A southern NSW farmer has initially lost out in a Federal Court ruling handed down in Sydney last week, but the findings in the case arguing for compensation for land clearing targets could still have positive ramifications for farmers.
Monaro farmer, Peter Spencer, has been fighting a long-running legal battle with the Commonwealth claiming compensation for carbon credits.
Mr Spencer says the carbon was obtained by the Government without compensation to the landhodler via bans on land clearing, which have helped Australia meet its Kyoto targets.
In the Federal Court last week, Honourable Justice Emmett did not rule in Mr Spencer's favour on the property rights, but his finding all but endorsed Mr Spencer's argument that he'd been denied property rights, and also financial benefits of carbon sequestration.
Justice Emmett said Mr Spencer has established there was "a serious question to be tried" as to whether he has suffered "sufficient detriment" as a consequence land clearing bans in 1997 and 2003 in NSW.
"Further, to the extent that there was a benefit to be derived from the grant of carbon sequestration rights by undertaking voluntary restraint, it is certainly arguable that Mr Spencer has been deprived of that benefit," Justice Emmett said.
"Whether the restriction is such as to constitute a taking or acquisition or expropriation may depend upon detailed evidence of value.
"Nevertheless, there is at least a seriously arguable case for concluding that there has been an acquisition of property of Mr Spencer's."
There was no case for compensation, however, because the agreement between NSW and the Commonwealth which led to the "acquisition" of property was not authorised by any Commonwealth statute.
Under Commonwealth law, just terms compensation is payable to people where a property right is to be taken, but the same laws are not present at the State level.
Mr Spencer is appealing the case, supported by the Commonwealth Property Protection Association, which said the question of compensation was a fundamental principal of Australian democratic society, embedded in the Constitution.
Sydney-based lawyer and farm owner, Paul McGirr, has been handling land clearing and property rights issues for farmers in NSW for some time and believes last week's Federal Court ruling will have major ramifications for farmers.
He said the case will not only be important in future disputes over carbon sequestration, but also in the looming battlefield of water rights.
"This has got big ramifications for rural holders because an identical situation is occurring with irrigation licences," Mr McGirr said.
"In my opinion this case shows that property owners' rights are being usurped both presently and prospectively as far as carbon sequestration is concerned.
"It shows a crying need for the State Governments to bring itself up to speed with the Federal Government."
Mr McGirr believes these types of constitutional arguments are going to become "bigger and bigger" and will be a very difficult area of law for the landowner.
He said already a significant number of water rights cases were beginning to surface in the areas of water trading, and differences in State and Federal legislation for water trading.
"The judge is saying this farmer has had a property right taken but just terms compensation doesn't apply because it's not a Federal action," Mr McGirr said.
"The State agreement with the Commonwealth should provide funding for these sorts of things – the Commonwealth is trying to get the States to do all this (environmental reform), and the Commonwealth has promised the funding, but the States are not moving until they see that money – it's a classic catch 22.
"These areas of dispute are going to grow, particularly so far as irrigation rights are concerned and the growing grey area in water rights.
"We will continue to see this problem where there are Commonwealth-State agreements but no State legislation giving it any effect."
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