The High Court of Australia delivered its latest judgment in the land acquisition space yesterday in Government of the Russian Federation v Commonwealth of Australia [2025] HCA 44.

The proceedings, brought in the Court’s original jurisdiction, related to the validity of the Home Affairs Act 2023 (Cth) and whether or not its introduction gave rise to an acquisition of property for which compensation is payable. The three questions asked of the Court were:

1. Is the Home Affairs 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 Home Affairs Act result in an acquisition of property from the Russian Federation to which s 51(xxxi) of the Constitution applies?
3. If the answer to Question 2 is “yes”, is the Commonwealth liable to pay to the Russian Federation a reasonable amount of compensation pursuant to s 6(1) of the Home Affairs Act?

The Court determined as follows:

1. No.
2. Yes.
3. Yes.

The above answers were agreed by all seven judges, though three separate statements of reasons were provided – Gageler CJ, Gleeson, Jagot and Beech-Jones JJ delivering one, Gordon and Steward JJ another, and Edelman J a third.

Costs were awarded in the Russian Federations’ favour, with Edelman J alone concluding that the Commonwealth should only pay half of those costs.

Context

The Russian Federation obtained possession of a property in Yarralumla known as Block 26, Section 44 (Property) in 2008 pursuant to a 99-year lease from the Commonwealth. The Russian Federation proposed to use the Property to construct a new embassy. While works on that embassy had commenced, they had not been completed.

However, in a 15 June 2023 press conference, the Prime Minister made statements that (quoting the extract from [17] of the Court’s judgment):

“…the Government had “received very clear security advice as to the risk presented by a new Russian presence so close to Parliament House” and that the proposed legislation was “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 “proposed legislation” was a Bill that was introduced that same day and would be enacted and would commence that same day to become the Home Affairs Act. That Act is very confined in scope, primarily functioning so as to terminate interests in the Property, including the Russian Federation’s lease (see s 5).

Question 1: Is the Home Affairs Act invalid?

The Court considered whether the Home Affairs Act is properly characterised as a law “for the government of any territory”, thereby falling within s 122 of the Constitution. The Court concluded that it is, subject to the requirement to acquire property “on just terms” in accordance with s 51(xxxi).

Following and quoting Bennett v The Commonwealth (2007) 231 CLR 91, Spratt v Hermes (1965) 114 CLR 226 and Berwick Ltd v Gray (1976) 133 CLR 603, the majority held, at [23], that the power under s 122:

“…is “a complete power to make laws for the peace, order and good government of the territory”, being “as large and universal a power of legislation as can be granted”. The power extends to “the entire legal situation of the territory, both internally and in relation to all parts of the Commonwealth” so as to permit laws for the “direct administration” of a territory as well as for “the establishment of a territory as a self-governing polity”.”

The majority then concluded that a statue to create or extinguish rights within the boundaries of a state or territory met the requirements of s 122. While the Court suggested that there may be other sources of legislative power in the Constitution that could validate the Home Affairs Act (including s 51(xxxi)), it was not necessary to address that point.

Questions 2 and 3: Did the Home Affairs Act result in an acquisition of property from the Russian Federation to which s 51(xxxi) of the Constitution applies? If so, is compensation payable?

While the Commonwealth did not advance an argument that the termination of the Russian Federation’s lease did not amount to an acquisition of property, it argued that it did not constitute an acquisition within the meaning and scope of s 51(xxxi) for two reasons:

1. There was no proposed future use of the acquired property by the Commonwealth.
2. It would be incongruous for “just terms” to be provided to the Russian Federation in circumstances where the Home Affairs Act was introduced to protect against a perceived national security risk.

On the first argument, the Court held that the Commonwealth’s interpretation of s 51(xxxi) was too narrow and that the overarching principle that s 51(xxxi) must be read “with all the generality which the words used admit” applies. All that is required is that a “purpose” be established that is within a Commonwealth legislative power. In this case, the relevant law would satisfy s 51(xxxi) if it were supported by another source of power, (i.e. s 122 – “any purpose in respect of which the Parliament has power to make laws”).

In its second argument, the Commonwealth sought to align the expression “just terms” with that of “fair dealing” between the Commonwealth and the states and territories. This, the Commonwealth argued, then supported the position that a fair dealing does not necessitate the payment of compensation to a foreign power for an acquisition of property when that acquisition was for the purpose of eliminating a perceived national security risk.

From the outset, the Court considered that this argument was compromised by the Commonwealth having leased the property to the Russian Federation and received funds for that lease. More consequentially, however, the Court held, at [46], that the relevant question is not whether the dispossessed owner’s interests have been fairly balanced against those of the broader community, but rather whether owners of the relevant interest in the property have been compelled to give up their interest for less than it is worth (citing Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297).

The Court held that it would therefore not be incongruous to provide just terms to the Russian Federation – rather, it is required by the Constitution.

Implications

While the facts of this case are very different to those in the recent decision in Commonwealth of Australia v Yunupingu [2025] HCA 6, the High Court (and, specifically, the same four-judge majority) has drawn certain parallels between the two:

1. The Commonwealth’s powers to make laws and to acquire property “on just terms” are to be read broadly.
2. The enactment of legislation that had the effect of extinguishing or acquiring an interest in property in both cases (whether in the nature of native title or a lease) constituted acquisitions of property to which s 51(xxxi) applies.
3. In light of (2), “just terms” must be provided to both dispossessed owners.

This reinforces the breadth not only of the Commonwealth’s legislative powers, but also of its obligations to the holders of interests in property affected by the legislation it enacts.

For more on the Yunupingu decision mentioned above, please see this snapshot from Beatty Hughes & Associates’ Ella Robertson.

Beatty Hughes & Associates are experts in compulsory acquisition law. If you would like to discuss the above decision, or another matter pertaining to land acquisition in Australia, Please feel free to get in touch.