Posted on March 4, 2014 by
Compulsory Acquisition of Reserve Trust Land
Tempe Recreation (D.500215 & D.1000502) Reserve Trust v Sydney Water Corporation  NSWLEC 221, is the first case to consider s106A of the Crown Lands Act 1989 (CL Act) which relates to the compulsory acquisition of reserve trust land under the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act).
Sydney Water Corporation (SWC) acquired easements over the Tempe Reserve which was under the care, control, and management of the Tempe Recreation (D.500215 & D.1000502) Reserve Trust (Trust).
The Trust claimed compensation in the amount of $5,000,000.00 including $6,000.00 for disturbance. SWC contended that only $6,000.00 for disturbance was payable.
Section 106A of the CL Act applies to the determination of compensation payable under the Just Terms Act in respect of the compulsory acquisition of the whole or part of a reserve in respect of which a reserve trust is constituted.
Section 106A(3) states:
(3) Despite section 55 of the Land Acquisition (Just Terms Compensation) Act 1991, in determining the amount of compensation, if any, payable to a reserve trust, regard is to be had to the following matters only (as assessed in accordance with this section):
(a) the value to the reserve trust of any improvements (including structures) erected or carried out by the trust on the land being acquired or vested, or over which the easement is vested, on the date the land is acquired,
(b) the amount of any loss attributable to the reduction in public benefit from any loss of public open space that arises from the acquisition or vesting of the land,
(c) the amount of any reduction in the value to the trust, as at the date the land is acquired or vests, or the easement vests, of any other improvements (including structures) erected or carried out by the trust on other land that is caused by the land acquired being severed from other land of the trust,
(d) the cost to the trust of acquiring additional land having environmental benefits that are comparable to the land being acquired or vested,
(e) any loss attributable to disturbance (within the meaning of section 59 of that Act), other than loss arising from the termination of a lease or licence over the whole or part of the land being acquired.
Importantly, s106(4) provides that the Crown is taken to be the holder of the fee simple in reserve trust land. Therefore any compensation payable in respect of the acquisition of the fee simple in reserve trust land, is payable to the Crown, not the reserve trust, and is determined in accordance with s55 of the Just Terms Act.
The purpose of s106A(3) is to limit the compensation payable to the reserve trust, given that the Crown would already have been compensated.
SWC argued that s106A(3)(b) did not apply in respect of the acquisition of an easement, as the section does not expressly refer to the acquisition of easements.
Biscoe J rejected this argument on the basis that s106A(3)(b) refers to the acquisition of land. He said:
… In my opinion, the general words at the end of s 106A(3)(b), “that arises from the acquisition…of the land”, are intended to include an easement, since s 4 of the Just Terms Act defines “interest in land” to include an easement, “land” to include “any interest in land”, and “acquisition of land” to include “an acquisition of land or of any interest in land”. The Just Terms Act applies in the present case except for the substitution of s 55 by s 106A of the Crown Lands Act, and hence the definitions in s 4 of the Just Terms Act apply to s 106A.
Biscoe emphasised that all that s106A(3) did was to oust s55 of the Just Terms Act. The remainder of the Just Terms Act continues to apply in respect of compensation payable to a reserve trust, including s3(1)(b) and s54(1), both of which seek to ensure that compensation payable in respect of any acquisition is on ‘just terms‘.
Ultimately, His Honour held that whilst there was a potential for reduction in the public benefit from the future works which SWC may be required to carry out under the terms of the easements which were acquired, assessing the extent of the reduction under s106A(3)(b) was incapable of any mathematical precision. He determined that an amount of $100,000 was appropriate compensation.
The $5,000,000 claim by the Trust failed primarily due to the Court’s construction of the terms of the easements.
One final point of interest is that SWC claimed that there could be no compensation for severance, as severance involves the creation of separate legal titles, or alternatively physical separation. Whilst ultimately Biscoe found on the facts that there was no entitlement to compensation for severance, he clarified that if an easement ran along the length of a property and entitled the beneficiary of the easement to erect a barrier, such that to travel from one part of the property to the other would involve a significant diversion to get around the barrier, then there could be a claim for severance.