WestConnex Hits Hurdle in

Desane v State of New South Wales

25 July 2018

Plus ça change, plus c'est la même chose: The Difference between being within Power and for a Proper Purpose

When you have been doing Government related legal work as long as I have, the cyclicality of issues in Government and the reality of the French maxim “Plus Ca Change, Plus Ca Meme Chose” comes home to roost.

The decision in April 2018 in Desane Properties Pty Limited v State of New South Wales[2018] NSWSC 553 (the Desane Decision) brought those words back to my mind. The decision is something of an embarrassment for Government, both public relations wise, commercially and legally.

Background

The case involved a challenge to a compulsory acquisition under the Land Acquisition (Just Terms) Compensation Act 1991, by the roads authority in connection with certain freeway works to the inner west of Sydney with the land in question being at Rozelle.

The works in question are but a part of a much larger complex of freeway works being organised by the State government but effectively built by the private sector.

Under the Roads Act 1993, Section 177 [Endnote 1] the authority has power to compulsorily acquire land in connection with relevant road related projects where a consensual negotiated purchase arrangement cannot be completed.

The roadway projects in question have been the subject of much public and political discussion and refinement which led to a certain fluidity and uncertainty in intentions of the roads authority at the time that it gave the notice of intention to acquire under the Land Acquisition (Just Terms) Compensation Act 1991.

Within Power v Proper Purpose 

The Court concluded that the particular piece of land was actually intended, long-term, for use as parks and gardens adjacent to the roadworks but that, at the relevant time, its intended use was not sufficiently roadworks related to be a valid compulsory acquisition purpose, having regard to the terms of the acquisition power of the roads authority under the law. 

The power to acquire for road purposes was not doubted but the purpose of the particular acquisition was found to be for “parks and gardens”, not road purposes.

In coming to this conclusion the Court cited the old case of Samrein Pty Limited v Metropolitan Water, Sewerage and Drainage Board (1982) 56 ALJR 678 at 679 which clearly laid down the law in 1982. 

That case laid down the principle that an attempted exercise of power by the Crown or a statutory authority, otherwise within the broad terms of power held, can be voided if a challenged purpose was not the sole purpose of the acquisition but a major motivation not amounting to a proper purpose. 

In the Desane decision, the court said “it will be an abuse of RMS’ powers of the ulterior purpose is a substantial purpose in the sense that no attempt would have been made to acquire the land if it did not been desired to achieve the unauthorised purpose”. [Endnote 2]

Implications

As noted above, the decision amounts to a significant embarrassment for Government. It is not simply losing and possibly being exposed to a higher claim for compensation on the particular acquisition (and the Court required the parties to come back to Court with draft Orders to resolve the matter), but, in the context of ever increasing outsourcing of functions to the private sector, the case highlights the tension between going to market too soon, with no fixed idea of what is to be built, and the Law’s requirement for relative certainty of purpose when exercising a compulsory acquisitions power.

The case reinforces the need for practitioners advising Government (including both State Agencies and NSW Local Government), that, when considering any exercise of power by such an authority, particularly a compulsory acquisitions power, to examine the facts to compare the actual purpose of the acquisition with the source of power and its precise wording at the time of exercise to ensure compliance with both the letter and spirit of the Law.

The Law

Even in the old High Court decision of Samrein Pty Limited v Metropolitan Water, Sewerage and Drainage Board (1982) 56 ALJR 678 (Samrein) it was fairly clear that some wriggle room existed under the then resumption power.

In Samrein, the issue was whether an acquisition, in conjunction with another entity, of a particular property to add to an amount of land MWS&DB already owned to build office accommodation in joint venture with Government Insurance Office was valid. The Court held the need for office accommodation was a primary driver of MWS&DB and the actual means (via a joint venture) was simply a means to that end. Accordingly the acquisition was valid.

The High Court, in Samrein, distinguished the earlier case of Thompson v Randwick Corporation (1950) 81 CLR 87.

In the Thompson case, Randwick Corporation sought to resume certain lands, ostensibly for road widening. However, Council sought to resume more than was necessary for the road widening with a view to selling the surplus to offset the cost of the works. The NSW Supreme Court held the proposed resumption invalid as for an ulterior purpose of profit making by sale:-

“Upon consideration of the scheme as a whole, the conclusion seems irresistible that, with respect to so much of the land included in the scheme as is not required for the new road, profit-making by sale is a substantial purpose actuating the Council in deciding upon the proposed resumptions”.

The question becomes, “how much wriggle room is permitted in the wording of an acquisitions notice under the law?”

In the Desane decision, the Court said:

“it will be an abuse of RMS’ powers of the ulterior purpose is a substantial purpose in the sense that no attempt would have been made to acquire the land if it did not been desired to achieve the unauthorised purpose”[1].

The Case was recently the subject of an Appeal to the NSW Court of Appeal. The result of the appeal is awaited by many.

More broadly, the issue will, of course, depend of the particular wording of the legislation applicable to any agency whose exercise of powers involves resorting to compulsory land acquisition powers but the primary need is to check the main purpose against the wording in relevant notices and whether it is wide enough or narrow enough to achieve the relevant statutory purpose.

The text of the paper is only a summary and discussion of particular facts and principles. It is not to be taken as legal or commercial advice as to any particular factual circumstances but feel free to contact the writer if you have any queries or comments.

The article is an amalgam of two of articles by Gregory Ross originally published by Legalwise News.

Endnotes

1. 177 Power to acquire land generally.
(1) The Minister, RMS or a council may acquire land for any of the purposes of this Act.
(2) Without limiting subsection (1), the Minister, RMS or a council may acquire:
(a) land that is to be made available for any public purpose for which it is reserved or zoned under an environmental planning instrument, or
(b) land that forms part of, or adjoins or lies in the vicinity of, other land proposed to be acquired for the purpose of opening, widening or constructing a road or road work.
(3) Without limiting subsection (1), RMS may also acquire land that it proposes to declare to be RMS development land.
2. Hammerslag J Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553 at paragraph 282.

Gregory Ross, an Accredited Specialist in Government and Administrative Law and a Partner at Eakin McCaffery Cox Lawyers. 

Gregory Ross has been a Partner at Eakin McCaffery Cox Lawyers since 2010

Gregory's legal practice reflects his many years of legal, commercial, policy and probity experience in NSW and beyond. As an Accredited Specialist in Government and Administrative Law, Gregory advises government bodies to develop legislation, contracting and process arrangements. 

Contract Gregory at ross@eakin.com.au


[1] Hammerschlag J Desane Properties Pty Limited v State of New South Wales [2018] NSWSC 553 at paragraph 282