Australia Section 51(xxxi) of the Australian Constitution is the oldest constitutional property guarantee in a written Commonwealth constitution.115 It empowers the federal government to expropriate property but requires compensation upon such acquisition. It is concerned with the legislative powers of the federal government (“the Commonwealth”). As such, it is not part of a traditional Bill of Rights, but serves that purpose by constraining the power of the federal government – it has no authority to enact legislation acquiring property without just terms. There is no provision in the Australian Constitution dealing explicitly with the regulation of property. Section 51(xxxi) provides as follows:
“51. The Parliament shall, subject to this Constitution, have power to make laws for the peace, order and good government of the Commonwealth with respect to:
[ . . . ]
(xxxi) the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has the power to make laws.”
The Australian High Court has taken a strict view against the circumvention of section 51(xxxi) by doing indirectly what the state has been prohibited from doing directly.116 Emphasis is placed on substance and not on form. The courts have, however, developed a doctrine around the regulation of property (including the dispossession of property) where the regulation in question, although not falling within the ambit of section 51(xxxi), is nevertheless considered lawful despite the fact that no “just terms” are provided for.
As foreshadowed above, not every compulsory acquisition of property by the Federal Government falls under section 51(xxxi). The courts require not only (i) an acquisition, but also an acquisition (ii) for the purposes of section 51(xxxi). In this regard the dispossession of property will only qualify as an acquisition if some resulting benefit or advantage to the state can be identified.117 As to the second test, a law that adjusts or resolves competing claims or that provides for the creation, modification, extinction or transfer of rights and liabilities as an incident of or a means of 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, is not a law as meant in section 51(xxxi) of the Constitution.118 Any acquisition in terms of such a law is seen as an “incidental benefit” and not one for the purposes of section 51(xxxi). It is thus a question of characterising the legislation.
( Re Director of Public Prosecutions; Ex Parte Lawler and Another119 dealt with the forfeiture without compensation of a leased fishing vessel which had been caught fishing unlawfully. The owners were unaware that their vessel was being used in this manner. They attacked the statutory provision allowing for forfeiture as contravening section 51(xxxi). The Australian High Court held that the forfeiture in question did not constitute an acquisition of property within section 51(xxxi) but part of valid regulatory provisions.
( Airservices Australia v Canadian Airlines International Ltd120 dealt with a statutory lien and the sale of aircraft in pursuance thereof. Airservices provided air traffic control and related services as the government air authority. It had the right to charge a fee “reasonably related to the expenses it incurred” but not such as to “amount to taxation”. This fee was substantial. The fees were payable by air operators. Such operators did not necessarily own the aircraft they fly. Nevertheless, if the charges were outstanding for nine months, Airservices could impose a statutory lien over any aircraft operated by the debtor and sell it to recover the charges.
In litigation concerning such a statutory lien the constitutionality of the provisions were attacked under section 51(xxxi) by the owner of the aircraft in question who was not a debtor. The majority of the High Court of Australia rejected this particular attack and held that the statutory liens and their consequences did not constitute an acquisition of property within section 51(xxxi) but part of valid regulatory provisions.
( In relation to deprivations not falling within the provisions of section 51(xxxi), the Australian High Court has developed a principle of proportionality in order to determine the circumstances under which it would be permissible for a statute to dispossess a person of property without compensation. Although frequently not mentioned by name, the approach has in substance been a form of proportionality inquiry. The following passage from the judgment of McHugh J in Lawler121 is illustrative of the reasoning of the Court:
“[A forfeiture] order . . . is a drastic but incidental measure whose purpose is to facilitate compliance with those provisions of the Act which regulate commercial fishing in Australian waters. When the forfeiture of property is a reasonably proportional consequence of a breach of a law passed under a power conferred by s. 51 of the Constitution, no acquisition of property for the purpose of s. 51(xxxi) takes place. The notion of paying fair compensation to the owner of property which is validly forfeited to the Crown for a breach of the law is simply absurd. . . . [T]he question is whether the forfeiture is reasonably incidental to the exercise of a power other than s. 51(xxxi). If it is not, the forfeiture is invalid. If it is, s. 51(xxxi) has no operation.”
McHugh J moreover pertinently held that –
“[f]orfeiture of foreign vessels involved in illegal fishing in Australian waters is a reasonably proportional means of achieving . . . [the section 100] object [of protecting Australian fishing grounds from exploitation by foreign fishing vessels without the consent of the executive government]. Of course, in determining whether a law is a reasonably proportional means of achieving a legislative purpose, the Court must take into account the adverse impact of the law on those affected by the law.”122
( In Airservices Australia123 the following passage from the judgment of Brennan J in Mutual Pools & Staff Pty Ltd v The Commonwealth124 was confirmed:125 “In my view, a law may contain a valid provision for the acquisition of property without just terms where such an acquisition is a necessary or characteristic feature of the means which the law selects to achieve its objectives and the means selected are appropriate and adapted to achieving an objective within power, not being solely or chiefly the acquisition of property. But where the sole or dominant character of a provision is that of a law for the acquisition of property, it must be supported by s 51(xxxi) and its validity is then dependent on the provision of just terms.”
It was pointed out126 that this was in effect the explanation of decisions that laws providing for the imposition of a tax, the compulsory payment of provisional tax, the seizure of the property of enemy aliens, the sequestration of bankrupts’ property, the forfeiture of prohibited imports or the exaction of fines and penalties are not affected by section 51(xxxi).