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COMPENSATION for INJURIOUS AFFECTION Submission

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					Law Reform Commission       Compensation for Injurious Affection         Submission FFM



COMPENSATION for INJURIOUS AFFECTION

Project 98 Discussion Paper

Submission

Robert Ferguson                        Licensed Valuer & Real Estate Agent
Ferguson Fforde Miller (FFM)           Claim Managers, Agents and Valuers

This business is conducted by 3 partner valuers who in combination have around 100 years
combined experience in valuation and property matters. The business specialises in
compensation matters and represents mainly private property owners. My views are based
on daily applications of compensation law as a valuer.

CHAPTER 3               TERMINOLOGY
Submission 1

a) The LAA terminology should revert back to the terms injurious affection and severance.
   Over 100 years of case law has been built up to assist valuers who are responsible for
   assessing compensation. The new terminology does not make things clearer. In fact it
   has created confusion. The Public Works Act 1902 was fair legislation. I have the
   opposite opinion that the term injurious affection should stay with the LAA legislation
   and the relatively new planning legislation find another term if it should be interpreted
   differently.

b) I disagree that s 241(7) be confined to “reduction in value of land”. It is unfair to group
   injurious affection and severance together to offset enhancement. For example a
   project may enhance values generally in a locality. A residential lot may be injuriously
   affected and also be severed creating an irregular shaped lot. Why should neighbours
   who have no land taken be left in a superior financial situation than the dispossessed
   land owner? Dispossessed land owners should be favoured rather than those who do
   not have land taken. Enhancement should be offset against injurious affection but not
   severance. If any deletions are to be made I suggest it be enhancement which is rarely
   applied basically for the reasons stated above.

c) Disagree that the distinction between injurious affection and severance should be
   dispensed with.


CHAPTER 4               ENTITLEMENT UNDER LAND ADMINISTRATION ACT
Submission 2

I agree that s 241 (7) should extend to leaseholders. An example of a new expanding land
use where such an extension would apply are mobile home parks.




F1111ift                                                                                    1
Law Reform Commission      Compensation for Injurious Affection         Submission FFM



CHAPTER 5               ENHANCEMENT
Submission 3

I disagree that enhancement should be offset against both injurious affection and
severance for the reasons stated in 1 b). Severance can not always be covered under
Business losses.


CHAPTER 6               ENTITLEMENT UNDER PLANNNING & DEVELOPMENT ACT
Submission 4

Injurious affection should be defined similarly to the LAA. There should not be two
meanings of the same words. If for example englobo land with urban potential has a
proposed regional road passing through the middle of it, then the land is injuriously
affected by the scheme which proposes a severance and an obvious injurious affection.
The resulting compensation is the same as if it was to be taken (resumed). The same
applies to the gas pipeline, one does not have injurious affection only when the pipes are in
the ground. The injurious affection occurs in the market when the easement is publicly
known. If superior minds consider there is a difference then another term should be used.

If this was not the case, then the Government would be acquiring land without
compensating for the loss to the remaining land.

Page 18 “The reservation of privately owned land under regional schemes does not give
rise to any right to compensation……”. This statement seems to conflict with Sect 178 (2)
of the Planning & Development Act.

The first example on page 20 leaves the valuer in an unworkable position. Compensation
should never be less than the difference between the land unaffected by the scheme and
the value affected by the scheme.

In relation to Sect 177 (3)(b), we have had an instance where the WAPC refused to
consider compensation as they contended that the application was not “made in good
faith”. The application was to replace an old service station with a new one. If privately
owned land is reserved for a public purpose then how does one claim injurious affection for
the refusal of a development application (DA)? It is highly probable that any DA on
reserved land will be refused. The WAPC should not be able to avoid their obligations to
pay compensation. This section should be deleted.


CHAPTER 6

Affected Land (P20):
“……..compensatable injurious affection can arise only in respect of land reserved.”

Where private land use is curtailed by public requirements then compensation should be
available to the owner. Unfortunately the WAPC take excessive time to reserve land. For
example Bush Plan was released for public comment in 1998. This plan proposed areas of
privately owned land to be reserved as Parks & Recreation in the Metropolitan Region
Scheme. It then became Bush Forever and we are still waiting on the land to be reserved.
It is my opinion that once privately owned land’s use is diminished because of public
requirements that Planning Control Areas (PCA) be declared over those affected properties.



F1111ift                                                                                   2
Law Reform Commission      Compensation for Injurious Affection         Submission FFM



Owners would then have injurious affection rights. To leave an owner in Limbo for 9 years
plus is not just.

There are many other public policies that affect property values without compensation. For
example classifications for heritage, Priority 1 Underground Water Pollution Control Areas,
wetlands, wetland buffers, rare flora, clearing of rural land etc. These affected properties
should also come under public reservations and their owners have compensation rights.

P20 “In such a case, the valuation method to be applied for the purposes of Sect 179 must
be one which values the slither in a way that does not incidentally capture variance in the
value for the rest of the holding. That is to say, the before and after approach…..”

It is my strong view that the slither should be valued by a before and after valuation
method so that the owner is fully compensated. To do otherwise creates an unworkable
situation for the valuer. P21 “first an unaffected value of the slither must somehow be
obtained”.

For example we had to assess compensation for a land owner affected by the Perth to
Mandurah railway (pending registration of taking notice). The owner was offered $1200
(land value only) for the slither. Shortly afterwards the land was taken and land value plus
injurious affection etc amounted to approximately $120,000!!!! This example highlights the
unfairness of the PDA if injurious affection is to be defined differently to the LAA.

I agree with P21 “if the law was stated in those terms, the Bond case difficulty would
disappear”. We should legislate to avoid difficulties.


CHAPTER 6
Submission 5

We have had instances where purchasers have been unaware that the property purchased
was reserved or had a Planning Control Area declared over them. In these days of
electronic data bases, there appears to be little reason why such restrictions are not shown
on the title. Quasi reservations such as heritage classifications etc should also be noted. I
strongly agree.


CHAPTER 6
Submission 6

I do strongly disagree with the proposal that there be an expiration of compensation rights
after 6 months from various events happening. This would appear as a way of avoiding
paying compensation to uneducated land owners. The land owner, whether the vendor or
purchaser, should be compensated for the land lost and for the loss to any remaining land.
Someone must be compensated in a democratic system. Vendors should have the right to
assign full compensation rights.


CHAPTER 7               VOLUNTARY ACQUISITIONS

“Compensation should be the full monetary equivalent of the value to [an owner] of the
land. All else is subsidiary to this end. Chief Justice Dixon, High Court of Australia”.


F1111ift                                                                                   3
Law Reform Commission        Compensation for Injurious Affection       Submission FFM




In a democratic country I wholeheartedly agree. This should apply to all compensation
legislation.

The Land Administration Act should be applied more often. It is fair legislation that has
wealth of case law supporting it.

P26 “unless the government’s valuer is specifically instructed to assess any reduction in
value of the land owner’s remaining fee simple, it seems unlikely that injurious affection
and severance would be included”.

It is our experience that Government authorities such as Main Roads WA will always
negotiate, whether a purchase in advance or as a result of a taking, as if the land was
subject to all compensation rights under Sect 241 of the LAA. MRWA are acting fairly.

It is our opinion that a valuer would be acting negligently if he or she knew there was a
pending taking order and took an instruction that avoided mentioning the full extent of
compensation. Valuers must be unfettered by instruction. See Bollard v Yates Property
Corp (1999) HCA which highlights the role of the Valuer.

See the example in the second paragraph P3 of this submission.

P27 I strongly agree that:

“..all acquisitions for a public purpose should be treated at least as quasi-compulsory, so
that the safe of ss 168 & 169 of the Land Administration Act apply”

This is how it should always apply. There should be no alternatives.

“Further the Commission is not aware of any public disquiet in this regard”

We can produce other examples, besides the one on P3 of this report, to show how
attempts have been made by Government authorities to secure bargains.

The outcome should be the same whether the authority purchases on a voluntary or
compulsory basis. We agree with the NSW provision.


CHAPTER 7
Submission 7

All land required for future public purposes should be purchased under the provision of Part
10 of the LAA.

ELECTIONS TO ACQUIRE P29

I believe that injurious affection and severance should be included where properties are
proposed to be severed for a public work. Injurious affection can occur as soon as the land
is identified for the public work. For example if the land is required for a highway and the
land is suitable for residential development or there is already a residence. Severance
damage could also be immediate if the land had subdivision potential and the land
immediately becomes more expensive to develop because of the severance.



F1111ift                                                                                  4
Law Reform Commission      Compensation for Injurious Affection         Submission FFM




I disagree that injurious affection could have two meanings.


CHAPTER 7
Submission 8

We agree and recommend that any purchases by the WAPC should be as per the provisions
of s241 of the LAA. If not the election to acquire should remain.

What happens when certain reserved land, where injurious affection has been paid, needs
to be acquired?

How does an acquisition price be determined, after injurious affection has been paid, where
an owner has further improved his/her property?

There are too many unknowns in the payment of injurious affection. Reserved properties
should be acquired to avoid the confusion of injurious affection.


CHAPTER 8               A SINGLE LAND COMPENSATION ACT

THE COMMISSION’S PROPOSAL

1. I believe that WA compensation law should follow suit with the rest of Australia.

    As valuers practising in this area of the law we would prefer a single Compensation Act.
    It would also be better for the general public.

2. Any exceptions could easily be inserted in individual statutes is OK but as long as those
   insertions are not to the detriment of the private owner

3. It is our experience that the LAA is losing its dominance and the PDA, which denies full
   compensation, is being used more often. Sometimes, in the example of Bush Forever,
   affected property owners are denied even the provisions of the PDA for as long as 10
   years.


CHAPTER 9               DAMPIER TO BUNBURY PIPELINE ACT
Submission 9

The definition of Injurious affection, in all Acts, should be expanded to include: “if any
interest is taken then any person with an interest in the land can make a claim for
compensation”. Compensation should be fair to both sides.


CHAPTER 10              OTHER EASEMENTS
P40
“2.    The model of the Dampier to Bunbury Pipeline is, in this regard, anomalously
beneficial to the land owner”.



F1111ift                                                                                  5
Law Reform Commission        Compensation for Injurious Affection          Submission FFM



Our observation is that it is beneficial to the extent that it provides fair compensation unlike
the Energy Operators(Powers) Act.

Injurious affection should not be deferred, it happens immediately on the taking of the
Corridor. The market responds immediately to the injurious affection.


Submission 10

The definition of Injurious affection, in all Acts, should be expanded to include: “if any
interest is taken then any person with an interest in the land can make a claim for
compensation under s 241 LAA”. If this is done then Western Power should acquire
through only the provision of the LAA. The limiting provisions in the Energy Operators
(Powers) Act should be repealed. This latter Act is blatantly unfair.


Submission 11

Private land owners should be fairly compensated for any loss incurred for projects that are
for the public benefit. This obviously includes owners whose land is devalued by water
infrastructure easements. If the land is devalued for the benefit of the public, then
compensation should be paid.


CHAPTER 11              OTHER SCHEDULE 1 ACTS
Submission 12

I was involved whilst in the VGO assessing compensation for rural land owners and also in
the development of guidelines on how compensation should be assessed.
The Country Areas Water Supply Act is fair legislation. Such legislation should extend to
clearing restrictions anywhere in the State. Restrictions under the Environmental Protection
Act 1986 (WA) and the Environmental Protection (Clearing of Native Vegetation) Regulation
2004 (WA) should be recognised as compensable. The CAWSA is not anomalous. The
Environmental Acts are anomalous.

Similar legislation should apply to heritage listed properties.


Submission 13.
Land affected by the Swan and Canning Rivers Management Act should be either acquired
through the LAA or reserved as Parks & Recreation in the PDA. Compensation should not
be restricted to the first owner.

This could be perceived as a way of avoiding paying compensation to uneducated land
owners.




F1111ift                                                                                      6
Law Reform Commission       Compensation for Injurious Affection         Submission FFM




CHAPTER 12        THE COMMISSION’S PROPOSALS
Commission’s Tentative Proposals

Compulsory Acquisitions:

Point      1   Agree
           2   Agree
           3   Agree but should be open to all owners.
           4   Agree if the acquisition was made through s 241 LAA.
           5   Should extend to if any interest is taken. Disagree that Severance should be
               offset against enhancement for reasons stated in our submission.

Planning Restrictions:

Point      1   Agree if the acquisition was made through s 241 LAA.
           2   Agree but believe the “first sale” provision avoids paying fair compensation.
           3   Agree


GENERAL COMMENTS:
It is our opinion that private owners should always be treated fairly when affected by public
requirements. Government Departments and owners should not be exploiting the law to
avoid paying fair compensation or for receiving excessive compensation.

Due to spreading of Regional Schemes and to avoid the proliferation of policies (quasi
reservations) there should be other ways of compensating rather than taking straight from
the public purse. It is our impression that numerous policies are developed that injuriously
affect the value of property. These policies are often placed over land pending reservation
and compensation rights. The policies are then used as reasons why the land has limited
value when the Government come to the point of purchase.

Parks and Recreation reservations are an example. Priority 1 Underground Water Pollution
Control Areas, Conservation Category Wetlands (many have no surface water), rare flora
etc are used as negative valuation features. If these features are the purpose of the
reservation then in accordance with case law they should be ignored. This is in accordance
with the Privy Council Case. Pointe Gounde Quarrying & Transport Co Ltd v Sub-Intendant
of Crown Lands (1941).

There should be Negotiated Planning Solutions that place owners in the same financial
situation as they were before reservation or policy. This may mean such things as transfer
of development rights or the right to subdivide into non conforming lots with covenants.
There could be part cash payments as well. Other forms of compensation should be
investigated. Along with any form of compensation there should be in-built independent
dispute resolution mechanisms.



Robert Ferguson
Licensed Valuer No 659
5/2/2008



F1111ift                                                                                       7

				
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