Compulsory acquisition of land: Lessons to be learnt from the Desane case

The Supreme Court of NSW has recently upheld a challenge brought by property developer, Desane, against an attempt by Roads and Maritime Services (RMS) to acquire its land for the WestConnex motorway project.[1]

In May 2017, RMS served a Proposed Acquisition Notice (PAN) upon Desane which would enable RMS to compulsorily acquire Desane’s property by 1 September 2017. However, Desane did not want to surrender the property to RMS and subsequently applied to the Court seeking a declaration that the PAN was invalid.

Essentially, Desane argued that the PAN was ineffective because:

• it did not comply with the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act) as it was not in the approved form
• it failed to identify the public purpose of the acquisition
• RMS was acting on an improper purpose which was unauthorised under the Roads Act 1993 (Roads Act). 

Issue 1: Departure from the approved form

Section 15(a) of the Just Terms Act states that a PAN must be “in the form approved by the Minister”. 

However, the PAN issued to Desane deviated from the approved form in a number of respects, including that it:

• used the expression “disadvantage resulting from relocation” rather than the approved word “solatium”
• extended the date in which an offer of compensation could be made from 30 days under the approved form to 45 days. 

RMS argued that these changes were justified as the terminology and timeframes were updated to reflect the recent amendments to the Just Terms Act. 

The Court held, however, that the amendments to the PAN were significant and meant that the PAN could not be characterised as being in the approved form. The Court also reinforced the importance of private property rights and held that interfering with this right was “no light matter”. As such, it was critical that the authority strictly complied with the requirements of section 15 of the Act, especially considering that they are not difficult or onerous. 

Issue 2: Failure to identify the public purpose

Interestingly, section 15 of the Just Terms Act does not expressly require a PAN to include a statement specifying the public purpose justification for the acquisition. 

However, Desane argued that given the serious consequences of compulsorily dispossessing someone of their land, the Just Terms Act should be interpreted as requiring the identification a relevant and lawful public purpose. 

In again finding for Desane, the Court held that by failing to specify the public purpose of the acquisition, the PAN was of no legal effect:

...there is a clear statutory necessary intendment or implication that when an owner of land is informed by an authority of State of its intention to take it, the notice will state the public purpose for which the land is proposed to be acquired. A prescription by regulation or approval by the Minister of a form which does not make provision for this, will, in a substantial way, not serve the purpose for which the power to prescribe or approve a form is conferred.[2]

The Court also reinforced that merely stating that the property is being acquired for a public purpose will not suffice.

Issue 3: RMS was acting on an improper purpose

Finally, the Court considered whether Desane’s property was being acquired by RMS for an authorised purpose. 

RMS argued that it was acquiring the land because it was situated in the vicinity of another parcel of land on which RMS proposed to construct a road. This was an authorised purpose under section 177(2) of the Roads Act. 

However, Desane introduced evidence which suggested that the dominant purpose for RMS’ acquisition of the land was, in fact, to provide open space and green parkland rather than for carrying out road works. In this regard, the Court was convinced that absent the purpose to provide the open space and parkland, RMS would not have issued the PAN and the acquisition would not have proceeded. 

Accordingly, RMS also failed on this ground as it was exercising its acquisition powers for an ulterior purpose. 

What now? 

This case reinforces the value placed on private property rights at law, and the need for those wishing to acquire such rights to do so in strict accordance with the statutory procedure.  With various infrastructure projects on foot across the State, there is likely to be a number of PANs being issued by acquiring authorities.  

The Sydney Morning Herald reports that approximately 165 PANs related to projects including the Prince of Wales Hospital redevelopment are at risk of becoming invalid or lapsing as a result of this decision.[3] We would, therefore, advise all authorities issuing such notices to examine them closely for irregularities with the relevant laws. We would also suggest that anyone wishing to challenge a PAN seek legal advice regarding the status of the notice. 

The Government has said that it will appeal the decision. The matter has been set down for hearing in the NSW Court of Appeal on 28 and 29 June 2018. 

For the full judgement, please click here.

[1] Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553.
[2] Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553, per Hammerschlag J at [223].
[3] Matt O’Sullivan ‘Major delay risks for hospital, transport projects due to legal tussle’, The Sydney Morning Herald, 12 June 2018. 

Authors: Georgia Appleby &  Peter Holt

Contacts:
Sydney 
Breellen Warry, Partner 
T: +61 2 8083 0420 
E: breellen.warry@holdingredlich.com

Peter Holt, Special Counsel
T: +61 2 8083 0421
E: peter.holt@holdingredlich.com

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future. 

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