Compulsory Acquisition of Land – the Desane Case

◷ 5 minute read

The compulsory acquisition of land is legislated under the Constitution of Australia and can be carried out at a federal, state, territory and local government level. In NSW, it is a statutory process under the Land Acquisition (Just Terms Compensation) Act 1991 (the Act).

Legitimate grounds

The legitimate grounds for the compulsory acquisition of land have not been specified in the Act other than it is for “a public purpose” (s21). However, different government agencies may compulsorily acquire land based on a further relevant Act.

For example, the Roads Act 1993 (NSW) (the Roads Act) makes provisions with respect to the roads of New South Wales and it (s171(I)) provides that Road and Maritime Services (RMS) may acquire land for any purposes of that Act.

General procedures

The first step in the compulsory process is for the Acquiring Agency (e.g. RMS) to issue a Proposed Acquisition Notice (PAN) in relation to the proposed compulsory acquisition of the property.

This formal notice will state the Acquiring Agency’s intention to acquire the property after a certain time period. The period is usually 90 days.

If, after a PAN is given, and there is no negotiated agreement, the land may be compulsorily acquired by Gazetted acquisition notice. It is when the Acquiring Agency publishes the acquisition notice in the NSW Government Gazette. From the date of that publication, the Acquiring Agency officially owns the land and the landowner’s legal and equitable interests in the property are converted to an entitlement to compensation.

The Desane Case

There is a general perception that should a government authority decide to compulsorily acquire a piece of land, there is not much a landowner can do other than trying to negotiate a better compensation deal.

That perception has changed since the decision of a 2018 NSW case Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553. It was the first Australian case where an entire compulsory acquisition attempt was successfully overturned in Court.

Desane Properties owned a valuable commercial site in Rozelle designated for a valuable residential development. The NSW government (RMS) had sought to compulsorily acquire that land as part of a motorway project called WestConnex. It was later revealed that the NSW government was considering the land for open space and green parkland instead of using it for the motorway project.

The Supreme Court of New South Wales decided that the PAN was of no statutory effect/invalid for the following three (3) basis:

1. The PAN was invalid because it did NOT conform to the Approved Form or that at the time of the PAN there was no valid Approved Form. This was determined factually.
   
   
2. The PAN was invalid because it did NOT identify the public purpose for which the land was to be acquired.

   While it was NOT part of the legislative intention, with respect to the Act, that the public purpose necessarily be specified in a PAN, it was the legislative intention to ensure compensation on just terms for landowners. Landowners’ ignorance of the specified public purpose for which the land is proposed to be acquired would put them at significant disadvantage in any sale negotiation or contest as to compensation.

   Therefore, the provision of such knowledge (the specified public purpose) is essential to achieving the legislative intention of compensation on just terms for landowners and, thus, the identification/specification of the public purpose in the PAN was an implied requirement in the Act.

   The Court determined that the PAN was invalid for failing to specify the ‘public purpose’ for acquiring the land.

3. The PAN was invalid because it was given for an improper purpose that was beyond and extraneous to the power relied on by RMS to give it.

   RMS’ dominant purpose was to acquire the land to create open space and green parkland (the ulterior purpose for which the PAN could properly have been given). It was an improper purpose because it was NOT one for acquisition under the Roads Act.

   From the evidence before the Court, it found that the ulterior purpose was a substantial purpose in the sense that no attempt would have been made to acquire the land if it had not been to achieve that ulterior purpose and to allow it would be an abuse of RMS’ power.

   Since RMS was motivated by that ulterior and improper purpose, the PAN was invalid.

Implications from the Desane Case

This case had set a clear message that a compulsory acquisition attempt is NOT unbeatable. The Court will review any attempt by a public authority to interfere with private property rights.

It has also set out important requirements for a government agency to be held accountable to landowners in providing a PAN. In relation to compulsory acquisition of land, the relevant government agency MUST:

1. Conform the PAN with the Approved Form stipulated in the Act;
   
   
2. Disclose the specified public purpose for which the land was to be acquired in the PAN; and
   
   
3. That specified public purpose MUST be proper in the sense that it is legitimate for acquisition under the relevant Acts.

What to do if you, the landowner, received a PAN?

1. A PAN must specify the authority of the State proposing to acquire your land. Contact them and find out who is in charge of corresponding with people whose land might be purchased.
   
   
2. Make sure you keep a record of all your correspondence with that authority – a record of correspondence could be vital if your matter goes to court.
   
   
3. Also, keep a record of the expenses that you’ve taken on as a result of the PAN, if any, as you may be able to claim these back.
   
   
4. Consider obtaining professional advice from solicitors and independent valuers. This will give you a better idea of whether the government authority has legitimate grounds to acquire your land, are acting in accordance with proper procedures and help determine whether you have been offered fair compensation.

For further information on this court judgement and its potential implications for you, please contact our office.