In early 2014, we mentioned that while there was still no movement on the review of the Land Acquisition (Just Terms Compensation) Act 1991, the year ahead nevertheless looked set to be a busy one in the class 3 jurisdiction of the Land and Environment Court.

We are in a similar position at the start of 2015. The Government has not moved on changes to the Just Terms Act, and the review process has been very quiet compared to other related reforms (e.g local government, and the controversy surrounding the Planning Bill).

In late December 2014, there were two Court of Appeal decisions handed down on the same day regarding acquisitions of land at Tempe. Our first blog of 2015 considers Tempe Recreation Reserve Trust v Sydney Water Corporation, which has implications for compulsory acquisitions involving open space, as well as the acquisition of easements. Such acquisitions are often necessary for the enabling of infrastructure that underpins the planning of our cities, in this circumstance water infrastructure for Sydney.

Court of Appeal revisits Tempe Recreation Reserve Trust v Sydney Water Corporation

You may recall we blogged on this decision at first instance here. The various points of relevance discussed in our earlier blog remain following the Court of Appeal’s judgment, given the Court of Appeal by and large agreed with Biscoe J’s reasoning in the matter at first instance. The words “by and large” are used since there was one point of sharp divergence in the judgment relating to costs in class 3 proceedings (see lesson 5 below).

The decision means the (narrow) interpretation of the easement rights put forward by Sydney Water were adopted, which in turn meant the smaller quantum of compensation determined by the Land and Environment Court to be payable to the Trust (when compared to what was claimed by the Trust) was also supported.

The Court of Appeal’s judgment provides a number of additional important lessons for easement acquisitions, and compulsory acquisitions of public open space.

Lessons

Lesson 1: Given the criticism of the drafting of the acquired easements by Justice Emmett JA, the drafting of similar water pipeline easements should not take their cues from the way these easements were prepared. It is important that the drafters of related easements being compulsory acquired at the same time for the same infrastructure maintain precision in their drafting and that there be symmetry between the definitions used in the various easements being acquired in the one instrument. Emmet JA’s judgment serves as a tutorial for the drafter of such easements.

Lesson 2: Legal documents need to read as a whole, and the meaning of language turns on its context. In this regard, contrary to the Trust’s submissions, it is important that the relationship between the different definitions in the various easements contained in the registered memorandum be holistically considered. Differences in the language were apt to convey differences in the legal meaning, and accordingly, Leeming JA considered that it was appropriate for the primary judge to have considered all of the easements for the purposes of construing their meaning. In other words, in this matter, extrinsic material was relevant to the interpretation of the easements.

As stated by Leming JA:

Different language in a legal document ordinarily conveys different meaning. In Schedules which appear in the same instrument, which form part of a series of contiguous acquisitions for the same purpose – making provision for a pipeline from the desalination plant at Kurnell to inner Sydney – and which are structurally and textually very similar, textual differences are especially significant.

Lesson 3: The Court reaffirmed that the general rule is that materials outside the Torrens Register may not be used in construing the registered instrument (such as an easement), but that does not rule out reliance on evidence of the physical characteristics of the land in construing the easement. In this case, the physical features of the land and the fact that the pipeline was constructed before the easement was acquired confirmed the conclusion reached from the language contained within the easements.

Lesson 4: Reserve trusts do not own land although such trusts are deemed to have an estate in fee simple. Any valuation must reflect the specific interest in the land held by the Trust.

Lesson 5: Costs awards in class 3 proceedings need to give force to the purpose of the Court’s rule relating to offers of compromise. However, this needs unpacking.

The ordinary rule that costs follow the event, which underlies the making and acceptance of offers of compromise in most proceedings, does not apply in class 3 proceedings. Rather dispossessed land owners ordinarily, if they act reasonably, are entitled to a favourable costs order. Given this different starting point for compulsory acquisition matters, there has been some uncertainty as to the relevance of offers of compromise in class 3 proceedings, some thinking they are a waste of time, others issuing them as if they have the same relevance as they would in normal litigation.

However, the Court noted that offers of compromise are made applicable to class 3 proceedings even though the “costs follow the event” starting point (in rule in 42.1 of the Uniform Civil Procedure Rules) does not apply. The Court of Appeal held that his Honour’s construction of the costs rules did not promote the purpose of offers of compromise, namely the encouragement of compromise in litigation which can be long and expensive. The Court of Appeal’s approach to giving force to the purpose of an offer of compromise in a jurisdiction where the dispossessed applicant who acts reasonably is entitled to costs in the ordinary circumstance, was for the Trust to obtain its costs of the proceedings up to and including 13 February 2013 (i.e. the date Sydney Water issued the offer of compromise more favourable than the Court of Appeal’s judgment), but that there be no order thereafter, with the intention that the parties bear their own costs.

This also meant that the Court of Appeal ordered the Trust to pay Sydney Water’s costs in the Court of Appeal.

The washdown

Applicant’s and acquiring authorities will need to pay due attention to this part of the judgment as they advise clients on cost consequences of class 3 proceedings and the making of offers of compromise, particularly where the matter is being appealed to the Court of Appeal.