Government bodies and private entities can acquire an interest in private properties across the country for their infrastructure projects via a process known as “Compulsory Acquisition”. The Land Acquisitions (Just Terms Compensation) Act 1991 (NSW) (the Act) governs the acquisition process for entities such Transgrid, Roads and Maritime Services, Sydney Water and Transport for NSW, and creates a regime for acquisition of properties wholly or partially, either permanently or temporarily (such as for the construction of a temporary worksite).
Some examples of current acquisitions, include:
- Transgrid’s acquisition of various properties for their “HumeLink project”, installing 365km of 500kv transmission lines which will connect Wagga Wagga, Bannaby and Maragle;
- Australian Rail Track Corporation’s acquisition of various properties throughout regional Victoria, New South Wales and Queensland to implement the 1,600km “Inland Rail”, connecting Melbourne and Brisbane; and
- EnergyCo’s Central-West Orana Renewable Energy Zone transmission project, currently in the development phase, which aims to deliver energy from solar and wind farms to households and businesses across the region and the state.
They want your property!
If an acquiring authority seeks to acquire your property, you will receive an introductory letter. The letter will appoint an Acquisition Manager to your matter and, as mandated by section 10A(2) of the Act, offer you the opportunity to engage in voluntary negotiations with the acquiring authority regarding the compensation you should be paid. Before initiating compulsory acquisition process, the acquiring authority must genuinely try to reach an agreement with you regarding the compensation you are to be made through negotiation for at least six months.
As a landowner, you can engage your own lawyer to assist you through the stages of negotiation and/or compulsory acquisition. You can also engage your own valuer to prepare a Compensation Assessment Report on your behalf. In most cases, the acquiring authority will cover your legal and valuation fees “reasonably incurred” and in connection with the acquisition process.
What happens if you can’t agree on compensation?
If negotiations are unsuccessful, you will be served with a Proposed Acquisition Notice (otherwise known as a PAN) by the acquiring authority. The PAN will be served on any owner of other interests in the property, including mortgagees. In compliance with section 11 of the Act, the PAN formally commences the compulsory acquisition process. The PAN serves to extinguish your interest in the property which is being acquired and convert your interest into an entitlement to compensation.
Please note that being issued a PAN does not prevent you from continuing voluntary negotiations with the acquiring authority.
A notification of compulsory acquisition will be published in the NSW Government Gazette after 90 days (and up to 120 days) from when you are issued the PAN.
How will the compensation be calculated?
If no agreement is reached between the Landholder and the acquiring authority, the compensation you are paid for the acquisition will be determined by the Valuer General of NSW. Importantly, the Valuer General does not act for you or the acquiring authority. The compensation as determined by the Valuer General, will not be less than the market value of the land (unaffected by the proposal) at the date of the acquisition (section 3(1)(a) of the Act).
To assist the Valuer General, you should complete the compensation form which would have been issued to you with the PAN (in accordance with section 39 of the Act).
The Valuer General will send you and the acquiring authority a preliminary valuation report to review. The report will set out how they have determined the compensation which should be paid to the Landholder, taking into consideration to the heads of compensation listed in section 55 of the Act as follows:
- the market value of the land on the date of its acquisition,
- any special value of the land to the person on the date of its acquisition,
- any loss attributable to severance,
- any loss attributable to disturbance,
- disadvantage resulting from relocation,
- any increase or decrease in the value of any other land of the person at the date of acquisition which adjoins or is severed from the acquired land by reason of the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired.
You have 10 business days after receiving the preliminary report to provide feedback to the Valuer General.
What happens once the Valuer General’s report has been finalised?
After the Valuer General’s report has been finalised, the acquiring authority must issue you with a Compensation Notice. The report is to be finalised and Compensation Notice issued to you within 45 days of the acquisition notice being published in NSW Gazette.
You can choose to accept or reject the Compensation Notice.
If you accept the Compensation Notice, you must sign a Deed of Release and Indemnity for the acquiring authority. By signing the Deed, you will release and indemnify the acquiring authority from any further claims relating to the acquisition. You will receive your compensation, as well as interest, within 28 days of returning the signed Deed.
If you reject the Compensation Notice, you must file an objection with the NSW Land and Environment Court within 90 days. This will initiate legal proceedings and the Court, usually at legal expense to both parties, will decide how the dispute between the Landholder and the acquiring authority will be resolved.
Review into Land Acquisition in NSW
The NSW Government is currently conducting a review into the land acquisition process in NSW and the legislative framework. The discussion paper was released in March 2024. A public consultation with all stakeholders took place between 22 March 2024 to 3 May 2024. Recommendations for the Government to consider will be released in mid to late 2024.
Please contact the team at Cheney Suthers if you need assistance through the process of compulsory acquisition. We have successfully assisted many clients to achieve the compensation they deserve for the loss and disturbance to their property. Further information can also be found in the NSW Government’s “Guide to Property Acquisition in NSW” pamphlet.
