Property Theory Law in many instances takes its position in the intangible, but sometimes it may look retrospectively to areas that may have been overlooked, to ensure equity and fairness are preserved. It is not simply good enough to look at the current legislation parties must dive scratch the surface to ensure a fair outcome.
The landmark case of (Spencer v Commonwealth) 1907 was of such significance that it directly led to the (Just Terms Act Cth) that is by which all compulsory acquisitions are assessed federally however on a state level no provision sits in the (Land Acquisition – Just Terms Compensation Act NSW). It is a commonly miss interpreted fact mainly because of the misleading sub-heading in the NSW legislation. This creates problems for the parties seeking compensation from state and local consent authorities
in that no provision lies in statute. When considering appropriate compensation, a party must first ascertain a property’s highest and best use, in which a property’s location, permissible usage is considered to ensure the level on compensation sort is equivalent to a property’s inherent value. In New South Wales like all states has a series of statutory frameworks are in place, in which Land usage parameters are set out, on a state and local government level on the state level the EPA (Environmental Protection Act) oversees the local government LEP (Local Environmental Plan). This framework sets out the permitted usage of areas of land areas in NSW. These permitted usage areas
are called “Zones” and these zones dictate what development is permissible in that area and what is usually the case is higher the permitted use higher the value of the land which is crucial in determining values in a compulsory acquisition. These LEP’s are review every 4 years usually and from time to time during these upgrades, 2 things can happen firstly permittable zones change or secondly permissible uses (Activities Permitted) change within a zone. When applying permittable use to a property in a Compulsory Acquisition (CA) case one could argue that it is crucial to “Peel back previous layers of Zoning” ie going through previous versions of the LEP or EPA to establish there has been an appropriate chain of progression of permitted uses within the legislation. This investigation is referred to as “Underlying Zoning” because it sits underneath the
existing legislation. This underlying Zoning can expose breaks in the chain or changes in direction in an existing or proposed LEP proposed by a local council, which can directly affect a property’s inherent value.
This is precisely what happened to landowners in the southern highland region of NSW where the Local Government re-zoned properties in Kiama to de-value the property’s in a plan to acquire properties at a much lower price than under the previous zoning, this act was to acquire land by stealth over a period of time.
Whilst Underlying Zoning perhaps deals with tangible facts, these facts often are not current which lead to confusion however when dealing with Compulsory Acquisitions it is vital for any party seeking compensation to ensure that the highest and best use is established regardless of which point in time it occurs.
By Daniel Stephenson