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Compulsory acquisition, private property rights, and government accountability

In-House Memorandum
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Kellehers Australia has expert and specialised knowledge in compulsory acquisition and recently acted in two unusual public acquisition cases.

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In general, an ‘acquiring authority’ can only compulsorily acquire a person’s land in accordance with the procedures in the Land Acquisition and Compensation Act 1986 (Vic) (‘the Act’). Section 5(1) of the Act sets out the general process for compulsory acquisition which involves two key steps. First the acquiring authority needs to reserve the land under a planning enactment for a “public purpose”. After the reservation of land, the mechanism set out in the Act for acquisition and compensation then applies [1]. The result is that a compulsory acquisition process normally takes place in two stages: first, a planning scheme amendment reserves the land for a public purpose; and second, the land is acquired and compensation paid to the landowner.

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This two-stage process is important to ensure that procedural fairness is afforded to affected landowners. A 1983 report on compulsory acquisition, commissioned by the Victorian Government, recommended that land set to be acquired should be reserved under a planning enactment to ensure that affected parties are notified of the acquisition well in advance, and have an opportunity to seek reasons for and contest the acquisition.

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Kellehers has been active in this area. One case involved a reservation of land for a public purpose that involved a far greater area of land than required for the purpose. The reservation process is restricted by a common law principle which can be traced back to the 19th century in UK authority and to the early 20th century in Australian High Court authority. According to the principle, where a statutory power is framed in general terms, it will not be interpreted as undermining fundamental rights unless it does so with unmistakably clear wording, including private property rights:

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“When interpreting a statute, courts will presume that Parliament did not intend to interfere with vested property rights, unless this intention was made unambiguously clear.” [2]

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When land is reserved for a public purpose, the principle applies to narrowly restrict the scope of the power to reserve the land:

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“A body … authorized to take land compulsorily for specific purposes, will not be permitted to exercise its powers for different purposes, and if it attempts to do so, the courts will interfere…” [3]

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For example, where Council purported to acquire land for the purpose of a bike trail but included large areas of open space, the question arose as to what was reasonably necessary for the purpose of a bike trail.

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In another recent Kellehers Australia case, a local council attempted to acquire land without going through the normal reservation process, relying on s 5(3) of the Act, a rarely used provision that enables the Governor in Council, on recommendation of the Attorney-General, to certify that a reservation would be “unnecessary, undesirable or contrary to the public interest”. Upon this certification, Council can skip the reservation stage and immediately begin acquiring the land. Use of this process significantly diverges from broad policy intention for acquisition.

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The Attorney-General is not required to provide reasons for the recommendation. However, in this case, his reasons were that owners of all land were difficult to locate, Council’s intentions were widely known and site conditions were unusual – there were costs to Council whilst the land remained in private ownership, and a planning scheme amendment process would unreasonably extend this time. The Attorney-General also considered that a clear public purpose was recognised by project funding approvals. One curious and troubling reason was that the costs of utilising the planning process were considered to be a factor to be weighed against the cost of delayed acquisition if the planning scheme amendment process was followed.

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These two cases demonstrate the complex issues of government accountability where the State seeks to take private property rights.

Freeman Zhong and Hubert Algie
21 December 2016

 

[1] There are a number of events which can trigger a right to compensation under the Act – for example, if a permit is denied in accordance with the reservation and zoning.
[2] Australian Law Reform Commission, Traditional Rights and Freedoms: Encroachment by Commonwealth Laws – Final Report (December 2015) at [18.104], citing Clissold v Perry (1904) 1 CLR 363, 373.
[3] Marquess of Clanricarde v Congested Districts Board of Ireland (1914) 79 JP, 481 (Lord Loreburn), cited in Municipal Council of Sydney v Campbell (1925) AC 343 (Duff J).
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