One of the more interesting amendments to the recent reforms introduced by the Land Acquisition (Just Terms Compensation) Amendment Act 2016 (NSW) (“Amendment Act“), which took effect on 1 March 2017, is the potential option for dispossessed land owners to buy back their former land – previously acquired by the acquiring authority – no longer required by the acquiring authority. The introduction of s71A to the Land Acquisition (Just Terms Compensation) Act 1991(NSW) (“Just Terms Act“) now encapsulates that right, subject to a range of stipulations.
The circumstances surrounding why land, compulsorily acquired, becomes surplus land to the actual or final requirements of the public purpose, are many and varied. Those circumstances include:
- land required for construction purposes associated with procuring the public purpose (for the establishment of a construction precinct, the storage of construction plant and equipment, temporary access pathways, etc).
- land initially required for a project which, subject to further design modifications, becomes unnecessary for the procurement of the public purpose.
- land adjacent to land specifically required for the public purpose, or the construction works associated with procuring the public purpose, which is deemed by the acquiring authority to be adversely impacted or otherwise rendered unsuitable (slithers of land adjacent to expressways, land-locked land, irregularly shaped land, etc).
- cancellation of the project, for which the land was acquired.
Section 71A of the Just Terms Act
(2) The authority must, if practicable, first offer the land for sale to the former owner at the market value of the land at the time the offer is made if:
(a) not more than 10 years has elapsed since the acquisition, and
(b) the authority has not made substantial improvements to the land, and
(c) the land is not Crown land, and
(d) the land is not proposed to be disposed of to another authority of the State for a public purpose.
The various elements of s71A(2) are apt to be considered by the Land and Environment in due course. Three elements in particular reach out for consideration:
- “if practicable”. The phrase is likely to be construed in very broad terms. In other words, if the acquiring authority deems the ‘first right of purchase’ option is impracticable for whatever reason, then there may be little recourse by the former owner.
- “at the market value”. The term is specifically defined as “the amount that would be paid for the land if it is sold by a willing but not anxious seller to a willing but not anxious buyer.” The term, in part, reflects the definition of “market value” as set out in s56 of the Just Terms Act.
- “substantial improvements to the land”. This subsection excludes any land – from the “first right of refusal” regime introduced by s71A – that has had “substantial improvements” made to it. It is not clear why this exclusion should apply, having regard to the definition of market value which applies to s71A, which effectively requires the former land owner to pay market value, which would countenance any “substantial improvements” to the land. Again, once can anticipate considerable debate about what constitutes “substantial improvements”.
The Acquiring Authority must elect to dispose of surplus land
Ultimately, the process will be governed by the authority’s election to dispose of surplus land and do so within 10 years of the original acquisition, in accordance with s71A(1)(b). If those preconditions are not met, a former land owner will have no right to compel an authority to sell the land. After 10 years, the option is no longer available.
Of course, outside of the operation of s71A of the Just Terms Act, nothing would prevent an authority from selling land to a former owner, provided due process was followed regarding the sale of public land.
Though not overtly stated by acquiring authorities, it is commonly presumed by dispossessed land owners that additional land is sometimes acquired for the express or related purpose of upzoning and re-selling that surplus land to the market at a later point in time, with the proceeds used to recoup some of the costs associated with delivering the public purpose. The introduction of s71A arguably goes some way towards dispelling that perception or, in some instances, reality.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.