Nintendo Company Ltd v. Centronics Systems Pty Ltd And Ors

(1994) 181 CLR 134
(1994) 121 ALR 577
(1994) 68 ALJR 537
(1994) 28 IPR 431
(1994) AIPC 91-077
[1994] HCA 27

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(Judgment by: Dawson J)

Nintendo Company Ltd
v Centronics Systems Pty Ltd And Ors

Court:

Judges: Mason CJ; Brennan, Deane, Toohey, Gaudron and McHugh JJ

Dawson J

Hearing date: 5-6 October 1993
Judgment date: 16 June 1994

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Judgment by:
Dawson J

I agree with the orders proposed by Mason CJ, Brennan, Deane, Toohey,Gaudron and McHugh JJ and with their reasons for judgment, save for the comments which I wish to make upon the question of the acquisition of property under s51(xxxi) of the Constitution which was raised by the respondents.

The respondents' contention was that the Circuit Layouts Act 1989 (Cth) ('the Act') purported to confer upon the appellant, Nintendo Company Ltd ('Nintendo'), the exclusive right to exploit commercially the integrated circuits in question which, at the time the Act came into force, were the property of the first respondent, Centronics Systems Pty Ltd ('Centronics'). By so providing, the respondents contend, the Act purported to effect a compulsory acquisition of those rights by Nintendo from Centronics upon terms which were not just.

It is, I think, possible to put to one side various difficulties in the way of the respondents' argument (such as the possibility that Nintendo previously had rights under the Copyright Act 1968 (Cth)) and to concentrate upon the terms of s51(xxxi).

That paragraph confers a legislative power upon the Commonwealth 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'. The power conferred is subject to two limitations. The first is that the acquisition must be on just terms. The second is that the property must be acquired for a purpose in respect of which the Parliament has power to make laws.

It is the second limitation that is relevant in the present case. The acquisition which is alleged is not an acquisition by the Commonwealth but by a third party, namely, Nintendo. It is now settled that s51(xxxi) extends to compulsory acquisition by a third party ^[35] but, of course, only if the requirements of the paragraph are met. Thus, if property is to be validly acquired by a third party under legislation reliant upon s51(xxxi) for its validity, the property must be acquired for a purpose in respect of which the Commonwealth has power to make laws. It is the intended use or application of the property which is significant. That was established in W.H. Blakeley and Co. Pty Ltd v The Commonwealth when this Court observed in relation to the acquisition of land: ^[36] 'It seems to be plain enough that the Constitution, in using the word 'purpose', is speaking of the object for which the land is needed. The word itself does not refer to any power or powers defined in the various paragraphs of s51 or s52 of the Constitution or elsewhere conferred; it is referring to the object for which the land is acquired. That object, however, must be one falling within the Commonwealth's power to make laws. It does not matter, however, from which of the paragraphs the power to make a law covering that object is derived. No doubt for practical purposes the word 'use' would have the same meaning as the word 'purpose' in para(xxxi) of s51, but of course 'use' must be given a very wide meaning.'

It will be apparent that where legislation provides for the acquisition of property by a third party, the property itself will frequently not be acquired for any purpose in respect of which the Parliament has power to make laws but for the purposes of the third party. ^[37]

However, that need not always be the case. An example of property acquired by a third party for the purposes of the Commonwealth is to be found in McClintock v The Commonwealth. ^[38] In that case, at least on one view of the legislation, pineapples were compulsorily acquired from the growers by certain canneries and were processed to provide pineapple products required to supply the needs of the armed forces. The property acquired was acquired for a purpose in respect of which the Parliament had power to make laws, namely, to feed members of the armed forces, a purpose within the power to make laws with respect to defence.

Where property is acquired by a third party pursuant to Commonwealth legislation, it is more likely that the use or application of the property envisaged by the legislation will not fall within any head of Commonwealth legislative power. The acquisition of the property will then not be for any purpose in respect of which the Parliament has power to make laws within the meaning of s51(xxxi), and legislative power to support the acquisition must be sought elsewhere. This is the situation with many Commonwealth laws which regulate the relationship between private persons. For example, it is the situation with the compulsory acquisition of property under bankruptcy law. The power to support the acquisition is not found in s51(xxxi) but in s51(xvii) (bankruptcy and insolvency). ^[39] It is the situation with the readjustment of property rights between the parties to a marriage where the legislative power is to be found in s51(xxi) (marriage) or 51(xxii) (divorce and matrimonial causes).

S51(xxxi) has been treated as abstracting from all other heads of power (including the incidental power but not s122) the power to legislate for the compulsory acquisition of property which is conferred by that paragraph. But that power is limited to the acquisition of property for any purpose in respect of which the Parliament has power to make laws, and that is all that is abstracted from the other heads of power. Thus the power to legislate for the acquisition of property which is not intended to be used or applied for such a purpose may be found in other heads of power. ^[40] A succinct explanation was given by Brennan J. in the Federal Court in Re Tooth and Co. Ltd (No.2): ^[41] 'Where a federal legislative power extends to the regulation of a relationship between private persons, pl.(xxxi) does not necessarily cut down that power so as to exclude the acquisition of property as a mode of regulation. If the acquisition is intended by the regulating law to be for a purpose referred to in pl.(xxxi) then pl.(xxxi) applies and the validity of the law depends upon its compliance with the requirement of just terms. But if the acquisition is not intended to be for such a purpose, pl.(xxxi) does not bear upon the law's validity. The validity of such a law is ascertained by inquiring whether it bears the character of a law with respect to some other head of federal legislative power.'

In Australian Tape Manufacturers Association Ltd v The Commonwealth some members of this Court found that it was unlikely that a law would fall within s51(xxxi) if it was concerned with 'a genuine adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity'. ^[42] That observation is consistent with the view which I have expressed above but it is, I think, necessary to identify with some precision its constitutional foundation. In my view that can only be done by recognizing that s51(xxxi) confers a legislative power and that power is confined to 'the acquisition of property ... for any purpose in respect of which the Parliament has power to make laws'. As we have seen in W.H. Blakeley and Co. Ltd v The Commonwealth, 'purpose' in that context refers to the use or application of the property acquired. Where that use is not for the purposes of the Commonwealth, the observation made in Australian Tape Manufacturers will be applicable. Thus a test emerges for determining whether the compulsory acquisition of property by a third party under Commonwealth legislation is or is not concerned with 'a genuine adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity'.

The rights, if any, acquired under the Act by Nintendo in respect of the integrated circuits in question were acquired for Nintendo's own purposes and not for any purpose in respect of which the Parliament has power to make laws. If any compulsory acquisition is involved, it is not an acquisition to which s51(xxxi) has any application. The power to support the acquisition is to be found not in s51(xxxi) but in s51(xviii) (copyrights, patents of inventions and designs, and trade marks).