Spencer v Commonwealth of Australia

• Jurisdiction: Australia Federal only
• Court: High Court
• Judge: French CJ,Gummow J.,Hayne,Crennan,Kiefel,Bell JJ.,Heydon J.
• Judgment Date: 01 September 2010
• Neutral Citation: [2010] HCA 28,2010-0901 HCA A
• Docket Number: S87/2009
• Date: 01 September 2010

[2010] HCA 28

HIGH COURT OF AUSTRALIA

French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel And Bell JJ

S87/2009

Peter James Spencer

Applicant

and

Commonwealth of Australia

Respondent

Representation

P E King with D H Godwin for the applicant (instructed by McKells)

S J Gageler SC, Solicitor-General of the Commonwealth with A Robertson SC and C L Lenehan for the respondent (instructed by Australian Government Solicitor)

Interveners

R J Meadows QC, Solicitor-General for the State of Western Australia with R M Mitchell SC intervening on behalf of the Attorney-General for the State of Western Australia (instructed by State Solicitor for Western Australia)

P M Tate SC, Solicitor-General for the State of Victoria with S P Donaghue intervening on behalf of the Attorney-General for the State of Victoria (instructed by Victorian Government Solicitor)

M G Hinton QC, Solicitor-General for the State of South Australia with S A McDonald intervening on behalf of the Attorney-General for the State of South Australia (instructed by Crown Solicitor for South Australia)

J K Kirk intervening on behalf of the Attorney-General for the State of New South Wales (instructed by Crown Solicitor (NSW))

B W Walker SC with L T Livingston intervening on behalf of NSW Farmers Association (instructed by NSW Farmers Association)

Spencer v Commonwealth of Australia

Practice and procedure — Federal Court of Australia — Summary judgment — Application by respondent to dismiss proceedings summarily under s 31A(2) of Federal Court of Australia Act 1976 (Cth) — Applicant claimed New South Wales legislation, said to be enacted pursuant to informal arrangements with Commonwealth, effected an acquisition of property other than on just terms — Applicant sought declarations that intergovernmental agreements, and Commonwealth legislation authorising them, were invalid under s 51(xxxi) of Constitution — Whether Court could be satisfied applicant had no reasonable prospect of successfully prosecuting proceeding — Effect of ICM Agriculture Pty Ltd v The Commonwealth (2009) 240 CLR 140, delivered after decisions below, on prospects of success.

Statutes — Construction — Summary judgment — ‘no reasonable prospect’.

Words and phrases — ‘no reasonable prospect’.

Federal Court of Australia Act 1976 (Cth), s 31A.

ORDER

1. Special leave to appeal granted.

2. Appeal treated as instituted and heard instanter and allowed with costs.

3. The orders of the Full Court of the Federal Court of Australia made on 24 March 2009 be set aside and in lieu thereof it be ordered that:

(a) The appeal be allowed with costs.

(b) Orders 2 and 3 of the orders made by Emmett J on 28 August 2008 be set aside and in lieu thereof it be ordered that:

(i) The respondent's motion of 26 July 2007 be dismissed.

(ii) The respondent pay the applicant's costs of the motion.

French CJ And Gummow J.

Introduction

1 On 12 June 2007, Peter Spencer, the owner of a farm at Shannons Flat in New South Wales, commenced proceedings against the Commonwealth in the Federal Court of Australia. Restrictions had been imposed on the clearing of vegetation on his farm by reason of the Native Vegetation Conservation Act 1997 (NSW) (‘the NVC Act 1997’) and the Native Vegetation Act 2003 (NSW) (‘the NV Act 2003’) 1. He claimed that the restrictions constituted an acquisition of property from him other than on just terms and that the acquisition was made in furtherance of agreements between the State of New South Wales and the Commonwealth. He alleged that the Commonwealth laws which authorised those agreements, the Natural Resources Management (Financial Assistance) Act 1992 (Cth) (‘the Financial Assistance Act’) and the Natural Heritage Trust of Australia Act 1997 (Cth) (‘the Natural Heritage Trust Act’) 2, were made for the purpose of acquiring property other than on just terms and were invalid by reason of s 51(xxxi) of the Constitution.

2 On 28 August 2008, Emmett J, on the Commonwealth's motion, made an order dismissing the proceedings pursuant to s 31A of the Federal Court of Australia Act 1976 (Cth) (‘the Federal Court Act’) on the basis that Mr Spencer had no reasonable prospect of successfully prosecuting the proceedings. His Honour also dismissed a motion for interlocutory injunctive relief filed by Mr Spencer. He held that there was no serious question to be tried as to whether Mr Spencer was entitled to the final relief which he claimed 3.

3 Mr Spencer was granted leave by a judge of the Federal Court to appeal from the decision of Emmett J and on 24 March 2009 the Full Court of the Federal Court dismissed his appeal with costs 4. He applied for special leave to appeal to this Court. The application was adjourned pending delivery of the judgment of this Court in Arnold v Minister Administering the Water Management Act 20005. On 23 February 2010, Gummow J directed that any proposed further or amended statement of claim that would be relied upon in the

Federal Court, if further leave were given there, should be filed and served on or before Friday, 26 February 2010. A proposed further amended statement of claim was filed on 26 February 2010 and a revised version was filed on 26 March 2010. On 12 March 2010, Mr Spencer's application for special leave was referred, by order of Gummow, Heydon and Bell JJ, to an enlarged Full Court of this Court for argument as on appeal. Mr Spencer was given leave to amend his draft notice of appeal and summary of argument.

4 When the referred application for special leave came on for hearing on 16 June 2010, the Court invited counsel for Mr Spencer and for the Commonwealth to address it initially on the question whether the case had been a suitable one for the application of s 31A of the Federal Court Act. After submissions on that question, the Court adjourned the hearing and announced that it would either decide the application and make orders on the basis of the s 31A argument, or list the matter for further hearing at a date in the future. For the reasons that follow, the proceedings in the Federal Court were not appropriate for summary dismissal pursuant to s 31A. The case which Mr Spencer seeks to raise potentially involves important questions of constitutional law. It also involves questions of fact about the existence of an arrangement between the Commonwealth and the State of New South Wales which may justify the invocation of pre-trial processes such as discovery and interrogatories. The possible significance of those questions of fact has become apparent in the light of this Court's judgment in ICM Agriculture Pty Ltd v The Commonwealth6, which had not been delivered when the primary judge and the Full Court delivered their judgments.

The statutes and agreements in contention

5 Salient features of the statutes and agreements referred to in the amended statement of claim considered by Emmett J are as follows:

• 1. Financial Assistance Act. The primary object of this Act is to ‘facilitate the development and implementation of integrated approaches to natural resources management in Australia’ 7. The Commonwealth may enter into an agreement with a State to provide financial assistance (by way of grant or otherwise) in respect of projects jointly approved by the relevant Commonwealth and State Ministers or specified in the agreement 8. Such

  an agreement must include provisions relating to ‘the conditions subject to which payments under the agreement are to be made’ 9. There is provision for repayment by the State, or for deduction of payments made from future payments, where a condition set out in the agreement has not been fulfilled. There is also provision for performance audits 10.

• 2. Natural Heritage Trust Act. This Act established a fund called the Natural Heritage Trust of Australia Reserve 11, now known as the Natural Heritage Trust of Australia Account. One of the purposes of the Account is the Natural Vegetation Initiative 12, the primary objective of which is ‘to reverse the long-term decline in the extent and quality of Australia's native vegetation cover’ by, inter alia, ‘conserving remnant native vegetation’ 13. The Account can be used to provide funds for the grant of financial assistance to a State on conditions to be set out in a written agreement between the Commonwealth and the State 14.

• 3. Agreement between the Commonwealth of Australia and the State of New South Wales, 31 October 1997. This agreement sets out the ‘roles and responsibilities of the Commonwealth and New South Wales for the delivery of the objectives of the Natural Heritage Trust and any associated programs’. One of those programs is ‘Bushcare: The National Vegetation Initiative’. The State of New South Wales undertook as part of that program to ‘prevent inappropriate native vegetation clearing’. It undertook to enact native vegetation conservation legislation. The agreement provided for Commonwealth funding from the Natural Heritage Trust, subject to the agreed objectives defined in Attachment A to the agreement being progressively met.

• 4. NVC Act 1997. This New South Wales statute imposed controls and restrictions on the clearing of native vegetation from land within the State of New South Wales. Generally speaking, clearing was not permitted unless a development consent was provided and the clearing accorded

  with a regional vegetation management plan or a native vegetation code of practice 15.

• 5. Intergovernmental Agreement on a National Action Plan for Salinity and Water Quality, 3 November 2000. Under this agreement, the Commonwealth undertook to provide $700 million over seven years for measures to address salinity and water quality problems, including the implementation of controls on land clearing, particularly in priority catchments or regions. The sum was to be matched by State and Territory financial contributions. Compensation to...