As a general proposition, an owner of land owns the ground below their property, subject to various reservations imposed by the Crown.  The nature of that ownership, however, will not always result in compensation payable to the land owner should a public authority require part of the subsurface for a public purpose.  The reasoning behind that approach, the argument runs, is that the deprivation of subsurface rights does not ordinarily result in any reduction in the value of the property (leaving aside property used for mining activity or subsurface enterprises).  In NSW, that approach is reflected in the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act).  In the recent decision of Azizi v Roads and Maritime Services [2016] NSWLEC 97, the land owner sought to challenge that approach, without success.

Azizi v Roads and Maritime Services [2016] NSWLEC 97

A substratum of land owned by Mr Azizi, some 60m below the surface, was acquired by the Roads and Maritime Services for the NorthConnex project, which involved the construction and operation of northbound and southbound twin dual carriageway road tunnels, connecting the Hills M2 Motorway at West Pennant Hills to the F3 Freeway (M1) at Wahroonga.

The Applicant contended that, on a proper construction of s62(1) and (2) of the Just Terms Act, he was not disentitled from claiming compensation for the subsurface acquisition.  Relevantly, s62 provides:

62(1)   If the land compulsorily acquired under this Act consists only of an easement, or right to use land, under the surface for the construction and maintenance of works (such as a tunnel, pipe or conduit for the conveyance of water, sewage or electrical cables), compensation is not payable except for actual damage done in the construction of the work or caused by the work.

62(2)   If land under the surface is compulsorily acquired under this Act for the purpose of constructing a tunnel, compensation is not payable (subject to subsection (1)) unless:

(a)   the surface of the overlying soil is disturbed, or

(b)   the support of that surface is destroyed or injuriously affected by the construction of the tunnel, or

(c)   any mines or underground working in or adjacent to the land are thereby rendered unworkable or are injuriously affected.

The Applicant essentially argued that s62(2) of the Just Terms Act – under which the Applicant’s property was acquired – referred expressly to the “construction” of a tunnel only, not the subsequent use of that tunnel; whereas s62(1) speaks of “construction and maintenance of works …”.  The Applicant contended that the subsequent “use” of the tunnel, which the Applicant emphasised would be operated by a private commercial entity, was a separate activity, thus rendering s62(2) ineffectual as a bar to claiming compensation in the Applicant’s circumstances.

The Applicant also sought to distinguish between the “passive” and “non-passive” use of the tunnel, with the Applicant contending that the “use of a tunnel for the conveyance of sewage, water or electricity, as per s62(1) of the Just Terms Act, was a “passive use”, to be distinguished from a “non-passive” use, such as the use of the tunnel as a motorway.

The Applicant submitted that there was some ambiguity in the relevant subsections of the Just Terms Act, and that regard should be had to the second reading speech to properly appreciate what was intended by s62 of the Just Terms Act.

The Respondent contended that the relevant provision of the Act should be given their “plain meaning”.  It submitted that there was no ambiguity. It also submitted that the reference to “construction” of a tunnel in s62(2) must properly and logically include the subsequent use of the tunnel.

The Court noted in passing that no case had previously considered s 62(2) of the Just Terms Act.

Statutory construction

The Court made various preliminary observations on the relevant statutory construction to apply in the circumstances:

  • the plain meaning of the text of a provision must be considered, where appropriate by reference to its context.
  • if there is to be compulsory acquisition of land without compensation this must be expressed by the legislature in unambiguous terms.
  • in the event of ambiguity, s34 of the Interpretation Act 1987 provides that consideration may be given to extrinsic material.

Findings

The Court dismissed the Applicant’s submissions, and held that the Applicant’s property was compulsory acquired under s62(2) of the Just Terms Act, the consequence being that the Applicant was not entitled to compensation under the Act.

The Court held that s62(2) expressly refers back to s62(1) of the Just Terms Act, and because s62(1) is part of the statutory context one applies to interpret s62(2), the subsections must be read together. It followed that the same meaning should be given to the word “tunnel” in both subsections (1) and (2) of s62, because there is no indication that Parliament intended the words to have a different meaning in each subsection.

The Court held that the Applicants’ construction – that s62(2) only applies where the compulsory acquisition relates to the “construction of a tunnel” and not the subsequent “use” of that tunnel – leads to an “absurd result”.  The Court observed:

[17] … I am unaware of any circumstance in which an acquiring authority would compulsorily acquire land for the construction of a tunnel with no intended use envisaged. It would be very troubling if it did given that public resources are usually at stake.

Regarding the “passive” verse “non-passive” distinction raised by the Applicant, the Court remained unpersuaded.  The Court observed that “the use of a tunnel for the conveyance of sewage, water or electricity (as per s62(1)) is a use, just as use of a tunnel for a roadway is a use. There is no factual or statutory basis for such a distinction.”

The Court further found that there was no ambiguity regarding the language of s62 of the Just Terms Act.  The terms of s62(2) are “clear and unambiguous”, and therefore resort to the Second Reading speech or other material was not warranted in the circumstances.

Comment

The case of Azizi v Roads and Maritime Services dealt with a threshold issue, which ultimately ended the matter.  However, had the threshold issue been determined otherwise by the Court, the matter would have progressed to an assessment of the compensation payable under the heads of compensation set out in s55 of the Just Terms Act, if any.  In the circumstances, it is difficult to see how the Applicant would have secured anything more than nominal compensation in the circumstances (leaving aside his legal and valuation costs), having regard to the fact that the tunnel was some 60m below the surface.