Aerial view of a Melbourne suburb

The right of citizens to enjoy the economic benefits of property in which they have invested is an emotionally and politically charged subject, with a long history. Into this tricky area of law and policy, the Western Australian Government took a step on 27 November 2014, when it introduced into Parliament a Bill entitled Land Acquisition Legislation (Compensation) Amendment Bill (Bill). This short article provides some comment on the Bill and its context.

Reform in this area has been called for many years by Parliamentary Committees and the Law Reform Commission, as well as various sectional interests, principally rural landholders and to some extent the property industry. The legal and valuation professions have also at times voiced concerns about the fairness of the law in this area and how it is administered.

My conclusion is that the Bill is likely to be a disappointment to those who were expecting substantial reform in this area of the law. My reasons for coming to this view are stated briefly below.

The Bill is short. In 17 sections spread over 11 pages, it seeks to:

  • reform to a limited extent section 241 of the Land Administration Act 2003(WA) (LA Act), which sets out landowners’ entitlement to compensation when the State takes their land; and
  • reform the power of utility providers to take interests in land for their infrastructure.

The main amendment to section 241 is the insertion of a requirement in section 241(1) that the compensation payable is just. At first glance this is a win for landowners. Unfortunately, it is not a great benefit because it is simply a confirmation of a right that has existed under various principles developed by the Courts.

The other amendment of significance was to section 241, to rectify an anomaly. Only an owner of the freehold, called in law the owner of the fee simple, can at present claim compensation for the additional loss suffered when a parcel of land is severed by the compulsory taking of part of that land; or the reduction in value of the land remaining after the severance.  A claim for the reduction in value to the remaining land is sometimes called ‘injurious affection’. The amendment provides that the holder of a lesser interest, the taking of which causes damage to an adjoining interest owned by the same person, may also claim for the severance or injurious affection damage.

The amendments relating to Water and Energy infrastructure providers are essentially to make it possible to claim for loss of amenity caused by the works.

The Bill, if passed will make a marginal improvement to the lot of landowners in conflict with the state over the value of land taken. It only addresses in a narrow way some problems under the LA Act and does not address other major areas of concern, including:

  • compensation for the reservation of land under the Planning and Development Act 2005 (WA) (P&D Act)-at present owners whose land is affected by a reservation have a narrower range of rights compared with those whose land is taken under the LA Act;
  • the vexed question of the need to clarify the extent to which steps taken by a government agency prior to a talking or reservation can affect the calculation of compensation-sometimes called the Pointe Gourde Principle;
  • in the case of takings under the LA Act and the P&D Act, if the land has environmental values there is much confusion about how compensation should be calculated; and
  • the value of land is diminished by policies or regulations, particularly in the case of environmental measures, without any formal reservation or taking under with the LA Act or the P&D Act.

Many of these issues could be addressed by a more general right to compensation for land affected by the actions of Government. This is a much harder subject for the Government to address but in the end it should not be avoided. One way of doing that would be to broaden the new statutory requirement to calculate compensation justly, so that it becomes a general right to obtain compensation on just terms and is not limited to claims under section 241 of the LA Act. While it is arguable that such a right may exist under current common law and therefore be implied into the State Constitution, in practice this is of little comfort to landowners who would have to fund the enforcement of such rights, possibly in the High Court.

The Government also recently published a Charter on property rights entitled ‘Private Property Rights Charter for Western Australia’ (Premier’s Circular 2014/04, 27/11/2014). It is a policy which ‘aims to ensure proper regard is given to landowners’. Public officers are required to ‘have regard to the principles of the Charter when contemplating or taking government action which may adversely affect private property rights in land.’ The inclusion of the word ‘rights’ in this document is somewhat of a misnomer. It in fact ‘sets out principles to inform the decision making process of public officers’ and is couched in terms of guidance which is so heavily qualified, often by reference to the public interest, that it is unlikely to be of benefit to landowners facing the resources of the State in a dispute over the taking of land. In particular, the Charter makes no reference to existing legal rights of landowners and the importance of public officers following established principles which favour landowners.

In conclusion, the Bill and the Charter are small steps forward which leave unaddressed many issues of importance to landowners.