Justifications for interferences

18.122       At common law the power of parliament to encroach upon property rights was subject to the qualification that any deprivation was not arbitrary and only occurred where reasonable compensation was given. The most general justification for laws that interfere with, or take away, vested property interests—that the interference was not ‘arbitrary’—is that the action was necessary and in the public interest. For example, the ECHR, after setting out the right to peaceful enjoyment of a person’s ‘possessions’, states:

No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.^[208]

18.123       Bills of rights commonly provide exceptions to the right not to be deprived of property, in similar terms, usually provided the exception is reasonable, in accordance with the law, and subject to just compensation.^[209] For example, the Fifth Amendment to the United States Constitution provides:

No person shall be … deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.^[210]

18.124       The provision in the Australian Constitution concerning acquisitions of property on just terms, considered above, is another example.

18.125       There are many laws and regulations that interfere with, or affect, property rights. The authority to do so is not in issue. What may amount to an interference ‘in the public interest’ can be subjected to a structured proportionality analysis, to assess whether a given law that interferes with property rights has a legitimate objective and is suitable and necessary to meet that objective, and whether—on balance—the public interest pursued by the law outweighs the harm done to the individual right.

Legitimate objectives

18.126       The control or regulation of the use of property in the public interest has been considered a legitimate objective, so long as that does not amount to an ‘acquisition’ or ‘taking’ of property, such as to contravene constitutional requirements of ‘just terms’ compensation.

18.127       For example the ECHR states that the right to possession

shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.^[211]

18.128       The regulation of the use of property rights may have an objective of protecting the environment, of balancing competing private interests, or be for the broader public interest.^[212] Commonwealth laws that regulate the content and advertising of products, such as food, drinks, drugs and other substances, to protect the health and safety of Australians, are considered in Chapter 19. Laws that interfere with real property rights are considered in Chapter 20.

18.129       The objective may be to regulate competing private claims to rights—such as the various laws concerning priorities to land and goods, referred to above. One particular aspect of such laws was tested in the UK, invoking the ECHR, which was incorporated into the domestic law of the UK in the Human Rights Act 1988. In the House of Lords opinion in JA Pye (Oxford) Ltd v Graham (Pye Case),Michael Graham established a claim to title of certain agricultural land by virtue of adverse possession pursuant to the then applicable limitation of actions legislation.^[213] The dispossessed landowners, including JA Pye (Oxford) Ltd, claimed that their property rights were protected by the ECHR and had been violated because they had lost ownership of their land without compensation.

18.130       The litigation was then taken to the European Court of Human Rights, finally reaching the Grand Chamber, which focused on the meaning of ‘necessary to control the use of property in accordance with the general interest’ in art 1. The Grand Chamber, by majority, held that, although the relevant provision was engaged, there had been no violation of the rights of the prior landowners by virtue of their loss of the land due to adverse possession.

18.131       The limitation of action provisions were characterised as ‘not intended to deprive paper owners of their ownership’,

but rather to regulate questions of title in a system in which, historically, twelve years’ adverse possession was sufficient to extinguish the former owner’s right to re-enter or to recover possession, and the new title depended on the principle that unchallenged lengthy possession gave a title.^[214]

18.132       Regulating questions of title as part of the general land law was a ‘control of use’ that did not amount to a ‘deprivation of possessions’ within art 1.

18.133       Distinguishing ‘regulation’ or ‘control’ from ‘acquisition’, ‘deprivation’ or ‘taking’ is generally intertwined with the question of compensation and its reasonableness. ‘The precise location of the threshold where regulation shades into confiscation (ie effects a “regulatory taking”)’, Gray commented, ‘is one of the most difficult questions of modern law’.^[215] The specific application of the acquisition/regulation distinction in the context of Commonwealth laws is considered in Chapter 19, in relation to personal property, and Chapter 20, in relation to real property.

Balancing rights and interests

18.134       Where a law interferes with property rights and is aimed at a legitimate objective, a further question may be asked as to the appropriate balance between interests, including between private interests and between private interests and the public interest.

18.135       An example of the balancing of private rights and the public interest is evident in JT International SA v Commonwealth, in considering whether there had been an acquisition of property within s 51(xxxi) of the Constitution pursuant to the Tobacco Plain Packaging Act 2011 (Cth) (TPP Act). French CJ rejected the argument that there had been an ‘acquisition’ of the plaintiffs’ intellectual property by the application of Commonwealth regulatory requirements as to the textual and graphical content of tobacco product packages. Rather, he said:

it reflects a serious judgment that the public purposes to be advanced and the public benefits to be derived from the regulatory scheme outweigh those public purposes and public benefits which underpin the statutory intellectual property rights and the common law rights enjoyed by the plaintiffs. The scheme does that without effecting an acquisition.^[216]

18.136       The Law Council submitted, to similar effect, that the question should be whether the public interest in acquisition, abrogation or erosion of the property right outweighs the public interest in preserving the property right.^[217]

18.137       A balancing of rights is evident in the Pye Case illustrating the application of the ECHR provision in the UK. The majority of the Grand Chamber of the European Court of Human Rights stated that, to be compatible with the first part of art 1, an interference with the right to ‘peaceful enjoyment’ of property ‘must strike a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights’.^[218] Normally a taking of property without reasonable compensation would amount to a ‘disproportionate interference’ in contravention of art 1.

The provision does not, however, guarantee a right to full compensation in all circumstances, since legitimate objectives of ‘public interest’ may call for less than reimbursement for the full market value.^[219]

18.138       In this case, the applicants lost their land through the operation of limitation provisions for actions to recover land. The interest in land was ‘necessarily limited by the various rules of statue and common law applicable to real estate’—including ‘town and country planning legislation, compulsory-purchase legislation, and the various rules on adverse possession’.^[220]

18.139       In deciding whether there was a ‘fair balance’ in the application of the ‘control of use’, the majority said that there must be a ‘reasonable relationship of proportionality between the means employed and the aim sought to be realised’. The Court acknowledged that ‘the State enjoys a wide margin of appreciation, with regard both to choosing the means of enforcement and to ascertaining whether the consequences of enforcement are justified in the general interest for the purpose of achieving the object of the law in question’.^[221] The determination of what was a ‘fair balance’ was not a straightforward one, given that the decision was reversed several times before it reached the Grand Chamber, which itself overturned the first decision of the European Court.^[222]

18.140       One rationale of the adverse possession rules was said to be certainty.^[223] However where the ownership of land is clear, as in the context of registered titles, this rationale is not compelling. In the House of Lords in Pye, Lord Bingham said that

where land is registered it is difficult to see any justification for a legal rule which compels such an apparently unjust result, and even harder to see why the party gaining title should not be required to pay some compensation at least to the party losing it.^[224]

18.141       Such arguments support review of the law concerning adverse possession—a matter covered in Australia under state laws.^[225] The particular law in question in the UK was amended in 2002.^[226]

18.142       What a case like Pye demonstrates is how a proportionality analysis can be used in relation to laws that may be said to interfere with property rights. It also shows how fine the distinction sometimes is in characterising a law as a ‘control of use’ or ‘regulation’ as distinct from one that is regarded as a ‘taking’ or ‘acquisition’—particularly where the law concerns a restriction of, or has an impact on, use.