In June 2011, the NSW Government established Restart NSW to fund a range of high priority future infrastructure projects in the State including public transport, roads, local infrastructure in regional areas and health facilities.  This year, the NSW Government has approved the allocation of $6.7 billion to accelerate the delivery of priority projects identified by Infrastructure NSW in the State Infrastructure Strategy. The key infrastructure projects include:

  • the NorthConnex – comprising twin motorway tunnels to link the M1 Pacific Motorway at Wahroonga to the Hills M2 Motorway at West Pennant Hills;
  • the WestConnex – comprising widening of the M4 and M4 East Tunnel to link Sydney’s West with Port Botany; and
  • the second airport at Badgerys Creek – comprising associated road upgrades and new road infrastructure.

Due to the increased spending on infrastructure projects and the inevitable spike in land acquisitions across the State, it is a timely reminder for landowners (both private and local government) to familiarise themselves with their rights - particularly the entitlement to be ‘justly’ compensated for the acquisition of businesses, homes and parks. 

While the vast majority of acquisitions are expected to be negotiated (and the amount of compensation agreed between the landowner and the relevant State authority), if the authority decides to exercise its powers to acquire land by compulsory process then landowners need to position themselves so that they obtain ‘just compensation’. 

The acquisition of land by compulsory process is heavily regulated under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act), and landowners typically have tight timeframes within which to make informed decisions about the legality and merits of the authority’s offer to compulsorily acquire their land.

In our experience, the implementation of a successful strategy to achieve ‘just compensation’ requires a pro-active approach by landowner’s to understand their rights, and the risks and opportunities, at an early stage in the ‘compulsory acquisition’ process.

If land has been earmarked for acquisition to facilitate an infrastructure project (such as in a feasibility study or environmental assessment), or the authority has issued a ‘proposed acquisition notice’ (PAN), then it would be prudent for landowners to obtain expert legal and valuation advice so that they fully understand their rights for ‘just compensation’. By taking these steps, landowners will be able to determine:

  • whether the State authority has validly exercised its powers to compulsorily acquire their land under the Just Terms Act;
  • whether the State authority has offered ‘just compensation’ for the value of their land in accordance with the Just Terms Act; and
  • their appeal rights to the Land and Environment Court of NSW if the State authority has failed to satisfy either of the above tests.

The Environment and Planning Team at Gilbert + Tobin has significant experience advising dispossessed landowners and State authorities in relation to compulsory acquisitions for the South West Rail Link Project, Pacific Highway Upgrade, Sydney Desalination Plant, Lane Cove Tunnel, Gore Hill Freeway, North Beaches Storage Tunnel Project and North-West Bus Transitway Project. Please contact us if you have any questions in relation to this issue.

Increased Land Acquisitions

A Sydney Morning Herald article published last year revealed that the NSW Government:

  • has put aside about $150 million to acquire around 1,200 properties over the past 5 years;
  • is planning to spend about $240 million on property acquisitions for the light rail in the city and eastern suburbs; and
  • has budgeted around $220 million for property acquisition along the north-west rail link corridor.

In addition, the State Government is currently undertaking or planning other major infrastructure projects, such as the second airport at Badgerys Creek, the Pacific Highway Upgrade and the Western Sydney Infrastructure Plan, which have or will result in significant acquisitions of land. 

In July 2014, the Environmental Impact Statement (EIS) for the NorthConnex M1 – M2 connection project was released to the public.  The EIS identified 99 properties for permanent acquisition and 12 properties for temporary acquisition for construction works.  

Then, in August 2014, the EIS for the M4 West Widening from Parramatta to Homebush (being Stage 1 of the WestConnex project) identified 23 properties for permanent acquisition and a further 22 properties for temporary acquisition.  Additional properties will be earmarked for acquisition during future stages of the WestConnex project.

Construction for the NorthConnex and Stage 1 of the WestConnex projects are expected to commence in 2015. 

Power to Acquire Land

In New South Wales, the principal legislation relating to land acquisition and compensation law is the Just Terms Act.  The Just Term Act applies to the acquisition of land by agreement or compulsory process.

In order to compulsorily acquire land, the NSW Government or its agencies and local councils must have the power under legislation to acquire land by compulsory process.  For example, Roads and Maritime Services is authorised to acquire land for the purposes of the Roads Act 1993 (NSW) under sections 177 and 178 of that Act and local councils are authorised to acquire land for the purpose of exercising any of their functions under sections 186 and 187 of the Local Government Act 1993 (NSW).

If the State authority has the power to acquire land, it may acquire the land (either in whole or in part) or interests in land such as leases or easements.  The amount of compensation to which dispossessed landowners are entitled is directly referrable to the interest in land that is acquired. 

Steps in the Compulsory Acquisition Process

The ‘compulsory acquisition’ process is highly regulated under the Just Terms Act. At a high level, the key steps in the compulsory acquisition process are as follows:

1. the State authority must issue a PAN;
2. if the landowner wishes to claim compensation, he/she must lodge a claim for compensation with the State authority within 60 days after the PAN was issued; 
3. if no agreement is reached between the landowner and the State authority, a notice is published in the NSW Government Gazette (with the approval of the Governor) compulsorily acquiring the land; 
4. within 30 days after the publication of the acquisition notice, the State authority must give the landowner written notice of the acquisition and the offer of statutory compensation (as determined by the Valuer-General); 
5. within 90 days after the offer of statutory compensation is made, the landowner may lodge an objection with the LEC in respect of the amount of compensation offered; and 
6. within 28 days after the State authority is given notice of the LEC proceedings, the State authority is required to pay 90 per cent of the statutory offer to the landowner as an advance payment pending agreement between the parties or a decision of the LEC.

If necessary, the advance payment can be used to pay the landowner’s costs of the proceedings, such as legal and expert fees.

What Are You Entitled To?

Under the Just Terms Act, dispossessed landowners are entitled to:

(a) the market value of the land; 
(b) any special value of the land, meaning a financial advantage or value which is incidental to the landowner’s use of the acquired land; 
(c) any loss attributable to severance, meaning the reduction in the market value of other land owned by the landowner and severed from the acquired land; 
(d) any loss attributable to disturbance, including legal costs, valuation fees, removalist costs, rental costs, pest and building inspection costs, stamp duty costs and mortgage discharge fees and, in the case of acquired businesses, loss of income or profits; 
(e) solatium, meaning an amount of money to compensate the landowner for the inconvenience of having to move from their primary residence (currently fixed at $25,020); and 
(f) any decrease in the value of any adjoining or severed land as a result of the acquisition.

When State authorities are negotiating acquisitions by agreement or the Valuer-General is determining the compensation payable for compulsorily acquired land, consideration must be given to the factors above.  While independent valuers engaged by dispossessed landowners will have regard to the same factors in determining the compensation payable, it is common for different comparable sales to be used and, therefore, a different market value to be derived.

LEC Proceedings and Costs

If dispossessed landowners are dissatisfied with the offer of compensation from the State authority, they may lodge an objection with the LEC within 90 days of receiving the offer.

Provided that dispossessed landowners act reasonably in pursuing such proceedings, the NSW Court of Appeal has held that they will be entitled to their costs of the proceedings.  In practice, this means that landowners will be entitled to reimbursement of their experts’ and barristers’ fees (if reasonable, in full), and solicitors’ fees (generally in the order of 60-80%). 

While this affords dissatisfied landowners some cost protections, a decision to appeal to the LEC should only be made where the claim for compensation is supported by compelling valuation evidence. 


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