In the recent case of Springfield Land Corporation (No. 2) Pty Ltd v Queensland [2011] HCA 15, the High Court considered the situation where land is compulsorily acquired, and the carrying out of the works or purpose for which the land was acquired brings about an increase in the value of other land owned by the claimant, which adjoins or is severed from the land acquired. In order to determine whether there has been any such increase, how is the "purpose" for which the land was acquired determined?
The facts of the case briefly were that a large residential development was planned for Springfield, near Ipswich in Queensland. A major road was to be constructed as part of the development, and under an agreement made in about 1999, land was set aside, free of compensation to its owners (the claimants) for that purpose. Some years later the road alignment was altered slightly, and as a result, some of the land previously set aside was returned to the claimants and a relatively small amount of additional land was acquired. The parties agreed that the compensation payable for the additional land was to be assessed as if it had been compulsorily acquired under the Acquisition of Land Act 1967 (Qld) (the Act).
The Act requires that when compensation for acquired land is assessed, account must be taken, by way of set-off, of any enhancement in the value of land owned by the claimants which adjoins, or is severed from, the land acquired, which is brought about by the carrying out of the purpose for which the land was acquired.
The central question in the case was: what is the purpose for which the additional land (ie the additional land for road realignment) was acquired?
The High Court decided (by a majority of four to one) that a broad view should be taken of the purpose, which in this case was the extension of the transport corridor west of the Springfield town centre. It was accepted that the adjoining land of the claimants would derive an enhancement in value as a result of the development of the transport corridor, far in excess of the value of the additional land acquired (which was agreed at approximately A$1.5 million), with the result that no compensation was payable for the acquisition of the additional land required for road realignment.
The Court rejected the narrower view that the purpose for acquisition of the additional land was to effect a realignment of a previously designated road corridor, which itself would cause no enhancement of the value of the adjoining land owned by the claimant.
This case is not concerned with the Pointe Gourde principle. That principle states that in valuing the land acquired, account is not taken of any increase in value brought about by the carrying out of the scheme for which the land was acquired. This case deals with adjoining or severed land, not the land actually acquired.
All Australian states and the ACT have statutory provisions substantially similar to the provision in the Queensland Act which was considered in this case.
In approaching negotiations for compensation for compulsorily acquired land, both government authorities and landowners need to be aware that a broad approach should be taken in defining the purpose for which the land is acquired, as this will have a bearing on whether the value of any adjoining land owned by the landowner has been enhanced, and this in turn may affect the amount of compensation payable.
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.
