New Zealand: The Minister for Canterbury Earthquake Recovery v Ace Developments Ltd and Ace Sales Ltd: compulsory purchase of land

This judgment considered the regime for the compulsory purchase of land in the Christchurch CBD by the Minister for Canterbury Earthquake Recovery (Minister).

Background

Ace Developments Ltd owns land on Moorhouse Avenue (property). The property is leased to Ace Sales Ltd, which operates a car dealership.

After the Christchurch earthquakes, the Christchurch Central Recovery Plan was prepared. The Recovery Plan identified a number of precincts and anchor projects to be built in the city. The site for one of the anchor projects, the Metro Sports Facility, includes the property.

Negotiations took place between the Canterbury Earthquake Recovery Authority (CERA) and Ace Developments as to a possible purchase of the property, but the negotiations proved unsuccessful.

The Minister has served a notice of intention to take land on Ace Developments.

The claim and counterclaim

The Minister issued proceedings against Ace Developments, asserting that the Crown is entitled to vacant possession of the property. A dispute arose over whether the Crown was entitled to possession of the property before compensation issues were resolved. Specifically:

  • Ace Developments claimed that the Minister was required to make a formal offer of compensation, and that the offer should be not less than $3.3 million, being the amount of a valuation obtained by CERA; and
  • Ace Sales claimed that it (in addition to Ace Developments) should have been served with the notice of intention to take land, and that it is entitled to remain on the property until compensation is agreed.

Compulsory acquisition and vacant possession

The procedure for compulsorily acquiring land is set out in the Canterbury Earthquake Recovery Act 2011 (CER Act). It provides that the Minister can serve a notice of intention on the owners of the land and on other people with a registered interest in the land, and publish a public notice to that effect. The Minister can then publish a Proclamation to compulsorily acquire the land. Title to the land then automatically vests in the Minister fourteen days after the Proclamation is published.

The CER Act then provides that if an owner or occupier fails to give vacant possession of land specified in a Proclamation within one month, the Minister may seek an order for vacant possession from the High Court.

Associate Judge Osborne found that the process to take land had been conducted properly. There was no requirement, as contended by Ace Sales, to serve the notice of intention on a person with an unregistered interest in the property (such as a lease). He decided that:

"The combined effect of s 55(6) CER Act and the steps indisputably taken by the Crown is that the property on 14 August 2014 became absolutely vested in fee simple in the Crown and freed from all mortgages, charges, claims, estates, or interests of whatever kind.
Section 57 CER Act entitled the Minister to seek an order directing Ace Developments (as owner or occupier) to give vacant possession of the property if, as owner or occupier, it failed to give such vacant possession."

Compensation – offer or claim?

Again, the procedure for compensation is set out in the CER Act. This provides that a properly completed claim form must be lodged by the person seeking compensation, and the Minister will determine whether compensation is payable, and the amount to be paid. This procedure can be contrasted with that in the Public Works Act 1981 (PW Act), which has two alternative processes, one for a claim to be made, and the other for an offer to be made by the person acquiring the land.

In this case, Ace Developments and Ace Sales both asked for the Minister to make an offer for payment of compensation.

Associate Judge Osborne decided that the CER Act procedure can operate without incorporating the PW Act, and that the "Minister is not required to make an offer of compensation to either defendant".

He also noted that the Minister should not be bound to a minimum compensation figure based on an earlier offer from CERA:

"the determination of compensation is a matter which Parliament has entrusted to the Minister... it is not open to this Court to conclude in a summary judgment setting that a position which CERA was prepared to adopt for the purposes of a negotiated settlement amounts implicitly to a conclusion (or some form of informal determination) by the Minister himself as to what constitutes the appropriate compensation by reference to s 64 CER Act and to the relevant provisions of Part 5 PW Act."

The decisions

Associate Judge Osborne therefore decided that the Minister was entitled to an order for vacant possession of the property. Ace Developments and Ace Sales should submit completed claim forms, so that the Minister can determine their claims for compensation.

A copy of the decision is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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