Court ruling on compulsory land grab shifts power to property owners

A top lawyer says a recent Supreme Court ruling on compulsory land acquisition could give property owners the upper hand over local government.

Russell McVeagh partner Bronwyn Curruthers says the decision alters how local government authorities take land using the Public Works Act. 

It comes as Auckland Transport is working toward acquiring 66 commercial properties within the city and inner suburbs for its central rail link. The local body is also in the process of buying six residential homes that sit on land needed for the new transport system.

Ms Curruthers says in Planet Kids v Auckland Council the nation’s top court has altered the test on how properties are taken when acquisition under the Public Works Act is by agreement.

Under the legislation, property owners can agree earlier with local bodies earlier under s17 to sell their properties rather than go through the compulsory acquisition provisions.

Planet Kids was a childcare centre that had agreed to leave its lease on council land that the council wanted back for a roading project. 

After a fire the council argued Planet Kids could not hold up its end of the agreement and the legal analysis focused on the rarely used legal doctrine of frustration.

However, Ms Curruthers says buried in the discussion about the contract is a clarification by the court of the test for entering agreements with property owners. 

While traditionally councils had insisted on assessing properties through the constraints of the act, the decision says they don’t have to be used.

Ms Curruthers says this means property owners and local bodies can agree on a much higher figure than before.

She says the decision will help those with sufficient leverage because while the council will try to avoid a paying a higher price for a property, there will now be situations where one or two people holding out against the council can negotiate a different, higher amount.

The council will still benefit by having an agreement made earlier but at a higher price to ratepayers, she says. 

She says the ruling appears to be of general application and not confined to the facts of the case. She is not aware of any court cases testing the decision since it came out last December.

JLL director of valuations David Wigmore says the development could help individual property owners, depending on the circumstances.

He says the bulk of properties affected by the city rail link aren’t full acquisitions; it is the easements underneath the properties that are being negotiated.

Auckland Transport says it needs land from 77 properties above the surface as well as legal rights of way to subterranean land from a further 200 properties. That is because land owners have a legal right to everything from the surface down to the core of the earth.

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