Compulsory Acquisition of Land by WestConnex

Assessing compensation when land is acquired by WestConnex, Sydney Metro and Sydney Light Rail

by Paul Dillon

The New South Wales government is committed to major public infrastructure projects to bring Sydney public transport into the 21st century.  To achieve their objectives, it has been necessary for the public authorities responsible for the WestConnex, Sydney Metro and Sydney Light Rail projects to compulsorily acquire private land to varying extents.

Where landowners are unable to negotiate agreements with the acquiring authorities on the proper amount of compensation to be paid for the acquisition of their land, compensation is determined in accordance with the provisions of the Land Acquisition (Just Terms Compensation) Act 1991 (“the Just Terms Act”).

For the purpose of assessing compensation, the following matters are set out in section 55 of the Just Terms Act:

Market value

The market value of the land is assessed on the date of its acquisition.  Market value means the amount that would have been paid for the land if it had been sold at the time by a willing but not anxious seller to a willing but not anxious buyer.  The impact of the particular project on the value of the land is disregarded in assessing its market value.

If the current zoning of the land reflects the public purpose for which the land is being acquired, it is also to be disregarded.  The underlying zoning of the land by reference to the zoning of the adjacent or surrounding land will be taken into account.

Special value

Special value of the land to a landowner is the financial value of any advantage, in addition to market value, which is incidental to his actual use of the land.

For example, a car dealer may own two sites consisting of a sales office/showroom which is being acquired and an adjoining caryard.  The car dealer would value the sales office and showroom over market value because of the advantages of operating the caryard from the adjoining site.

Severance

A landowner may suffer loss by reason of his land being severed or divided in two as a result of a partial acquisition.

For example, a nursery may be divided in two with its retail outlet no longer having access to a display area due to severance by a rail line running between the retail outlet and the display area.  The nursery owner will recover compensation for the reduction in value of the retail outlet caused by it being severed from the display area.

Disturbance

Loss attributable to disturbance refers to costs reasonably incurred by a landowner due to the acquisition.  Examples of disturbance costs for a landowner include:

  • legal costs
  • valuation fees
  • legal costs on the purchase of a replacement property of the same value
  • removal expenses
  • pest certificate fees
  • survey fees
  • building inspection fees
  • electricity and telephone reconnection fees
  • stamp duty on the purchase of a property of the same value
  • discharge of mortgage costs
  • mortgage reinstatement costs on a replacement property

Solatium

Solatium is compensation payable to a landowner for non-financial disadvantage resulting from the necessity of the landowner to relocate his home as a result of the acquisition.

The maximum amount payable for solatium is adjusted annually and is published in the New South Wales Government Gazette.  The maximum amount currently payable for solatium in respect of land acquisitions taking effect on and after 1 June 2016 is $27,235.

The matters that are taken into consideration include:

  • the interest in the land of the person entitled to compensation
  • whether the person is residing on the land temporarily or indefinitely
  • inconvenience likely to be suffered because of the person’s removal from the land
  • the period after acquisition during which the person will be allowed to remain in possession of the land

Increase or decrease in the value of adjoining or severed land

Any increase or decrease in the value of the land held by the landowner which adjoins or is severed from the acquired land must be taken into account.

In the earlier example of the nursery being divided in two by a rail line, the value of the display area may be reduced due to the landowner being unable to continue its previous existing use because it has been severed from the retail outlet.  The landowner would be entitled to an increase in compensation corresponding to the reduction in value of the display area.

The value of the display area may be increased, however, because it benefits from the acquisition for a public purpose.  For example, the construction of roads associated with the rail line may improve access to the display area.  In that event, compensation for the acquired land would be reduced by the amount of the increase in value of the display area.

Conclusion

Landowners affected by the WestConnex, Sydney Metro or Sydney Light Rail projects need to ensure that they receive full and proper compensation for the compulsory acquisition of their land.  The proper amount of compensation payable to individual landowners will vary from case to case.

Foulsham & Geddes are able to advise landowners as to their entitlements under the Just Terms Act to receive compensation for the compulsory acquisition of their land.

Keyword: compensation compulsory acquisition westconnex