Monday morning small talking on the avenue… Property and Cunningham v Commonwealth

On Wednesday, the High Court will deliver judgement in a rather strange case called Cunningham v the Commonwealth.  On the face of it, the case is absurd.  And when you dig into it more, it’s even more ridiculous.  It’s ridiculous turtles all the way down.

But teasing apart the case lets us discuss a few interesting legal ideas, not least: what is ‘property’?

First, the details of the case.  Barry Cunningham, Tony Lamb, and John Moore are former ALP members of parliament and Barry Cohen was a Liberal Party member of parliament.  When they retired, they became entitled to a form of parliamentary superannuation and to a stack of taxpayer-funded free travel.

But the entitlements were reduced.  They now appear to get less out of the parliamentary super scheme, and they now have a cap on the number of trips they can charge to the taxpayer.

The former politicians are complaining that this was an acquisition of their property and that it was not acquired ‘on just terms’.  If that phrase sounds familiar, it’s because it’s pretty much the key plot element of the film, The Castle.

Section 51 (xxxi) of the Constitution gives Parliament the power to make laws with respect to ‘the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws’.  We can forget about ‘on just terms’ for now and ask whether we think that property has been acquired.

Few concepts are more important in a liberal capitalist society than property and so we tend to think that the concept is intuitively obvious.  Land is obviously property.  I can build a fence around my land.  I can tell people to get off my land.  I can do things with my land.  I can decide whether I will grow crops, or fatten cattle, or construct a building.  I can destroy my land or sell my land to somebody else.

And I can similarly own tangible objects that aren’t land.  I own many books.  As with land, I can decide what I want to do with my books: I can destroy the books, I can sell the books, I can horde the books and laugh at those who would make better use of the books.

So far, so intuitively obvious.  Things go cross-eyed when we think too much about how property is created.  John Locke thought that property was created by mixing labour with non-property objects.  So the field that is used by nobody (except the inconvenient Indigenous population) can become property by having a white person build a fence around it.  And a fish that is swimming in the river can become my property by having one of my servants catch it.  And also John Locke believed in slavery, so there’s that.

It’s true, we’ve progressed a lot since the days of Locke and we can (to some extent) patch up problems in his theory, but there’s still a ‘gap’ between popular intuitions about property and what a Court will recognise.  The concept of property is used as a foundation to so many folk-political ideas (particularly those of libertarians) that most of us are tricked into thinking that it’s ‘objectively’ definable rather than socially constructed.  One place that the physical objects intuition falls down is property in a person.

Can people really be property?  Even if we (as we should) oppose slavery, we still might think that a person can own their own body.  Maybe I should be allowed to destroy my body as a piece of property, sell my body (or my body parts) as a piece of property, or prevent others from using my body as a piece of property.  To some people (me included), it seems intuitively wrong that I should think about my body as property: property are objects that are capable of being owned, and I struggle with the idea of considering it morally good to think of a person as an object.  I don’t think that, for example, the Commonwealth should be able to acquire a person on just terms.  But reasonable people disagree with me on this.  Liberal feminists, for example, situate most of their discourse on the property rights that a woman has in her own body, enabling the kind of liberation that economic forces yield.

So far, we’ve been discussing physical objects as property mostly to mess up the intuition that property is a simple concept.  But there’s another kind of property.  For complex legal reasons, we have created a class of property that is not constituted by physical objects.  I can own a share in a company, for example.  The share doesn’t have to (and, indeed, cannot) occupy physical space but is instead a kind of legal fiction that lets us create companies.  I can own a licence to another person’s property.  Again, the licence doesn’t occupy physical space but is a kind of legal fiction that allows us to regulate trade in the use of other people’s property.  I can also own property in my inventions, my writings, and my defamatory rhymes: intellectual property.  This intellectual property doesn’t occupy physical space, but exists so that nerds can have self-righteous debates online about why they would download a car and force artists into poverty.  

Anyway, the name given to this kind of property is chose in action.  The physical kind of property is called a chose in possession, and the type of chose in possession that is land is called real property (hence ‘real estate’).

Section 51 (xxxi) does not distinguish between the different kinds of property.  If the Commonwealth wants to acquire it, it can do so but only on just terms.  And this gets us to the puzzle of Cunningham v Cth: is the ‘special reward for long and faithful service’ given to former politicians a chose in action that can be acquired by the Commonwealth?

Can we stomach a bit more of the dry law stuff?  I know I was pushing the friendship by discussing choses in action.  The next section is going to cover some previous decisions of the High Court about the acquisition of property, but I don’t think that’s the interesting part.  The really interesting part is whether we think that the Constitution should really protect these crybabies and what the answer to that question means for a Constitutional Bill of Rights.

Okay.  Dry law time.

Tim Wilson (former Human Rights Commissioner, former fellow of the Institute of Public Affairs, and now Liberal Party member of parliament) is basically wrong about absolutely everything in the world.  Even when he is asked what he wants for breakfast, he foolishly says muesli when he really wants porridge.  He’s basically Bizarro incarnate.

Back in 2010, Tim Wilson opposed the internationally celebrated and immensely successful Plain Packaging Laws.   He claimed that we would need to gift up to $3 billion dollars a year to big tobacco to acquire their intellectual property on just terms.

Stripping intellectual property from products is akin to stripping someone of their physical property and requires compensation under the Commonwealth Constitution [Source]

The High Court disagreed with him.  And the World Trade Organization (sort of) disagreed with him.  What’s more embarrassing is that he made the claims while releasing a report, Governing in ignorance: Australian governments legislating, without understanding, intellectual property.  

For our purposes, the 2012 High Court decision is the relevant one.  

In JT International SA v Commonwealth, the High Court was asked if the Tobacco Plain Packaging Act 2011 resulted in an acquisition of any property.  The Court held (six to one, Heydon dissenting) that it did not.  The key decision was Gummow’s, with the other concurring judges approving or restating his judgement.

Gummow said that the Plain Packaging laws didn’t result in the acquisition of property.  He opened by quoting a U.S. decision which complicated the idea of the comparison between land (real property) and a company (chose in action).  We understand them both with the language of property, but we need to cool our jets and make sure that we can port the concepts of real property neatly over to the spookier kinds of property.  In legalese: ‘Whether the law in question sufficiently impairs the group of rights inhering in the property in question as to amount to an involuntary taking of that property, presents questions of substance and degree, rather than merely of form.’

And this is where we run into what it means to acquire property.  I went through the lengthy breakdown of physical property because it makes it easier to understand what an acquisition of property might look like.  If I acquire your land, I get to do all the things that you were formerly able to do with the land.  I control the land, reaping whatever benefits might arise from ownership of the land.

The puzzle is to what extent this concept of acquisition is useful for talking about property in non-physical objects.  So, with land, you had the right to build a fence around it and plant corn.  I acquired your property so now I have the right to knock down the fence to build a wall and I can burn all your corn crops and plant rhubarb instead.  With a share in a company, you had the right to vote in shareholder meetings and get paid dividends.  I acquired your property and now I have the right to vote in shareholder meetings and get paid dividends.  It looks deceptively simple, but the ‘right to vote in shareholder meetings’ isn’t an act like ‘build a wall’.  It’s a participation in a social event rather than the exercise of physical labour over an object.  If an evil wizard cursed all humankind with amnesia and illiteracy, I might still recognise property rights over land and stuff through physical possession, but would have no way to recognise the right to participate in shareholder meetings and get paid dividends.  This is a right that demands that everybody else is playing the same game that I am.

And that’s what we end up seeing in the Plain Packaging Case.  The Court tries to work out what the acquisition of non-physical property looks like and concludes that acquisition is about benefits within the property system.  When the evil wizard curses all humankind and makes everybody forget what non-physical property they own, the wizard has deprived people of their property (in a sense, extinguished the underlying basis for the existence of the property) but the wizard hasn’t acquired the property (can’t now vote in shareholder meetings or get paid dividends).  It’s on this point that Gummow quotes an earlier decision (Mutual Pools):

s 51(xxxi) is directed to ‘acquisition’ as distinct from deprivation. The extinguishment, modification or deprivation of rights in relation to property does not of itself constitute an acquisition of property. For there to be an ‘acquisition of property’, there must be an obtaining of at least some identifiable benefit or advantage relating to the ownership or use of property.

Returning to the case that started this spiel, we get to ask ourselves if we think reducing the benefits to former parliamentarians is an acquisition or a deprivation.  Is the Commonwealth getting the benefit of owning or using some property that was previously in the possession of the litigants?  From a non-legal perspective, it does not seem like it is.  It’s not like the Commonwealth is using those extra flights for its own benefit.

The thing that excites me about this case is not the property aspect of it, but the role of a written constitution in bringing about the litigation.  Here are four Baby Boomers who have been amongst the most privileged group of people ever to walk on the face of the Earth.  They have been living large at the cost of the taxpayer and parliament — as the democratic representative of popular will — decided to restrict access to the public purse.

The response of the former politicians was not to campaign for their entitlements, building public support for their claims.  It was, instead, to go to court to have the judiciary restrain parliament.  For these four men to win, the Court must say (implicitly) that the most democratic body in our system of government is unable to arrange its own affairs for the payment of benefits to former politicians.

The very idea that this result could yield ought to disgust us on some level, and yet it is exactly the same principle behind having constitutional bills of rights.  This bit of s 51 is, in some way, akin to a constitutional protection of property rights.  It is used here for the benefit of the exceedingly privileged to the detriment of everybody else, and it is used here far outside the bounds of where the drafters would have originally intended.

And that’s the risk with constitutional bills of rights.  If we’d had constitutional protections of free speech, we might not have been able to get our Plain Packaging Laws.  Here’s a constitutional protection of property being used to defend the exorbitantly generous welfare that we gift to former politicians.  The Australian Christian Lobby is bankrolling court cases to defend the harassment of people seeking family planning services.  How much easier they would have it if Australia had a bill of rights.

Cunningham not only opens up a discussion about the actual subject matter of the case — what is property? what is acquisition? how can the Commonwealth acquire property? — but it should also draw our attention to the basics of our legal system: why have we got a system where four former politicians are able to mount a legal challenge against restrictions being put on their taxpayer-subsidised lifestyles?

Related: Give Up Smokes – High Court

Author: Mark Fletcher

Mark Fletcher is a Canberra-based PhD student, writer, and policy wonk who writes about law, conservatism, atheism, and popular culture. Read his blog at OnlyTheSangfroid. He tweets at @ClothedVillainy

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