Constitutional law
Acquisition of land – ‘On just terms’
In a special case, Government of the Russian Federation v Commonwealth [2025] HCA 44 (12 November 2025), the High Court unanimously answered questions in the affirmative with costs of the special case to be paid by the Commonwealth.
1. Is the Home Affairs Act 2023 (Cth) (HA Act) invalid in its entirety on the ground that it is not supported by a head of Commonwealth power?
2. If the answer to Question 1 is “no”, does the operation of the HA Act result in the acquisition of property from the plaintiff to which s51(xxxi) of the Constitution applies?
3. If the answer to Question 2 is “yes”, is the Commonwealth liable to pay to the plaintiff a reasonable amount of compensation pursuant to s6(1) of the HA Act? (at [51]).
Background
The special case related to a 99-year lease on a piece of land in Canberra to be used for the Russian consulate. Construction had commenced but not been completed, and fencing had been erected on the property.
Pursuant to the lease, a one-off payment of $2,700,000 was to be paid by the plaintiff and the plan and survey of the building to be deposited.
Section 51 of the Constitution gives the commonwealth parliament power to make laws for the acquisition of property “on just terms”, while s122 of the Constitution gives the power to make laws “for the government of any territory”.
On 15 June 2023, the Prime Minister gave a press conference stating that he had “received very clear security advice as to the risk presented by a new Russian presence so close to Parliament House”. He indicated that the government would propose legislation “based upon very specific advice … about the nature of the construction that’s proposed for this site, about the location of the site, and about the capability that that would present in terms of potential interference with activity that occurs in this Parliament House”.
The High Court cited the recent decision in Commonwealth v Yunupingu and the principle that s122 does not grant any power to acquire property other than on just terms.
Does the power require acquisition for a particular use or application?
In answering this question, the High Court cited Clunies-Ross v Commonwealth (Clunies-Ross). In Clunies-Ross, the Commonwealth had advanced the argument that the powers under s51 expanded beyond acquisition of property for a particular use or application of the property. This had been rejected by the majority of High Court but was not required to be decided in that case.
In the present case, the Commonwealth argued a narrow construction of s51 contrary to this position. The Russian Federation argued the position taken by the Commonwealth in Clunies-Ross, which the High Court held was the correct approach (at [41]).
Was acquisition ‘on just terms’ incongruent?
The High Court rejected the Commonwealth’s argument that expanded the concept of just terms and held that:
“The conceptual error in the Commonwealth’s argument lies in its stretching of the constitutional conception of ‘just terms’ as ‘fair dealing’ beyond the true import of that description. In the language of Brennan J in Georgiadis ,the provision of ‘just terms’ ‘does not attempt a balancing of the interests of the dispossessed owner against the interests of the community at large’” (at [46]).
“To compensate the Russian Federation for the acquisition of its property constituted by that termination would do nothing to undermine the legal or practical operation of [s5 of the HA Act] to achieve that object” (at [49]).
The High Court resolved the questions as follows:
1. No
2. Yes
3. Yes (at [51]).
Costs
Restitution – Unjust enrichment
In Gray v Lavan (A Firm) [2025] HCA 42 (5 November 2025), the High Court unanimously dismissed an appeal from the Court of Appeal of the Supreme Court of Western Australia.
In this case, Dr Gray (applicant) had retained a law firm, Lavan (respondent).
There was a settlement agreement reached prior to taxation of the costs, which required Lavan to repay to Dr Gray the sum of $900,000, being the amount that would have been refunded at taxation (at [2]).
Under that agreement, Dr Gray had no right to retain any part of that payment if the costs were taxed at a lower rate. The parties left open the question of issue of interest that Dr Gray may be able to claim on the refund. “Interest claim” was broadly defined as “any allegation, debt, cause of action, liability, claim, contribution, indemnity, proceedings, suit or demand of any nature, whether present or future, fixed or unascertained, actual or contingent, and whether at law, in equity, under statute or otherwise that Gray has against Lavan to recover interest on fees paid by Gray to Lavan that has been agreed are refundable by Lavan to Gray” (at [12]).
Dr Gray brought an action for unjust enrichment, arguing that Lavan had the benefit of the $900,000 from the date of payment until the date of repayment (at [2]).
Both the primary judge and the Court of Appeal rejected the claim.
At the heart of this matter was whether the applicant could pursue the common law restitutionary claim.
The High Court cited the categories, as expressed in Redland City Council v Kozik, and the example of enrichment occurring in the absence of an obligation in Roxborough v Rothmans of Pall Mall Australia Ltd.
The High Court held that:
“[T]he provisions of the [Legal Practice Act 2003 (WA)] formed a comprehensive regime for recovery of the principal sum paid for legal costs over the amount certified by a taxing officer, and interest on that sum, to the exclusion of any common law claim for restitution. Those provisions did not provide for interest to be payable by a law firm on those excess amounts for the period prior to the grant of a certificate. And those provisions left no room for a common law restitutionary claim for principal or interest consequent upon such excess amounts. The settlement deed aimed to replicate the effect of a taxation pursuant to those provisions and did not create any restitutionary claim” (at [3]).
