Your guide to compulsory acquisition - · PDF fileHunt & Hunt | Compulsory acquisition | Page 3 What is an acquiring authority? An acquiring authority is a body that has been granted

Your guide to compulsory acquisition

IntroductionThis guide has been prepared to assist land owners, tenants, businesses and licence holders affected by compulsory land acquisition and seeks to:

» explain some of the processes associated with compulsory land acquisition » explore some of the types of compensation » highlight legal obligations » advise how Hunt & Hunt can assist

The aim of this document is to provide an overview of the compulsory acquisition process and to outline the avenues and options available to:

» those who are involved in a compulsory acquisition » those who think they may be affected by a future compulsory acquisition

Hunt & Hunt | Compulsory acquisition | Page 1

ContentsIntroduction 1

What is compulsory acquisition? 2

What is an acquiring authority? 3

What rights does an acquiring authority have? 3

Can I stop a compulsory acquisition? 3

Three stages of compulsory acquisition 4

Stage 1 – Early planning 6

Stage 1 facts 7

How Hunt & Hunt can help 7

Stage 2 – Identifying future acquisitions 8

What is the impact of a PAO? 8

Stage 2 facts 8


Stage 3 – Acquisition process commences 10

Who can claim? 10

What am I entitled to? 10

Compensation 12

Resolving Claims 12

Stage 3 facts 13


Can I deal with this myself? 14

Acquisition timeline 16

Glossary and Legislation 18

Compulsory acquisition experience 20 The information contained herein is intended to provide general information in summary form, current at the time of publication. It does not constitute legal advice or a substitute for legal advice and should not be relied upon as such.


What is an acquiring authority?An acquiring authority is a body that has been granted power to acquire land for a specific purpose pursuant to the Land Acquisition and Compensation Act 1986.

An acquiring authority could be:

» VicRoads » A rail authority » A government department » A services company (e.g. water, power, etc.) » A municipal council

What rights does an acquiring authority have?The ‘Acquiring Authority’ is granted planning permission by the government to mark certain properties for future acquisition so they can be used for a public purpose.

The acquiring authority can acquire:

» All of your land » Some of your land » The right to use some or all of your land

(e.g. an easement)

Structures or developments situated on the land (including houses, gardens and sheds) may also be acquired.

Can I stop a compulsory acquisition?Generally, it is not possible to stop a compulsory acquisition. However, in some instances concerns raised about an acquisition have led to a different outcome. Examples include the Western Highway project and more recently the East West Link proposal. In these cases, appropriate questions were raised and variations were made to the infrastructure projects.

Our partners have previously acted for groups that form opposition to proposed infrastructure developments. Some examples include unChain St Kilda (in relation to the St Kilda Triangle development) and Lower Our Tracks Incorporated (in relation to the proposed Sky Rail Project).

Before the acquisition process commences, the acquiring authority may approach you with a request to reach an agreement for the sale of the affected land (i.e. to buy the land from you rather than taking it). The process may be referred to as voluntary purchase.

This option may be beneficial to you, however it is advisable to ensure that you are aware of all your rights and obligations before making a decision.

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What is compulsory acquisition?In simple terms, it is the compulsory purchase of all or part of your land by a government or statutory authority. It often affects land owners, tenants, businesses and licence holders.

Common examples include: » A family home acquired to build a

new road » A tenant’s rental property acquired to

widen a road » A cattle farmer’s property acquired to

build a new freeway » Part of a vineyard acquired for a water

easement » A restaurant business acquired for

a revitalised town centre » A house and business acquired for

a new airport runway

Other examples of compulsory acquisition can include easements on your land which allow some access to your property and the placement of overland / underground:

» Electrical transmission towers / lines » Water / sewerage pipes » Gas pipelines » Access roads » Other infrastructure

PAO

1

2

3

Early planning

Identifying future acquisitions

Acquisition process commences

1

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Three stages of compulsory acquisitionThere are three stages to the acquisition process:

Stage 1. A public reservation is proposed (usually for infrastructure projects). Various plans and feasibility studies are undertaken to determine whether and how to proceed.

Stage 2. A reservation in a planning scheme is usually made by placing a Public Acquisition Overlay or Project Area Designation (PAO for convenience) over the relevant portion of land.

Stage 3. When the proposed project is ready to proceed, the acquiring authority will commence with the acquisition (this may be a number of years after the placement of the PAO). Then, the formal acquisition process and your claim will proceed.


Stage 1 facts » Depending on the size of the proposed

project, this stage can take a number of years

» Well advised action may enable objections to be raised or alternative outcomes to be sought

» The acquiring authority may contact you to negotiate plans for the proposed acquisition

» It can involve a number of planning and zoning issues in addition to potential compulsory acquisition of property

» You may not be aware that a property could be affected

How Hunt & Hunt can help » We can help you determine how the

proposed project may impact you » We are experienced in preparing or

assisting clients to raise objections. We can identify some of the unexpected long term impacts of raising these issues to avoid reducing or affecting your (future) claim

» Whether or not you have been contacted by the acquiring authority, we can provide advice regarding your potential claim and the advantages and drawbacks of a negotiated acquisition

» If involved at this early stage, we can assist you in making decisions about selling or improving your property

» We can maintain open lines of communication to inform you of developments and what you can expect in the following acquisition stages

» We can review any proposed agreement with the acquiring authority as it may affect you in the future

» We explain and manage the entire process for you, so you can choose your level of involvement

Stage 1 – Early planningThis early planning phase is usually undertaken in the background and may be without the knowledge of potentially affected owners. Planning commences when a project is conceptualised, and involves a number of feasibility studies and plans. It may involve public consultation to determine the future of the project.

The planning phase ends when a decision is made about whether to continue to the next stages. Sometimes the decision is made not to proceed at all.

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How Hunt & Hunt can help » We are able to determine if your property

is affected by a PAO

» We can make enquiries about anticipated project outcomes and timelines

» We can work with you to assess your available options and possible future impacts

» We can assist in the identification of your relevant compensation claims

» We are adept at providing advice about the effect of other parties’ potential compensation claims

» We can maintain open lines of communication enabling us to keep you abreast of developments and inform you about what you can expect in the following acquisition stages

» We are well placed to review any proposed agreement with the acquiring authority as it may affect you in the future


Stage 2 – Identifying future acquisitionsOnce the feasibility of the project has been determined and the intention is to proceed, the acquiring authority usually places a ‘Public Acquisition Overlay’ (PAO) over the properties affected by the project.

A PAO is a planning control which identifies an area of land for future potential compulsory acquisition. A PAO does not mean that the land will definitely be acquired, but that it may be acquired in the future.

It is not mandatory for the acquiring authority to notify landowners personally about a PAO over their property until the next stage of the acquisition.

What is the impact of a PAO?It may affect the purchase or sale of a property or restrict your ability to develop the land. Therefore, the PAO may affect:

» The value of the land upon sale » An owner’s ability to sell the land » An owner’s ability to obtain planning

permission for the land » The intended use of the land » A purchaser’s ability to claim

compensation when the land is acquired

Stage 2 facts » You may not be aware that a PAO

affects a property you own, rent, or are interested in

» A prospective purchaser or financial institution holding security may become aware of a PAO

» A PAO may be in place for many years (even decades) before being acted upon. Some PAOs may never be acted upon

» Sale of an affected property may trigger a compensation claim

» Refusal of a planning permit for an affected property may trigger a compensation claim

» Any compensation payments are noted on title and can affect future landholders


Stage 3 – Acquisition process commencesThe third stage of a compulsory acquisition requires the acquiring authority to make contact with you and begin the formal acquisition process.

The Land Acquisition and Compensation Act 1986 contains a process for the acquiring authority to follow.

The formal acquisition process usually commences when the acquiring authority issues affected parties with a ‘Notice of Intention to Acquire’ (NOIA).

The NOIA informs you that your land is intended to be acquired within 2-6 months. The NOIA is accompanied by information that details your entitlements as an affected party, such as your right to obtain independent legal and expert advice.

The NOIA also imposes obligations on the affected land, which may restrict your ability to alter the land without the acquiring authority’s permission. For example, if you intend to build a shed on the affected land, you may need to seek written permission prior to construction.

Following the NOIA, a ‘Notice of Acquisition’ (NOA) is issued. A NOA is the formal notification that the affected land now belongs to the acquiring authority, however the

acquiring authority may not be entitled to take possession of the affected land immediately.

The process for compensation follows.

Who can claim?Those entitled to claim compensation include: » Landowners » Tenants » Businesses » Licence holders » Usually any person or entity with

an interest in the land

What am I entitled to?Some of your entitlements may include:

» Market value » Special value » Loss attributable to severance » Enhancement/depreciation in value of the

claimant’s interest in adjoining/severed land

» Loss attributable to disturbance » Solatium » Legal, valuation and professional expenses

necessarily incurred » Capital Gains Tax rollover » Stamp Duty reimbursement » Conveyancing

Market value – the amount that would have been paid to the claimant upon sale at the date of NOA (subject to strict legal and valuation guidelines).

Special value – where the property has a greater financial value to the claimant than the market is willing to pay.

Loss attributable to severance – the reduction in market value of the claimant’s other interests in the acquired property, or the claimant’s interests in other related-use land.

Enhancement or depreciation – increase or decrease in the value of the claimant’s adjoining or severed land due to the project’s purpose.

Loss attributable to disturbance – the financial losses suffered by the claimant as a consequence of the NOIA or the NOA.

Solatium – any non-financial disadvantages such as the ‘emotional impact’ of the acquisition. Solatium is capped at 10% of the market value of the property.


Stage 3 facts » Formal acquisition usually commences

when the NOIA is issued to each affected party

» The NOA is usually issued within 2-6 months. When the NOA is issued, the acquiring authority owns the affected land

» Within 14 days of the NOA, the acquiring authority will provide an initial offer of compensation

» The compensation process can be expedited if required. However, in most cases claimants prefer to obtain additional time to allow full exploration of the claim and to ensure all entitlements are considered

How Hunt & Hunt can help » We discuss your personal circumstances

and entitlements on a private and confidential basis (protected by legal privilege)

» We assist with the early identification of issues to maximise your claim


» We can engage independent expert advisors at arm’s length

» We explain the legal impacts of documents which you will be required to sign, taking into account possible future impacts which are not always expected

» We ensure that the acquiring authority acts appropriately, explaining your rights and obligations

» We conduct valuation and settlement conferences and negotiations, as required

» We can provide additional services such as taxation advice, conveyancing etc.

You do not need to handle this situation alone. We are here to help you identify

your rights to compensation and manage the process for you.

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CompensationYou are entitled to seek an advance of any initial offer made by the acquiring authority if the initial offer is in excess of $5,000. Payment of an advance does not affect your right to seek further compensation.

You may instruct your lawyer to advise on the benefits or disadvantages of requesting the advance.

Usually, your lawyer will engage the necessary experts to assist in quantifying your claim. Such experts may include valuers of property, business and agribusiness. Sometimes your situation may require other experts, for instance, town planning advisors can be engaged to assess the land’s highest and best use (development potential).

Resolving claimsAs the majority of claims seek more than the acquiring authority’s initial offer, negotiations can ensue to settle the claim.

The acquiring authority may organise a valuers’ conference to better understand your valuation assessment.

In most cases, your final compensation payment is made by reaching agreement with the acquiring authority.

Should you be unwilling to accept the acquiring authority’s last negotiated offer, you may elect to dispute your claim and refer it to the Victorian Civil and Administrative Tribunal (VCAT) or the Supreme Court of Victoria.


Can I deal with this myself?It is possible for you to deal with the acquiring authority directly without involving a lawyer. Unrepresented claimants have encountered varying degrees of success.

Compulsory acquisition is a niche area of law as it does not follow typical property law practices. Claimants represented by lawyers with significant experience in this area are better informed about the interplay between the legislation, case law and practicalities. An intimate knowledge and attention to your particular circumstances allow all possible entitlements to be uncovered.

The legislation provides for necessary legal costs and disbursements to be paid by the acquiring authority. It is therefore possible to avoid any out of pocket costs and expenses.

It is advisable for expert valuation, planning and other necessary advice to be undertaken independently, so it can be effectively relied upon throughout the entire process. As such, it is important that these experts are engaged directly by your lawyers.

Some pitfalls affecting unrepresented or poorly represented claimants:

» Failing to apply principles from one stage of compulsory acquisition to the other stages, resulting in miscalculations and even a reduction in compensation

» Failing to identify the correct application of interest as calculations can be complex, particularly noting the differences between settled claims and awarded claims

» Overlooking a mortgagee’s rights in relation to advances and payments for compensation

» Failing to identify when the acquiring authority utilises powers of entry and powers to temporarily occupy

» Ignoring the responsibility to mitigate loss, such as agribusiness and business destruction/disruption

» Improving or selling property after the NOIA, without first clarifying rights and obligations

» Overlooking the impacts of personal circumstances including tax implications

1 Early planning

2 Identifying future acquisitions

Within 14 days of NOA, offer of

compensation received

Within 3 months, the claim

(Response to Offer) is due

Response to the claim is due within 3 months

of receiptNOIA usually

issued

Within 2-6 months the

NOA is usually issued

On date of NOA, affected land belongs to acquiring authority

3 Acquisition process commences


Acquisition timeline » The Stage 3 process usually commences with the Notice of Intention to Acquire (NOIA)

pursuant to the Land Acquisition and Compensation Act 1986 » The Notice of Acquisition (NOA) will usually be issued within 2 – 6 months of the NOIA » On the date of the NOA, the affected land belongs to the acquiring authority

» The acquiring authority must make an initial offer of compensation within 14 days of the NOA » The claimant provides their ‘Response to Offer’ (your claim) within 3 months of the initial offer

of compensation (under some circumstances this time frame can be extended) » The acquiring authority must respond to the claim within 3 months of receipt


Glossary and legislation » “LACA” - Land Acquisition and Compensation Act 1986 (Vic) » “LACA Regs”- Land Acquisition and Compensation Regulations 2010 (Vic) » “NOIA” - Notice of Intention to Acquire » “NOA” - Notice of Acquisition » “P&E Act” - Planning and Environment Act 1987 (Vic) » “P&E Regs”- Planning and Environment Regulations 2005 (Vic) » “PAO” - Public Acquisition Overlay » There are many ‘Special Acts’ which govern each Victorian Acquiring Authority,

such as:– Eastlink Project Act 2004 (Vic)– Electricity Industry Act 2000 (Vic)– Local Government Act 1989 (Vic)– Major Transport Projects Facilitation Act 2009 (Vic)– Pipelines Act 2005 (Vic)– Road Management Act 2004 (Vic)– Water Act 1989 (Vic)


Compulsory acquisition experienceAdvising on, and acting in relation to, prospective and actual compulsory acquisitions by:

» Local councils for public open space, roads and other projects including Ballarat, Banyule, Bass Coast, Brimbank, Casey, Frankston, Geelong, Glen Eira, Greater Dandenong, Greater Shepparton, Kingston, Melton, Stonnington, Surf Coast, Wellington, Whittlesea, Wyndham and Yarriambiack

» Road projects (VicRoads and other authorities) including the Chandler Highway, Craigieburn Bypass, Dingley Bypass, Drysdale Bypass, Eastlink, East-West Link, E6 / Outer Metropolitan Ring Road, Geelong Bypass, Hallam Road, Horsham Bypass, Kilmore-Wallan Bypass, Koo Wee Rup Bypass, Melbourne CityLink, Palmers Road, Princes Highway Project (multiple stages), St Albans, Thompsons Road, Western Highway Project (multiple stages), Westgate Freeway up-grade, Yan Yean Road duplication and numerous other road widening projects

» Water corporations including Barwon Region, Coliban Region, Gippsland, Grampians Wimmera Mallee, Goulburn Valley Region, Lower Murray Urban and Rural, Melbourne, South East, Sugarloaf Pipeline, Western Region and Yarra ValleyMelbourne Metro Rail Authority

» Places Victoria (previously the Urban Renewal Authority) including the Dandenong Revitalisation

» Melbourne Metro Rail Authority and other Rail Authorities in relation to the Melbourne Metro Rail Project, Regional Rail Link Stage 1, Regional Rail Link Stage 2, various Regional Rail Link alliance projects concerned with Regional Rail Link, level crossing removals, and the further development of infrastructure, as well as Westall Railway Station upgrade

» Level Crossing Removal Authority, including various removals such as Caulfield to Dandenong (Sky Rail), St Albans and others

» Linking Melbourne Authority including Eastlink and East-West Link

» Melbourne Airport

» Government departments in charge of various environment, land, water, transport, planning and infrastructure including the desalination plant at Wonthaggi, the desalination pipeline and a bus depot at a Westfield shopping centre

» Gas pipelines created for Esso Australia Resources Pty Ltd

» Electrical transmission lines created for SPAusnet and United Energy Distribution

» Western Grasslands Reserves Overlays including the Werribee Districts

» Department of Infrastructure, Energy & Resources (Tas)

» Various Authorities in relation to Public acquisition overlay claims including loss on sale claims and planning permit application refusals

Anton DunhillPartner Head of Property Disputes and Compulsory Acquisitions in Victoria

Contact detailsT: +61 3 8602 9254F: +61 3 8602 9299M: 0413 268 663E: [email protected]

Tony RaunicPartner

Bill HazlettPartner

For further information please contact Anton Dunhill

T +61 3 8602 9254F +61 3 8602 9299M 0413 268 663E [email protected]

www.hunthunt.com.au

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Your guide to compulsory acquisition - · PDF fileHunt & Hunt | Compulsory acquisition | Page 3 What is an acquiring authority? An acquiring authority is a body that has been granted