Government of the Russian Federation v Commonwealth [2023] HCA 20

A single justice of the High Court dismissed an application by the Government of the Russian Federation (GRF) which sought to restrain the Commonwealth from re-entering land leased to the GRF pending the determination of the latter’s claim that legislation passed by the Commonwealth to terminate the lease was invalid.

Background

In or about 2008, the GRF was granted a 99-year lease over land in Yarralumla, close to Parliament House (Land).

On 15 June 2023, the Commonwealth terminated the lease by the passing of the Home Affairs Act 2023 (Cth) (Act). Section 5 of the Act provided:

A relevant lease [defined in s 4 of the Act as the lease of the Land], and any legal or equitable right, title, interest, trust, restriction, obligation, mortgage, encumbrance, contract, licence or charge, granted or arising under or pursuant to a relevant lease, or in dependence on a relevant lease, is terminated by force of this section on the commencement of this section.

Section 6(1) of the Act provided that:

If the operation of this Act would result in an acquisition of property to which paragraph 51(xxxi) of the Constitution applies from a person otherwise than on just terms, the Commonwealth is liable to pay a reasonable amount of compensation to the person.

The GRF’s case

The GRF commenced proceedings in the original jurisdiction of the High Court seeking a declaration of constitutional invalidity of the Act on three bases ([9], [20]).

First, that the Act was not supported by any constitutional head of legislative power. That was said to be because the Act was, in substance, a law with respect only to the ‘relevant lease’ or, more generally, a law with respect to ‘property’ and the Commonwealth does not have a constitutional head of power as to either the relevant lease or property more generally.

Secondly, that the termination of the relevant lease by the Act was not for a purpose in respect of which the Parliament has power to make laws. That was in circumstances where the Land remained available for embassy purposes, which according to the GRF demonstrated that the Act did not relate to any public purpose of the Commonwealth.

Thirdly, that the Act was contrary to s 51(xxxi) of the Constitution because: (i) by terminating the lease, the Commonwealth acquired property, which can only be done on just terms for the Act to be valid; and (ii) the Act does not provide for just terms because s 6(1) of the Act is conditional in circumstances where it provides that: ‘[i]f the operation of this Act would result in an acquisition of property’ then ‘the Commonwealth is liable to pay a reasonable amount of compensation’.

The GRF sought interim relief seeking to restrain the Commonwealth from re‑entering the Land and taking any steps to re-lease the Land. In support of that relief, the GRF argued that, if the relief was not granted, it would incur great expense and time demolishing improvements to the property that had cost US $5.5million to construct and in undertaking replacement construction works, in circumstances where the Commonwealth would suffer no prejudice because, when the lease was purportedly terminated in 2022, the GRF was allowed to remain in possession of the Land and there had been no change in circumstances since that time (at [21]).

Determination

Jagot J refused to grant the interlocutory relief sought by the GRF because it failed to establish a prima facie case or serious question to be tried and because there were no compelling circumstances that would support an injunction to restrain the enforcement of legislation.

Whether the GRF had established a prima facie case or serious question to be tried, her Honour said, depended on the nature of the rights the GRF was seeking to assert and the practical consequences likely to flow from the orders sought (citing Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65]). In this case, one of the practical consequences of granting the relief sought by the GRF would have been preventing the operation of legislation until the determination of the claim. In those circumstances, her Honour applied Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148, in which Mason A-CJ said at 155-156 that ‘[i] In the absence of compelling grounds, it is the duty of the Court to respect, indeed, to defer to, the enactment of the legislature until that enactment is adjudged ultra vires’ (at [26]-[27]).

Her Honour then considered the strength of the GRF’s case for invalidity, considering it not to be a strong one because there were, prima facie, several constitutional heads of power that would support the Act, including s 51(xxxi), s 51(xxix) and s 122. Further, her Honour agreed with the Commonwealth’s submission that the conditional nature of s 6(1) of the Act did not support the GRF’s submission that the Act had the effect of acquiring the lease other than on just terms. Her Honour also rejected the GRF’s submission that there had been no change in circumstances since it was allowed to remain in possession of the Land in in 2022, as the commencement of the Act was a fundamental change in circumstances (at [28]-[30]).

In relation to the GRF’s submission that the Act did not relate to any public purpose of the Commonwealth, her Honour agreed with the Commonwealth’s further submission that it was not relevant that the Commonwealth may not have identified an immediate purpose for the Land as it has a clear sovereign interest in being able to determine that the Land will not be occupied by the GRF, and had done so in the provisions of the Act (at [35]-p36]).

Finally, while her Honour felt it was ‘by the by’ because the evidence from the GRF was too vague and nebulous, she also said that the ‘Court cannot purport to balance the weight between what might be the national security interests of the GRF and what might be the national security interests of the Commonwealth’(at [322]). BN