Section 51(xxxi) of the Constitution of Australia
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Section 51(xxxi) 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 provision states:
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:
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.
The High Court of Australia 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 hereditaments such as rents 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.
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 Amendment of the U.S. Constitution, where the destination does not matter – it is enough that the holder of property has been deprived of it. Thus in JT International SA v Commonwealth the High Court held that the Commonwealth's plain tobacco packaging laws, which restricted the plaintiff's use of its trademark, did not involve the Commonwealth acquiring any property. Similarly in Cunningham v Commonwealth the High Court held that changes to the retiring allowances and life Gold Pass for retired members of Parliament were not an acquisition of property.
In P J Magennis Pty Ltd v Commonwealth the High Court held that a grant to NSW which was tied to NSW compulsorily acquiring property was invalid as an acquisition of property upon terms which were not just. The validity of a grant in the absence of a requirement to acquire property was upheld in the later case of Pye v Renshaw.
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 American Fifth Amendment, 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.
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).
- Constitution (Cth) s 51 Legislative powers of the Parliament.
- Grace Brothers Pty Ltd v Commonwealth  HCA 11, (1944) 72 CLR 269 (17 April 1946), High Court.
- Minister of State for the Army v Dalziel  HCA 4, (1946) 68 CLR 261 (17 April 1946), High Court.
- Bank of New South Wales v Commonwealth  HCA 7, (1948) 76 CLR 1 (11 August 1948), High Court (Australia).
- Commonwealth v Tasmania (Tasmanian Dams case)  HCA 21, (1983) 158 CLR 1 (1 July 1983), High Court.
- Smith Kline & French Laboratories (Aust) Ltd v Department of Community Services and Health  FCA 151 at para 150-151, (1990) 22 FCR 73 at pp 116-7 (16 May 1990), Federal Court (Australia).
- JT International SA v Commonwealth  HCA 43, (2011) 250 CLR 1 "judgment summary" (PDF). High Court. 5 October 2012.
- Cunningham v Commonwealth  HCA 39, (2016) 259 CLR 536 "judgment summary" (PDF). High Court. 12 October 2016.
- P J Magennis Pty Ltd v Commonwealth  HCA 66, (1949) 80 CLR 382 (1 December 1949), High Court.
- Pye v Renshaw  HCA 8, (1951) 84 CLR 58 (8 October 1951), High Court.
- Durham Holdings Pty Ltd v New South Wales  HCA 7, (2001) 205 CLR 399 (15 February 2001), High Court (Australia).
- Constitution (Cth) s 122 Government of territories.
- Teori Tau v Commonwealth  HCA 62, (1997) 190 CLR 5134 (14 August 1997), High Court (Australia).
- Newcrest Mining (WA) Ltd v Commonwealth  HCA 38, (1969) 119 CLR 564 (9 December 1969), High Court (Australia).
- Attorney-General (Cth) v Schmidt  HCA 21, (1961) 105 CLR 361 at pp 371–2 per Dixon CJ (27 April 1961), High Court (Australia).