Pre-acquisition negotiations with minor interests: some good news from the Land and Environment Court

18 May 2023
Time to read: 1.5 minutes

Acquiring authorities in NSW now have support from the Land and Environment Court (L + E Court) to adopt a pragmatic approach that affords the six-month negotiation period to the primary interest holders in land only.

Since its commencement in 2016, acquiring authorities have queried whether the reference to "land" in section 10A of the Land Acquisition (Just Terms Compensation) Act 1991 includes "any interest in land" and what happens to acquisition programs where new interests in land are created during the acquisition program. Section 10A states:

"(2) The authority of the State is to make a genuine attempt to acquire the land by agreement for at least 6 months before giving a proposed acquisition notice.

(7) Nothing in this section gives rise to, or can be taken into account in, any civil cause of action." [emphasis added]

Perry Properties Pty Limited v Georges River Council [2023] NSWLEC 51, the relevant land was subject to a leasehold interest. However, on or around the time Council issued the landowner and lessee with Proposed Acquisition Notices (PANs), the landowner entered into an option contract with four option grantees. The option grantees then recorded the option contract on title via caveat. Council subsequently issued PANs to the option grantees. Council engaged in section 10A negotiations with the landowner and the lessee, but not the option grantees.

The option grantees claimed that the PANs issued on the option grantees were unlawful, as the option grantees were not afforded the required six-month negotiation period before issuing the PANs, which was a jurisdictional precondition to issuing a PAN.

The decision clarifies that:

  • the reference to "land" in section 10A(2) requires, as a matter of construction, to identify the person who is in a position to sell the land (ie. "the landowner"), stating:

    "It is not every owner of every 'interest in land' within the meaning of the Just Terms Act that has to be negotiated with or with whom agreement is attempted to be reached before a proposed acquisition notice can be given."

  • non-compliance with section 10A(2) does not affect the lawfulness of the PAN (ie. section 10A is not jurisdictional); and
  • section 10(7) precludes seeking relief in Court for any alleged non-compliance with section 10A.

The Court was not asked to consider, and did not provide commentary on, the application of section 10A to leasehold interests or other interests in land that may be capable of alienation or have value.

The judgment in Perry does, however, make clear that while section 10A is "a provision of importance", non-compliance does not give rise to the unlawfulness of the giving of a PAN and cannot be the subject of civil proceedings. We will wait to see whether the applicants appeal the judgment, but in the meantime acquiring authorities should review and consider current acquisition program practices for pre-acquisition negotiations in light of the judgment.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.