I approach this aspect of my findings: namely, that contrary to what I have decided, Mr Spencer has a claim recognised by the law in damages against the respondents in respect of their conduct in the scheme comprising the two federal laws, the intergovernmental agreements and the state legislation (as identified by Mr Spencer). 795 If that were the situation, I am satisfied on the balance of probabilities that Mr Spencer has suffered considerable stress and anxiety over the imposition of the native vegetation clearance regimes on Saarahnlee. That damage however is in the form of a personal injury. No submissions were made to the Court about how this kind of non-economic loss might be recoverable, even on the extended hypothesis that claims for economic loss were recoverable.

Re-opening 796 There were legitimate objections taken by the respondents to considerable parts of Mr Spencer's final submissions on the basis that they constituted evidence which had not been adduced during the trial, especially as to the damages he alleged he had suffered. 797 Being self-represented, Mr Spencer did his best in a factually and legally complicated trial. It may be that he did not fully appreciate the need to adduce and prove by admissible evidence all facts he wished to rely on, particularly as to his damages claim. Had I reached different conclusions on the law, as to both s 51(xxxi) and the existence and success of a private cause of action in tort for Mr Spencer, I would have been inclined to afford the parties an opportunity to make submissions whether before the making of any orders in this matter, leave should be granted to Mr Spencer to re-open his case to present, in admissible form, at least the evidence he refers to in his final submissions. Given the conclusions I have in fact reached, this matter need not be determined.

CONCLUSION 798 There will be orders dismissing the application. 799 Despite the views which I have reached, I consider it is far from inevitable that it is appropriate there should be an order that costs follow the event, in the usual form. 800 In his 6 June 2014 affidavit in this proceeding, Mr Spencer stated: The fact that the court case has taken such time I respectfully say affects all aspects of the damages - the property was in my name from 2007, when Court proceedings commenced, until early 2010. If the Respondents had not pursued Section 31A of the FCA Act, the matter could have been resolved within that 3 year period of time. The Applicant's material loss and personal/family suffering has been greatly magnified by the time taken and attitude of the Respondents in pursuing this matter. 801 As I have set out earlier in these reasons, I do not presently accept the decision of the Commonwealth to pursue an application under s 31A and the resulting appeals necessarily had a bearing on the nature or extent of losses suffered by Mr Spencer. However, Mr Spencer's submission is illustrative of the differing contentions which might be made on whether a costs order should be made against Mr Spencer at all, if so what kind of costs order, or whether the Court should make a lump sum order. 802 After a proceeding of this length and complexity, the parties should be given a reasonable opportunity to consider their positions on the question of costs, and to file such evidence and submissions as they wish, including any proposals for lump sum costs orders. 803 I certify that the preceding eight hundred and two (802) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mortimer.