Land Acquisition (Just Terms Compensation) Amendment Bill 2009
Mr President, I rise to speak on the Land Acquisition (Just Terms Compensation) Amendment Bill.
The object of this Bill is to amend the Land Acquisition (Just Terms Compensation) Act 1991 (the Principal Act) to clarify the application of sections 7A and 7B of that Act relating to the acquisition of native title rights and interests and interests and the acquisition of land already owned by the acquiring authority.
According to the Agreement in Principle speech, the aim of the Bill is to overcome what the State Government considers are the unintended consequences of the recent High Court of Australia decision in R& R Fazzolari Pty Ltd v Parramatta City Council; Mac’s Pty Ltd v Parramatta City Council [2009] HCA 12 (2 April 2009).
The High Court decided that Parramatta City Council may not compulsorily acquire land owned by R & R Fazzolari Pty Ltd and Mac’s Pty Ltd without their approval.
Fazzolari, Mac, Parramatta Council, and Grocon
Parramatta City Council proposed to redevelop a block within the city centre bounded by Smith, Darcy, Church and Macquarie Streets. The $1.6 billion “Civic Place” redevelopment (the biggest urban renewal project NSW has seen for a decade) was to be carried out under a Public Private Partnership between Parramatta City Council and two companies in the Grocon group. The agreement between the Council and Grocon provided, amongst other things, that the Council would acquire certain land within the redevelopment block and would transfer some of the acquired land to the Grocon companies, and in return, the Council would receive substantial financial payments and other benefits from Grocon.
Some of the land which the Council has to acquire in order for the agreement between it and Grocon to come to fruition and for the redevelopment to proceed belonged to R&R Fazzolari Pty Ltd. Some belonged to Mac’s Pty Ltd. Some parts of the land – in Darcy and Church Streets – were actually parts of the public roads owned by the Council under the Roads Act. Although those two streets were vested in the Council, it had to compulsorily acquire them from itself in order for them to be utilised in the redevelopment. That procedure was authorised by section 7B of the Land Acquisition (Just Terms Compensation) Act.
NSW Land and Environment Court Decision
The appellants challenged the compulsory acquisition, at the first instance, in the NSW Land and Environment Court. Justice Biscoe accepted Fazzolari’s arguments. Biscoe’s J finding are based on section 188 (1) of the NSW Local Government Act which provides that if land is being acquired for the purpose of re-sale, then it may not compulsorily acquired without the approval of the owner.
Section 188 (2) qualifies this constraint on a Council’s power to compulsorily acquire land – it provides that the owner’s approval is not requires if the land is part of, adjoins or lies in the vicinity of other land acquired at the same time under Part 1 of Chapter 8 of the Local Government Act for a purpose other than re-sale.
NSW Court of Appeal Decision
On appeal by the council, the NSW Court of Appeal overturned Biscoe’s J decision, accepting the council’s argument that it had sought to acquire the land at all times for the purpose of implementing the Civic Place redevelopment, which constituted a “public purpose” within the meaning of the Local Government Act.
High Court of Australia Decision
The High Court rejected the Court of Appeal’s decision and endorsed the Land and Environment Court’s narrow approach. Chief Justice French delivered his own judgment. Justices Gummow, Hayne, Heydon and Keifel delivered another judgment substantially in agreement with French CJ.
In his decision, Chief Justice French adopted the judgment of Chief Justice Gleeson in Woollahra Municipal Council v Minister for the Environment (1991) which advised that when identifying the purpose for which land is used one is to look at what is “done with the land” and not the motives of the persons involved in the activity.
Taking this approach French CJ observed that the development agreement contemplated that the appellants acquired land was to be transferred, along with the other land, in exchange for money and consideration. In finding for the appellants, French CJ accepts that such a transaction would fall within the definition of sale and therefore re-sale, according to established authority.
The High Court found that the development of Civic Place for which the landowner’s land was acquired for the development as stipulated in the commercial agreement between the council and the developer. Under the development agreement, after the land was acquired by the council, it was to declare itself a trustee of the land in return for the developer’s provision of money and the works. The High Court concluded that such terms were properly described as effecting the “re-sale” of the land. Therefore, the High Court has reinforced a private landholders right to retain ownership of his/her land.
There are two key issues that I want to discuss with respect to this Bill. First, the introduction of this Bill shows the complete disregard by the Executive of the judicial decision. Second, I will discuss the consequences of the legislation.
Separation of Powers
This Bill is an attempt by the NSW Government to overcome the recent decision of the High Court of Australia.
A press release from Parramatta Council stated:
“Council believes that the amendments to the Land Acquisition Act will allow it to compulsorily acquire Fazzolari’s and Mac’s land because Section 7B of the Land Acquisition Act has been linked back to the Local Government Act, and in particular Council will rely upon the argument of land which “adjoins or lies in the vicinity of” so that by compulsorily acquiring its own roads (i.e. Darcy and Church streets). It can then compulsorily acquire Fazzolari’s and Mac’s land.”
In common law countries such as Australia, the doctrine of the separation of powers is an indication of a working government and democracy. In the case of R& R Fazzolari Pty Ltd v Parramatta City Council; and Mac’s Pty Ltd v Parramatta City Council, the Executive (the NSW Government) perceives the High Court decision as an encroachment and erosion of its power.
As Chief Justice Gleeson commented:
“It is self-evident that the exercise of judicial review will, from time to time, frustrate ambition, curtail power, invalidate legislation, and fetter administrative action…The High Court from time to time disappoints the ambitions of legislators and governments. This is part of our system of checks and balances. People who exercise political power, and claim to represent the will of the people, do not like being checked or balanced.”
The Civic Place redevelopment case highlights that judicial decisions can hamper the execution of important governmental policies. Their effect can be “antithetical to administrative efficiency”. For the public service in particular, decisions made by the Judiciary can mean that plans are thwarted, policy is impossible to implement, and there is an increased expense in carrying out administrative procedures.
Private property rights, although subject to compulsory acquisition by statute, have long been hedged about by the common law with protections. These protections are not absolute but take the form of interpretative approaches where statutes are said to affect such rights.
The common law caution to the legislature in exercising its power over private property, is reflected in what has been called a presumption, in the interpretation of statutes, against an intention to interfere with vested property rights. It was expressed in Clissold v Perry, a land resumption case, which Griffith CJ stated:
“In considering this matter, it is necessary to bear in mind that it is a general rule to be followed in the construction of statutes such as that with which we are now dealing, that they are not to be construed as interfering with vested interests unless that intention is manifest.”
The High Court decision considered the infringement on individual property rights. The High Court judgment considered the following approach:
“In its application to property rights, this long-standing interpretive principle is consistent with international developments in the recognition of human rights since World War II. Although not specifically protected by the International Covenant on Economic, Social and Cultural Rights, the right to property was recognised in the Universal Declaration of Human Rights and in various other international instruments.”
Consequences of the legislation
I will now turn to the consequences of the legislation.
First, these amendments will allow councils to compulsorily buy up their own roads, and then compulsorily buy up the adjacent land, transfer adjacent land to a joint venture partner (i.e. a private developer) pursuant to a Public Private Partnership (PPP), and sell it as a profit.
Second, the High Court decision in Fazzolari and Mac’s did not change the law. The decision did not raise an anomaly, and nor was it a technical win as suggested by the press releases.
Third, the High Court clearly confirmed the law as it stands out today in New South Wales and the limit of councils’ power to acquire private landholders’ land.
Fourth, this amendment is an attempt to change the law in a fundamental way in that it would enable councils to assist big developers to develop land by council compulsorily acquiring small landholders’ land once the council has compulsorily acquired its own road.
In the High Court case, the Court considered the effect of section 188(2)(a) as it stands as an exception to the requirement of section 188(1) that the approval of the owner of the land is being acquired for the purpose of resale. The Court considered where, as in the case of both Darcy Street and Church Street, only part of the land is to be resold to Grocon and part is to be retained by Parramatta Council, the better view may well be that the land compromising those streets is acquired for more than one purpose.
The more natural meaning of section 188(2)(a) applied to such a case would appear to be that those streets, if they were “other land” acquired at the same time as Mac’s and Fazzolari’s land, were each acquired for the purpose other than the purpose of resale.
The provisions included in the Bill mean that Parramatta Council can get around the prohibition of “resale” as held by the High Court. This Bill intends to move the power of acquisition from the Land Acquisition Act, for Council to compulsorily acquire its own land, to the Local Government Act, particularly section 188(2)(a).
The Land Acquisition (Just Terms Compensation) Amendment Bill will apply to all councils . This Bill will allow all councils in New South Wales to compulsory acquire their own roads (which they already own) and then use the power in 188(2)(a) to compulsory acquire any land which forms part of, or adjoins or lies in the vicinity of, council’s own roads.
The Bill will enable councils throughout the State to enter into joint ventures with big developers, and the compulsory acquire their own lands which would give them the right to acquire privately held land which adjoins or lies in the vicinity of council’s own roads.
Recommendations by the Urban Taskforce
The recommendations of the Urban Taskforce should be implemented by the Government. Their proposals include:
First, landowners must be entitled to just terms of compensation.
Second, landholder compensation must be valued based on the rezoned value of the land, following the granting of the final development approval, in connection with the urban renewal project. That is, any consequent land value uplift must flow to the landholder, rather than the acquiring state government authority.
Third, the actual transfer of title from the original landholder should not take place until the rezoning is completed and the development application is approved. This will permit a proper basis for striking a just terms land value. In the event that the landholder wishes to exit ownership early in the process before these matters are finalised, they should be entitled to compensation based on what is known at the time and subsequent additional payment based on the final increase in land value arising from the additional permitted development potential.
Mr President, I support the Government’s commitment to urban renewal projects such as Civic Place in order to reinforce Parramatta’s position as the retail and commercial capital of Western Sydney. Urban renewal projects such as Civic Place are clearly in the public interest.
However, the government is wrong to pursue a model which weakens the fundamental rights of landowners to their property and deprives them of full compensation. This Bill denies the individual of their basic property rights.
Therefore, I cannot, in good faith, support the Land Acquisition (Just Terms Compensation) Amendment Bill.
