Between: MINISTER FOR THE ARMY
And: DALZIEL

Judges: Latham CJ
Rich J
Starke J
McTiernan 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)

MELBOURNE

Judgment by:
WILLIAMS J

This appeal comes before this Court under the following circumstances:

For thirteen years prior to 12th May 1942 the respondent Dalziel had been a weekly tenant of the Bank of New South Wales of a block of vacant land situated at the corner of Wynyard and York Streets, Sydney, at a rental of PD8 per week upon which he had carried on a car-parking station.

On 12th May 1942 the Commonwealth, acting under the powers conferred upon it by reg. 54 of the National Security (General) Regulations, entered into possession of the land.

Possession was taken pursuant to a notice in writing dated 5th May 1942. The notice authorized the Quartermaster, United States Armed Forces in Australia, to occupy the land, and authorized him to do in relation to the land anything which any person having an unencumbered interest in the fee simple in the land would be entitled to do by virtue of that interest and provided that, while the land remained in possession of the Commonwealth, no person should exercise any right of way over the land or any other right relating thereto, whether by virtue of an interest in land or otherwise. It is common ground that the respondent at the date of dispossession was making a clear profit of PD15 per week out of the business.

The respondent duly made a claim in accordance with reg. 60D of the National Security (General) Regulations for the loss or damage which he had suffered by reason of the Commonwealth taking possession of the land. On 1st February 1943 the Central Hirings Committee determined that compensation at the rate of PD34 13s. 4d. per month for the period 16th May 1942 to 26th November 1942 should be paid to the respondent. During this period the respondent had continued to pay the amount of PD8 per week (or PD34 13s. 4d. per month) to the Bank of New South Wales by way of rent to preserve his tenancy, and the Commonwealth had not been paying the bank anything for the use of the land, so that the Central Hirings Committee only offered the respondent the equivalent of the rent which he had paid to the bank and refused to offer him anything in respect of the loss of a lucrative business.

The respondent refused to accept this amount and his claim was then forwarded to a Compensation Board in accordance with reg. F, which assessed compensation at PD197 in addition to the amount awarded by the Central Hirings Committee.

Cross-applications were then made to the Supreme Court of New South Wales in accordance with reg. 60G for a review of the assessment by the Compensation Board, the respondent claiming that he was entitled to more compensation than the amount awarded by the Compensation Board, and the Minister contending that the respondent was not entitled to any compensation in addition to that offered by the Central Hirings Committee.

The cross-applications came on for hearing before Roper J. upon certain preliminary points of law, who held that the right to the possession of the land conferred upon the Commonwealth by reg. 54 was an acquisition of property within the meaning of s. 51 (xxxi.) of the Constitution, so that the Commonwealth could only take possession of land under the regulation on just terms; that reg. 60H did not provide just terms so that it was ultra vires the Constitution; and that the compensation payable should therefore be determined without regard to the Basis of Compensation Order, hereinafter referred to, made under reg. 60H (1), and under the ordinary established principles of the law of compensation for the compulsory taking of property.

From this decision of Roper J. this Court gave special leave to appeal.

At the hearing of the appeal the main contention raised by Mr. Fullagar was that the acquisition of property in s. 51, placitum xxxi., of the Constitution refers to the acquisition of some legal or equitable estate or interest in land, and does not include the temporary but indefinite possession of land taken by the Commonwealth under statutory authority for some purpose (in this case defence), authorized by s. 51 of the Constitution.

As between British subjects, the expression the acquisition of property in land does no doubt refer to the acquisition of some estate or interest in land, but this is because English law does not recognize absolute ownership of land unless in the hands of the Crown. At common law the Crown is the supreme owner or lord paramount of every parcel of land in the realm and all land is holden of some lord or other and either immediately or mediately of the King. The word "estate" is therefore especially used to denote the extent of the interest that the subject has in his land, and an estate in fee simple, which is the greatest interest in land which a subject may have, is wellnigh equivalent to absolute property. See Williams and Eastwood on Real Property, (1933), pp. 5, 6:"To have a good title to land is to have the essential part of ownership, namely, the right to maintain or recover possession of the land as against all others. In English law all title to land is founded on possession. Thus a person, who is in possession of land, although wrongfully, has a title to the land, which is good against all except those who can show a better title; that is, can prove that they or their predecessors had earlier possession, of which they were wrongfully deprived. For possession of land is prima facie evidence of a seisin in fee; and he who sues for the recovery of land of which another is in possession must recover on the strength of his own title, and cannot found his claim on the weakness of the possessor's title" (Williams and Eastwood, (1933), at p. 448).

So a possessory title is a devisable title and the heir of the devisee can maintain an ejectment against a person who has entered on the land and cannot show title or possession in any one prior to the testator (Asher v Whitlock ^[F57] ); and upon a resumption a person who has a possessory title good at the date of resumption against everyone but the rightful owner can claim compensation (Perry v Clissold ^[F58] ). In Leach v Jay, ^[F59] at p. 44, James L.J. quoted with approval a passage from Mr. Joshua Williams' book on seisin:"If a person wrongfully gets possession of the land of another he becomes wrongfully entitled to an estate in fee simple, and to no less estate in that land; thus, if a squatter wrongfully encloses a bit of waste land and builds a hut on it and lives there, he acquires an estate in fee simple by his own wrong in the land which he has enclosed. He is seised, and the owner of the waste is disseised."

It is plain, therefore, that the wrongful entry into possession of land is an acquisition of an interest in the land, and it must necessarily follow, in my opinion, that possession under a statutory title which gives the Commonwealth for an indefinite period, which may last during the war and for six months thereafter, an exclusive right to possess the land against the whole world, including the persons rightfully entitled to the possession of the land at common law, must be, a fortiori , an acquisition of an interest in the land.

At common law interests in land in possession are either estates of freehold or chattel real (that is, leasehold) interests.

The nearest analogy to such a statutory right in rem at common law would appear to be a tenancy at will. Such a tenancy creates a chattel interest in the land. But such a tenancy must be at the will of either party (Spencer v Harrison, ^[F60] at p. 104), whereas under the regulation the period of possession is at the sole will of the Commonwealth.

Such a statutory right in rem does not, in my opinion, bear the slightest analogy to the rights created by a licence. A licence does not create any estate or interest in the land but creates merely personal rights between the parties to a contract. Such personal rights are binding solely upon the parties to the contract and do not run with the land (King v David Allen & Sons, Billposting Ltd; ^[F61] Walton Harvey Ltd v Walker & Homfrays Ltd; ^[F62] Cowell v Rosehill Racecourse Co Ltd ^[F63] ).

In many instances agreements which have been couched in language appropriate to leases have been held on their true construction to be mere licences: See the authorities collected in Clore v Theatrical Properties Ltd. ^[F64] The position was succinctly stated by Lord Davey when delivering the judgment of the Privy Council in Glenwood Lumber Co Ltd v Phillips, ^[F65] at p. 408:"It is not, however, a question of words but of substance. If the effect of the instrument is to give the holder an exclusive right of occupation of the land, though subject to certain reservations or to a restriction of the purposes for which it may be used, it is in law a demise of the land itself." So, too, Lord Coleridge, when referring to an agreement which was held to be a licence, said in Wells v Kingston-upon-Hull, ^[F66] at p. 409: "The contract did not relate to the possession or enjoyment of the land or any right over it, but only to the use of it under very stringent regulations, the defendants retaining themselves complete possession of and all rights over it."

If anyone could grant a licence for the Commonwealth to enter into possession of land for the purposes of defence it would be a person having some estate or interest in the land (whether of a freehold or of a chattel nature) entitling him to grant such a right. But if the grant conferred upon the Commonwealth the exclusive right to possession of the land it would be a demise.

But no such grant is required. The Commonwealth enters into possession of the land, not at the invitation of any such person, but in invitos all persons by virtue of a statutory right which overrides any rights to possession vested in any of them: See Minister of Health v Bellotti, ^[F67] at pp. 240, 241.

Reg. 54 provides, so far as material, that: (2) While any land is in the possession of the Commonwealth the land may, notwithstanding any restriction imposed on the use thereof (whether by law or otherwise), be used by, or under the authority of, the Minister of State for the Army for such purpose, and in such manner, as he thinks expedient in the interests of the public safety or the defence of the Commonwealth, or for maintaining supplies and services essential to the life of the community; and that Minister, so far as appears to him to be necessary or expedient in connection with the taking of possession or use of the land in pursuance of this sub-regulation-(a) may do, or authorize persons so using the land 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; and (b) may by order provide for prohibiting or restricting the exercise of rights of way over the land, and of other rights relating thereto which are enjoyed by any person whether by virtue of an interest in land or otherwise.

The regulation therefore confers upon the Commonwealth for the purposes of defence the express right 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; and also confers upon the Commonwealth rights against the owners of incorporeal hereditaments not exercisable by any person having any estate or interest in the land at common law, namely, rights to prohibit or restrict the exercise of rights of way over the land and of other rights relating thereto which are enjoyed by third parties whether by virtue of an interest in land or otherwise. The notice under which possession was taken in the present case exercised all these rights.

It is true that the entry into possession by the Commonwealth does not determine any estate or interest in the land, so that in the present case the Bank of New South Wales continues to be the owner of the land in fee simple and the respondent continues to be a tenant of the Bank of New South Wales from week to week, but the rights of the bank and of the respondent only continue to exist subject to the statutory right of the Commonwealth to take possession of the land and to use it for the purpose authorized by the regulation. Under the regulation, therefore, the Commonwealth acquires by compulsion a right for an indefinite period to the possession and use of land previously vested in some person (in the present case the respondent) by virtue of some estate or interest in the land which that person owns at common law. That person has therefore been divested of the right to possess the land so long as the Commonwealth continues in possession. Moreover, whilst the Commonwealth continues in possession any person becoming entitled to the possession of the land, such as the owner of the fee simple upon the determination of a lease, the owner in fee simple of a reversion which falls into possession, or a mortgagee becoming entitled to and desiring to exercise his right to enter into possession of the land is also divested of that right. All rights to possession existing or coming into existence at common law are therefore acquired by the Commonwealth by compulsion at the expense of the person entitled or becoming entitled to such rights.

The position is the same but even clearer in the case of a chattel. A contractual right to the possession of a chattel does not create a proprietary right (Broad v Parish, ^[F68] at p. 609). But a statutory power to take possession of a chattel does create a proprietary right in rem at the expense of all such persons (France Fenwick & Co Ltd v The King, ^[F69] at p. 467; Lane v Minister of War Transport ^[F70] ).

In Matthey v Curling ^[F71] the House of Lords held that where the military authorities entered into possession of land under powers conferred by the Defence of the Realm Regulations similar to those conferred by reg. 54 the lessee was not evicted by title paramount and continued to be liable upon the covenants in the lease. Lord Buckmaster, in whose opinion Lord Sumner and Lord Wrenbury concurred, said:"Eviction by title paramount means an eviction due to the fact that the lessor had no title to grant the term, and the paramount title is the title paramount to the lessor which destroys the effect of the grant, and with it the corresponding liability for payment of rent". ^[F72]

In the present case the Bank of New South Wales as the unencumbered owner of the land in fee simple had a good title to grant the lease, so that the respondent was not evicted by title paramount and remains liable to pay the rent whilst the weekly tenancy continues.

The decision of the House of Lords in Matthey v Curling ^[F73] has established that the doctrine of frustration does not apply to leases, so that covenants by a lessee which are absolute in terms are not discharged where the lessee is deprived of the benefits conferred upon him by the lease, as, for instance, where the property is destroyed by fire or flood or occupied by the King's enemies (Matthey v Curling ^[F74] ), or demolished as a dangerous structure (Popular Catering Association Ltd v Romagnoli ^[F75] ), or where as in the present case he is dispossessed under some statute passed subsequently to the lease. As Birkett J. said in Swift v Macbean, ^[F76] at p. 379, in a judgment which has recently been approved by the Court of Appeal in Leightons Investment Trust Ltd v Cricklewood Property and Investment Trust Ltd, ^[F77] at p. 496:"In English law the fact that a lessee had been deprived of the possession of the premises is no excuse for non-payment of rent in the absence of express exception, and the contractual position between the landlord and tenant is in the main unaffected."

But Matthey v Curling ^[F78] is not a decision that under a statute similar to reg. 54 an estate or interest in property is not compulsorily acquired at the expense of the lessee because the lease is not discharged by the compulsory entry. In this decision, and in the earlier decision in Attorney-General v De Keyser's Royal Hotel Ltd ^[F79] the House of Lords was dealing with the right to compensation under the English statutes providing for the compulsory taking of land in England for the purposes of defence, and in particular with s. 19 of the Defence Act 1842 (Imp.). Section 16 of that Act authorized the Crown to enter into lands, buildings or other hereditaments or easements required for the defence of the realm and to treat and agree with the owners of such land, etc, or with any person or persons interested therein for the absolute purchase thereof or for the possession or use thereof during such time as the exigence of the public service should require. Section 19 empowered the bodies or persons authorized to acquire the lands, etc, either absolutely or for a temporary purpose to offer a sum of money as a consideration for the absolute purchase of the lands, etc, or such annual rent or sum for the hire thereof either for a time certain or for such period as the exigence of the public service might require; and, if an agreement could not be made, to cause a jury to be summoned to find the compensation to be paid either for the absolute purchase of such lands or for the possession or use thereof. The permanent and temporary acquisition of property were therefore dealt with in the statute in the same way. Both transactions were treated as concerning property which was being acquired from the owners or any other person or persons interested therein and in both cases the statute provided for a purchase or a hiring (which is plainly an acquisition of property) by agreement; or, in default of agreement, for what was equivalent to a purchase or a hiring, namely, a compulsory acquisition of the fee simple or of the temporary possession of the land at a compensation which was intended to be the equivalent of the purchase money or rent. So, in the Case of De Keyser's Royal Hotel, ^[F80] Lord Atkinson, in referring to that Act, said:"Whether the land or its use were presumed to be acquired by voluntary purchase under its sixteenth section, or compulsorily under its nineteenth section, the owner in each case was to be paid or compensated for what he parted with." (The italics are mine.) In that case the taking was, as in the present case, a temporary one, but Lord Moulton said:"The duty of paying compensation cannot be regarded as a restriction. It is a consequence of the taking, but in no way restricts it, and, therefore, as the acquisition is made under the Defence Act 1842 the suppliants are entitled to the compensation provided by that Act". ^[F81] (The italics are again mine.)

The close analogy between the compulsory acquisition of a lease of land and the compulsory taking of possession of land for some statutory purpose is made clear by the speech of Lord Buckmaster in Matthey v Curling. ^[F82] His Lordship referred to the following words of Lord Hatherley in Harding v Metropolitan Railway Co, ^[F83] at p. 159:"As to the abstract principle, I have no doubt that a company purchasing a leasehold interest as this company has done, is bound to take an assignment and bound to enter into an engagement to indemnify the vendor against the covenants of his lease. It would be a grievous injustice to take property by force from a man who is unwilling to dispose of it, and to leave him subject to a substantial rent of PD600 a year, and to the other covenants and conditions of his lease." His Lordship went on to say: "That statement has never been questioned, has formed the foundation of procedure from that date, and to my mind is an accurate statement of the true position in such circumstances; but if it be accepted, the appellant's defence is taken away, for it establishes the proposition that the lessee remains liable on his covenants in the lease, notwithstanding that he has been deprived of the term by the exercise of legal powers."

The following important passage then occurs in his Lordship's speech:"In the present instance it is true that there was no assignment, nor do I think that the War Office intended to acquire the leasehold interest. They entered into possession by virtue of the authority conferred by the Defence Act of 1842, which empowered them to take, and compelled them to pay compensation as therein provided: Attorney-General v De Keyser's Royal Hotel Ltd. ^[F84] The preliminary conditions and restrictions imposed by this Act were removed by the statute of 1914, and the regulations made thereunder, but though this prevented the necessity for formal vesting by assignment or otherwise in the Crown, it left untouched the liability to make the compensation. It is, therefore, closely analogous to-though it is not identical with-the compulsory acquisition by a railway company, and there is no principle upon which it is possible to hold that the lessee remains liable to the lessor in the one case and not in the other". ^[F85] (The italics are again mine.)

The resemblance between the periodical payments which are appropriate compensation for the taking of the compulsory temporary possession of land to rent has received statutory recognition in the legislation referred to in Mellows (H.M. Inspector of Taxes) v Buxton Palace Hotel Co Ltd. ^[F86]

The principal purpose of a lessee in entering into a lease is to obtain the exclusive possession of the demised property so that he may use and enjoy it for those purposes for which the property is suited and which are not forbidden by the lease. This exclusive possession is, therefore, of the very essence of the proprietary interest conferred upon a lessee by a lessor. By entering into possession under reg. 54, the Commonwealth divests the lessee of this exclusive possession and acquires it for itself. The lessee is placed in an analogous position to that in which he is placed where he assigns the lease or sublets. He is still liable to the lessor on the covenants in the lease, but he has parted with the possession which has been acquired from him by the assignee or sub-lessee. The only distinction is that in the case of an assignment or sub-lease the possession has been parted with and acquired voluntarily, while in the case of reg. 54 it has been parted with and acquired by compulsion. In Attorney-General v De Keyser's Royal Hotel Ltd, ^[F87] Lord Atkinson speaks of the Crown going into possession of the land by virtue of a legislative title or by force of a paramount power. His Lordship's words are equally applicable to the Commonwealth Parliament legislating for the acquisition of the possession of land under the Constitution, because the power conferred by placitum xxxi. is a plenary power which enables the Commonwealth to acquire property in land in the amplest connotation of the term (per Isaacs J. in The Commonwealth v New South Wales, ^[F88] at p. 37).

For these reasons I agree with Roper J. that reg. 54 provides for the acquisition of property in land within the meaning of s. 51 (xxxi.) of the Constitution so that such an acquisition can only be lawful if the legislation which provides for the acquisition also provides for just compensation to the person dispossessed.

The National Security Act, s. 5 (1), provides that, subject to the section, the Governor-General may make regulations for securing the public safety and the defence of the Commonwealth and in particular (b) for authorizing (i) the taking of possession or control, on behalf of the Commonwealth, of any property or undertaking; or (ii) the acquisition, on behalf of the Commonwealth, of any property other than land. The Parliament, therefore, in enacting the section, intended to distinguish between the taking of temporary possession or control of land and the acquisition of some permanent estate or interest in land, but this distinction cannot affect the proper construction to be placed on placitum xxxi., or enable the Executive lawfully to legislate under s. 5 (1) (b) (i) to take possession of land except upon just terms. Placitum xxxi. does not give a person who is dispossessed of his property a constitutional right to sue the Commonwealth for compensation, but it does require that all laws made by the Commonwealth for the acquisition of property shall contain just terms, so that if they do not contain such terms they are unconstitutional and the taking of the property is unlawful and a tort (Attorney-General v De Keyser's Royal Hotel Ltd; ^[F89] Johnston Fear & Kingham & The Offset Printing Co Pty Ltd v The Commonwealth ^[F90] ).

The provisions for compensation are contained in regs. 60D to 60M of the National Security (General) Regulations. Reg. 60D provides, so far as material, that any person who has suffered or suffers loss or damage pursuant to anything done in pursuance of, inter alia, reg. 54, in relation to any property in which he has any legal interest shall be paid such compensation as is determined by agreement, or, in the absence of agreement, may make a claim in writing to the Minister for compensation. The Regulations then proceed to prescribe that the Minister through a hirings committee shall assess the compensation, but that if the applicant is dissatisfied he may apply to a Compensation Board; while reg. 60G provides that if either the Minister or the claimant is dissatisfied with the assessment of a Compensation Board he may apply to a court of competent jurisdiction for a review of the assessment. It was under the provisions of reg. 60G that the cross-claims already mentioned came before Roper J.

The respondent did not suggest before Roper J. or before this Court that the Regulations other than reg. 60H do not provide just terms. The contest between the parties arises with respect to reg. 60H and to the Basis of Compensation Order, as amended by the Minister, made under sub-reg. 1 of that regulation. Reg. 60H is in the following terms:

(1)

The Minister may, by order, make provision regarding the basis on which compensation is to be awarded in any class of case.

(2)

Any such order relating to the acquisition of property shall provide just terms to the person from whom the property is acquired.

(3)

Notwithstanding anything contained in these Regulations, where a Minister has, whether before or after the commencement of this regulation, 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.

The words "acquisition of property", in my opinion, are used in sub-reg. 2 of reg. 60H in the same sense as they are used in s. 5 (1) (b) of the National Security Act-see the Acts Interpretation Act 1901-1941, s. 46 (a)-and are intended to refer to what the Act in effect defines as an acquisition of property, and not to the taking possession and control of land, which the Act in effect defines not to be such an acquisition. The Basis of Compensation Order, fixing the basis of compensation for loss or damage suffered by an owner of land by reason of the taking possession of land, made by the Minister on 23rd March 1942 in pursuance of reg. 60H, and subsequently amended on 30th June 1942, 18th December 1942 and 23rd December 1942, provided, so far as material, that where the Commonwealth entered into possession of land under reg. 54 the loss or damage suffered by an owner should not, unless the Central Hirings Committee otherwise determined, exceed the aggregate of a sum equal to four per cent per annum, for the period during which possession was retained, of the capital value of the land at the time of taking possession, plus sums equal to the rates, taxes and insurance payable by the owner in respect of the land during this period, plus a reasonable amount to cover depreciation of any depreciating or wasting asset, plus a sum equal to the cost of making good any damage to the land as a result of the occupation thereof by the Commonwealth.

The original order contained, inter alia, the two following provisoes:(iii.) In assessing compensation, loss of occupation or profits shall not be taken into account. (iv.) In any case in which, owing to exceptional circumstances, the payment of compensation on the basis set out above would not provide just terms to the owner of the land, the compensation may include such additional amount as is just. After the date that the Commonwealth entered into possession of the land, but before the claim for compensation came before the Compensation Board, the order was amended to provide, inter alia, (2) that owner includes a tenant and (iiia) that the total amount of compensation payable shall not 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.

During the argument many contentions were raised with respect to whether the order contained just terms within the meaning of placitum xxxi. I agree with the contention that an Act in order to contain just terms need not necessarily comply in all respects with all the principles of the common law relating to the compulsory acquisition of property. Each Act must be judged on its merits. As the matter was discussed I will add that, as at present advised, I do not think that there is anything in the placitum which prevents a statute providing for the compulsory pooling of property where such a method of disposing of property is for the benefit of a large body of growers of perishable products, so long as the statute provides for the division of the proceeds amongst the growers upon an equitable basis. At the same time it appears to me that the determination of what is adequate compensation must vary so greatly in different circumstances that it would be extremely difficult to provide a detailed legislative scheme that would be just in all cases to which it was intended to apply (Australian Apple and Pear Marketing Board v Tonking ^[F91] ). Moreover, as it is evident that questions of law will generally arise in the assessment and apportionment of compensation, it appears to me that if the amount of compensation is to be fixed by arbitration the statute should contain machinery for questions of law being determined by a court by providing, as in the Regulations discussed in Johnston Fear & Kingham & The Offset Printing Co Pty Ltd v The Commonwealth, ^[F92] that the arbitration should be conducted under the arbitration laws of the States, or by providing for cases upon questions of law to be stated for the opinion of a court: See the Imperial Acquisition of Land (Assessment of Compensation) Act 1919, s. 6, and the Imperial Compensation (Defence) Act 1939, s. 7.

The present Regulations do not relate to pooling, but to the assessment of separate claims for compensation in respect of separate parcels of land, and it is clear to my mind that the Basis of Compensation Order would not work justly in many cases. Where an owner was in possession of the land at the date the Commonwealth entered into possession, the land was unencumbered, and the land had no special advantages for the carrying on of some particular business, a rental fixed on the basis of four per cent of the capital value of the land plus the amounts required to pay rates, taxes and insurance might provide just terms in most cases, and proviso iv would provide for exceptional cases where this return would be inadequate. But it is difficult to see how a return of four per cent could be just where market values in the vicinity were based on some higher percentage. In particular, by the amendment of the order made on 18th December 1942 the claims of a dispossessed tenant are to be assessed on the same basis. But if a tenant was paying rent assessed say on an eight per cent basis it could not be just for the Commonwealth to compensate him on a four per cent basis. In addition I agree with Roper J. that terms cannot be just which provide that in assessing compensation loss of occupation or profits shall not be taken into account. It was suggested during the hearing that the word "occupation" in the proviso meant personal occupation. But, in my opinion, it has the same meaning as in par. d, namely, occupation of the land. Since proviso iii specifically directs that loss of occupation or profits is not to be taken into account, such loss cannot be regarded as one of the exceptional circumstances included in proviso iv, but, as Roper J. said: "In a proper case loss of occupation or profits must be taken into account for the assessment of compensation on just terms on the resumption or taking of possession of land: See Pastoral Finance Association Ltd v The Minister." ^[F93]

For these reasons I am of opinion that the Basis of Compensation Order does not contain just terms within the meaning of the Constitution, so that, if it should be regarded as legislation made by the Minister under the provisions of the National Security Act, s. 5 (3), it is invalid. On the other hand, if it should be regarded as of an executive character, it also fails because it was made by the Minister under the powers conferred upon him by reg. 60H. That regulation authorizes the Minister by order to make provision regarding the basis on which compensation is to be awarded in any class of case, but it is only where the order relates to the acquisition of property as that expression is used in the National Security Act that the Minister is required to provide for just terms in the order. He can, therefore, make an order in the case of the Commonwealth taking possession of land, that does not provide for just terms, and sub-reg. 3 provides that all Compensation Boards and courts are to observe the provisions of the order; so that he is authorized to make unconstitutional orders and such a regulation must be invalid (R. v Barger; ^[F94] Vardon v The Commonwealth, ^[F95] at p. 452). As sub-reg. 1 is invalid the order, which depends upon its validity, must also be invalid. Reg. 60H (3), which provides that the basis of compensation fixed by the Minister shall be observed by all Compensation Boards and courts, must also be invalid.

If the result of the invalidity of sub-regs. 1 and 3 of reg. 60H had been to deprive the respondent of any right to compensation, the entry by the Commonwealth would have been unlawful and the respondent's proper course would have been to sue the Commonwealth for damages for tort, but, as I have said, the validity of regs. 60D to 60G inclusive has not been challenged, and these regulations give the respondent the right to claim compensation for the loss or damage which he has suffered by the Commonwealth entering into possession. In particular, reg. 60G (5) empowers the court to determine whether any compensation is payable, and, if so, the compensation which it thinks just. This provision, which confers upon a court complete power to award adequate compensation, is severable from and independent of reg. 60H. It is clear that reg. 60G was intended to be operative whether the Minister made any orders under reg. 60H or not so that, applying the Acts Interpretation Act, s. 46 (b), the effect of which has been discussed by this Court in several cases, including the recent case of Pidoto v Victoria, ^[F96] the validity of reg. 60G is not affected by the invalidity of reg. 60H.

For these reasons I am of opinion that Roper J. reached a right conclusion and that the appeal should be dismissed.