Australia: Compulsory acquisition of properties in NSW now not so certain

Last Updated: 20 June 2018
Article by Digby Dunn

A landmark court decision has delivered a blow to the NSW government’s seemingly unstoppable compulsory acquisition of property.

I have spent the past twenty years fighting for people who have been ordered out of their homes or businesses under various laws that give power to the government to take over their property under procedures set down in the Land Acquisition (Just Terms Compensation) Act 1991 (NSW).

It is very rare that the courts prevent the government from seizing a property under the law that gives them the power to acquire land compulsorily for major projects.

Court rejects government’s attempt to seize land adjacent to rail yard

In the NSW Supreme Court case Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553, the property owner succeeded in stopping the government seizing land in Sydney’s inner west for the massive and controversial $16.8 billion toll road project, WestConnex.

Roads and Maritime Services said it wanted to acquire Desane’s 5,274 square metre property in Rozelle as part of a plan to turn a disused rail yard into a 10 hectare park.

Section 177 of the Roads Act 1993 (NSW) gives power to Roads and Maritime Services to acquire land adjacent to – or in the vicinity of – a road project.

Government’s reasons for compulsory acquisition seen as inadequate

Desane’s land was next to the old rail yard, but the court found that plans for the property were “ill defined” and “may never be realised”.

The WestConnex project has already led to more than 400 homes and businesses being forcibly handed to the government, often for inadequate compensation, but it seems that in this particular case the courts found that the government had overreached its powers. Its reason for compulsory acquisition was seen as inadequate.

Decision to have significant ramifications for future acquisitions

It was a huge blow to the NSW government, which has been using the powers granted under the law far too freely. I have seen the terrible effect compulsory acquisition can have on a family or business, when people are thrown out of the home they love or the business they have poured their life into.

After the Desane ruling I hope that the government will be more careful before it decides to force people off their property.

It’s an important decision which will have significant ramifications. It will make government bodies think twice before deciding which properties they actually need to acquire for a project.

The court decision means that from now on, it can be a live issue in each case about whether the acquisition itself should be challenged, rather than arguing only about how much compensation should be paid.

Meanwhile, Roads and Maritime Services has launched an appeal against the Desane decision, successfully arguing that the appeal should be heard before the end of June 2018, as the decision has cast doubt on the validity of 165 proposed acquisition notices recently issued to property owners by the government. (For more information please see Major delay risks for hospital, transport projects due to legal tussle.)

Couple notified that their first married home to be acquired by government

The plight of those facing compulsory acquisition improved slightly in 2016, with the passing of amendments to the law which allowed for higher compensation in some circumstances.

I had a recent case of a young couple who were busy making arrangements for their imminent wedding when they received a notice from the government notifying them that their property was being acquired.

They had bought an apartment in an Art Deco building, a rare residential strata building in Sydney city. It was everything they wanted as their first married home – beautiful, full of character, close to everything they needed. Finding out that the apartment they loved was to be taken away from them was a crushing blow.

Unlike the Desane case, there was no chance of opposing the government’s acquisition of the property. On a practical level, all that this young couple could do was look for the best way to obtain the maximum compensation for their loss.

Compensation for compulsory acquisition can consist of a range of components

The matter didn’t proceed to court. Instead there was a negotiated settlement where the couple received the market value of their property, in addition to valuation fees, legal costs and stamp duty for the purchase of a new property which they bought to replace the residence they had lost.

Importantly, they also received what was then called “solatium” – now referred to as “disadvantage resulting from relocation” under section 60 of the Land Acquisition (Just Terms Compensation) Act. This one component on its own was worth tens of thousands of dollars to them, making a significant difference to the amount of compensation they received.

Government tries to pay as little as possible, but independent legal advice is free

I would say to anyone whose property is being acquired compulsorily – if you’re wanting to be fairly compensated, the government is going to put up a fight. It’s a given. You know that they will do their best to put you through the wringer in the hope of paying you as little as possible.

That doesn’t mean that you are powerless or that you can’t stand up for what you deserve. Independent, experienced legal advice comes free for those facing compulsory acquisition of their property, as the government has to foot the bill.

Digby Dunn
Compulsory acquisition
Stacks Law Firm

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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