A big loss for the State of NSW in their attempt to compulsorily acquire land: Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553

Published 05 Jun 2018
Dominic Maley

The NSW Government sustained a major loss in their campaign of compulsory land acquisition, in a case that serves as a poignant reminder of how compulsorily land acquisition will only be permitted if it is for a clear and proper purpose and also if the required procedure is followed fully.

While the following decision will have immediate practical consequences insofar as the final design of the WestConnex and its surrounding land is concerned, it will have broader consequences for all matters of compulsory land acquisition.

Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553

On 26 May 2017, The Roads and Maritime Services ('RMS') issued a Proposed Acquisition Notice ('PAN') under the Land Acquisition (Just Terms Compensation) Act 1991 ('Just Terms Act') stating their intention to compulsorily acquire land at 68-72 Lilyfield Road, Rozelle, owned by Desane Properties Pty Ltd ('Desane').

The PAN confirmed that if Desane and RMS could not come to an agreement with respect to the sale within 90 days (in accordance with s 13(a) of the Act), the RMS would then place a notice of compulsory acquisition in the Government Gazette.

The proposed acquisition related to Stage 3 of the WestConnex. Importantly, there is no present final design for Stage 3. Stage 3 only issued a 'Concept Design' in early May 2017: issuing the PAN to Desane later that month.

Moreover, the conceptual purpose insofar as this property was concerned was predominantly for open space and parkland.

In the years prior to the PAN, Desane had lodged a proposal with the Department of Planning seeking an allowance for 200 apartments, retail and commercial space and a 90-place childcare centre. Desane's belief in the value of the property was far in excess of the $21,489,259.00 offered by the RMS.

Desane objected to the validity of the PAN on the following grounds:

1. The PAN form itself failed because it did accord with the Just Terms Act.

2. The proposal on which the PAN was based was not sufficiently certain. 3. Even if it was sufficiently certain, the proposal was 'improper' because it related to open space and green parkland and not a purpose in accordance with the Roads Act.

Additionally, Desane argued that the RMS had breached the Australian Consumer Law "because by the PAN and its covering letter, it misrepresented that the Property was required by it, for a public purpose, when in truth it was not required or not required at that time."

A. Failure of Form?

Interestingly, the PAN form itself was rendered invalid by the court for a failure to comply with the legislation.

Complex legal questions arose about the applicability of the 'Approved Form' which was approved before the amending legislation. At the time in question, the Just Terms Act was in a state of transition. The RMS sought to 'update' the form in this PAN. Two issues in the update conflicted significantly with the 'Approved Form'. One of those issues essentially accorded with the amending legislation, whereas one did not.

The PAN was accordingly deemed invalid on this basis.

This goes to highlight the importance of a rigorous examination of the PAN.

B. Proposal not sufficiently certain?

The Court held that for a PAN to be valid, it is a requirement that the PAN state the public purpose for which the land is to be resumed.

According to His Honour Hammerschlag J, "there is a clear statutory necessary intendment or implication that when an owner of land is informed by an authority of State of its intention to take it, the notice will state the public purpose for which the land is proposed to be acquired."

With the legislation not expressly stating this requirement, consideration was had to a landowner's common law right for a land owner to be told precisely the public purpose for which the land is being taken from them.

The PAN did not state this purpose and was again deemed invalid.

C. Even if certain, was it improper?

Desane had maintained that, putting aside the issue of whether the final purpose was sufficiently clear, the purpose here was to acquire land compulsorily with the dominant purpose of green parkland and open space.

Consideration was had by his Honour to s 177 of the Roads Act, which determines:

(1) The Minister, RMS or a council may acquire land for any of the purposes of this Act.

(2) Without limiting subsection (1), the Minister, RMS or a council may acquire:

(a) land that is to be made available for any public purpose for which it is reserved or zoned under an environmental planning instrument, or

(b) land that forms part of, or adjoins or lies in the vicinity of, other land proposed to be acquired for the purpose of opening, widening or constructing a road or road work.

(3) Without limiting subsection (1), RMS may also acquire land that it proposes to declare to be RMS development land.

According to His Honour, this acquisition was "[a]n acquisition … to provide open space and green parkland … These are not purposes of the Roads Act."

Again the PAN was deemed invalid; this time on the basis the dominant purpose of the proposed acquisition was improper.

Finally, whilst Desane did not abandon their claim that the RMS had breached the Australian Consumer Law, this ground was 'very faintly argued' and quickly disposed of by the court.

If you have been issued with a Proposed Acquisition Notice under the Land Acquisition (Just Terms Compensation) Act 1991, contact Maclarens Lawyers on 9682 3777 for advice on your rights.