Update on whether there is a right to be afforded an additional level of procedural fairness in a compulsory acquisition

Suzanne Manson

Melbourne Water Corporation & Anor v Caligiuri & Ors [2020] VSCA 16


On 23 January 2020, we advised you of the outcome of the Supreme Court of Victoria’s decision in Caligiuri & Anor v Attorney General (on behalf of the State of Victoria) & Ors (No 2) [2019] VSC 365. You will recall that this matter related to the acquisition of land and easements by Melbourne Water and Yarra Valley Water (Authorities) in circumstances where the Governor in Council (on the recommendation of the Attorney General) certified that reservation of the required land was unnecessary, undesirable or contrary to the public interest pursuant to s 5(3) of the Land Acquisition and Compensation Act 1986 (Vic) (LAC Act).

Essentially, his Honour Justice Garde held that there was a duty on the Authorities to afford Anthony Caligiuri and J.I.I. Investments Pty Ltd (Caligiuri Parties) an opportunity to be heard before their interest(s) in the land was divested by publication of a notice of acquisition (NOA) in the Victoria Government Gazette on 20 February 2019. He also held that the Authorities failed to discharge that duty and therefore, the NOA was invalid (Declaration). The link to our previous alert can be found here.

In July 2019, the Authorities on the one hand, and the Caligiuri Parties on the other hand, applied to the Court of Appeal of the Supreme Court of Victoria (Court) to appeal Justice Garde’s decision. The Court’s decision was handed down on 13 February 2020.

The Authorities sought orders setting aside the Declaration and dismissing the proceeding at first instance. They argued that the trial judge erred in finding that s 19 of the LAC Act (the power to acquire an interest in land by publishing a NOA) was conditioned by an obligation to afford procedural fairness, and if it were, there was no failure by the Authorities to afford the Caligiuri Parties procedural fairness. The Authorities also argued that they themselves were denied procedural fairness by the trial judge as the Caligiuri Parties neither pleaded this point in court documents, nor argued it during the trial of the matter. This position was no longer disputed by the Caligiuri Parties.

As Mr Heffernan was not a party to the first proceeding, he sought to be joined as a party to the appeal. He argued that by reason of the Caligiuri Parties failing to join him as a party to the first proceeding, the Declaration is invalid and of no effect and should be set aside.

The Court’s decision

As the parties settled the matter prior to the Court hearing the case, the Court was asked to make separate orders by consent, dismissing the Caligiuri Parties’ appeal and allowing the Authorities’ appeal. In these circumstances, it is not a fait accompli that the Court makes the orders sought by the parties in allowing an appeal. It still “had a duty to be satisfied that there was an ‘appellable error’” and the Authorities were therefore required to argue their case before the Court.

In respect of the Authorities’ appeal, the Court held that:

  1. section 19 of the LAC Act is not conditioned by a right to afford procedural fairness; and
  2. as Mr Heffernan was a necessary party to the first proceeding, he is entitled to have the Declaration set aside.

Consequently, the Court upheld the Authorities’ appeal, set aside the Declaration and dismissed the proceeding at first instance. As a result, the NOA published on 19 February 2019 was valid.

The Court’s reasons for its decision

In the joint memorandum submitted to the Court, the parties made various arguments, with which the Court agreed.These arguments are addressed under the following 3 subheadings with the arguments made by Mr Heffernan contained in the 4th subheading.

A right to be heard was already included in the LAC Act

The parties argued that the trial judge overlooked that a right to be heard was already included in the earlier step in the acquisition process under s 5(1) of the LAC Act. This step involves reserving the proposed land and incorporates amendments to planning schemes under the Planning and Environment Act 1987 (Vic). The parties submitted, and the Court agreed, that as a result, it was unlikely that Parliament intended for there to be multiple rights to be heard in the acquisition process.

Compulsory acquisition is a single process

Although the trial judge held that procedural fairness did not condition the certification process under s 5(3) of the LAC Act, the parties argued that he erred in treating each step in the acquisition process as a divisible statutory process. By doing so, he overlooked the effect of the anterior certification under s 5(3). The parties submitted that “the exclusion of a right to be heard by the [C]ertification necessarily excluded any further right to be heard at any subsequent step in the process.” 

They argued that the compulsory acquisition process is a single process, and in this case, the acquisition process commenced with the certification made by the Governor in Council under s 5(3) of the LAC Act and ended with the acquisition of the interests in the land pursuant to the NOA issued under s 19 of the LAC Act. Moreover, it is only the first step in the process (the certification) to which any right to be heard might apply and the trial judge had determined that a right to be heard did not apply to this step.

The Court agreed with the parties’ arguments above and also found that s 19 of the LAC Act (publication of a NOA) is a machinery provision giving effect to the transfer of the interest in land to the acquiring authority.

Any disadvantage as a result of the acquisition is ameliorated by the payment of compensation

Finally, the parties submitted that the trial judge erred in focusing solely on the purported disadvantage to a dispossessed interest holder without an opportunity to be heard, without having due regard to the fact that any disadvantage is ameliorated by the payment of compensation.

Mr Heffernan’s position

Mr Heffernan argued that had he been a party to the first proceeding, he would have opposed the orders sought by the Caligiuri Parties and adduced evidence and made submissions in support of his position. As Mr Heffernan was not actually aware of the first proceeding (despite a finding made by Justice Garde), the trial judge’s decision was “attended by errors in that he proceeded on a mistaken view of the facts.”

The Court found that there was much force in Mr Heffernan’s submissions, particularly that the orders sought by the Caligiuri Parties, and the order ultimately made by the trial judge, directly affected his statutory rights as a result of the acquisition.  Further, even though the Caligiuri Parties challenged the validity of the anterior steps in the acquisition process in the first proceeding, the Court found that Mr Heffernan was a necessary party to the proceeding at first instance and the failure to join Mr Heffernan provides a further reason why the Court should make the orders sought by the parties.

Please contact Suzanne Manson should you wish to discuss the Court’s decision or your obligations in the future.

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