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Government Alert

Compulsory land acquisition - The facts

| Published by Julie Colsell

An authority, which may include a range of Ministers, government departments, public authorities, utility service providers and municipal councils, may obtain title to land either by purchasing it or by formal statutory acquisition.

An authority can only compulsorily acquire land if the power to do so is set out in its governing legislation, which is deemed for such purpose to be a “special Act”.

In some cases, the special Act requires that the acquiring authority can only compulsorily acquire land with the consent of a relevant Minister or the Governor in Council.  Where an authority is given the power under a special Act to compulsorily acquire land, the authority must follow the process for acquisition set out in the Land Acquisition and Compensation Act 1986 (the LACA). Section 30 of the LACA confers a statutory right to be compensated upon a person whose interest in land is compulsorily acquired by reason of the publication of a Notice of Acquisition.

The measure of compensation is dealt with in Part 3 of the LACA. Within Part 3, s.41 sets out the relevant considerations to be taken into account in assessing the amount of compensation payable to a dispossessed land owner (a claimant) in respect of the interest in land acquired.

These include:

  1. The market value of the interest on the date of acquisition;
  2. Any special value to the claimant on the date of acquisition;
  3. Any loss attributable to severance;
  4. Any loss attributable to disturbance;
  5. The enhancement or depreciation in value of the interest of the claimant, at the date of acquisition, in other land adjoining or severed from the acquired land by reason of the implementation of the purpose for which the land was acquired;
  6. Any legal, valuation and other professional expenses necessarily incurred by the claimant by reason of the acquisition of the interest.

Recent decisions of the Supreme Court of Victoria have recognised the need to give effect to the “principle of equivalence” – the principle that the owner shall be paid neither less nor more than his loss. To give effect to that principle requires that the dispossessed owner be compensated fairly and fully for his loss but is not entitled to receive more than fair compensation with the consequence that a person is not entitled to be paid twice for the same loss.

Acquiring authorities should ensure that upon receipt of a claim for compensation the claim is scrutinized to avoid duplication or “double dipping”. The concept of double dipping is of particular relevance where the claim includes a claim for loss attributable to disturbance which is defined in s.40 of the LACA to be: “any pecuniary loss suffered by a claimant as the natural, direct and reasonable consequence of...the fact that an interest of the claimant in that land has been divested or diminished, being a pecuniary loss for which provision is not otherwise made in this Part”. There is potential for such disturbance loss claims to bring into account some or all of the factual matters relied upon in respect of the market value calculation, which would result in “double dipping”. In McDonald v Roads and Traffic Authority (NSW) v McDonald [2009] NSWLEC 105 Biscoe J said –“Where the before and after method captures the decreased value of the residue land, a disturbance claim  . . . would be double dipping to the extent of the capture”. 

As such, acquiring authorities should scrutinize a claim for compensation to ensure that they do not effectively compensate a claimant twice for the same loss.