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Information Guide To Land Acquisition & Compensation
This publication is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this publication without first obtaining specific professional advice. All the paper and printing processes used in this brochure have been chosen to minimise their impact on the environment. Further details are available on our suppliers’ websites. ecoStar » http://www.thinkrecycled.com.au/landing.aspx
WHAT IS LAND ACQUISITION AND COMPENSATION? Many of us would remember the great Australian film The Castle where the hero Darryl Kerrigan successfully took on a big airport corporation trying to compulsorily acquire his land for an extension. At the end of the day, Darryl won the case and the acquisition did not go ahead. Unfortunately, in the real world, compulsory acquisition of land interests takes place all the time and land owners like Darryl Kerrigan are normally powerless to prevent them. Statutory authorities like VicRoads, water authorities, municipal councils and other government departments and instrumentalities often have powers to acquire interests in your land without your consent. An acquisition may involve acquiring the title to all or part of your land. On other occasions easements or other interests might be acquired so that the authority can put in an underground pipeline or an overhead electricity line or similar. While you may not be able to prevent a compulsory acquisition proceeding you have some important rights under relevant legislation Before land is acquired, there is often a Public Acquisition Overlay (PAO) put in place. The effect of a PAO may be to prevent further development on your land if seen to be contrary to the future use of the land contemplated by the PAO. Therefore the PAO may block any activity that requires a planning permit or maybe even the ability to sow a crop. The overlays are sometimes in place for years or decades before the land is compulsorily acquired. While the PAO may impact your ongoing use of the land, the effect may be greater if you have any intention of selling your property since the value of the land may be greatly diminished. But you have rights Both tenants and land owners have rights under the legislation relating to compulsory acquisitions and planning overlays. It is imperative that you engage lawyers and consultants experienced in the compulsory acquisition and planning overlay process to assist you in obtaining appropriate compensation. These processes are covered by unique legislative regimes which do not follow standard property and conveyancing law practices.
At Aitken Partners, we believe we are well placed to assist you as we have the expertise in acting exclusively for landholders and tenants and we manage the entire process for you. In particular, we engage on your behalf valuers experienced in valuing land for the purposes of assessing compensation by reason of compulsory acquisition as well as business and other valuation experts where appropriate. Once the acquisition process commences, an Acquiring Authority usually gives you advance notice of its intention to do so. In our experience, the earlier we are engaged in the process, the better placed you are to make the right choices and ensure you receive full compensation. The cost of obtaining advice is usually covered by the Acquiring Authority, which means you are generally not out of pocket for your legal, valuation and other expert advice. We are happy to discuss this with you prior to engaging us to represent you. Our clients have benefitted by getting us involved in the process as soon as they become aware that a PAO or an acquisition is likely. It is critical that you understand the process and your rights before you try to sell your property or enter into discussions on any level with the Acquiring Authority, including any surveys or ‘chatting’. I have received a Notice of Acquisition. What do I do now? If you have received a Notice of Acquisition generally your rights and the procedures for the Acquiring Authority are set out in the Land Acquisition and Compensation Act 1986 (the Act). The usual way an interest in land is acquired by a public authority is under Section 19 of the Act where a Notice of Acquisition is published in the Government Gazette. The Notice identifies the interest(s) in land to be acquired and who the public authority believes owns that interest.
The Notice is also served on all the persons who have an interest in the land. The effect of a Notice of Acquisition is that the land immediately vests in the Acquiring Authority, which means it no longer belongs to you.
Compensation Under the Act, an Acquiring Authority must make an offer in writing to any person it is aware of that has an interest in the land being acquired, within 14 days of the date of the Notice of Acquisition. The offer normally will be accompanied by a certificate of valuation reflecting the amount of the offer. It is important that upon receiving a Notice of Acquisition and subsequently an offer of compensation, a claimant obtains independent advice on the documentation and an independent valuation to determine whether the amount offered by the Acquiring Authority is in fact fair value for the interest being acquired. In many cases, after an independent valuation is obtained and brought to the Acquiring Authority’s attention, the authority will revise the offer of compensation upwards. I don’t agree with the Acquiring Authority’s offer but can I get some money from them now? Yes you can. Under Section 51 of the Act, a ‘Claimant’ (the name given under the Act for landowners or other persons with an interest in the land seeking compensation for compulsory acquisitions) can obtain an advance of compensation equal to the amount offered provided the offer is greater than $5000. The advance payment is without prejudice to the Claimant’s right to pursue a claim for additional compensation. Usually an advance must be paid within a month of a request otherwise additional interest is payable to the Claimant.
How is compensation assessed? Compensation is assessed by a valuer appointed by the Acquiring Authority. The valuer may make an inspection time with the claimant to view the land in question. The principal legislation governing valuations in this field is the: Land Acquisition and Compensation Act 1986
What is the land worth BEFORE the easement?
What is the land worth AFTER the easement?
Say: $30,000/acre Equals: $300,000
Say: $24,000/acre Equals: $240,000
This Act spells out for valuers the way in which compensation must be assessed. The primary ‘before and after’ method may be illustrated as follows:
This is known as the ‘Market Value of the Land Acquired’ (Section 41 (1) (a) and Section 41 (3) of the Act).
Other potential heads of compensation referred to in the Act include:
Severance (Section 41 (1) (c)); Land is regarded as severed when the following occurs:
Any Special Value to the claimant, in addition to Market Value, incidental to his or her ownership or occupation of the land as at the date of acquisition (Section 41(1) (b));
Fields 1 & 3 are inaccessible and said to be ‘severed’ from one another.
Any loss attributable to Disturbance (Section 41 (1) (d)) Disturbance is any pecuniary or financial loss suffered as a consequence of the acquisition other than just land value. For example the loss of access of a farm to feed in a paddock which impacts on stock weight and pasture/sillage/crop production or requires the purchasing of supplementary feed for stock;
Solatium (Section 44) Additional payments of up to 10% of the market value of the land acquired to compensate for intangible and non pecuniary disadvantage resulting from the acquisition. In rare cases, the full 10% is granted however most claims are granted between 1% to 5% depending on the claimant’s particular connection to the land in question.
Other items which a valuer may take into consideration include:
reduced property value due to restrictions on the use of land within an easement;
reduced property value of remaining land within an affected land holding;
possible visual impact of an easement and infrastructure associated with an easement on any residential component of a property;
in the case of overhead/aboveground easements, the number of transmission lines and similar structures located on the easement or the number of above ground outlet valves (in the case of water pipelines);
the effect the easement might have on farming operations;
loss of vegetation;
Blot on title – this relates to the impact the notation of the Acquiring Authority’s interest on your Title may have on any purchaser’s considerations were the property to be offered for sale in the future.
Rental – an amount per week/month relating to the temporary use of land by the Acquiring Authority for placement of equipment or supplies during construction of the power line/pipe line etc.
How does the Land Acquisition & Compensation Act work? Notices A Notice of Acquisition (NOA) is the document prescribed under the Act that takes the acquired property interest from the land owner and vests it in the Acquiring Authority. Generally speaking, a NOA is preceded by a Notice of Intention to Acquire (NOIA), another notice prescribed under the Act (Section 6), basically foreshadowing that the Acquiring Authority intends to acquire an interest in land. Generally, a NOA cannot be served and published until 2 months have passed since the date the NOIA was served. A NOA must contain a description sufficient to identify the interest in land to be acquired. Generally speaking, a NOA is accompanied by a Survey Plan showing the area to be affected by the proposed acquisition and a Schedule of Rights and Responsibilities. Once a NOA has been published in the Government Gazette, it must be served on all persons whose interest has been acquired and the ownership of the land vests immediately. Accordingly, once the NOA is published, the land is owned by the Acquiring Authority. An Acquiring Authority generally must not take possession of the acquired land if it is a primary residence or business before the expiration of 3 months after the date of acquisition. The Acquiring Authority must then give seven days notice in writing to the person in occupation of that land of its intention to take possession. As such, timelines vary between properties.
How and When is Compensation Paid? An Acquiring Authority must make an initial offer of compensation to the claimant in writing within fourteen days of the date of acquisition. The offer is accompanied by a copy of the Certificate of Valuation to which the Acquiring Authority has had regard in making its offer and a statement setting out the principal rights and obligations of persons whose interests in land have been acquired under the Act. If you hold an interest in land and receive an offer of compensation it is important to be aware that you need not accept the offer. In every case, we recommend that you consult an experienced compulsory land acquisition lawyer who will engage an independent property valuer immediately to check whether the amount being offered is appropriate and reasonable. Where a claimant engages a lawyer to act on their behalf, the independent valuer will carry out a valuation and, where an independent valuer’s valuation is higher than that of the Acquiring Authority’s valuer, a valuers conference is generally held whereby the valuers for each party meet and table their valuation approaches and calculations to discuss any differences. Often agreements are reached at these valuers conferences and often these agreements involve the Acquiring Authority increasing their initial offer as a result of facts and other matters brought to light by the claimant’s valuer. Should agreement not be reached between the respective valuers, there may still be further higher offers made by the Acquiring Authority and, should the matter not be resolved, either party may refer it to a Court or Tribunal for determination.
The Act requires prescribed documents to be served by the Acquiring Authority and deadlines to be observed by both the Acquiring Authority and the claimant with potential consequences where the parties do not meet the time lines set out in the Act.
What other rights do I have? Can I refuse access to contractors or personnel from the Acquiring Authority? The simple answer is generally not. If a Notice of Acquisition has been served under the Act, the Authority has the power to force an owner or occupier who refuses to give up possession of their land or hinders the Authority from entering upon and taking possession of the land to do so. The Authority may issue a warrant to the Sheriff to enforce their right to enter and take possession. It is important to note that where the Authority complies with the provisions in the Land Acquisition & Compensation Act regarding entry into possession and has to obtain a warrant and engage the Sheriff to assist in this process, then the costs associated may be payable by the claimant. Accordingly it is always important that claimants consult an experienced lawyer before attempting to refuse an Acquiring Authority access. Powers of Entry An Acquiring Authority or a person authorised in writing by that Authority can enter and remain upon land acquired with contractors, vehicles, machinery or equipment and affix survey pegs, marks or poles, dig, bore and take samples of soil, rock, groundwater or minerals. However, it is important to note that the Acquiring Authority must serve notice in writing seven days before the land is to be entered. Landowners and occupiers should be aware that a person who wilfully and without authorisation interferes with any survey pegs, marks or poles or obstructs any person acting in accordance with Part 9 of the Land Acquisition & Compensation Act (the powers of entry provisions) is guilty of an offence. Temporary Occupation Once a Notice of Acquisition is served, the Acquiring Authority is required to give seven days notice prior to occupying the land. Under Section 76 of the Act, when the Acquiring Authority vacates the land it must leave it, as nearly as possible, in the condition in which it was immediately before being occupied by that Authority.
Do I have to pay any fees? Where negotiations are taking place between the claimant and an Acquiring Authority or even with a private company in relation to a proposed acquisition or easement, it is only fair and reasonable that the claimant’s legal and valuation costs are paid for by that Acquiring Authority. However, it is sensible for claimants to ensure that their lawyers receive confirmation in writing from the Acquiring Authority, or the respective private company involved in the acquisition, confirming that the claimant’s valuation and legal expenses will be paid. Where the Act applies, Section 41(1)(f ) provides that, ‘…any legal, valuation or other professional expenses necessarily incurred by the claimant by reason of the acquisition of the interest…’ are to be paid for by the Acquiring Authority.
Water Pipeline Easements Water Authorities often seek to acquire, either through negotiation or compulsory means, easements to place water pipelines across the property. Most water pipeline easements are located underground and vary from accommodating 450 to 600 millimetre diameter pipes. Often where an underground pipeline is proposed, the Water Authority will place large stockpiles of pipes on a private property awaiting construction and excavation to reach the point where the pipes can be placed in the excavated culvert. In these circumstances, an independent valuer may be able to assess a level of rent to be paid by the water authority for rental of the land area upon which the pipelines are temporarily stored. In these circumstances it is useful for land owners to note when the equipment and supplies of the Water Authority or its contractors arrive on the private land as this will assist the valuer in calculating this component of compensation.
Electricity Easements Often claimants will be faced with attempts by Electricity Authorities to obtain, either through negotiation or compulsory acquisition, easement rights to place electricity poles and stays or even underground electricity wires on a private property.
» Types of electricity transmission towers
There are some general restrictions that often apply to the use of land where an electricity easement is located. The specific restrictions are contained in the Creation of Easement document that the Acquiring Authority will prepare and hence it is critical for claimants to receive independent advice on terms of this document before they sign it. Some restrictions often contained in Creation of Easement documents include:
no houses or other structures to be erected on the easement;
no swimming pools;
no storage of chemicals or flammable substances;
no filling or refuelling of any vehicle;
no use of vehicles or equipment of a height of more than 3 metres;
no parking of large trucks or caravans;
no operating of spray irrigators;
The precise terms of the restrictions contained in the Creation of Easement document are very important as they can affect the resale value of the land and the claimant can be held liable to the Acquiring Authority for any damage caused by them within the Easement area where those activities are prohibited under the Creation of Easement document.
» Types of electricity easements
Underground Easement The most common depth of an underground easement is between 450mm and 900mm below the ground surface.
Poles and Stays The pole to the right describes a 6-wire 132kV line, the pole being approximately 18 metres in height at a span to the next pole of 150-160 metres (approx.)
Companies Overview Aitken Partners Aitken Partners is a Premium Level Melbourne-based law firm offering a range of legal services to business and private clients. We have 9 partners and 25 other professional staff, many of whom are Accredited Specialists in their fields (including property, taxation, business law, Wills & Estates, commercial litigation and family law) who are often consulted during the compulsory acquisition process. We have experience advising land owners, tenants and businesses (ranging from small tenancies to large businesses including Boral and Westfield) affected by land acquired for most major infrastructure projects in Victoria as well as owners affected by public acquisition overlays. Infrastructure projects in which we are, or still, involved include: »» Local councils such as Banyule, Bass Coast, Brimbank, Casey, Frankston, Geelong, Greater Shepparton, Melton, Surf Coast, Wellington, Yarriambiack; »» VicRoads including the Craigieburn By-Pass, Dingley By-Pass, Eastlink, EastWest Link, Geelong By-Pass, Horsham By-Pass, Koo Wee Rup Bypass, Outer Metropolitan Ring Road, Western Highway project, Westgate Freeway up-grade, Yan Yean Road duplication and numerous other road widenings; »» Water corporations including Barwon Region, Coliban Region, Gippsland, Goulburn Valley Region, Lower Murray Urban and Rural, Western Region, Yarra Valley; »» Department of Transport Planning and Local Infrastructure (now
merging the Department of Transport and the Department of Sustainability and Environment, among others) including the Desalination Plant at Wonthaggi and pipeline, a bus depot at a Westfield shopping centre, Regional Rail Link Stage 1 and 2; Various alliance projects connected with Regional Rail Link and the further development of infrastructure; Electrical Transmission Lines created for SpAusnet and United Energy Distribution; Grasslands Overlay including Werribee Districts; and Places Victoria (formerly Urban Renewal Authority) including the Dandenong revitalisation.
Anton Dunhill Partner Head of Property Disputes & Compulsory Acquisition Direct Phone: 03 8600 6019 Mobile: 0439 382 554 Email: [email protected]
Hay Property Group Hay Property Group was founded by Peter Hay in 1996 and now employs over 30 staff in its day to day operations. Hay Property Group are an independent professional property consulting and valuation practice servicing both the Melbourne Metropolitan Area and Rural and Regional Victoria. Its team of qualified valuers has over 60 years experience in the property market and we are proactive in implementing the most up to date technology to ensure our customer service levels and turnaround times are the envy of our competitors. In recent times, Hay Property Group has acquired ValuerCo further expanding our practice into business, plant and equipment valuations. Hay Property Group welcome the opportunity to discuss your property needs and you should not hesitate to contact Peter Hay to discuss your particular requirements. Hay Property Group - We’ve got Victoria covered Experience - Service - Quality
Qualifications: Assoc. Dip. (Vals) RMIT REIV Sworn Valuer ASM - Associate Strata Manager (OSV) Fellow of the Australian Property Institute Certified Practising Valuer No. 1047 Prior to founding Hay Property Consultants in 1996, Peter was a director of Brendan Rice Pty Ltd Valuers for 10 years. He qualified as a valuer in 1982 and throughout the past 30 years has gained extensive experience in valuing all types of property including commercial, industrial, rural, residential and specialist properties throughout the Melbourne Metropolitan Area and rural and regional Victoria. He has experience in valuing suburban and country hotels and motels, caravan parks, multi unit developments and conducting feasibility analysis for medium density sites suited for redevelopment. Peter is currently on the panel of valuers for most State Government Departments in Victoria together with most Victorian banks, building societies and financial institutions. He completes valuations for mortgage purposes, compensation and Government acquisitions, litigation, rental determinations, insurance and pre-purchase and sale advice. Peter has completed many specialised rural valuations ranging from large size grazing properties, dairies, orchards, cold stores and cropping properties through to horse studs, equestrian centres and hobby farms. Peter has valued numerous dairy and cattle properties in the Yarra Valley and Gippsland. He has valued sheep and wool grazing properties for property trusts throughout the Western District and High Country and through into East Gippsland.
Contact: Peter Hay p: 1300 96 96 48 m: 0418 311 276 e: [email protected] www.hayproperty.com.au Anton Dunhill p: 03 8600 6019 m: 0439 382 554 e: [email protected] www.aitken.com.au