In the words of Lord Nicholls of Birkenhead:
"Compulsory purchase of property is an essential tool in a modern democratic society. It facilitates planned and orderly development. Hand in hand with the power to acquire land without the owner’s consent is an obligation to pay full and fair compensation."1
Public Infrastructure
Some recent Brisbane infrastructure projects have included the Clem 7 North-South Tunnel under the Brisbane River, the Airport Link, and the duplication of the Gateway Arterial Road. However, major infrastructure programmes are not confined to Brisbane or to South East Queensland. The Bruce Highway will undergo an extensive upgrade through Calliope, west of Gladstone.
Legal Basis
The Acquisition of Land Act 1967 (the Act) confers on a "constructing authority" a power to resume land in private ownership. Generally, the compulsory resumptions are undertaken by the Crown or a local authority. The Act authorises the resumption of private property for public works and a schedule to the Act lists those public purposes including roads relating to transportation, educational facilities, health services, natural resources, recreation, water, primary production and other works with a similar purpose.
Notice of Intention to Resume
The first official step by the constructing authority is the delivery of a Notice of Intention to Resume upon any person who is likely to have a compensation claim and a mortgagee of that land. However, prior to the issue of this Notice, the constructing authority has generally foreshadowed its plans in the media and in public forums, where the scheme of public works involves significant areas and construction.
A person who receives a notice does have grounds to object to the taking of the land. The grounds for an objection to a proposed resumption will not be canvassed in this article because objections are rarely successful. That is not because the constructing authority takes no notice of an objection, but because of the forward planning and investigations that are undertaken before a notice is issued. Furthermore, grounds that appear apparent to an owner, are not necessarily grounds for objection, but rather they are elements in the quantum of the compensation claim.
Taking by Agreement
Section 15 of the Act enables a constructing authority to acquire land by agreement with the owner. The owner and the constructing authority can agree upon the amount of compensation or, if they disagree as to the quantum, they can agree that the amount of compensation is to be determined by the Land Court.
Furthermore, where a public announcement of a proposed scheme of works casts a shadow of uncertainty over a property, the Crown may negotiate to acquire the property under "hardship" criteria.
Claim for Compensation
On and from the date the taking of land notice is published in the government gazette, the owner’s estate and interest in the land or the tenant’s interest in the land through a lease for example, is converted into a right to claim compensation. The resuming authority and the claimant may agree on compensation, but the consent of any mortgagee is needed, because a mortgagee is entitled to payment ahead of the claimant. A person whose interest in the land is through a services contract, such as a cleaning contract, does not have a right to compensation.
A claim for compensation must be in writing and must be served on the resuming authority. The elements of the written claim are set out in section 19 of the Act.
Assessment of Compensation
The amount of compensation claimable under the Act comprises the value of the land taken, and where only part of the land is resumed, it can include an allowance for damages for severence loss or injurious affection. Costs subsequently incurred by the claimant also form part of the amount of compensation. These costs which are grouped under the heading "disturbance," are set out in section 20(5) of the Act and include, for example professional fees such as "reasonable" legal and valuation costs and costs and expenses, such as transfer duty on a replacement property. Severance and injurious affection are separate but related heads of compensation that arise where the works on lands resumed for the scheme depreciate the value of the claimant’s remaining land.
There are two main methods used by valuers to assess the quantum of compensation. The market value of land based on comparable sales is adopted where the whole of the land is resumed. Where part of the land is taken, the loss in value is determined by assessing the value of the land before the resumption (ignoring the effects of the resumption, both positive and negative) and the value of the remaining land after the effects of the resumption have been considered. Under particular circumstances special value to an owner is claimable. These methods have been considered and approved by the courts since the early part of last century,
Advance against Compensation
Section 23 of the Act enables a claimant to apply for an advance payment of compensation once a claim has been lodged with the constructing authority. The amount of the advance usually equates to the constructing authority’s valuer’s assessment. An advance payment provides the claimant with funds to meet the on-going costs in bringing the claim to completion.
Reference to the Land Court and Costs
Either the constructing authority or the claimant may refer the claim to the Land Court for determination of the amount of compensation. In practice, this usually happens if negotiations are unsuccessful. If the matter is ultimately determinated by the Court, the Court has discretion to award costs. Where the Court exercises its discretion to award costs, they will be awarded in favour of the party whose amount put in evidence is closer to the amount that is determined by the Court. Interest upon the amount of compensation may also be payable.
Summary
Negotiations of compensation claims involve legal and valuation issues and, depending on the nature of the property, they may also require advice from other experts such as town planners and engineers. As the State and Federal governments undertake more and more major infrastructure projects, the incidence of compulsory acquisitions will remain a part of property ownership.
Upon receiving a notice of intention to resume or a taking of land notice, a ‘dispossessed’ owner should seek professional advice to formulate a claim and negotiate an appropriate settlement.
Marcus Johnson – Director, McCarthy Durie Lawyers
Solicitor and qualified valuer
1Water and Ors v. Welsh Development Agency [2994] UKHL 19
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