Litigation is the last resort, not the first. Part IV of the Land Act 1996 provides three routes to fixing the amount: agreement, arbitration, and a court. This article deals with the first two.
Section 25 — agreement before acquisition
(1) The Minister may, on behalf of the State, enter into an agreement with the owner of land as to the amount of compensation to which the owner will be entitled if the land is acquired by compulsory process within a time specified in the agreement.
(2) If the land is acquired within that time, and while the owner who made the agreement is still the owner, the compensation payable shall be deemed to have been determined by agreement at the amount specified.
This is a useful and under-used provision. It lets an owner facing a likely acquisition fix the figure in advance, with certainty, rather than waiting to see what is offered afterwards.
The deeming only operates if the acquisition happens within the time specified in the agreement, and if the person who made the agreement is still the owner at that time. Sell the land, or let the period lapse, and the agreed figure falls away. Watch the expiry date, and negotiate a realistic period.
Section 26 — agreement after acquisition
Where a claim for compensation has been accepted under section 21, the amount may be determined by agreement between the Minister and the claimant.
This is the ordinary route, and most claims end here. The negotiation is conducted against the section 23 principles, so both sides are arguing about the same three heads: value at the date of acquisition, severance, and enhancement or depreciation of adjoining land.
Section 27 — arbitration
Instead of determining the amount by agreement, the Minister and a claimant may agree to submit the determination to arbitration. Where such an agreement is made, the Arbitration Act (Chapter 46) applies, subject to the terms of the agreement.
Note the structure: arbitration is consensual. Neither side can be forced into it. It is an alternative to agreement, chosen by agreement.
It is usually faster than a court action, the arbitrator can be someone with valuation expertise, and — importantly — interest can be awarded. Against that, an arbitration has its own costs, and the grounds for challenging an award are narrow.
Section 28 — interest in an arbitration
In an arbitration for the assessment of compensation for compulsory acquisition, the arbitrator may, if he thinks fit, order that there be included in the sum assessed, interest at such rate as he thinks proper, on the whole or part of the compensation, for the whole or part of the period between the date of the acquisition and the date of the assessment.
This matters. Compensation is assessed at the date of acquisition, which may be years before it is paid. Section 28 lets an arbitrator bridge that gap.
Section 28(2) prevents doubling up: subsection (1) does not apply to any amount of compensation on which interest is payable under any other law. See payment and interest for the Division 8 position.
Section 29 — revoking an agreement to arbitrate
Section 29 provides for the position where, after an arbitration agreement is made in relation to a claim but before the award is made, circumstances change. The Act allows the agreement to arbitrate to be revoked in the situations it specifies, so that a claim is not locked into a process that has been overtaken — for example by a dispute about entitlement that has to be resolved first.
If you are considering arbitration, read section 29 alongside section 27 before signing, so you know what can and cannot be unwound.
Section 20 — the National Court’s overriding power
Sitting above all three routes is section 20, which is easy to miss and very wide. Where land is acquired by compulsory process, the National Court may, on the application of the State or any other interested person, make such orders as it thinks proper for declaring or adjusting rights and liabilities in connection with the land or transactions in relation to it.
Those orders expressly include:
- orders for the payment or repayment of money;
- orders discharging a person from an obligation to pay money;
- where there was a subsisting contract of sale — orders about the parties’ rights and liabilities; and
- where there was a charge or encumbrance — orders releasing a person from a personal covenant, and apportioning the charge between the acquired land and other land subject to it.
Notwithstanding anything else in the Act, the National Court may, on the application of the State or a claimant, make such order as it thinks just in the special circumstances of a particular case declaring the basis on which compensation is to be determined — and the compensation shall be determined accordingly.
Where a case does not fit the ordinary section 23 mould, this is the provision to reach for.
For customary land, section 19 substitutes the Land Titles Commission for the National Court throughout Part IV.
Sources
- Land Act 1996 — ss 19, 20, 21, 23, 25–29; Part IV Divisions 4 and 5
- Arbitration Act (Chapter 46) — PacLII consolidated legislation index
- Constitution — s 53(2), (3)
Before relying on anything here, read the current text of the Land Act 1996 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.