Skip to content.

Home

Allens Arthur Robinson

Focus: High Court declares council compulsory acquisition unlawful

8 April 2009

In brief: A recent High Court of Australia decision has found that a proposed compulsory acquisition of land by Parramatta City Council was unlawful. Partner Paul Lalich (view CV) and Lawyer Brooke Newell review the decision.

How does it affect you?

  • A council has no statutory power to compulsorily acquire land for the purposes of 're-sale'.
  • The acquisition of land will be for the purpose of re-sale in circumstances where the land is required for a project where the council is in a commercial agreement with a developer, and the agreement proposes the transfer of the land to the developer as consideration for it carrying out development.
  • This will be the case even if it can be said that the development itself is, in part, for a public purpose.

Background

In R & R Fazzolari Pty Ltd v Parramatta City Council 1, Parramatta City Council (the council) had entered into a 'public-private partnership' with Grocon (Civic Place) Pty Limited and Grocon Constructors Pty Limited (together, the developer) to develop a parcel of land, which would be known as 'Civic Place'. The site for Civic Place included land owned by R&R Fazzolari Pty Limited and Mac's Pty Limited (the landowners).

The agreement between the council and the developer required the council to grant the developer the right to carry out the development of the site, and obliged the developer to finance, design, construct and commission specified 'works'. The works included buildings and facilities for use by the public, as well as residential, commercial and retail buildings that the developer would own and be able to dispose of as it saw fit. One of the conditions precedent to the agreement was the acquisition by the council of the landowners' land. The council gave notice to the landowners, pursuant to the Local Government Act 1993 (NSW) (the LG Act), that it would compulsorily acquire their land.

Return to top

Land and Environment Court

The landowners sought injunctions in the Land and Environment Court of NSW, alleging that their land was proposed to be 'acquired for the purpose of re-sale' and that, under section 188(1) of the LG Act, the council had no statutory power to compulsorily acquire their land for this purpose. Justice Biscoe held that the proposed acquisitions were unlawful, as they were acquisitions for the purpose of 're-sale', and granted the landowners injunctive relief.

Return to top

Court of Appeal

On appeal by the council, the NSW Court of Appeal overturned Justice Biscoe's decision, accepting the council's argument that it had sought to acquire the land at all times for the purpose of implementing the Civic Place development master plan, which constituted a 'public purpose' within the meaning of the LG Act.

Return to top

High Court

The High Court rejected the Court of Appeal's approach, explaining that the court's focus on what function the council was exercising when it sought to acquire the land, although relevant to other parts of the LG Act, did not address the separate question posed by s188(1), ie whether the acquisition of the land was for the impermissible purpose of 're-sale'.

The High Court found that the development of Civic Place for which the landowner's land was acquired was for the development as stipulated in the commercial agreement between the council and the developer. Under the development agreement, after the land was acquired by the council, it was to declare itself a trustee of the land in return for the developer's provision of money and the works. The High Court concluded that such terms were properly described as effecting the 're-sale' of the land. Accordingly, it reversed the Court of Appeal's orders and restored the injunctive relief that Justice Biscoe had granted in the Land and Environment Court.

Footnotes
  1. [2009] HCA 12.

Published 8 April 2009

For further information, please contact:

Return to top

Share with

What are these?

 

 

Recent Environment & Planning publications