Minister for the Army v Dalziel
68 CLR 261(Judgment by: STARKE J)
Between: MINISTER FOR THE ARMY
And: DALZIEL
Judges:
Latham CJ
Rich J
Starke JMcTiernan J
Williams J
Subject References:
Constitutional law
National security
Acquisition of property
Just terms
Validity of Regulation
Legislative References:
Constitution (Cth) - s 51(xxxi)
National Security Act 1939 No 15 - s 5
National Security (General) Regulations 1939 SR No 87 - r 54; r 60G(5); r 60H
Acts Interpretation Act 1901 No 2 - s 46(b)
Judgment date: 10 March 1944
MELBOURNE
Judgment by:
STARKE J
The first question on this appeal is whether the taking possession of land pursuant to reg. 54 of the National Security (General) Regulations is an acquisition of property within the meaning of the Constitution, s. 51 (xxxi.). That section confers upon the Commonwealth power to make laws with respect to the acquisition of property upon just terms from any State or person for any purpose in respect of which the Parliament has power to make laws. And the decisions of this Court construe this power as a limitation upon the legislative power of the Commonwealth to acquire property except upon the terms mentioned (Andrews v Howell; [F42] Australian Apple & Pear Marketing Board v Tonking; [F43] Johnston Fear & Kingham & The Offset Printing Co Pty Ltd v The Commonwealth [F44] ).
Reg. 54 authorizes the taking possession of any land, but the period cannot, by reason of the provisions in the National Security Act 1939-1943, s. 19, in any event be longer than six months after His Majesty ceases to be engaged in war. The regulation may be compared with reg. 53, which authorizes the doing of work on any land, and with reg. 55, which authorizes the use of land. And it may also be compared with reg. 55AA, which marks the distinction between the taking possession of land for temporary purposes, the doing of work on and using land, and the compulsory acquisition of land pursuant to a law of the Commonwealth.
The power of the Commonwealth to make laws with respect to the acquisition of property is an extensive power, but the Court must construe it according to the plain and ordinary signification of English words. Property, it has been said, is nomen generalissimum and extends to every species of valuable right and interest including real and personal property, incorporeal hereditaments such as rents and services, rights of way, rights of profit or use in land of another, and choses in action. And to acquire any such right is rightly described as an "acquisition of property." On the other hand a mere personal licence such as is not assignable would not be rightly described as property: Cf. Leake, Uses and Profits of Land, pp. 196-199. There is no doubt, I think, that taking possession of land pursuant to reg. 54 confers a definite legal right upon the Commonwealth in the nature of property (Cf. Pollock and Wright, Possession in the Common Law (1888), pp. 22, 23), but I should not think that the right acquired pursuant to reg. 54 is assignable.
Now is this right of the Commonwealth an acquisition of property within the meaning of the Constitution? It is said in the Imperial Dictionary that to gain a mere temporary possession of property is not expressed by the word acquire, but by such words as gain, obtain, procure, as to obtain (not acquire) a book on loan. But the construction of the Constitution cannot be based on such refinements. However, the ownership of the land the possession of which is taken under reg. 54 is not transferred to the Commonwealth nor is any estate therein, but a temporary possession. The right conferred upon the Commonwealth may be classified, I think, under the denomination of jura in re aliena, and so a right of property, the subject of acquisition. Nothing is gained by comparing the right given by reg. 54 to the Commonwealth with various estates or interests in land of limited duration or with rights over the land of another recognized by the law, for it is a right created by a statutory regulation and dependent upon that regulation for its operation and its effect. And the operation and effect of the regulation gives the Commonwealth the right to possession of the land of another for a period, limited only as already mentioned, and to do in relation to the land anything which any person having an unencumbered interest in fee simple in the land would be entitled to do by virtue of that interest: See reg. 54 (2) (a).
The Commonwealth, however, cannot so exercise its legislative power of acquisition unless the terms are just. It does not follow that an acquisition under the regulation is ineffective because no terms are provided, for in such case the Commonwealth would, nevertheless, I think, be liable to pay such compensation as was reasonable and just: See Attorney-General v De Keyser's Royal Hotel Ltd; [F45] Johnston Fear & Kingham & The Offset Printing Co Pty Ltd v The Commonwealth. [F46] The constitutional power given to the Commonwealth by s. 51 (xxxi.) is a legislative power and not, as in the Fifth Amendment of the Constitution of the United States of America, a provision that private property shall not be taken for public use without just compensation. Under the Australian Constitution the terms of acquisition are, within reason, matters for legislative judgment and discretion. It does not follow that terms are unjust merely because "the ordinary established principles of the law of compensation for the compulsory taking of property" have been altered, limited or departed from, any more than it follows that a law is unjust merely because the provisions of the law are accompanied by some qualification or some exception which some judges think ought not to be there. The law must be so unreasonable as to terms that it cannot find justification in the minds of reasonable men.
And this brings me to the compensation provisions, regs. 60B to 60M of the Regulations, and what is called the "Basis of Compensation Order" made under reg. 60H. The Regulations provide (reg. 60D) that any person who suffers loss or damage by reason of anything done in pursuance of (inter alia) reg. 54 in relation to any property in which he has, or has had, any legal interest, or in respect of which he has, or has had, any legal right shall be paid such compensation as is determined in the manner provided by the Regulations. The compensation may be determined by agreement, or, in the absence of agreement, a claim may be made to the Minister, who (reg. 60E) may make an offer, and, if not accepted, the claim may be referred to a Compensation Board, and (reg. 60G), if either the Minister or claimant is dissatisfied with the assessment of the Board, then either party may apply to a court of competent jurisdiction to review the assessment. The amount of compensation may be in the form of a lump sum or a periodical payment or both. And reg. 60H provides that the Minister may by order make provision regarding the basis on which compensation is to be awarded in any class of case, but any order relating to the acquisition of property shall provide just terms to the person from whom the property is acquired. And clause 3 provides that, notwithstanding anything contained in the Regulations, where a Minister has by order made any provisions regarding the basis on which compensation is to be awarded in any class of case, every Compensation Board and court shall be bound, in the assessment of compensation in any case of that class, to observe these provisions. Reg. 60H is not, in my opinion, obnoxious to the provisions of the Constitution, for it expressly provides that any order regarding the basis of compensation relating to the acquisition of property shall provide just terms. In my opinion clause 3, providing that assessment tribunals shall observe the basis of compensation order in any class of case in which the Minister has made provision regarding it, does not override the express provision relating to the acquisition of property nor permit the Minister to disregard it. If the Minister does not observe the prescription as to just terms, that would invalidate his order, but not the regulation itself.
The Basis of Compensation Order, it was also held, was bad in several respects, but the judgment below is based upon the invalidity of the provision that loss of occupation or profits shall not be taken into account in assessing compensation. An owner under the Basis of Compensation Order includes any person who has or has had any estate, right or interest in or to land. The Basis of Compensation Order does not provide a measure of compensation, but fixes the upper limits of compensation in two respects. It shall not exceed the aggregate of certain sums specified in the Order, nor shall it exceed the amount which would, but for any increase in rental value attributable to the war, be the fair market rental of the land at the date when possession was taken. But it also provides that in assessing compensation loss of occupation or profits shall not be taken into account. An owner, however, cannot claim compensation or damages for losses to his business or for its destruction consequent on the taking of his property: See Mitchell v United States. [F47] And the Judicial Committee pointed out in Pastoral Finance Association Ltd v The Minister [F48] that suitability of land for the purposes of special business affected the value of the land to the owner and furnished material for estimating what was the real value of the land to him, but that it was a serious fault to say that he was entitled to receive compensation for business profits or savings which he expected to make from the use of the land.
In assessing compensation for taking property compulsorily the settled rules of law, I think, preclude any allowance for consequential damages for loss of occupation or profits, and the regulation appears to me merely a re-assertion of that rule. And this is the more apparent when it is observed that in assessing compensation a sum equal to four per cent per annum, for the period during which possession is retained, of the capital value of the land at the time of taking possession may be taken into account in ascertaining the limit prescribed by the regulation. The special suitability of land for the purposes of special business would be a relevant consideration in ascertaining its capital value. And, further, it must be observed that the regulation provides that the basis of compensation shall not exceed an aggregate amount "unless the Central Hirings Committee otherwise determines", and that in any case in which owing to exceptional circumstances the payment of compensation on the basis set out in the regulation would not provide just terms to the owner of the land the compensation may include such additional amount as is just. In my opinion there is nothing unreasonable or unjust in these circumstances in the prescription that in assessing compensation loss of occupation or profits shall not be taken into account.
It was suggested in the Supreme Court that the regulations and Basis of Compensation Order were invalid for other reasons, which were not specified and which counsel on the argument before this Court did not elaborate. But I suppose that the provision allowing only a sum equal to four per cent per annum of the capital value of the land to be taken into account in assessing compensation is one to which exception is taken. I see nothing unreasonable in it: the interest allowed by the Commonwealth on its own public securities is now less than four per cent. Again, the direction that no account shall be taken of any appreciation of values due to war is also, I suppose, a provision to which exception is taken. But that kind of provision has been common in Compensation Acts for many years and there is nothing unreasonable or unjust about it. Beyond these provisions I have not noticed any that call for special mention. The Basis of Compensation Order attempts to bring about some uniformity in the assessment of compensation and its provisions should be considered as a whole and not singly and detached from the scheme of the Order.
In my opinion this appeal should be allowed.