Posted on 19 Oct 2016
A leading NSW lawyer has welcomed the Baird government’s reforms to the state’s compulsory acquisition scheme, but has warned the new framework does not go far enough to ensure fairness.
Under the changes, compulsorily acquired landholders in NSW will be entitled to an extra $50,000 in compensation for non-financial impact (referred to as solatium), allowed to stay in their properties rent-free for 90 days after acquisition, given dedicated case managers, and guaranteed a six month negotiation period.
The announcement of the reforms coincided with the much anticipated release of the ‘Russell Review’ into compulsory acquisition in NSW, which has been kept secret for more than two years.
Slater and Gordon Compulsory Acquisition Lawyer Vincent Butcher said the government’s efforts to improve fairness were "better late than never".
“We welcome any move that improves fairness for people whose homes and businesses have been forcibly acquired and I commend the decision to backdate compensation increases,” Mr Butcher said.
“However, I sincerely doubt whether this new framework will actually achieve increased transparency and independence without firm guarantees that these reforms will be enforced on the ground level.
“A big issue for landholders is the transparency of acquisition officers working on their cases, whom we regularly see withhold information, such as valuation reports, until they are forced to release them.”
Mr Butcher said increased solatium compensation was also welcome, but he was concerned that claims would be disputed by the acquiring authorities in the absence of a fairness guarantee.
“Currently, disputes for a maximum solatium claim of $27,235 are very rare, because the amount is so inadequate compared to the non-financial impact people actually suffer,” Mr Butcher said.
“An increase in this amount is definitely needed, but guarantees need to be put in place to ensure increased claims aren’t harshly litigated or upheld inconsistently.
“Residents are already facing intense opposition when they challenge gaps in valuation and disturbance offers – the last thing they need is another lengthy dispute and legal headache.”
Mr Butcher said there was no reason why rent-free periods should be capped at 90 days.
“Rent-free periods following acquisition will alleviate a lot of stress for residents, but it is unclear why the government is only willing to allow 90-days,” Mr Butcher said.
“The acquiring authority has no use for the property until vacant possession is required, why kick people out earlier than needed if the property will simply sit empty?
“Additionally, this provision should be backdated in the same way as solatium compensation, considering residents have paid thousands of dollars to rent their own houses since February 2014, despite the existence of this review.”
Mr Butcher outlined six ways the reforms could ensure fairness in the compulsory acquisition process.
Six ways NSW compulsory acquisition reforms could be improved
Fairness guarantees to improve transparency on the ground level
- Best practice directions for acquiring officers in regard to their conduct during negotiations, especially in regards to transparency of information.
- Assurances that increased solatium claims won’t be harshly litigated or upheld inconsistently – a similar scheme should be developed for businesses.
- Greater accountability for initial offers made to residents. Transparency and accountability are key to ensuring no landowner is worse off after compulsory acquisition.
Increase 90 day rent-free period to the date that vacant possession is required
- The acquiring authority has no use for the property until vacant possession is required, so residents should be allowed to live rent-free in their properties until this date.
- The law already provides for rent in these circumstances to be compensated, so the cap of 90 days is actually a limitation of what is already provided.
Guarantee for initial 90 day notice period, as well as the six month negotiation period
- Currently, the Proposed Acquisition Notice (PAN) period is 90 days and the acquiring authority is legally able to apply to the minister for a shorter period if there’s urgency.
- There is a concern that the newly announced six month negotiation guarantee may result in the acquiring authority seeking shorter PAN periods to accommodate their construction or project deadlines.
Legislative reform to address lack of compensation for cases of hardship
- A merits-based review for hardship decisions will help many people in tough situations, but their compensation will still be very limited. As such, the full rights of compensation should be provided to such applicants as provided by law
- Legislative change is needed to address the compensation shortfall for hardship, rather than merely a review to see if they qualify for minimal assistance. Hardship cases should be treated in the same way as other compulsory acquisition cases.
Clear definition of ‘unique’ properties
- Consideration of the cost of purchasing a comparable ‘unique’ property will improve fairness, but it depends on the definition of unique.
- The definition of unique could be very subjective, for instance, would the unique proximity of an acquired property to the owner’s family be taken into account? These are the kind of issues residents face when trying to repurchase a home locally.
- If the definition of unique is too narrow, very few people will be able to take this up and most will still be priced out of the communities they are a part of.
All independent review panels should include a broad range of experts
- Review panels should include independent valuers, lawyers and other suitable experts, as well as community members who have experienced land acquisition firsthand.
- As an example, the Valuer-General has a panel of valuers. They work for the Valuer-General as their main source of income and it is in their interest to remain on the panel, which potentially creates a conflict with the independence of their decisions.
- Additionally, it is our experience that many of these valuers assess the value of properties, as well as disturbance. They are valuation experts and don’t necessarily have experience with disturbance claims.