FEDERAL COURT OF AUSTRALIA Spencer v Commonwealth of Australia [2007] FCA 1415 Commonwealth of Australia Constitution Act 1900 (Cth) s 51 (xxxi) Pye v Renshaw 84 CLR 58 referred to PETER JAMES SPENCER v COMMONWEALTH OF AUSTRALIA ACD 24 OF 2007 EMMETT J 31 AUGUST 2007 CANBERRA IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY ACD 24 of 2007 BETWEEN: PETER JAMES SPENCER Applicant AND: COMMONWEALTH OF AUSTRALIA Respondent JUDGE: EMMETT J DATE OF ORDER: 31 AUGUST 2007 WHERE MADE: CANBERRA THE COURT ORDERS THAT: 1. The Statement of Claim filed 17 July 2007 be struck out. 2. The Applicant be granted leave to file and serve an amended Statement of Claim addressing questions referred to in the Reasons for Judgment of Emmett J dated 31 August 2007, no later than 19 October 2007. 3. The Applicant pay the Respondent's costs thrown away by the amendment. 4. The notice of motion be stood over to 1 November 2007 before Emmett J. 5. The matter be stood over for directions on 1 November 2007 before Emmett J. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY ACD 24 OF 2007 BETWEEN: PETER JAMES SPENCER Applicant AND: COMMONWEALTH OF AUSTRALIA Respondent JUDGE: EMMETT J DATE: 31 AUGUST 2007 PLACE: CANBERRA REASONS FOR JUDGMENT 1 By notice of motion dated 26 July 2007, the respondent, the Commonwealth of Australia (the Commonwealth), seeks an order that this proceeding be dismissed summarily. The basis for the application is the Commonwealth's contention that the proceeding has no reasonable prospects of success. 2 In his statement of claim, the applicant, Mr Peter Spencer, alleges that he is the owner of a freehold parcel of land situated in New South Wales. His complaint, essentially, is that restrictions on his use of the land have been imposed by the State of New South Wales, and that those restrictions are such as to prevent him making any reasonable use of the land. He says that the effect of the restrictions amounts to an acquisition of the land. Secondly, he says that the reason for the restrictions are to be found in arrangements between the Commonwealth and the State concerning the consequences of Australia having signed the Kyoto Protocol in 1997 (the Protocol). 3 The reasoning that links Australia's signing of the Kyoto Protocol and the restriction on the use of his land is obscure on the pleading as it presently stands. The argument appears to run along the following lines. Under the Protocol, a signatory nation may transfer or acquire emissions for the purpose of increasing or reducing emissions as measured, for the purpose of determining progress towards targets under the Protocol. Mr Spencer says that the Commonwealth is in a position to benefit from trading emissions credits only by virtue of a reduction in land clearing within Australia. Next, he says that the Commonwealth has entered into agreements with New South Wales which include provision of Commonwealth funds for the purpose of reversing the long term decline in the extent and quality of Australia's native vegetation. New South Wales has passed the Native Vegetation Conservation Act 1997 (NSW) and the Native Vegetation Act 2003 (NSW). Mr Spencer says that, pursuant to those legislative enactments, he has been prohibited from clearing native vegetation on his land. He alleges that the Commonwealth has provided funds to the State, although the basis upon which funds have been provided is by no means clear. 4 The statement of claim alleges that an acquisition occurred as a result of activities for which funding by the Commonwealth was provided pursuant to the Natural Resources Management (Financial Assistance) Act 1992 (Cth) and the Natural Heritage Trust of Australia Act 1997 (Cth). It also alleges that funding was provided from the proceeds of the partial sale of the Commonwealth-owned telecommunication company, Telstra. Next, it alleges that funding was provided for activities, without which the Commonwealth would not have been able to meet its international commitments under the Protocol, nor be in a position to benefit from trading emissions credits. The ultimate complaint is that there has been an acquisition of Mr Spencer's land by the Commonwealth otherwise than on just terms, as is contemplated by s 51 of the Commonwealth of Australia Constitution Act 1900 (Cth). 5 There are two difficulties with the pleading, as it stands. The first is that there is a mere assertion that the restrictions on the clearing of native vegetation constitute an acquisition of Mr Spencer's proprietary rights in his land. If that is as far as it is intended to go, the proceeding would, in my view, be doomed to fail. However, as I have indicated, in the course of argument it was asserted that the acquisition arises because the effect of the restrictions is to prevent all reasonable use of the land. No such allegation is made in the statement of claim. The mere imposition of a restriction on the use of land is not, of itself, inconsistent with ownership and, without something more, would not involve an acquisition of land. However, it may be that, if the restriction is such as to prevent any reasonable use of the land, that may be a different matter. Since the allegation is not made, it is not possible for me to decide that question at this stage. If there is no acquisition, then, of course, the proceeding is doomed to fail. 6 The Commonwealth says, however, that, even if there is an acquisition, it is not an acquisition by the Commonwealth, but by the State. The Commonwealth refers to a long-standing authority of the High Court to the effect that the Commonwealth may properly induce a State to exercise its powers by offering a money grant. The Commonwealth says that, even if the powers exercised by the State constitute an acquisition of land, it is not an acquisition by the Commonwealth but an acquisition by the State (see Pye v Renshaw 84 CLR 58 at 83). 7 Counsel for Mr Spencer contends that the authorities relied on by the Commonwealth are distinguishable from the present case. That may well be. Mr Spencer's argument is along the lines that the Commonwealth has, in some way, provided funds to the State in order to induce the State to impose restrictions that constitute an acquisition, such that the Commonwealth acquires some benefit by reason of the restrictions, the benefit being tradable emissions credits. 8 I consider that the statement of claim, in its present form, is embarrassing, in the sense that it does not disclose facts that, if established, could support the relief that is claimed. I therefore propose to strike out the statement of claim. However, I am prepared to give Mr Spencer the opportunity of filing an amended statement of claim to address the two questions that I have briefly mentioned. If there is an appropriate question of law to be thrown up, it may be possible to consider an application for preliminary determination of that question. It does appear, however, that there will be a factual issue thrown up by any amended pleading, namely, the extent to which the restrictions imposed by the State legislation are capable of constituting an acquisition. It may be that some new facts would enable the court to proceed to dispose of the whole proceeding on the basis of legal argument. That remains to be seen when the amended statement of claim is filed. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 13 September 2007 Counsel for the Applicant: Dr J Walsh Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 31 August 2007 Date of Judgment: 31 August 2007