Section 51(xxxi) of the Australian Constitution
Encyclopedia
Section 51 of the Constitution of Australia is a subsection of Section 51 of the Constitution of Australia providing that the Commonwealth
has the power to make laws with respect to "the acquisition of property on just terms from any State
or person for any purpose in respect of which the Parliament has power to make laws." It is both a power and a constitutional guarantee of just compensation for property rights contingent on its exercise.
The language of s 51(xxxi) was adapted from the final words of the Fifth Amendment to the United States Constitution
. Unlike the American provision, however, it is primarily a grant of Commonwealth law-making power. It is clear that the requirement of "just terms" does not affect the State Parliaments. In Grace Bros Pty Ltd v The Commonwealth (1946) Justice Dixon
stated that the inclusion of the condition was to "prevent arbitrary exercises of the power at the expense of a State or a subject."
The interpretation of the terms "acquisition" and "just terms" by the High Court of Australia
have had the effect, however, of limiting its protection of property rights. Moreover, it operates at any time the Commonwealth makes a compulsory acquisition of property. As such, it is a contingent guarantee rather than a general constitutional right or freedom to enjoy property rights.
The Commonwealth may only acquire property on just terms for a "purpose in respect of which the Parliament has power to make laws". This means that every law supported by s 51(xxxi) must also be supported by at least one additional legislative power.
The effect of the section was the subject of the Australian film The Castle
.
has taken a wide view of the concept of "property". Several members of the court took the opportunity to consider the meaning of the term property in Minister of State for the Army v Dalziel (1944). Justice Starke
said the term includes: "every species of valuable right and interest including real
and personal property
, incorporeal hereditament
s such as rent
s and services, rights-of-way
, rights of profit
or use
in land of another, and choses in action
. Justice McTiernan
confirmed the term property extends to tangible and intangible property.
An example of the breadth of the concept of property in section 51(xxxi) is provided by Bank of New South Wales v Commonwealth
(the Bank Nationalisation Case). In that case, Federal legislation contemplated the acquisition of private banks through vesting of shares in private banks in the Commonwealth, and later the appointment of directors by the Governor of the Commonwealth Bank. Justice Dixon characterised the provisions as removing effective control over the property of the private banks. He concluded that this was, in the essential sense, an acquisition of a proprietary right.
While statutory licences have sometimes been equated with proprietary interests, the removal of rights enjoyed under a statutory licence does not typically constitute an acquisition of property within section 51(xxxi), as licence conditions are inherently susceptible to change.
, where the destination does not matter - it is enough that the holder of property has been deprived of it.
, however, "just terms" imports no equivalence of market value
. The arrangements offered must be "fair", or such that a legislature could reasonably regard them as "fair". However, this judgment of "fairness" must take account of all the interests affected, not just those of the dispossessed owner.
The requirement of "just terms" does not necessarily require that a compensation package be presented as part of the acquisition scheme. It is sufficient that the scheme provides adequate procedures for determining fair compensation. However, the Court may scrutinise such procedures closely to ensure their adequacy.
There may be some acquisitions of property to which section 51(xxxi) does not apply.
Section 51(xxxi) is an exception to the norm for interpretation of the subsections of section 51
, that one grant of power cannot be used to "read down" another. In this case, however, the Court will not allow another grant of power to be read so broadly as to circumvent the specific limitation to the power granted by section 51(xxxi).
Parliament of Australia
The Parliament of Australia, also known as the Commonwealth Parliament or Federal Parliament, is the legislative branch of the government of Australia. It is bicameral, largely modelled in the Westminster tradition, but with some influences from the United States Congress...
has the power to make laws with respect to "the acquisition of property on just terms from any State
States and territories of Australia
The Commonwealth of Australia is a union of six states and various territories. The Australian mainland is made up of five states and three territories, with the sixth state of Tasmania being made up of islands. In addition there are six island territories, known as external territories, and a...
or person for any purpose in respect of which the Parliament has power to make laws." It is both a power and a constitutional guarantee of just compensation for property rights contingent on its exercise.
The language of s 51(xxxi) was adapted from the final words of the Fifth Amendment to the United States Constitution
Fifth Amendment to the United States Constitution
The Fifth Amendment to the United States Constitution, which is part of the Bill of Rights, protects against abuse of government authority in a legal procedure. Its guarantees stem from English common law which traces back to the Magna Carta in 1215...
. Unlike the American provision, however, it is primarily a grant of Commonwealth law-making power. It is clear that the requirement of "just terms" does not affect the State Parliaments. In Grace Bros Pty Ltd v The Commonwealth (1946) Justice Dixon
Owen Dixon
Sir Owen Dixon, OM, GCMG, KC Australian judge and diplomat, was the sixth Chief Justice of Australia. A justice of the High Court for thirty-five years, Dixon was one of the leading jurists in the English-speaking world and is widely regarded as Australia's greatest ever jurist.-Education:Dixon...
stated that the inclusion of the condition was to "prevent arbitrary exercises of the power at the expense of a State or a subject."
The interpretation of the terms "acquisition" and "just terms" by the High Court of Australia
High Court of Australia
The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, has the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the States, and...
have had the effect, however, of limiting its protection of property rights. Moreover, it operates at any time the Commonwealth makes a compulsory acquisition of property. As such, it is a contingent guarantee rather than a general constitutional right or freedom to enjoy property rights.
The Commonwealth may only acquire property on just terms for a "purpose in respect of which the Parliament has power to make laws". This means that every law supported by s 51(xxxi) must also be supported by at least one additional legislative power.
The effect of the section was the subject of the Australian film The Castle
The Castle (film)
The Castle is a 1997 Australian comedy film directed by Rob Sitch. It starred Michael Caton, Anne Tenney, Stephen Curry, Sophie Lee, Eric Bana and Charles 'Bud' Tingwell. The screenwriting team comprised Sitch, Santo Cilauro, Tom Gleisner and Jane Kennedy of Working Dog Productions.The Castle was...
.
Property
The High Court of AustraliaHigh Court of Australia
The High Court of Australia is the supreme court in the Australian court hierarchy and the final court of appeal in Australia. It has both original and appellate jurisdiction, has the power of judicial review over laws passed by the Parliament of Australia and the parliaments of the States, and...
has taken a wide view of the concept of "property". Several members of the court took the opportunity to consider the meaning of the term property in Minister of State for the Army v Dalziel (1944). Justice Starke
Hayden Starke
Sir Hayden Erskine Starke KCMG , an Australian judge, was a justice of the High Court of Australia.Starke was born in the town of Creswick, Victoria in 1871...
said the term includes: "every species of valuable right and interest including real
Real property
In English Common Law, real property, real estate, realty, or immovable property is any subset of land that has been legally defined and the improvements to it made by human efforts: any buildings, machinery, wells, dams, ponds, mines, canals, roads, various property rights, and so forth...
and personal property
Personal property
Personal property, roughly speaking, is private property that is moveable, as opposed to real property or real estate. In the common law systems personal property may also be called chattels or personalty. In the civil law systems personal property is often called movable property or movables - any...
, incorporeal hereditament
Property law
Property law is the area of law that governs the various forms of ownership in real property and in personal property, within the common law legal system. In the civil law system, there is a division between movable and immovable property...
s such as rent
Renting
Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...
s and services, rights-of-way
Easement
An easement is a certain right to use the real property of another without possessing it.Easements are helpful for providing pathways across two or more pieces of property or allowing an individual to fish in a privately owned pond...
, rights of profit
Profit (real estate)
A profit , in the law of real property, is a nonpossessory interest in land similar to the better-known easement, which gives the holder the right to take natural resources such as petroleum, minerals, timber, and wild game from the land of another...
or use
Use (law)
Use, as a term in real property law of common law countries, amounts to a recognition of the duty of a person, to whom property has been conveyed for certain purposes, to carry out those purposes....
in land of another, and choses in action
Chose (English law)
Chose , is a term used in common law tradition in different senses. Chose local is a thing annexed to a place, such as a mill. A chose transitory is something movable, that can be carried from place to place...
. Justice McTiernan
Edward McTiernan
Sir Edward Aloysius McTiernan, KBE , was an Australian jurist, lawyer and politician. He served as an Australian Labor Party member of both the New South Wales Legislative Assembly and federal House of Representatives before being appointed to the High Court of Australia in 1930...
confirmed the term property extends to tangible and intangible property.
An example of the breadth of the concept of property in section 51(xxxi) is provided by Bank of New South Wales v Commonwealth
Commonwealth v Bank of New South Wales
Commonwealth v Bank of New South Wales 79 CLR 497; [1950] AC 235 - popularly known as the Bank Nationalisation Case - was a Privy Council decision that affirmed the High Court of Australia's decision in Bank of New South Wales v Commonwealth, promoting the theory of "individual rights" to ensure...
(the Bank Nationalisation Case). In that case, Federal legislation contemplated the acquisition of private banks through vesting of shares in private banks in the Commonwealth, and later the appointment of directors by the Governor of the Commonwealth Bank. Justice Dixon characterised the provisions as removing effective control over the property of the private banks. He concluded that this was, in the essential sense, an acquisition of a proprietary right.
While statutory licences have sometimes been equated with proprietary interests, the removal of rights enjoyed under a statutory licence does not typically constitute an acquisition of property within section 51(xxxi), as licence conditions are inherently susceptible to change.
Acquisition
For the purposes of section 51(xxxi), property must have been acquired by somebody, and the acquisition must be for a Commonwealth purpose. This is in contrast to the Fifth AmendmentFifth Amendment to the United States Constitution
The Fifth Amendment to the United States Constitution, which is part of the Bill of Rights, protects against abuse of government authority in a legal procedure. Its guarantees stem from English common law which traces back to the Magna Carta in 1215...
, where the destination does not matter - it is enough that the holder of property has been deprived of it.
Just terms
Typically, a determination of just terms based on the market value of the property at the time of acquisition will be sufficient to satisfy the requirement of just terms. Unlike the "just compensation" requirement in the Fifth AmendmentFifth Amendment to the United States Constitution
The Fifth Amendment to the United States Constitution, which is part of the Bill of Rights, protects against abuse of government authority in a legal procedure. Its guarantees stem from English common law which traces back to the Magna Carta in 1215...
, however, "just terms" imports no equivalence of market value
Market value
Market value is the price at which an asset would trade in a competitive auction setting. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some...
. The arrangements offered must be "fair", or such that a legislature could reasonably regard them as "fair". However, this judgment of "fairness" must take account of all the interests affected, not just those of the dispossessed owner.
The requirement of "just terms" does not necessarily require that a compensation package be presented as part of the acquisition scheme. It is sufficient that the scheme provides adequate procedures for determining fair compensation. However, the Court may scrutinise such procedures closely to ensure their adequacy.
There may be some acquisitions of property to which section 51(xxxi) does not apply.
Section 51(xxxi) is an exception to the norm for interpretation of the subsections of section 51
Section 51 of the Australian Constitution
Section 51 of the Constitution of Australia grants legislative powers to the Australian Parliament only when subject to the constitution. When the six Australian colonies joined together in Federation in 1901, they became the original States and ceded some of their powers to the new Commonwealth...
, that one grant of power cannot be used to "read down" another. In this case, however, the Court will not allow another grant of power to be read so broadly as to circumvent the specific limitation to the power granted by section 51(xxxi).