- Some dispossessed owners of land in NSW can now seek compensation on the basis of ‘reinstatement’.
- The NSW reinstatement provision has been judicially considered for the first time, with the applicant unsuccessful in seeking to apply it.
- It remains open to former owners of land used for a range of unique purposes to claim compensation for reinstatement.
Compensation for the acquisition of land by government entities is typically calculated by reference to what a dispossessed owner of land has lost; the market value of the land being acquired, their costs of procuring legal and other expert advice, and relocation costs incurred, etc. These ‘heads’ of compensation are set out in s 55 of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (‘Just Terms Act’). Of prime importance is how one assesses the market value of the land being acquired:
‘56 Market value
(1) In this Act –
market value of land at any time means the amount that would have been paid for the land if it had been sold at that time by a willing but not anxious seller to a willing but not anxious buyer, disregarding (for the purpose of determining the amount that would have been paid) –
- any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, and
- any increase in the value of the land caused by the carrying out by the authority of the State, before the land is acquired, of improvements for the public purpose for which the land is to be acquired, and
- any increase in the value of the land caused by its use in a manner or for a purpose contrary to law.’
Reforms to the Just Terms Act in 2017 introduced a new means by which compensation can be claimed based on what the dispossessed owner is required to buy in order to reinstate itself elsewhere, rather than the value of what it is losing. This is achieved through s 56(3) – the ‘reinstatement’ provision:
‘(3) If –
- the land is used for a particular purpose and there is no general market for land used for that purpose, and
- the owner genuinely proposes to continue after the acquisition to use other land for that purpose, the market value of the land is taken, for the purpose of paying compensation, to be the reasonable cost to the owner of equivalent reinstatement in some other location. That cost is to be reduced by any costs for which compensation is payable for loss attributable to disturbance and by any likely improvement in the owner’s financial position because of the relocation.’