Compulsory Land Acquisition

Date: Aug 03, 2010
Document Type: Newsletter

This article considers the process of compulsory land acquisition. In some other jurisdictions (eg the United States) this is known as the concept of "eminent domain". Essentially, compulsory acquisition is the process by which a government body acquires land for the benefit of the public. This acquisition may be by voluntary agreement with the owner or through a compulsory acquisition.

This article considers only the acquisition of freehold land (that is, land owned in the ordinary sense) under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW). In New South Wales, land acquisition is most likely to be undertaken by a local council or a specially constituted development corporation. For the purposes of this discussion, a local Sydney council acquiring land to widen a road will be used as an example.


Process of Acquisition

The Land Acquisition (Just Terms Compensation) Act 1991 itself does not necessarily empower any body to compulsorily acquire land, as that body must derive its power from another source. In our example, the local council possess the power to acquire land under the Roads Act 1993 (NSW) and would begin by formally resolving at a council meeting to acquire the land. However, the local council must seek the formal approval of the relevant Minister through the Department of Local Government before proceeding, as well as undertaking other preliminary steps concerning the widening of the road (which may include applying to the State Governor to issue a proposed acquisition notice).

Typically, the local council will contact the owner of the land and attempt to reach an agreement to acquire the land. If this is successful, the acquisition can take place quickly and with little disruption. The value of compensation will vary and is assessed by the New South Wales Valuer General, taking account of factors including:

  • the market value of the land;
  • any loss to the value of other land caused by "severance" (eg running a road through a large farm); and
  • any other special matters.

Alternatively, if no agreement can be reached, the local council may formally notify the owner that it is compulsorily acquiring the land (providing 90 days notice). Once the acquisition has taken effect, the council has free and clear title to the land and a technical defect in the compulsory acquisition will not necessarily invalidate the entire acquisition.


Objections, Appeals and Compensation

If the owner of the land is objecting to the acquisition, the objection would need to be lodged directly with the acquiring council. This may result in the resumption not proceeding or being varied in some way.

Alternatively, the council may refuse the objection. As the council had to seek approval from the Minister (and in some cases, the Governor) there is the possibly of legal challenge to the process or basis for the acquisition. Legal challenges to council acquisitions have been successful where the council misrepresented the purpose of the acquisition to the Minister. Additionally, drawing the matter to public attention through contact with your local member of parliament (or the media) may also be an effective means of compelling the council to reconsider a contentious acquisition.

It may be possible to challenge the amount of compensation that the local council is offering in the New South Wales Land and Environment Court. A property lawyer may also be able to advise on other possible grounds of legal challenge and should be your first point of advice in the event that you are concerned with a compulsory land acquisition.

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