Compulsory Acquisition of Land and Legal Costs
By Lovegrove Smith & Cotton
January 2015
While big public projects like roads and train tracks are what we typically think of when we talk about compulsory acquisition, it actually happens all the time in smaller, less obvious ways. The Land Acquisition and Compensation Act 1986 is the primary legislation that sets out the process to be followed and how compensation is to be paid. The compensation determination process is complicated and some confusion arises. Fortunately, a small part of the compensation determination process was made much clearer in a recent VCAT decision, where the Tribunal awarded legal costs in the claimant’s favour, notwithstanding that the amount of compensation ultimately awarded was much less than the claimant’s claim.
Whilst the recent change in government in Victoria may have put a halt on the East West Link proposal in Melbourne, there are a number of significant planning and infrastructure projects currently being led by the state and federal government in Melbourne. One of the projects currently funded by the state government and federal government is the Regional Rail Link, which plans to untangle metropolitan and regional train tracks as they travel through Melbourne into the heart of the city. Though such a project will have a significant import on many train and car commuters in Melbourne’s west, inevitably homes will be lost to public imperatives in the process. This is because land required for a public purpose can be acquired/assumed by government departments and agencies, either by compulsion or by negotiation.
The Land Acquisition and Compensation Act 1986 sets out the process to be followed for the compulsory acquisition of land. The Act also outlines how the appropriate amount of compensation is to be determined. Naturally, when people are compelled to part with their home, they will have conflicting opinions and expectations about the values of their homes. A common problem that arises during the acquisition process is when land, the subject of the acquisition, has further subdivision or redevelopment potential. Because of the nature of compulsory acquisitions, it is easy to see why it is a highly litigious area of the law.
The reality is though, many people who are left feeling underwhelmed with the government’s compensation offer, do not end up challenging the government’s compensation determination. This is often because legal costs play a huge factor in their decision, as the costs of litigation are significant and the Courts and Tribunals retain a discretion as to costs in compensation proceedings. Therefore, there is no guarantee of true success with a claim.
Fortunately for potential claimants, a recent decision in VCAT (Heislers v Melbourne Water Corporation [2014] VCAT 1399) showed that the discretion as to costs in compensation proceedings is still tilted in favour of claimants. In that case, the claimant was awarded its legal costs, albeit with a 20% discount, notwithstanding the fact that the amount of compensation ultimately awarded by the Tribunal was exactly the amount of the acquiring authority’s compensation offer, and as we know, the government has “deep pockets”.
This decision highlights that a successful claimant will still have a strong claim for legal costs being awarded in the claimant’s favour even if the amount of compensation ultimately awarded is much less than the claimant’s claim. In addition, it calls for concern amongst acquiring authorities to re-think the way in which they approach compulsory acquisition cases. Acquiring authorities need to protect themselves against the risk of adverse costs orders being made against them in these types of matters.
For further information about compulsory acquisition of land, we strongly suggest that you contact a suitably qualified construction and planning lawyer.
Written by Peter Micevski, a former solicitor of Lovegrove Smith & Cotton
