← The hardest concepts in Australian law
In one breath
Section 51(xxxi) of the Constitution lets the Commonwealth Parliament acquire property, but only on just terms, and the High Court reads that condition as a guarantee that limits the Commonwealth’s other powers as well. A law is caught only if it takes some proprietary benefit, however slight, from the owner, and not merely because it removes or regulates a right.
The picture
The market stall and the till
A council can regulate a market. It can say where the stalls stand, when they open and what may be sold, and it can close a stall that breaks the rules. A stallholder who loses trade through those rules has no claim, because the council has only controlled how the market works. But if the council’s inspector walks off with the stallholder’s crates of fruit for the council cafeteria, the council must pay at the till. Taking the goods for its own use is a different act.
The Constitution draws the same line. Parliament may control and burden property in many ways under its ordinary powers, as the council controls the market. The guarantee bites when the government, or someone for it, gains something of a proprietary kind. The question is not how badly the owner is hurt but whether the government got something in return.
Where the picture stops working
A market deals in goods, but the guarantee covers any kind of property, including leases, licences and rights to sue, and whether a law acquires something or only extinguishes a right has divided the High Court. The guarantee also does not apply in the same way to taxes, penalties and some other categories.
How it really works
- 1Place the rule. It is federal: section 51(xxxi) binds the Commonwealth. A State that takes property is governed by its own acquisition legislation, which differs from State to State.
- 2Ask whether there is property. The High Court reads the word widely, to include every right in the nature of property, including statutory and contractual rights.
- 3Ask whether there is an acquisition. Did the Commonwealth, or someone else, obtain an interest or proprietary benefit, however slight, from the owner? Merely ending or reducing a right, with no corresponding benefit to anyone, is not an acquisition. Where ending the right gives the Commonwealth a benefit, it is.
- 4Check the usual exceptions. Taxes, penalties and forfeitures, and some adjustments of competing rights in a regulatory scheme, have been treated as outside the guarantee.
- 5If the law is caught, ask whether the terms are just: fair, though not necessarily equal to market value. Without just terms the law is invalid to that extent.
Why people get it wrong
- Equating the guarantee with a general right to compensation. Regulation, taxation and loss of value alone need no compensation.
- Thinking the size of the loss decides whether it applies. The test is acquisition, not harm.
- Assuming it applies only to land. It covers many forms of property.
- Treating it as a restriction on the States. It limits Commonwealth power.
- Forgetting that it limits the other powers. A law under, say, the defence power that acquires property still needs just terms.
A worked example
The facts are invented
A Commonwealth Act, made under the defence power, requires owners of private hangars near an airfield to hand them over for Commonwealth storage, for a small flat sum whatever the hangar is worth. The Commonwealth gains the hangars, so there is an acquisition. A flat sum unrelated to value is unlikely to be just terms, so the law is in serious doubt.
Change the facts: the Act forbids buildings above a set height near the airfield, for flight safety. Owners lose development opportunities, but no one gains a proprietary benefit, so the law is likely regulation, not acquisition. Change them again: the Act cancels a private operator’s licence over some land and gives the Commonwealth equivalent rights. The Commonwealth now has a benefit it did not have before, which points to an acquisition.
Try it
A Commonwealth law bans the sale of a certain pesticide, and a distributor’s stock becomes worthless. The Commonwealth takes neither the stock nor any benefit from it. Does section 51(xxxi) require just terms?
Landmark authorities
Read the sources themselves; this list is a starting point.
- Minister of State for the Army v Dalziel, (1944) 68 CLR 261
- Commonwealth v Tasmania, (1983) 158 CLR 1
- Georgiadis v Australian and Overseas Telecommunications Corporation, (1994) 179 CLR 297
- Newcrest Mining (WA) Ltd v Commonwealth, (1997) 190 CLR 513
Where to go next
More hard concepts in Australia law
- Section 109: when Commonwealth and State laws clash (Constitutional law)
- The separation of judicial power and the Boilermakers principle (Constitutional law)
- The implied freedom of political communication (Constitutional law)
- The Commonwealth’s heads of power (Constitutional law)
- State and federal courts: Wakim and Kable (Constitutional law)
This page is an educational overview. It is not legal advice and not a substitute for the sources: the statute, the rule, the case itself. Australia is a federation: the Commonwealth, the six States and the Territories each make law, and the High Court is the final court for all of it. The common law, by contrast, is one law across the country. Each page says whether the rule is constitutional, federal or common law shared by every jurisdiction, or State-by-State legislation that varies, and flags where the States and Territories differ. Each page states the usual formulation of the rule and names landmark decisions; check the primary sources of your own jurisdiction before relying on any rule.