Allens

Real Estate

Increase text sizeDecrease text sizeDefault text size

Client Update: Implications for government acquiring agencies under NSW land acquisition reform

25 October 2016

In brief: The NSW Government has announced its intention to reform the land acquisition process in New South Wales. Partner Paul Lalich , Special Counsel Marcia Doheny and Lawyer Claire Macdonald summarise the key changes.

Introduction

The Land Acquisition (Just Terms Compensation) Act 1991 (NSW) enables agencies to acquire land for public purposes by agreement or by compulsory acquisition.

Reforms to the process have been foreshadowed in reports recently released by David Russell SC and Customer Service Commissioner Mike Pratt and in the Land Acquisition (Just Terms Compensation) Amendment Bill 2016, which was introduced into Parliament on 20 October 2016.

The key implication for acquiring authorities arising out of the Bill is the proposed extension in the period between giving notice of proposed acquisition and the transfer of ownership. Currently a resuming authority can compulsorily acquire land within 90 days of the issue of a proposed acquisition notice, or 30 or 60 days with the consent of the relevant Minister. The reforms propose a six-month compulsory negotiation period except in the case of emergencies. Neither the Bill nor the Russell or Pratt reports provide guidance on what constitutes an emergency.

A merit review is also proposed to be available to land owners whose land is designated for acquisition where a claim of hardship in relation to the designation is refused.

The Bill also proposes a greater role for the Valuer-General, with land owners providing their claims directly to the Valuer-General rather than to the acquiring authority.

Reports and proposed amendments

Following reports by David Russell SC and Customer Service Commissioner Mike Pratt, the NSW Government has announced an intention to reform the land acquisition process in NSW. The key changes to the acquisition regime fall into two categories, governance and process, as outlined below.

Governance

The Customer Service Commissioner's recommendations relate largely to the governance of the compulsory acquisition system by acquiring agencies. The recommendations include the establishment of a Property Acquisition Standards Group within the Department of Finance, Services and Innovation and development of whole of government standards for land acquisition processes, as well as increased acquisition oversight responsibilities for the Minister for Finance, Services and Property.

A Centre of Excellence for Resident Engagement will also be established within Transport for NSW to provide training to government staff involved in compulsory acquisition. For the public, there is now a dedicated land acquisition website and a Land Acquisition Information Guide, which aims to increase transparency and community engagement. In order to improve transparency and efficiency, guaranteed face-to-face meetings with the acquiring authority at the beginning of the process, and dedicated case managers are proposed.

Process

The process and rules for acquisition are currently set out in the Land Acquisition Act. Acquisition can occur through negotiation and commercial agreement with the landowner, or, where agreement cannot be reached, through compulsory acquisition.

The Bill, introduced in the Legislative Council on 20 October 2016, includes a number of changes to the provisions of the Land Acquisition Act, summarised in the following table:

Summary of key land acquisition reforms
Potential increase in compensation
  • Maximum compensation for disadvantage (currently called solatium) resulting from relocation increased from $27,235 to $75,000 (more than the $50,000 recommended by the Pratt and Russell reports).
Fixed negotiation period
  • Six-month minimum period for genuine negotiation by the acquiring authority before issue of a proposed acquisition notice, unless otherwise agreed with the landowner or there are urgent circumstances.
Procedural changes
  • Landowners will provide their claims directly to the Valuer-General.
  • Acquiring authority must provide a list of relevant issues to the Valuer-General within 7 days of the compulsory acquisition.
  • Increased timeframe of 45 days for provision of a compensation notice, which officially notifies the former landholder that the land has been compulsorily acquired and includes an offer to pay the compensation amount determined by the Valuer-General (previously 30 days).
  • The Valuer-General must provide a copy of a compensation determination to both the landowner and the acquiring authority.
  • Independent merit review of decision not to acquire land when claim of hardship made by owner.
Changes in landowner rights
  • Rent is no longer payable during the three-month period post-compulsory acquisition if owner remains in occupation.
  • Landowners to be generally entitled to a first right to repurchase the property for market value if it is no longer needed within 10 years of acquisition.

Report recommendations not addressed

Not all recommendations have been adopted. The following recommendations by David Russell SC do not appear to have been taken up in the Bill:

  • obligation on the acquiring authority to provide a detailed 'plain English' explanation to the landowner, setting out the land acquisition process and the rights and responsibilities of the parties;
  • consultation with interested parties regarding compensation in the assessment of business claims;
  • formal arrangements for acquiring authorities to pay the reasonable costs of the Valuer-General in providing a compulsory compensation valuation;
  • requiring the landowner to notify the Valuer-General of issues (the Bill only requires the acquiring authority to do so);
  • amendment of the Land Acquisition Act to give the Valuer-General authority to extend the time  for giving a compensation notice to 90 days;
  • reacquisition by the original landowner at market price paid by the acquiring authority (whereas the Bill refers to market value at the time of the offer to allow repurchase);
  • compensation on a reinstatement basis has been taken up in limited circumstances;
  • further consultation with electricity transmission authorities and interested parties;
  • undetermined Aboriginal land claims records to be made available to all acquiring authorities, with Crown Lands to advise local councils regularly of undetermined Aboriginal land claims; and
  • next review of the Just Terms Compensation legislation be conducted by a reviewer obliged to hold public hearings and take evidence from interested parties.

The recommendations in the report by the Customer Service Commissioner are largely for implementation by Transport for NSW and the Department of Finance, Services and Innovation, and relate to internal operating models and processes. The recommendation regarding the establishment of the Property Acquisition Standards Group and Operational Centre of Excellence in particular are to be taken up. 

Comment

Most agencies use compulsory acquisition as a last resort and, where agreement cannot be reached, take care to manage interactions with the land owner carefully and respectfully.

To that end, many of the recommendations of the Customer Service Commissioner will be formalising good practice that is already in place.

 

For further information, please contact:

Share or Save for later

What are these?

 

To save this publication on your smartphone or
tablet for off-line reading (eg on a plane flight),
we recommend Pocket.

 

 

You can leave a comment on this publication below. Please note, we are not able to provide specific legal advice in this forum. If you would like advice relating to this topic, contact one of the authors directly. Please do not include links to websites or your comment may not be published.

Comment Box is loading comments...