Negotiations under s10A of the Land Acquisition (Just Terms Compensation) Act 1991. Perry Properties Pty Limited v Georges River Council [2023] NSWLEC 51

23 May 2023

HWL Ebsworth acted for the Georges River Council, in a recent case which involved consideration of s10A of the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act). The decision will bring clarity to the obligations of acquiring authorities to negotiate for 6 months, prior to proceeding with the compulsory acquisition of land.

Justice Pritchard’s judgment of 11 May 2023 in Perry Properties Pty Limited v Georges River Council [2023] NSWLEC 51, which involved a challenge to the Council’s proposed compulsory acquisition of land, alters what many acquiring authorities had understood the position to be in relation to negotiations under 10A of the Just Terms Act to date and will have important implications for acquiring authorities and recipients of Proposed Acquisition Notices (PANs) alike. Her Honour found that negotiations only need be undertaken with the person in a position to sell the land.

Factual Background

The Old Kogarah Hotel is a heritage-listed premises located at 247 Princes Highway, Kogarah (the Premises). The Premises had been zoned for Open Space since 1976 and was reserved for acquisition by the former Kogarah Council (now Georges River Council) for public purposes under the Kogarah Local Environmental Plan 2013 (KLEP). The Premises were similarly reserved for acquisition by Council for public purposes under the later Georges River Local Environmental Plan 2021 (GRLEP).1

The Premises is owned by Perry Properties Pty Ltd (the Landowner) and tenanted by the International Buddhist Association of Australia Co-operative Limited (the Tenant). The Premises is subject to a mortgage held by the National Australia Bank (the Mortgagee) and a caveat lodged by holders of an option to purchase the Premises (the Option Grantees).

Council entered into negotiations with the Landowner for the required 6 month period pursuant to s10A but was unable to reach any agreement. Council also entered into negotiations in the same period with the Tenant in relation to its leasehold interest.

On 28 February 2022 Council resolved to compulsorily acquire the Premises ‘for the purpose of providing public recreation space in accordance with the requirements of the Just Terms Act’.

On 10 May 2022, unbeknownst to Council, the Option Grantees entered into a call option deed, creating their interest in the Premises. A caveat was registered on the title of the Premises by the Option Grantees on 8 June 2022.

On 17 June 2022, Council (with the approval of the Minister for Local Government and acting on its resolution of 28 February 2022) issued PANs to the Landowner, the Tenant and the Mortgagee.

Subsequently, on 19 June 2022 Council was advised of the Option Grantees’ interest in the Premises, and then, on 24 June 2022 Council issued PANs to the Option Grantees.

On 11 August 2022 the proceedings were commenced by the Landowner and the Option Grantees in the Class 4 jurisdiction of the Court alleging that the PANs were unlawful because, among other reasons, the Council had failed to comply with s10A of the Just Terms Act as it had not engaged in negotiations with the Option Grantees for 6 months as required by s10A(2) of the Just Terms Act.

Legal Background

The Court’s determination made reference to a range of legislative provisions.

The Council’s acquisition of the Premises was governed (in part) by the Local Government Act 1993 (NSW) (LG Act) and the proceedings were brought under s674 of the LG Act, which provides that any person may bring proceedings in the Court for an order to remedy or restrain a breach of the LG Act.

S10A of the Just Terms Act requires that an acquiring authority negotiate for acquisition by agreement, for at least 6 months, before giving a proposed acquisition notice. S10A(7) provides, ‘Nothing in this section gives rise to, or can be taken into account in, any civil cause of action’.

While s10A has been the subject of some judicial consideration in the past (such as in R & R Fazzolari Pty Ltd v Parramatta City Council (2009) 237 CLR 603 (Fazzolari), Roads and Maritime Services v Desane Properties Pty Ltd (2018) 98 NSWLR 820 (Desane), Bligh Consulting Pty Ltd v Ausgrid [2017] NSWCA 95 (Bligh), Elmasri v Transport for NSW [2021] NSWSC 929 (El Masri)), the following questions arose in this case:

  1. whether any failure to comply with s10A renders a subsequently issued PAN unlawful;
  2. the extent of the obligation upon acquiring authorities to negotiate with interest holders under s10A; and
  3. the application of s10A(7).

These questions have never been the subject of judicial consideration by a Court.

The parties’ competing positions in relation to s10A

The applicants submitted, in essence, that Council’s failure to negotiate for 6 months with the Option Grantees rendered the PANs unlawful. On their case, each of the Option Grantees had an ‘interest’ in the land as defined in s4 of the Just Terms Act and was therefore an owner of the Premises with whom Council must negotiate for 6 months in accordance with s10A(2) before issuing PANs. Further, the applicants submitted, relying on Desane and El Masri, that such negotiation was a jurisdictional precondition to the issue of the PANs.

The Council submitted, in summary:

  1. s12(4) of the Just Terms Act, which provides that PANs must be given to caveators, contradicts the submission that the Option Grantees were ‘owners’ of the Premises for the purposes of the Just Terms Act, as this would mean s12(4) had no work to do, since any owner must already be given a PAN by reason of ss 12(1) – (3);
  2. relying on the Court of Appeal’s decision in Bligh, ‘land’ (as referred to in s10A(2)) should not necessarily always be read as ‘any interest in land’ in the context of the Just Terms Act;
  3. the obligation in s10A(2) was satisfied by Council’s genuine attempts to acquire the Premises by agreement from the landowner, being the person with the power to dispose of the Premises; and
  4. in any event, were the Court to find that s10A had not been complied with, the language of s10A(7) (which has never been the subject of judicial consideration) precludes anything in s10A giving rise to, or being able to be taken into account in, any civil cause of action – which includes cases brought under s674 of the LG Act.

The Court’s decision

The Court found in favour of Council’s submissions on every point. In particular, in relation to s10A, Her Honour found, in effect, that:

  1. the obligation upon acquiring authorities under s10A is to negotiate with the person in a position to sell the land [150];
  2. non-compliance with s10A does not affect the lawfulness of PANs. Considered contextually within the Just Terms Act, s10A appears not to be jurisdictional in nature [152]; and
  3. in any event, s10A(7) precludes anything in s10A giving rise to, or being able to be taken into account in, any civil cause of action, which will include proceedings under s674 of the LG Act.

This decision will, naturally, greatly impact upon how acquiring authorities go about complying with s10A. The Court’s judgment can be found here.

This article was written by Jane Hewitt, Partner and Sarah Wilson, Senior Associate.

1Kogarah Council having been amalgamated with Hurstville Council to form Georges River Council in 2016.

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