Compulsory Acquisition of Land: The Desane case is overturned

Acquiring authorities can rest easy. The NSW Court of Appeal has overturned the decision of the Supreme Court of NSW in Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553.

The Supreme Court’s judgement attracted significant attention earlier this year when it upheld Desane’s challenge to the compulsory acquisition of its land by Road and Maritime Services (RMS).

Essentially, the Court found that the form of the Proposed Acquisition Notice (PAN) issued by RMS was ineffective for three reasons:

  • 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).

However, the Court of Appeal has now reversed this decision and set aside the orders. Below we summarise the decision and provide a summary of the reasons.

Issue 1: Departure from the approved form

The Supreme Court initially found that the PAN’s non-compliance with the approved form was fatal because the Court considered that such a significant interference with private property rights was “no light matter” and accordingly, it was essential that the authority strictly comply with all statutory requirements including the wording set out in the approved form.

The Court of Appeal took a different view. It approached the questions of invalidity on the basis of looking at whether the purpose of the Just Terms Act discloses that a breach would result in invalidity (Project Blue Sky).

The Court of Appeals view was that the Just Terms Act was designed merely to establish the procedural requirements for the acquisition of land, rather than as a protection of the private rights of landowners. To this extent, the purpose of the legislation could not be said to deem a non-compliant PAN as being entirely invalid.

The Court also noted that the deviation in form was not significant and that, in fact, in the context of section 80(1) of the Interpretation Act 1987, the PAN substantially complied with the approved form.

Further, the Court of Appeal also found that the fact that the Just Terms Act allowed for corrections to be made to a PAN for “obvious mistakes” was also indicative of a legislative intention that strict compliance with form was not required.

On those grounds, the departures from the approved form did not result in invalidity.

Issue 2: Failure to identify a public purpose

Initially, the Supreme Court found that a failure to specify the public purpose of the proposed acquisition rendered the PAN at odds with the objects of the statute. This is despite the fact that the Just Terms Act does not specifically require a clear statement as to the purpose.

In its decision the Court of Appeal noted that the previous Act, being the Public Works Act 1912, contained an express requirement for a stated purpose. The Court found that this amendment was significant because it demonstrates a deliberate intention to move away from this requirement.

The Court of Appeal also found that the 6 month negotiation period required in the Just Terms Act was sufficient to afford the landowner the opportunity to obtain more information. As such, a mere statement of purpose was no longer necessary in order to fulfil the objects of the Act.

Further to this, the Court also held that the public purpose “for the WestConnex Stage 3 M4-M4 Motorway Link” was disclosed in the covering letter to the PAN and that it would artificial to restrict the terms of the notice to the only the notice, excluding consideration of the covering letter.

Issue 3: Improper purpose

Much of the Supreme Court’s previous decision was centred on the finding that RMS was acquiring Desane’s land for an improper and ulterior purpose. This was submitted on the basis that RMS was not acquiring the land in order to construct a road, as alleged, but rather with a view to providing open space and green parkland.

However, in finding for RMS, the Court of Appeal held that the relevant time to assess or consider the purpose of the acquisition is at the time the notice is issued, rather than retrospectively. To this end, it is immaterial that over time, the authority changes its intended use of the land such that it is, in fact, no longer intended to be used for the purpose previously identified.

Implications

The flurry of excitement created by the Supreme Court’s initial findings placed a great deal of pressure on acquiring authorities to issue notices which strictly complied with the obligations under the Just Terms Act.

It also opened up the potential for landowners to seek to challenge PANs issued in respect of their land having regard to the defects of the kind identified in the Supreme Court decision.

Many of the concerns about the possibilities that arose from the Supreme Court’s decision have, to acquiring authorities, been alleviated by the Court of Appeal decision.

However, from the perspective of the landowner, the decision is concerning. If deficiencies of the kind identified do not invalidate the PAN, then the question must be asked regarding whether any deficiencies result in invalidity? Also, if there is no obligation to state with particularity what the public purpose is, how is a landowner able to find this out? Presumably, this may be undertaken by some form of informal discovery during the 90 day period.

Finally, if the Just Terms Act is largely procedural in nature, what guarantees are there (if any) that the amount of compensation to be paid to a landowner will not be less than the market value of any land acquired. Interestingly, the former Premier is on the record as previously conceding that compulsory acquisition processes have not been anywhere near as good as they should have been and that the proposed changes are about making the compulsory acquisition processes fairer, more transparent and customer friendly for landowners.

Desane, for its part, has said that it is not interested in further litigation and has agreed to sell its Rozelle site for $78 million-plus GST. Interesting, that sale was done by agreement, rather than through the compulsory process. The RMS originally offered $18.4 million for the site [1].

For a discussion of the Supreme Court’s judgement, see our previous article here.

For a copy of the NSW Court of Appeal’s judgement, please see the link here.

Authors: Peter Holt, Georgia Appleby and Julia Wyatt

[1] See Desane Media Release ‘Sale of 68-72 Lilyfield Road, Rozelle to RMS’ dated 7 September 2018; Mario Christodoulou, ‘Triangle of prime Rozelle land threatens to add $80 million to WestConnex’ The Sydney Morning Herald dated 10 August 2018.

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