The Victorian Government last week announced that it will allocate $294 million towards stage one of the East West Link project (Project). In what is a clear indication that compulsory acquisition of a substantial number of properties will be required to facilitate the Project, $50 million of that funding is to be directed towards compensation claims by affected property owners.

The indicative Project corridor for the six kilometre stage involves the East West Link entering a tunnel just past the Eastern Freeway, running beneath Alexandra Parade, the cemetery and Royal Park before surfacing to connect with CityLink.

The Acquisition and Compensation Process

The planning for the Project will be undertaken pursuant to the Major Transport Projects Facilitation Act 2009 (MTPF Act). The MTPF Act provides the power for the compulsory acquisition of land under Part 6 of the Act, which invokes the process of compulsory acquisition as contained in the Land Acquisition and Compensation Act 1986 (LAC Act).

Particularly relevant to the acquisition of land for the tunnel component of the Project, section 163 of the MTPF Act provides that where underground land is owned in fee simple, the ordinary compensation principles apply. Determining whether a right to compensation exists will depend on whether the land is owned in fee simple and to what depth. Although dependant on the nature of the Crown Grant or plan of subdivision applicable to particular land, usual practice is that title extends approximately 15 metres beneath the surface, however individual title searches will be required to confirm this. At this stage the depth to which the tunnel will be constructed is not clear to us.

Ordinarily, the process of compensation would involve service of a Notice of Intention to Acquire by the Acquiring Authority on the owners of land which has been deemed necessary for acquisition as part of the Project. A Notice of Acquisition would follow 2 to 5 months later and at that time an entitlement to compensation arises. Compensation is assessed pursuant to Part 4 of the LAC Act. With respect to the market value of the land this is assessed at the date of acquisition and is determined as being the amount of money that would have been paid for that interest in land if it had been sold on that date by a willing but not anxious seller to a willing but not anxious purchaser.

An entitlement to compensation may also arise prior to service of a Notice of Acquisition if the land has been reserved for the purposes of acquisition or if there is loss on sale as a result of the reservation. There are also circumstances in which the Acquiring Authority may consider early purchase of the land on hardship grounds.

In most instances, your reasonable legal fees will be reimbursed by the Acquiring Authority.

Other Rights

You are only entitled to be compensated pursuant to the LAC Act where a legal or equitable interest can be established. Accordingly, if your land or part of it is not compulsorily acquired, you do not have a right to claim compensation under the LAC Act. Having said this, tunnel projects can sometimes bring about nuisance and damage to land (for example through movement of foundations resulting in damage and cracking to buildings), which, although not compensable under the LAC Act, may give rise to common law rights.