The Role of Valuers in Compulsory Acquisition Cases

Valuers are usually retained by a dispossessed owner or by the dispossessed owner’s lawyer early in the compulsory acquisition process. In fact, valuers very often become involved before the formal process has even commenced, when acquiring authorities approach the owners or occupiers of ‘targeted’ properties with a view to purchasing those properties outside the statutory compulsory acquisition process.
Before involving themselves in a compulsory acquisition process, valuers should establish exactly what role they are to perform. In doing so, they need to keep in mind that, ‘at the end of the day’, failure to reach agreement on a figure can be resolved in one of two ways – either by the dispossessed owner accepting the authority’s lower offer, or by referring the issue to the Land and Valuation Division of the Supreme Court. It also needs to be kept in mind that an owner whose property is required for acquisition is in a very different position in relation to ‘price’ compared with an owner in an arms length negotiation where failure to reach agreement on price results in the prospective purchaser ‘missing out’ on securing the property and the owner missing out on a sale. An acquiring authority failing to reach agreement will simply take a required property by compulsory process and proceed to undertake public works on it. This leaves the dispossessed owner to pursue recovery of compensation afterwards, with his or her only ‘bargaining tool’ being the ultimate right to have the Supreme Court make the call.
Consequently, a valuer who is engaged by a ‘targeted’ or dispossessed owner should establish whether the owner would ultimately want the valuer to perform the role of an expert in the matter should no agreement on price be reached.
If yes, the valuer should appreciate the difficulty that might result from his or her involvement in the inevitable early dealings with the authority, especially if the dispossessed owner is not being looked after by a competent lawyer or agent. In those circumstances, it will be difficult for a valuer to avoid sliding into the role of agent of and advocate for the dispossessed owner, a role that will most likely result in the valuer contravening the Rules of the Supreme Court in relation to experts, which will very often ‘taint’ the valuer’s opinions. Even if this is only a perception it may lead to little weight being afforded to the valuer’s report in negotiations and in a court hearing.
Consequently, a valuer needs to be fully aware of the requirements of the Supreme Court in relation to experts. Under the Supreme Court Rules:

  •  an expert has an overriding duty to assist the Court and not the party retaining the expert;
  • an expert is not an advocate for the party who retains and pays the expert;
  • if experts retained by an acquiring authority and dispossessed owner meet the other experts at the request of the parties or their lawyers or at the direction of the Court, an expert must not be given or accept instructions to not reach agreement;
  • an expert must retain any drafts of a report or part of a report that has been communicated to a party, a party’s representative or a third party;
  • an expert’s report must contain an acknowledgement that the expert has been provided with copies of the relevant Supreme Court Rules and that the expert has read and understood these before preparing a report;
  • an expert is required to communicate (through lawyers) any change of mind after exchange of expert reports or otherwise;
  • before any hearing of the case by the Court each party must disclose to the other parties copies of all relevant expert reports whether or not the party intends to rely on the reports; and
  • at the request of the other party, full disclosure must be made of every written and oral communication between the party and the expert, between the party’s representative and the expert and between the expert and another expert. Also, if requested any fee or benefit paid or given to an expert must be disclosed.

The Rules of Court require a fully transparent process. A party or the party’s lawyer or representative must serve on the other party within 5 business days even a request for an expert to prepare a report, and an expert should in preparing a report confer with other experts who have previously prepared reports in the case. Also, a party intending to rely on an expert at a hearing can be required to disclose on request all communications with the expert and communications between experts, fees paid to the expert and so on.
There can be significant consequences in failing to observe the Court Rules in relation to experts. Failure that arises during a hearing may result in the expert evidence being excluded, or adjournment of the hearing with an adverse order for costs.
The clear purpose of the Supreme Court Rules in relation to experts is to eliminate the problem of ‘barracking’ by experts. That barracking is prevalent in compulsory acquisition cases seems apparent from the fact that the difference between the assessments made by valuers engaged by each of the parties is often so great that ‘barracking’ by one or the other or both can be the only feasible explanation. Full compliance by all concerned with the Rules of Court would make it inherently unlikely that such extreme differences would occur.
Valuers should be aware that ‘ambit claims’ by a dispossessed owner, or very low offers by authorities can result in a party being penalised in relation to costs. The Supreme Court has pointed out that a claim for compensation for compulsory acquisition is different from other civil/commercial claims in that a claimant in a compulsory acquisition has a statutory right to compensation and consequently should in the normal course expect to obtain a favourable order for recovery of costs. However, under the Land Acquisition Act an ambit claim might well result in a dispossessed owner being ordered to pay the authority’s costs.
Overwhelmingly then, the ‘thrust’ of the Court’s requirements, set out in its Rules, is for complete independence and impartiality on the part of an expert who has been retained on that basis. It will be apparent that a valuer who begins a compulsory acquisition process by acting as a party’s agent or representative will have started off on the wrong footing if the dispossessed owner wishes that valuer to subsequently perform the role of an expert in negotiations and at a hearing. In those circumstances it is likely to be unconvincing for a valuer to change his or her role to become a ‘pure’ expert down the track. This may result in a disappointing result for the dispossessed owner if less ‘weight’ is given to the valuer’s opinions than otherwise.
For further information on any compulsory acquisition matters please contact William Rudd or Tom Crompton on 82129777.