September 2006

An avenue closes for owner initiated acquisitions of reserved land

How things were

An owner of land reserved exclusively for a public purpose under an environmental planning instrument had two grounds to give notice to the responsible public authority to acquire the land. The relevant provisions being found in

  1. the Environmental Planning & Assessment Act 1979; or

  2. the Land Acquisition (Just Terms Compensation) Act 1991.

Under the EP&A Act, if the public authority did not within a reasonable time acquire the land either by agreement or compulsory process, the property owner could seek an order from the Land & Environment Court that the acquisition proceed.

The public authority was required to pay all of the applicable heads of compensation under the Just Terms Act. There was no restriction of the class of affected property owners or any special circumstances which needed to apply. The fact that the land was reserved for a public purpose under a planning instrument was the determining factor.

This right to prompt on acquisition under the EP&A Act has now been withdrawn. As we explain below, landowners can now only rely on the "owner initiated acquisition" provisions of the Just Terms Act.

The Amending Act

The Environmental Planning & Assessment (Reserved Land Acquisition) Act 2006 recently commenced and amends the EP&A Act by taking away the ability for property owners to force government authorities to acquire land reserved for public purposes. The effect of this can also potentially reduce the amount of compensation payable for such acquisitions.

The changes

Section 27 of the EP&A Act as now amended provides that:

  • An environmental planning instrument which reserves land for a public purpose must specify a state authority to acquire the land if it is required to be acquired under the owner-initiated acquisition provisions of the Just Terms Act.

  • The test to determine whether a planning instrument reserves land for use exclusively for a public purpose is now solely contained within section 21 of the Just Terms Act.

  • Nothing in a planning instrument is to be construed as requiring the state authority to acquire the land except as required by the owner-initiated acquisition provisions of the Just Terms Act.

The s21 Just Terms Act test which now solely applies

Land is designated for acquisition only if:

  • in response to an application for development consent or building approval, the authority of the state gives written notice to the local council that the land has been designated for future acquisition for a public purpose; or

  • an environmental planning instrument reserves the land exclusively for a public purpose and specifies the authority of the state required to acquire the land.

What are we left with?

Owners of land designated for acquisition under an environmental planning instrument can no longer force the responsible authority to acquire the land based on that fact alone.

The owner-initiated acquisition provisions of the Just Terms Act mean:

  • Public companies or their subsidiaries which own land designated for a public purpose can no longer require the state authority to acquire that land.

  • All other owners such as individuals or private companies can only serve a notice requiring acquisition of the land if the land is designated for acquisition in accordance with the test in s21 of the Just Terms Act and those owners consider they will suffer hardship if there is a delay in the acquisition proceeding.

  • The state authority must also be of the view that the owner is unable to sell the land at market value because of the designation for acquisition and it has become necessary for the owner to sell for pressing personal, domestic or social reasons or in order to avoid the loss or substantial reduction in the owner's income.

  • The acquiring authority need not pay special value, loss attributable to severance, disturbance or solatium however if the state authority was to proceed with the acquisition at its own initiative, these heads of compensation would be payable.

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