This month's report, by the NSW Legislative Council Portfolio Committee 6, on Acquisition of land in relation to major transport projects, features an overview of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) and two previous NSW government commissioned reviews in relation to the Act − the 2014 Russell Review and the 2016 Housing Acquisition Review (Pratt Review).
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Government agencies, some state owned corporations and local councils have the authority to acquire land for public infrastructure or facilities. While the NSW Government aims to make the best use of existing state-owned land for these purposes, at times it will need to acquire private land.
According to the NSW Government submission, land acquisition for essential infrastructure purposes is critical to the state's growing population and the government's duty to provide essential services to its citizens. Acknowledging that acquisitions of private land are not approached lightly, and only taken when there is a significant benefit to the broader public, the NSW Government outlined the importance of the acquisition process being fair and transparent, allowing landowners to make informed decisions, with appropriate support throughout the process.
In practice, according to Property Acquisition NSW, the Centre for Property Acquisition provides an independent service to help property owners understand the property acquisition process, '[w]hen the Government makes a decision to build a project, such as a new road or hospital, it instructs the relevant agency to investigate where that project might best be located, or what might be the best route'.
This is in conjunction with 'extensive consultation ... with the community to find out its views on where and how a project might be built'.
Once a preferred design, route or location for the project is determined, the agency responsible may identify properties that need to be acquired to deliver the project.
In this regard, it is important to note that both Transport for NSW and Sydney Metro (and the former Roads and Maritime Services) have legislative powers to acquire land for public purposes, as prescribed within the: • Transport Administration Act 1988 & Transport Administration Amendment (Sydney Metro) Act 2018, and • the Roads Act 1993.
The land acquisition process
The Land Acquisition (Just Terms Compensation) Act 1991 prescribes the process an acquiring authority must follow in order to acquire land from a landowner, as well as the principles for determining compensation on just terms.
The objects of the Act are to: • provide a statutory guarantee that the amount of compensation will be not less than the market value at the date of acquisition • ensure compensation on just terms for landowners whose land is acquired • establish procedures which simplify and expedite the acquisition process • require an authority to acquire land designated for acquisition for a public purpose where hardship is demonstrated • encourage the acquisition of land by agreement instead of by compulsory process.1
Typically, all legal interests in land are identified before commencing the acquisition process. The NSW Government explained that detailed planning of activities is usually conducted many weeks in advance of the announcement of a new project and the commencement of acquisitions, to ensure as many landowners are advised by the acquiring authority first. At this point, owners are provided with specific project information, and information related to their rights in relation to the property acquisition process.
When the acquisition process formally commences, the acquiring authority will instruct an independent valuer to inspect the property. This valuer will determine the market value of the property and any additional compensation payable. Landowners are encouraged to obtain their own valuation from an independent valuer, with the reasonable costs of this being paid for by the acquiring agency.
Once the independent valuation is complete, acquiring authorities will issue a formal letter of offer and enter into a process to reach agreement with landowners and their professional consultants. The NSW Government advised that the process of reaching agreement often involves the exchange of both parties’ completed valuation reports, followed by a number of legal and valuation meetings between both parties, with a view to reaching an agreement on compensation'.
To comply with the legislation, the acquiring authorities are required to make a genuine attempt to acquire the property interest by agreement within a minimum six month period before commencing the compulsory acquisition process. According to the NSW Government, '[o]ver 80% of government acquisitions of private land ... are achieved through agreement between the landowners and the acquiring authority on an independent market valuation of the property'.
During this negotiation process any additional compensation is also determined.
In the instance that the acquiring authority and the affected party cannot reach an agreement on the amount payable over the minimum six month negotiation period, the property may be acquired compulsorily under the Act.
As the NSW Government explained:
... [t]he acquiring authority commences this process by issuing a Proposed Acquisition Notice (PAN) to the property owner and advising the Valuer General. Following the expiry of the PAN period [90 days], the property will be compulsorily acquired through gazettal and the Valuer General will independently determine the amount of compensation payable.
The NSW Government claimed that '[l]ess than 20% of acquisitions proceed to compulsory acquisition, which occurs when the acquiring authority and the landowner are unable to agree on land valuation and compensation'.
Following the compulsory acquisition of a property, the NSW Government advised that 'a person is entitled to remain [in] the building for 3 months after ... if it is the person’s principal place of residence or principal place of business'.
Determinations by the NSW Valuer General The NSW Valuer General is an independent statutory officer appointed by the Governor of New South Wales to oversee the State’s land valuation system. The Valuer General’s functions are primarily set out in the Valuation of Land Act 1916 and the Land Acquisition (Just Terms Compensation) Act 1991.
As noted at 1.12, the NSW Valuer General becomes involved when a landowner and acquiring authority are unable to reach an agreement on the amount of compensation to be paid and the property is acquired compulsorily through gazettal.
Under the Land Acquisition (Just Terms Compensation) Act 1991 the NSW Valuer General independently determines the appropriate amount of compensation due.
Dr David Parker, NSW Valuer General explained to the committee the independent determination process:
... I assess the disturbance claims of the dispossessed and I assess the other heads of compensation. I do that with regard to the provisions of the Act, court precedent—of which there is quite a lot—and Valuer General policy. I read the claims submitted by the dispossessed and the issues list submitted by the acquiring authority and we exchange that information between each party so that there is no risk of adverse information. When completed, a preliminary report is provided to both parties for consideration before I finalise my determination. There are a series of conferences for the parties during the process and it is very common for my determination to differ from the claim made by the dispossessed or the offer made by the acquiring authority.
Dr Parker also advised that a landowner can appeal to the Land and Environment Court if they are unhappy with the Valuer General's determination.
Appeals to the Land and Environment Court
As noted above, if a person is dissatisfied with the amount of compensation offered by the acquiring authority, as per the determination of the Valuer General, the person may lodge an objection with the Land and Environment Court. The Court them decides the amount of compensation that will justly compensate the person for the acquisition of the land.
An application to the Land and Environment Court must be lodged within 90 days of the compensation notice being issued by the acquiring authority. The applicant must give the acquiring authority notice in writing that they have begun proceedings in the Court, after which the applicant and the acquiring authority will provide evidence about entitlement to and quantum of compensation.
In nearly all cases, the Court will arrange a conciliation conference between the parties under section 34 of the Land and Environment Court Act 1979, with the purpose of assisting the parties to resolve the claim for compensation without the need for a hearing.
If the case does proceed to a hearing, the amount of compensation determined by the Land and Environment Court could be more or less than the amount of compensation originally offered by the acquiring authority.
A party may only appeal against the Land and Environment Court's decision on the matter on a question of law. If the order or decision was made by a commissioner, the appeal is made under section 56A of the Land and Environment Court Act 1979 and is heard by a judge of the Court. If the order or decision was made by a judge, the appeal is made under section 57 of the Land and Environment Court Act 1979 and is heard by the NSW Court of Appeal.
Hardship acquisitions
Under section 23 of the Land Acquisition (Just Terms Compensation) Act 1991 an authority of the state can acquire land in certain hardship circumstances, for example, if the owner is unable to sell the land at its market value because of the designation of the land for acquisition for a public purpose.
According to the NSW Government, applications for hardship acquisition are made to the relevant authority using a Notice Requiring Acquisition of Land form from the Centre for Property Acquisition website. If an authority rejects the application for hardship or there is no response within 90 days, the applicant can seek an independent review of the application. It is then referred to a panel of independent reviewers appointed by the Minister for Water, Property and Housing.
The NSW Government advised that a total of eight applications have been considered by this panel since its inception in April 2017, with four decisions upheld, two overturned in favour of the applicant, one withdrawn and one pending.
Recent reviews or reports related to the property acquisition process This section outlines two previous government commissioned reviews conducted in relation to the Land Acquisition (Just Terms Compensation) Act 1991 and the implementation of recommendations from each review. According to the NSW Government, both reviews 'were undertaken with the objective of delivering a fairer, more transparent, more equitable land acquisition process for landowners, while improving consistency and accountability of government agencies engaged in the acquisition of private property'.
In its submission to the inquiry, the NSW Government stated that the 'majority of the government’s commitments [in response to the two reviews] have been delivered or are ongoing and are monitored for continuous improvement'.
2014 Russell Review
In 2014, the NSW Government commissioned Mr David Russell SC to undertake a review of the Land Acquisition (Just Terms Compensation) Act 1991. The aims of the review were to: • define and clarify what real property rights or interests in real property are • recommend a set of principles to guide the process for how acquisitions of real property should be dealt with by Government • consider whether and how these principles should be reflected in current legislation, and • recommend a process for considering these principles in future legislation.
However, the Russell Review 'did not include consideration of the level of compensation payable for the acquisitions of real property'.
The Russell Review made 20 recommendations to government including 'several amendments to the Act and to the property acquisition process to ensure that it adequately supports participants'.
In October 2016, the NSW Government provided a response to the Russell Review, 'supporting most of the recommendations ... and ma[king] several amendments to the Act as a result'.39 One of the recommendations from the review, Recommendation 17, was not implemented and was discussed during the current inquiry, relating to compensation being based on a 'reinstatement basis'. This will be discussed further in Chapter 3.
2016 Pratt Review
In 2016, the then Customer Service Commissioner, Mr Michael Pratt AM, conducted a Housing Acquisition Review with the objective of 'improving the manner in which the NSW Government deals with residents' which was 'triggered by concerns in relation to WestConnex'.
The Law Society of NSW described the review as a high-level, citizen focused review which 'produced a series of resident "pain points", guiding principles and recommendations'.
The Pratt Review made 20 recommendations, including the 'establishment of the Centre for Property Acquisitions and the Property Standards Group, and amendments to the administrative process'.
In response to recommendations from this review, the NSW Government 'immediately undertook work ... to improve the property acquisition process by developing circulars and certain guidelines, and by establishing the Centre for Property Acquisition to provide a whole- of-government approach to supporting landowners through the acquisition process'.
The Centre for Property Acquisition, based within Transport for NSW, is responsible for ensuring that all government agencies have access to consistent property acquisition standards, processes and guidelines, as well as ensuring all property owners, residents and businesses are dealt with in a respectful and empathetic way. The property acquisition standards state that: • property owners will be treated fairly and with empathy and respect • property owners will be provided with clear information about their rights • property owners will be supported throughout the acquisition process with assistance tailored to meet their individual circumstances • the acquisition process will be consistent across projects and acquiring authorities • the Government will monitor and report publicly on the effectiveness of the land acquisition process.
Reforms that followed this review included: • the minimum six month negotiating period to provide residents with more certainty and time to understand the process • the creation of a Personal Manager role in acquiring agencies to provide affected owners with a single point of contact for the acquisition • the offering of free counselling to residents being affected • greater access to information about the compulsory acquisition process.
Current context and approach to the inquiry
Land acquisition for essential infrastructure is an important step in the delivery of critical infrastructure. Transport for NSW is currently delivering the largest infrastructure program in Australia with $72 billion of investment over four years for major city-shaping and precinct projects like Sydney Metro, light rail, motorways and road upgrades.
Reflecting on the current levels of activity, Transport for NSW confirmed that the scale of corridor preservation currently underway has not been seen since the 1950s.
According to data provided by the Centre for Property Acquisitions, most acquisitions are undertaken by local councils, Sydney Metro and Transport for NSW. In the 2021 financial year, local councils undertook 157 acquisitions, with approximately 70 of these being partial and the remainder whole acquisitions. Sydney Metro completed 152 acquisitions, nearly all of which were full acquisitions, and Transport for NSW undertook 147 acquisitions, the majority of which were only partial (approximately 120).
Transport for NSW advised that, as at April 2022, there were 639 property acquisitions underway, including acquisitions of interests in land. Of these, 285 are in the Greater Sydney region and 354 are in regional NSW. This was in addition to 142 live interests in land being acquired by the agency.
In the 2021 financial year, Transport for NSW acquired property in relation to a number of projects, including the Coffs Harbour Bypass, Barton Highway, M7-Northern Road and Mulgoa Road upgrade.
In relation to Sydney Metro, the committee was advised that there were: • 417 interests being acquired for Metro West (Westmead to The Bays), being 149 freehold interests (75 commercial and 74 residential) and 268 leasehold interests (202 commercial and 61 residential)53 • 64 acquisitions undertaken for the Metro Western Sydney Airport project, 19 of which were in Orchard Hills (and of this 19, 15 being freehold interests) • 513 interests to be acquired, across 13 buildings, for Metro West (Pyrmont & Hunter Street stations).
