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Is there a right to be afforded procedural fairness in a compulsory acquisition?

Suzanne Manson

Caligiuri & Anor v Attorney General (on behalf of the State of Victoria) & Ors (No 2) [2019] VSC 365

Background

Russell Kennedy acted on behalf of Melbourne Water and Yarra Valley Water (Authorities) in respect of the compulsory acquisition of land and easements in Beveridge, Victoria. The Authorities acquired the land and easements to construct critical water storage tanks and supply infrastructure as part of the Yan Yean to Bald Hill Pipeline Project. 

In November 2018, the registered proprietor and caveator (as purchaser under a terms contract of sale) were served with a notice of intention to acquire (NOITA) the interests. The interests of the registered proprietor were then subsequently acquired by the Authorities when they published a notice of acquisition (NOA) in the Victoria Government Gazette on 20 February 2019.

The purchaser and the purchaser’s nominee (Plaintiffs) intended to develop the land in the future for residential purposes. They issued a Supreme Court proceeding in January 2019 wherein the Attorney General (on behalf of the State of Victoria) as representative of the Governor in Council for the State of Victoria, the Attorney General (in his own capacity), Melbourne Water and Yarra Valley Water became defendants in the proceeding. The Plaintiffs sought judicial review and declaratory relief in respect of the following 4 stages of the acquisition process adopted in this matter:

  1. the recommendation by the Attorney General (being the Minister administering the Land Acquisition and Compensation Act 1986 (LAC Act)) to the Governor in Council that she certify that reservation of the required land was unnecessary, undesirable or contrary to the public interest pursuant to s 5(3) of the LAC Act;
  2. the Governor in Council’s decision to make the certification referred to above;
  3. the Authorities’ decision to serve a NOITA pursuant to s 6 of the LAC Act; and
  4. the Authorities’ decision to publish a NOA in the Government Gazette pursuant to s 19 of the LAC Act.

Arguments

The main issue in the proceeding based on the pleadings and the manner in which the case was run at trial, was whether the Plaintiffs had a right to be heard by the relevant decision maker before stages 1 to 3 above occurred. The Plaintiffs objected to the acquisition and submitted that there were matters of substance regarding the water tanks that they wished to put to the decision makers and were denied this opportunity. They argued that procedural fairness was implied in ss 5(3) and 6 of the LAC Act. 

Based on the arguments in respect of stages 1 to 3, the Plaintiffs then argued that the NOA issued pursuant to stage 4, was invalid. However, they did not argue that the power in s 19 of the LAC Act (to publish a NOA) was conditioned by procedural fairness, unlike the arguments made in respect of the anterior stages 1 to 3.

Put simply, the Authorities and the Attorney General argued that procedural fairness was excluded by the LAC Act by implication. The Attorney General’s submissions related to stages 1 and 2 of the acquisition process, arguing that s 5(3) of the LAC Act was not conditioned by a right to afford procedural fairness. In defence of the pleaded case and the case at trial, the Authorities argued that the LAC Act was not conditioned by procedural fairness in relation to any of the decisions made in stages 1 to 3. The same argument was not made in respect of stage 4 as this submission did not form part of the Plaintiffs’ case.

Decision in respect of stages 1 to 3

His Honour Justice Garde held that a right to be heard did not exist prior to the exercise of the powers of recommendation and certification under s 5(3) of the LAC Act in stages 1 and 2 as this right was impliedly excluded by s 5(3) of the LAC Act. Such a right also did not exist prior to the service of a NOITA pursuant to s 6 of the LAC Act in stage 3. Some the reasons provided by his Honour in reaching these conclusions are as follows:

  1. there would be conflict and inconsistency between the suggested right to be heard and the procedural provisions in the LAC Act as to how notices are to be given”;
  2. at this early stage of an acquisition there would often be considerable practical difficulty in identifying the members of the class of persons who might have an interest in the land to be acquired, and the right to be heard”;
  3. the fact that the certification of the Governor in Council…can be given in the public interest, suggests that Parliament did not intend that persons whose interests in land may be affected by the certification be afforded a hearing at this stage”; and
  4. the statutory obligation placed on the authority by s 6 to make diligent inquiry and serve a [NOITA] on persons with an interest in the land operates as a step in affording procedural fairness. The fact that this step is part of procedural fairness points against the implication of a right to be heard before the power in s 6 is exercised. It points in favour of the implication of procedural fairness after the notice is given”.

Decision in respect of stage 4

Justice Garde held that “there is no clear positive legislative intent to exclude a right to be heard as part of procedural fairness prior to a decision by an acquiring authority to serve a [NOA] under s 19 of the LAC Act.” Further, in his Honour’s view, “a person with an interest in land cannot, and should not, be deprived of that interest without the opportunity of being heard by the acquiring authority. Procedural fairness requires that a person who may be deprived of an interest in land, or whose interest in land may be diminished, should have an opportunity to be heard by the acquiring authority before the interest is lost or diminished.

Hence, the Plaintiffs had a right to be heard after service of the NOITA and prior to the publication of a NOA pursuant to s 19 of the LAC Act (stage 4). From the start of 2018, or earlier (well prior to the service of the NOITA), information regarding the project was provided by the registered proprietor to the Plaintiffs and numerous meetings and communications occurred between the Authorities and the Plaintiffs. Despite this, his Honour found that the Plaintiffs were not afforded procedural fairness during stage 4 and consequently, the Authorities’ NOA was invalid.

However, as noted above, this precise point was not argued by the Plaintiffs in their pleadings, nor was it included in the oral and written arguments made during the course of the hearing. Justice Garde’s decision was therefore made without the defendants having the opportunity to respond to or address his Honour on this point.

Appeal

The Plaintiffs and the Authorities have appealed different aspects of the decision to the Court of Appeal. We understand that the matter is likely to come before the Court of Appeal at end of this month. However, unless and until the decision is overturned, it remains “good law” in Victoria. Therefore, since 19 June 2019, acquiring authorities are required to afford a party with an interest in land according the LAC Act procedural fairness prior to gazetting a NOA. 

Although the decision gives some guidance on the requirements of the procedural fairness obligation, the application of the decision to future acquisitions is complex and each matter needs to be considered on its own merits having regard to the project, the interests and the manner in which the interests are being acquired.

We will keep you informed of the outcome of the appeal. In the meantime, please contact Suzanne Manson so that we can advise you of your obligations going forward until the Court of Appeal hears and determines the matter.

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