Compulsory Acquisition – when can you and when can’t you claim?

Public works often disrupt and inconvenience nearby landowners and occupants. While most would be aware they can claim compensation if public works or purposes involve the compulsory acquisition of part or all of their land, there are less obvious scenarios where rights to compensation are ‘grey’ rather than black or white.

Under the SA Land Acquisition Act, a person is entitled to compensation for acquisition of land if the person’s “interest” in land is divested or diminished by the acquisition or the enjoyment of the person’s interest in land is adversely affected by the acquisition.

It is necessary for the purposes of this discussion to briefly consider the seemingly obvious question “what is land?” Legally, it embraces not only a physical area of the Earth’s surface, but also the “bundle of rights” that can exist in relation to such a physical area. The Acts Interpretation Act (SA) defines “land” as including buildings fixed to the land, waters and airspace over land, subsoil and subterranean waters; and defines “estate” in relation to land as including “any estate or interest, easement, right, title, claim, demand, charge, lien or encumbrance in, over, to or in respect of the land”.

What then amounts to an “interest” in land for the purposes of compulsory acquisition law, the taking of which would entitle a person to compensation? The expression is defined in the Land Acquisition Act. It can be a legal or equitable estate or “an easement, right, power, or privilege in, under, over or affecting, or in connection with, the land” (emphasis ours).

It can fairly be contended that under compulsory acquisition law in this State the concept of “interest” in land is more expansive than the concept as defined under the Acts Interpretation Act. That it can include a mere “privilege” over or in connection with the land goes further than the definition of “estate” in the Acts Interpretation Act.

For example, we have had cases that arose out of the compulsory acquisition by a road authority of a corridor of land through an aerodrome controlled by a local government council. The council had leased portion of the aerodrome land to a glider club for its clubrooms. The club managed the airport for the council. Some members of the club leased hangar sites on the aerodrome from the council. The corridor of land compulsorily acquired for road purposes did not include any portion of the leased hangar sites, but it did sever those hangar sites from the portion of the aerodrome containing the runways, rendering the hangar sites useless.

We considered that the lessees of the hangar sites were entitled to compensation even though no part of the leased hangar areas had been taken; that, by virtue of their leases they had implied rights of access, if not implied licences to occupy and use the aerodrome land. They had a “right, power or privilege over, affecting or in connection with” the corridor of land that was acquired. The road authority relocated the hangars at its expense.

Courts have grappled with this question on a number of occasions. The NSW compulsory acquisition legislation also defines “interest” in land as extending to a mere privilege over or in connection with the land. In one case, the Full Court of the Supreme Court of NSW considered that some limitation must be placed on the words. The Court considered that the ‘rights’, although falling short of the kind of “estate” in land as defined for example in the SA Acts Interpretation Act, must at least be limited to a right of a proprietary or quasi-proprietary nature.

However, that approach seems to have been ‘relaxed’ in considering a range of factual scenarios. For example, in another NSW case a large contaminated site was compulsorily acquired. An option to purchase the site had been exercised before the compulsory acquisition so that the party which had exercised that option was a claimant for compensation for the acquisition of its equitable interest in the land as purchaser. There is nothing remarkable about that. However, the point of interest is that the option agreement included a contractual obligation on the part of the vendor to remediate the contamination of the site. The purchaser was required to exercise the option before the vendor had to remediate so that the contractual obligation to remediate existed independently of the equitable interest of the purchaser and so could not in any sense be seen as any kind of an estate or interest in land in the usual sense. Although the court acknowledged that the claimant’s contractual right to have the site remediated fell short of an “interest” in the land in the “proprietary” sense, the claimant was held to be entitled to compensation including an amount that reflected the right to have the site remediated.

In a Queensland case a doctor had a contract with a medical practice company for the use of a car park on the company’s land. The road authority compulsorily acquired a portion of the company’s land for road widening and the car park disappeared. The doctor’s contractual right to the use of the car park was held to be a relevant “interest” entitling the doctor to compensation even though the Queensland legislation did not contain a wide definition of “interest” like the SA and NSW legislation.

Careful consideration is needed before accepting defeat even where a right to compensation may not be obvious.

For further information on any compulsory acquisition matters please contact Pip Metljak or Richard Olson on 8212 9777.