The Constitution's just terms acquisition provisions won’t usually apply where someone voluntarily sells their land to the government. That’s what the High Court has confirmed in a recent case which involved a government decision to protect the habitat of the pygmy possum at the expense of landowners’ ability to develop their land.

The parcels of land bought for potential

The High Court refused to allow a group of landowners to bring an appeal in which they argued they were denied proper compensation when some of them voluntarily transferred their land for inclusion in a national park as part of a project run by Bartier Perry’s client, the Foundation for National Parks and Wildlife (Foundation).

The landowners had bought a number of adjoining parcels of land in the Shoalhaven area of the NSW South Coast. These parcels sat between Jervis Bay National Park and Booderee National Park. They were sold in the 1980s as part of a ‘paper’ subdivision known as the Heritage Estates.

When the land was bought, zoning prevented the owners from constructing dwellings and also infrastructure in the area. However, the owners believed that these restrictions would change under a re-zoning - a belief that was encouraged by the people selling the land.

Unfortunately for them, this wasn’t the case.

How the land became worthless

Instead, it was discovered that the parcels of land were part of a habitat corridor for vulnerable and threatened species under the Environmental Protection and Biodiversity Conservation Act 1999 (Cth). These included the Eastern Pygmy Possum, the Leafless Tongue Orchid, Biconvex Paperbark, Eastern Bristlebird and the Grey-Headed Flying Fox.

As developing the land would have the potential to adversely impact on the habitat of each of these species, the Act required Federal Ministerial approval for that to occur.

In May 2007, Shoalhaven City Council sought the Minister’s approval for rezoning and infrastructure works. And, in March 2009, the Minister refused (Minister’s Decision).

As a result, each landowner’s lot in the Heritage Estates became worth less than $500.

The Foundation steps in

From October 2012, the Foundation began a project under which it offered to transfer the parcels of land for more than their real value but less than what the landowners believed the land to be worth if they’d been allowed to develop it. The idea was that any land transferred would then be rezoned for environmental conservation use and added to the Jervis Bay National Park. Some, but not all, landowners took up this offer.

In 2013, some landowners then sought an interlocutory injunction in the Federal Court of Australia to stop the Foundation from continuing with the project. They submitted that they were entitled to receive compensation ‘on just terms’ for the ‘acquisition’ of their land under section 51 (xxxi) of the Constitution. The landowners claimed that the amount of this compensation should be the difference in the land value before and after the Minister’s Decision.

The landowners argued that the arrangement between the Commonwealth, New South Wales and the Foundation was a ‘device’ entered into to circumvent section 51 (xxxi) of the Constitution. The first step in this device was the Minister’s Decision. The second was the Foundation’s involvement in implementing the project.

The landowners argued that the Minister’s decision effectively ‘sterilised’ the use of their land and amounted to an ‘acquisition’. They also argued that their voluntary sale of land as part of the project was effectively an ‘acquisition’ under s 51(xxxi) of the Constitution.

The court rules against the landowners

When the landowners’ application went before the Federal Court, it ruled that there was no acquisition under section 51 (xxxi) of the Constitution.

This was because the landowners were at all times free to sell their land - subject to its land use restrictions - as part of the project. Some of them had chosen to do this. The court also found that the two tiers of government and the Foundation had not collaborated to create a device that would help the Commonwealth avoid its Constitutional obligations.

Despite this, the landowners pursued their claims to a final hearing in the Federal Court of Australia and then appealed to the Full Court of the Federal Court. They lost both times - and for similar reasons.

Not happy with this outcome, the landowners then applied for special leave to appeal to the High Court of Australia. But on 5 May 2016, the High Court dismissed their application with costs, without even allowing an oral hearing to proceed.

Moving forward

Now that the Heritage Estates litigation has been finalised, the Foundation (subject to funding) is free to complete its project of buying land from the landowners and transferring it into the Jervis Bay National Park. In doing so, it will provide them with a viable option to dispose of land which has been unusable since the time it was purchased, and an investment which has become worthless.

It also ensures the maintenance of vital habitat in and around the Heritage Estates area for the identified threatened species and ecosystems, especially the Eastern Pygmy Possum.