appendix 4
comparative material

Part A: An Australian legislative code

Land Acquisition Act 1989 (Cth)

Section 52: Entitlement to compensation

A person from whom an interest in land is acquired by compulsory process is entitled to be paid compensation by the Commonwealth in accordance with this Part in respect of the acquisition.

Section 55: Amount of compensation- general principles

(1) amount of compensation to which a person is entitled under this Part in respect of the acquisition of an interest in land is such amount as, having regard to all relevant matters, will justly compensate the person for the acquisition.

(2) In assessing the amount of compensation to which the person is entitled, regard shall be had to all relevant matters, including:

(a) except in a case to which paragraph (b) applies:

(i) the market value of the interest on the day of the acquisition;

(ii) the value, on the day of the acquisition, of any financial advantage, additional to market value, to the person incidental to the person's ownership of the interest;

(iii) any reduction in the market value of any other interest in land held by the person that is caused by the severance by the acquisition of the acquired interest from the other interest; and

(iv) where the acquisition has the effect of severing the acquired interest from another interest, any increase or decrease in the market value of the interest still held by the person resulting from the nature of, or the carrying out of, the purpose for which the acquired interest was acquired;

(b) if:

(i) the interest acquired from the person did not previously exist as such in relation to the land; and

(ii) the person's interest in the land was diminished, but not extinguished, by the acquisition;

the loss suffered by the person because of the diminution of the person's interest in the land;

(c) any loss, injury or damage suffered, or expense reasonably incurred, by the person that was, having regard to all relevant considerations, including any circumstances peculiar to the person, suffered or incurred by the person as a direct, natural and reasonable consequence of:

(i) the acquisition of the interest; or

(ii) the making or giving of the pre-acquisition declaration or certificate under section 24 in relation to the acquisition of the interest;

other than any such loss, injury, damage or expense in respect of which compensation is payable under Part VIII;

(d) if the interest is limited as to time or may be terminated by another person—the likelihood of the continuation or renewal of the interest and the likely terms and conditions on which any continuation or renewal would be granted;

(e) any legal or other professional costs reasonably incurred by the person in relation to the acquisition, including the costs of:

(i) obtaining advice in relation to the acquisition, the entitlement of the person to compensation or the amount of compensation; and

(ii) executing, producing or surrendering such documents, and making out and providing such abstracts and attested copies, as the Secretary to the Department requires.

Section 56: Meaning of “market value”

For the purposes of this Division, the market value of an interest in land at a particular time is the amount that would have been paid for the interest if it had been sold at that time by a willing but not anxious seller to a willing but not ancious buyer.

Section 57: Special provision where market value determined upon basis of potential of land

Where the market value of an interest in land acquired by compulsory process is assessed upon the basis that the land had potential to be used for a purpose other than the purpose for which it was used at the time of acquisition, compensation shall not be allowed in respect of any loss or damage that would necessarily have been suffered, or expense that would necessarily have been incurred, in realising that potential.

Section 58: No general market for interest acquired

(1) This section applies where:

(a) an interest in land (in this section called the old land ) is acquired from a person by compulsory process;

(b) immediately before the acquisition, the person was using the old land, or intended to use the old land, for a purpose other than the carrying on of a business;

(c) but for the acquisition, the land would have been, or would have continued to be, used for that purpose;

(d) at the time of the acquisition, there was no general demand or market for land used for that purpose; and

(e) the person has acquired, or intends to acquire, another interest in other land (in this section called the new land ) in substitution for the acquired interest and intends to use the new land for the same purpose.

(2) The market value of the acquired interest on the day of acquisition shall be taken to be the greater of:

(a) the amount that, apart from this section, would be the market value (if any) of that interest on that day; and

(b) the net acquisition cost in relation to the interest in the new land.

(3) The net acquisition cost, in relation to the interest in the new land, is the amount calculated in accordance with the formula:

CA + E - FI

where:

CA is the amount of the cost, or the likely cost, to the person of the acquisition of the interest in the new land;

E is the amount of the expenses and losses incurred, or likely to be incurred, by the person as a result of, or incidental to, ceasing to use the old land and commencing to use the new land for the same purpose; and

FI is the present value of any real and substantial saving in recurring costs (relating to land or an interest in land) gained by the person as a result of the relocation.

Section 60: Matters to be disregarded in assessing compensation

In assessing compensation, there shall be disregarded:

(a) any special suitability or adaptability of the relevant land for a purpose for which it could only be used pursuant to a power conferred by or under law, or for which it could only be used by a government, public or local authority;

(b) any increase in the value of the land caused by its use in a manner or for a purpose contrary to law;

(c) any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the purpose for which the interest was acquired; and

(d) any increase in the value of the land caused by the carrying out, after a copy of the pre-acquisition declaration or certificate under section 24 in relation to the acquisition of the interest was given to the person, of any improvements to the land, unless the improvements were carried out with the written approval of the Minister.

Part B: Australian and Canadian material on injurious affection where no land is taken

(i)Extracts from ALRC report

Reproduced with kind permission from the Australian Law Reform Commission. Source: The Australian Law Reform Commission Report No 14: Lands Acquisition and Compensation (1980), pages 165-170 and pages 174-181.

Chapter 11: Injurious Affection and Enhancement: A New Approach

Paras 305-312

305. The anomaly summarised. The situation which exists at present under Commonwealth legislation can be illustrated by a diagram:

 

Assume the Commonwealth decides to construct an aerodrome on lots 2 and 3. lt owns lot 3 but it must acquire lot 2 from A who also owns lot 1. B owns lot 4. As land is acquired from A he will be entitled[1] to compensation not only for the value of lot 2[2] but also for depreciation arising from injurious affection to his retained land (lot 1) due to the proposal to construct and use the aerodrome. If the depreciatory factors can be isolated, as between lots 2 and 3, such compensation will be limited to damage arising from the works on and use of lot 2; Edwards'[3] case will be applied.[4] If not he will be compensated for depreciation in the value of lot I arising from the work on and use of both lots 2 and 3. B, as owner of lot 4, may be equally affected by the construction and use of the aerodrome. He may be more seriously affected than A. He will receive no compensation as he has lost no land. As the aerodrome will be constructed under statutory authority, he has no action in nuisance against the Commonwealth such as would lie if the aerodrome were established by a private person or without statutory authority. A should receive compensation for the value of the land taken but there is no justification for allowing A to receive compensation for 'pure' injurious affection while denying it to B.

306. The burden of the loss. It may be argued that extending a right to compensation to B would be to extend to individuals the opportunity to profit from public works and add to the cost of necessary public facilities. Landowners must, according to this view, accept expansion of public works in their neighbourhood, even if they cause personal loss, for the greater public good. This argument overlooks the fact that the affected landowner loses his common law remedy. If compensation is accurately calculated, there is no question of a profit-merely the offset of loss. It is desirable that an affected landowner should at least be given a statutory right to claim compensation in lieu of a nuisance action. The potential cost to the government, and the community, of compensation is clearly an important consideration. But the cost, whatever it may be, is already there. The only question is whether it should be borne by the community whose representatives plan and effect the work in the perceived public interest or by particular landowners who are unfortunate enough to be in the 'wrong' place at the time of the public works.

307. Equation of partial taking and no taking situations. A preliminary issue is whether injurious affection on a partial taking and that where there is no taking should be treated the same way. In principle, as the overseas reforms and the Australian committees have recognised, there is no reason to treat the assessment of injurious affection compensation differently. The only contrary argument is that it is only by reason of the use of the acquired land that the government authority is able to do the acts which cause the injury and that it is therefore appropriate to treat an owner from whom the land has been acquired as being in a special position. However, the factual situation resulting from the public works is more important. Reverting to the diagrammatic example, the owners of lots I and 4 may be equally affected. If they are differently affected this will be a result of the planning of the work, not the history of the land title.

308. Present partial taking rules. If partial taking and no taking situations are to be treated in the same way it is necessary to consider the suitability of the existing rules governing injurious affection on a partial taking. The main problem is that which is highlighted by Edwards' case[5] and illustrated in the diagram, where the works involve the use not only of the acquired land but also of other land (for example lots 2 and 3). However, this difficulty resolves itself once the approach is taken that partial taking and DO taking situations are comparable. On this basis there is no ground for distinguishing the effect of acts done on the land acquired from that of acts done on other land. It is the effect of the project as a whole that should be considered. Similarly, if taking and no taking situations are equated, the requirement that the affected lands be 'held with' the acquired lands becomes irrelevant. It is, however, necessary to consider whether claims should lie whether or not the acts complained of would have given rise to a common law action (as is the present position in relation to partial takings). Furthermore the construction/use distinction must be considered and also the important issue of whether damages should be available for all economic loss, for business loss or merely for depreciation in the value of the land. These issues can conveniently be dealt with in a consideration of the alternatives which could be adopted to provide compensation for injurious affection in a principled way.

Alternative Approaches

309. Piecemeal answers. Three possible, piecemeal, approaches exist.

·         Compensation only if land taken. Retain the existing system: that is, limited compensation where land is taken if certain prerequisites are satisfied. No compensation if no land is taken. This is anomalous and unjust.

·         Compensation where land taken for effects of whole work. Retain the existing system with modifications: that is, minor legislative changes to ensure that the rule in Edwards' case[6] does not apply; clarification of the distinction between 'held with' and 'adjoining or severed from'; consider the possibility of extending claimable loss to personal and/or business damage. No compensation if no land is taken. While minor amendments would perhaps bring a higher degree of clarity to the Commonwealth Act such an approach ignores the need to consider generally the effect of injurious affection from commonwealth construction and use of works. Unless compensation is to be limited to individuals from whom land has been acquired, this reform will not suffice.

·         Separate rules for injurious affection where no land is taken and where land is partly taken. The third possibility is to retain injurious affection where land is partly taken, as at present or as modified, and to have separate provision for injurious affection where no land is taken. This is what has occurred in England. The existing law on a partial taking has been retained as has the provision which enables compensation to be paid where there is no taking, when the circumstances satisfy certain rules. The 1973 amendments[7], while representing a major development. have been 'tacked on' to the existing law. However, Australia lacks a legislative equivalent of s. 68, so that a 'tacking' operation is not possible. The better approach is to deal with the positions covered by the various English provisions in one statute.

310. Possible new approaches: the law of nuisance. The statutory remedy of compensation. where no land is taken. is given in lieu of the common law right of action in nuisance. The latter is taken away by the statutory authority under which the injury is done. Accordingly there is a logical attraction in specifically reinstating the claimant's right to a claim equivalent to nuisance. Compensation would then be payable where the acts of the Commonwealth involved it in activities which would, at common law, fall within the tort of nuisance. The need to provide compensation would arise only where the statute authorising the work excluded a common law action. If immunity was not conferred, a common law action for damages or an injunction would lie. Such an approach would place the Commonwealth in much the same position as a private individual except that, instead of damages and injunctions, a right to a once-only payment of compensation would be given. Three objections may be raised to this proposal. First, it is arguable that the introduction of such a rule would actually reduce compensation for those owners whose land is partially acquired. Whereas, at the present time, they may receive injurious affection compensation for any damage occasioned by the proposed work they would, under such a rule, be limited to damage from nuisance. It is difficult to see how, in practice, a claimant would be disadvantaged if all nuisances were compensable. Nuisance damage includes not only the physical factors mentioned in the United Kingdom list (noise, fumes etc.) but also obstruction of access[8], in some cases a major source of damage. Most types of damage fall within the concept of nuisance. Furthermore the limitations inherent in the present approach must be recognised. The calculation of injurious affection is based upon the nature of the proposed use, not upon actual experience. Such a calculation may substantially understate the loss. There is every advantage in preferring actuality to prediction. The second objection is that, as the Justice Supplemental Report points out, there would be great difficulty in fitting many of the larger kinds or public works, such as highways, into the common law concept or nuisance.[9] A highway authority could claim that it is merely making ordinary and reasonable use of the land or argue that the nuisance is created by the traffic not the road. Finally, the policy issue of whether statutory authorities should be equated with private individuals must be considered. It might be thought that the cost of public works constructed for the benefit of the community should be shared generally by the community so that individuals living near such public works do not suffer financial loss for the injurious affection caused by such works, but the consequence of any new right will be to increase the cost of some public works. Cost may be reduced by limiting the type or damage recoverable. [10]

311. A combination of the United Kingdom provisions. An alternative approach would be to combine the effect of the English provisions, eliminating certain difficulties and obscurities. Compensation could be paid for depreciation in the value of an interest in land, whether or not land had been acquired from the claimant, caused by the construction, in the sense of the existence, or public works or by physical factors resulting from the use of public works. There would be no requirement that the acts should amount to an actionable nuisance, although in fact this would often be the case. However, if compensation is paid, to avoid double recovery, a nuisance action should not be permitted. [11] The legislation could require that compensation claims be brought only after a specific period had elapsed after the commencement of the use of the public works. Although injury from the existence of works may well be in evidence before this time, a compulsory waiting period would ensure that a single assessment of damage could be fairly made. Two criticisms may be levelled at such a scheme. The first is that the list of specified physical factors may be too restrictive. Any list may omit factors which will arise in some cases and which are presently compensable on a partial taking. There is force in this point. For example, if the intent or the United Kingdom legislation was to list those factors which would be actionable in nuisance, in the absence of statutory authority, it is difficult to justify the exclusion of obstruction to access. This is a public nuisance but it may cause special damage to a particular individual. A landowner has a legal right of access to a public road to which his land has frontage.[12] If, pursuant to statutory powers, a public authority denies that access, the use to which the land may be put, and therefore its value, may be seriously affected. Access has been denied for some perceived public benefit. It seems reasonable that the community compensate for the loss. It is a loss which a private owner could not inflict on another. Secondly, it may be argued that the concept or damage is too narrow-that restriction of the claim to depreciation in the value of the land does not take account of business losses. The Ontario Act a1lows injurious affection compensation for 'such personal and business damages, resulting from the construction and not the use of the works by the statutory authority as the statutory authority would be liable for if the construction were not under the authority of a statute'.[13] An affected person, it may be argued, should not be in a worse position than if the development were carried out privately. The argument has merit, but there are countervailing factors. First, there is a danger of duplication. Where land is used commercially for its highest and best use any diminution in the profitability of that use is likely to affect adversely its market value. Hence the capitalised value of damage to the business will be compensable. Where the land is used commercially for a use less than its highest and best use damage to the business wi1l not necessarily cause loss. It may hasten a change to the higher use. The Ontario formula may give compensation where no loss has been suffered. Compensation on the basis of loss of value to the land would appear adequately to cover most owners. Secondly, there is a practical objection. Loss of land value is relatively easy to prove. Inquiries into the extent and cause of business losses are likely to be lengthy, complex and expensive. To restrict compensation to loss of value of the land is not to diminish benefits presently available to owners part of whose land is acquired. Their compensation is calculated on the basis of loss of value of the land. What then of tenants? This depends upon the right of compensation given under new legislation. If all tenants, regardless of the length of their lease, are free to bring a claim for the diminution in the value of their interest they will recover the greater part, at least, of their business losses. The United Kingdom Act limits claims by tenants to those who, at the relevant date, have an unexpired term of at least three years. The policy has been to provide rights for people with less than a fee simple interest but to impose a lengthy term condition is to avoid a multitude of small claims from tenants with a very limited interest in the land. However any arbitrary limitation will give rise to anomalies. If a tenant, with an unexpired term of less than three years, is able to prove that his leasehold has been diminished in value there is no reason of principle to deny him compensation. The burden of costs is likely to discourage petty and frivolous claims.

312. Blight and the time of claim. Whether it be decided to adopt the law of nuisance. a statutory list or a combination of both the question arises as to the date upon which the right to compensation should arise. The earlier it is, the more certain that a person who has the claim will be the person actually damaged by the public work. From that point of view it would be best to fix the date as the time of the announcement of the work. However, works frequently take years to construct. Plans change. Projects stop and start. To value the claim as at the announced date would be to prefer prediction to experience with possible injustice to one of the parties. The statutory authority may find itself, as it could now in the case of partial acquisitions, in the position of having paid injurious affection for works which are never completed. This situation did. in fact, occur in respect of the land the subject of Morison's case. [14] The land was acquired for the extension of Mangalore airport to permit the training of jet pilots. Subsequently the Parliamentary Public Works Committee found that the noise from the proposed extensions would be excessive and that there were suitable alternative facilities at Avalon. Training was centralised at Avalon. In the result the Commonwealth paid $22 800 for injurious affection damage which did not eventuate. To vest the claim at the date of announcement but to value it after completion of the project would create administrative difficulty. The original claimant might have sold his property, died or disappeared, by the time it could be valued and paid. The alternative is to vest the claim after the work is completed, either immediately, as is the United Kingdom position[15], or at some specific later period. Delayed vesting has the disadvantage that an owner may sell during the course of construction, his price being reduced because of the proposed work, and yet be deprived of compensation. The purchaser would know that, when the work is completed, he will have a claim for compensation and this may enable the vendor to argue against a full reduction of the price. However, there will be some reduction since no purchaser will pay the full value of the estimated future compensation. In the course of time, as people adjust to the notion of claims on the basis of a vesting at the date of the announcement, the Commission would so recommend. However, there appears to be no such method. The least unsatisfactory alternative is to vest the claim on a date shortly after the completion of the work, when its effects are known, and to allow an action to be brought immediately. This solution would give less than full compensation to the owner forced, or electing, to sell during the construction of the work. But he would be better off than he is now, to the extent that the purchaser was persuaded by the prospect of compensation being payable not to reduce his offered price unduly by reason of the public works complained of.

Paras 319-332

The Cost of Reform

319. Relevance of cost. The importance of cost may be exaggerated. If a loss is suffered by reason of the construction and use of a public work, and if it is correct in principle that the loss be borne by the community, the cost or giving effect to that principle should not be regarded as decisive. However, it is a relevant consideration and the Commission has sought to ascertain the cost of providing an enlarged compensation right for injurious affection.

320. Aerodromes. The major Commonwealth activity likely to attract injurious affection claims is the construction of aerodromes. In 1973 the Australian Taxation Office, at the request of the Department of Civil Aviation, studied the effect of the use of Adelaide airport upon values In the area. Valuers compared sales of residential properties in the flight paths with sales of properties just outside the flight paths. Sales of properties in the vicinity of the airport were compared with sales of properties in areas not affected by the airport. A total of 387 sales was considered. The properties the subject of those sales were inspected. Houses were divided into three categories, according to age and style. Graphs were prepared to show the mean price of each type of house within, and just outside, each flight path. In some cases the graphs revealed no difference between the mean price of houses of a particular category within, and just outside, a particular runway. In other cases the mean price of houses within the flight path was a little lower than the mean price of the same type of house just outside that runway. However, in no case did the difference exceed 10 per cent. The valuers were not able to say whether that difference, where it occurred, was solely attributable to aircraft noise. They concluded:

          From the objective view point of the real estate market, it is difficult to prove      that there is any detrimental effect on property values. Comparison of values             on properties inside and outside the same flight path does not reveal any great           divergence in the trend of values. [16]

The Department of Administrative Services sought comment from the Australian Taxation Office upon the cost of providing injurious affection compensation in respect of the extension of Brisbane aerodrome. The Office advised:

          No accurate assessment can be made of the extent of damage caused to           properties not acquired until final plans are approved showing the location of   runways and flood mitigation works. Nevertheless, the valuer is of the opinion    that wherever sited these works will result in damage to a number of          properties and that additional compensation could exceed $I mil1ion.[17]

The estimate of about $1 million should be put into context. The works proposed for Brisbane aerodrome are major extensions, upgrading it from domestic to international standard. Two additional runways will be constructed, doubling both the capacity of the aerodrome and the area used for runways. The Department of Transport estimates the total cost of the project at $l70 million.[18] The total acquisition cost of the land needed for the extensions will exceed $15 million.[19] In this context an additional $1 million, to provide compensation for private individuals damaged by the extension, is not unacceptable.

321. Roads: Commonwealth constructions. The Commonwealth is directly responsible for road works only in the Australian Capital Territory and the external territories. In neither case is injurious affection from the construction and use of roads likely to be a significant factor. In the Australian Capital Territory it has been the practice for major roads to be constructed wen before development and lease of the surrounding land. I t is unlikely that a claim would arise in respect of those roads. There may, of course, be need to construct some new roads. or to widen existing roads, but the planning of Canberra renders it unlikely that such work will significantly affect private land. Similarly, there is little likelihood of significant cost in the external territories each of which is small and unlikely to require major road building programs.

322. Roads: State constructions. The Commonwealth has, in the past, provided finance for road construction by State instrumentalities, including local authorities. The cost effects of injurious affection on State road programs might therefore be a legitimate matter for consideration before adopting Commonwealth legislation which could set a precedent for State legislation. To some extent the precedent has already been set. Government-appointed committees in each of the two most populous States, New South Wales and Victoria, have already recommended the principle of injurious affection compensation.[20] In Victoria, that recommendation has already been accepted by the Government.[21] Although in each case limitations were proposed, it is clear that each committee saw depreciation from the noise occasioned by road use as the major area of concern. In these two States, therefore, the cost may well be incurred by force of State law. Notwithstanding, inquiries have been made to ascertain the cost of the compensation provided in the United Kingdom by the Land Compensation Act 1973.[22] Figures for the whole of the United Kingdom are available only in relation to the trunk road program, which is financed through the Department of the Environment. The total cost of that program exceeds £ 300 million per year. Approximately 10 per cent of the total cost is expended on compensation to landowners in respect of the acquisition of land or injurious affection. During the period of 5 1/4 years from the commencement of the 1973 Act until 31 December 1978, the Department paid a total of £3.93 million for compensation under Part I of the 1973 Act, that is to landowners from whom no land was taken in respect of the adverse effects of the use of trunk roads. The effect of such compensation has been to add about 0.25 per cent to the cost of the trunk road program. In the United Kingdom, non-trunk roads are constructed by county councils. It has not been possible to obtain comprehensive figures to illustrate the extent to which the provision of Part I compensation has increased the cost of the non-trunk program. However in the period of3i years from the commencement of the Act until 30 June 1977 the Greater London Council had received 45 claims of which, in July 1977, 30 had been admitted or were likely to be admitted. The estimated liability of the Council in respect of those claims was only £30000. The Assistant Divisional Valuer of the Council told the Commission that he regarded the additional public cost as insignificant but considered that the Act was useful in providing justice in the relatively few cases where individuals suffered extraordinary damage through road construction.[23]

323. Other works. In 1978 the State Offices of the Australian Taxation Office were asked to review the properties compulsorily acquired during the financial years 1975-76, 1976- 77 and 1977-78 with a view to detecting cases in which additional costs would have been involved if the injurious affection proposals of the Commission tentatively advanced in the Discussion Paper had then been the law.[24] The purposes of acquisitions included water and sewerage pipelines, offices, defence stations, industrial and residential subdivisions in the Northern Territory, road widening and re-alignment, navigation and radio instrument sites, a ‘naval impact area’, and an air weapons range. Only in the case of Brisbane aerodrome was it thought that the tentative proposals would have resulted in any increase in the amount of compensation payable by the Commonwealth.

324. Conclusion on cost. The available evidence indicates that the cost of implementing a scheme for comprehensive injurious affection, measured by depreciation in the value of the land, will be quite low. In the case of the construction or extension of a major airport it may add a million dollars or more to a cost likely to be measured in hundreds of millions of dollars. In Commonwealth Territories it will add insignificantly to the cost of road works. In the States, if the British experience is any guide[25], it will add a figure less than 0.5 per cent to that cost. In the case of other works rarely will there be any additional cost.

325. Need for reform. If the cost is likely to be small the number of claimants will be small. Why, then, is there a need for reform of the present rules? Does the call for reform stem simply from a desire for legal tidiness? The present rules are anomalous. They are explained by history but they cannot be supported by logic. A more rational law may easily be substituted. However, that would be an insufficient argument for change. Change, if it is to be made, must be justified by relevance to need. That need is demonstrated by the fact that there have been successful claims in Britain and that studies have shown a need in Australia. The Victorian Committee identified cases where loss had been sustained because of the use of roadways.[26] The study at Adelaide airport showed some relationship between use of the airport and the values of particular properties.[27] The opinion of the Australian Taxation Office, in relation to the extension of the Brisbane airport was that, wherever the runways were located, the values of about 100 properties in a particular small township, in which no land had been acquired, would be affected. For the individuals concerned the fact that depreciation through public works is relatively infrequent is no consolation or answer. Justice to such owners demands reform of the law to give them proper compensation. The comparative rarity of the problem makes it possible to undertake that reform at acceptable public cost.

A Comprehensive Scheme

326. Nuisance or a list of factors? In the Discussion Paper the Commission suggested a list of factors which would attract injurious affection claims.[28] They were divided into construction factors: denial of access from a frontage lot to a public road, loss of air and overshadowing; and use factors: noise, vibration, smelt, fumes, smoke, artificial lights and discharge of substances. The major reason why a list was proposed (rather than a principle making the Commonwealth liable where, but for statutory immunity, a nuisance action would have succeeded) was the difficulty of applying the common law rules as to nuisance to public works. However, comment on the Discussion Paper provided a numl1er of additional examples of possible injurious effects of public works which were, in principle, indistinguishable from the factors suggested. No list could be, and remain, comprehensive. Reliance upon a list necessarily leads to anomalies. A wider principle is required but resort to the law of nuisance alone has the difficulties already noted. The solution is to underpin the legislation by referring to the law of nuisance, but to add a list to avoid doubt. This will allow the courts to apply it to new situations and to adapt the compensation entitlement to developments in the law of nuisance. With this in mind it is proposed that the legislation use the term 'injurious factor', defined to include:

·         noise

·         vibration

·         smell

·         smoke

·         fumes

·         artificial lighting

·         discharge of substances

·         heat

·         gas

·         vapour

·         loss of air

·         overshadowing

·         loss of support

·         restriction or prevention of access between the relevant land and a public road, waterway or seashore

In addition to this list the definition should include anything in relation to which, in the State or Territory in which the relevant land is situated and in the absence of statutory authority or immunity, there exists a right of action for nuisance by an owner of land against the owner or occupier of other land.[29] The list of specific items includes factors which would, at common law, give rise to an action in nuisance. It also includes two factors, loss of air and overshadowing, which would not ordinarily give rise to an action. They are losses which may be caused by a private development, as much as a public one, but there is generally a better opportunity to resist adverse private development than public development.[30] This distinction justifies their inclusion. It may be contended that, upon the same basis, loss of view should be included. However, it is desirable that a statutory authority, in planning a work. should be able to calculate the total cost. It will know the extent to which a given design will cause overshadowing of, and loss of air to, nearby land and may reasonably estimate the adverse effect on value. The number of affected properties will be comparatively small. Loss of view is more difficult to calculate. The number of properties affected is likely to be greater and the loss is likely to be more variable. The loss of view occasioned, on particular properties, by a public development will vary from time to time, as buildings on intervening land are erected or demolished or even as the affected property is remodelled or extended. The position calculated when the public development is planned may be very different from that applicable when it is completed. This would render budgeting more difficult. Even accepting the argument that there is no essential virtue in limiting rights against a public developer to those available against a private developer the provision of compensation for loss of view may go too far.

327. Right of compensation. The legislation should apply to any land vested in the Commonwealth, or in any authority of the Commonwealth.[31] As in the United Kingdom, the test should be whether there has been a loss of value in land because of the injurious factor. Mere inconvenience or loss of amenity should not attract compensation unless this adversely affects value. Where that test can be met, compensation should be provided in respect of changes which occur after the commencement of the new legislation. Such a change may take one of three forms:

·         completion of the construction of a work on Commonwealth land;

·         commencement of a use of Commonwealth land: or

·         substantial intensification in the use, whenever commencing, of Commonwealth land, being an intensification that results from completion of construction of a work.[32]

Compensation should not be available for the mere inconvenience caused during the construction period. This is an inconvenience equally suffered in respect of private development and has at most a transient effect upon property values. In relation to a building or work constructed on land, compensation should be available in respect of any injurious factor caused by the existence of the building or work. Such cases will probably be limited to denial of access, lo5s of air and overshadowing and be comparatively rare. There will be more cases involving use of land, in relation to which any of the other injurious factors may become relevant. Compensation should not be available in respect of a use which was in existence at the commencement of the Act. To allow such compensation would involve significant cost. Moreover it would involve compensating people who have purchased land knowing of the existence of a particular Commonwealth use and thus purchased more cheaply. Any new compensation right should be prospective in the sense that it applies only to activities commencing after the date of the new legislation. Thus, in relation to use of land, the general position should be that compensation is available only where the use commences after the date of the legislation. There will, however, be cases where a long standing use has been intensified because of the construction of works. Morison's case[33] provides an example; the extension of an existing aerodrome so as to make it suitable for jet aircraft. It would be anomalous to provide compensation in the case of a completely new aerodrome but to deny it where the aerodrome has been extended, with a consequent substantial intensification of use. Substantial intensification consequent upon construction should attract compensation. There will be cases where a use gradually, and without any new construction, intensifies to the disadvantage of neighbouring owners. Ideally compensation should be available in such cases, but to introduce this category would involve the parties in significant evidentiary problems. Moreover, normally, people would expect a gradual increase in the use of existing facilities. They may be presumed to have taken this likelihood into account when purchasing their land. They would not normally, be expected to anticipate the construction of new works which significantly change the position.

328. Measure of compensation. Compensation should be related to loss of value. The appropriate test is not whether there has been an actual reduction, in money terms, in the value of a particular parcel of land by reason of the injurious factor. To impose that requirement would be to deny compensation in cases where land values, generally, are increasing through inflationary factors. There may have been an actual increase in the money value of a parcel notwithstanding that it has been comparatively disadvantaged because of the injurious factor. The appropriate comparison is between the value of the land in its affected condition and the value which it would have had in the absence of the injurious factor. There will, occasionally, be difficulties in determining that hypothetical value but evidence of sales of properties which are unaffected by the injurious factor will generally provide guidance. The United Kingdom Land Compensation Act 1973 provides for a similar approach. This has caused no difficulty in practice. The compensation which is payable should therefore be defined as the amount by which the market value of the land is less than the amount that would have been the market value on the 'relevant day' if the depreciation caused by the existence of the thing constructed, the commencement of the use or the substantial intensification of the use, as the case may be, had not occurred.[34] The term 'relevant day' should be defined as being the first anniversary of the completion of the construction or commencement of the use, as the case may be.[35] This delay of 12 months should allow the market to adjust to the new work or activity and will provide some opportunity for sales evidence to accumulate, providing guidance to valuers in determining the extent of the depreciation.[36]

329. Source of injury. The intention is to provide compensation for injury occasioned by Commonwealth works. It ought, therefore, to be necessary for the claimant to show that the source of the injury is an injurious factor emanating from Commonwealth land. This is the normal obligation of a plaintiff bringing a nuisance action at common law. It is insufficient merely to show that an activity on particular land has had the indirect effect of increasing noise levels and the like. However, an exception must be made in respect of aerodromes. The adverse affect of an aerodrome is occasioned by the noise of aircraft arriving at, or departing from, the aerodrome. Usually the worst effect, on a particular householder, occurs when the aircraft is passing over his own land. Thus a limitation, in relation to aircraft noise, requiring the noise to emanate from Commonwealth land would largely defeat the purpose of the amendment. It would also occasion significant valuation problems as valuers would have to assess the extent to which the market would be influenced by noises in and over the aerodrome but disregarding noises outside the aerodrome. The reality of the matter is that the problem is occasioned by the existence and use of the aerodrome. Consequently the legislation should specifically provide that injurious factors caused by aircraft arriving at, or departing from, an aerodrome vested in the Commonwealth shall be regarded as having their source at the aerodrome.[37]

330. Relationship to damages claims. The proposal for statutory compensation arises from the assumption, which is valid in most cases, that a common law action will be precluded because of the provisions of the statute authorising the public work. In order to ensure that the compensation provisions are not defeated by the general rule of legal immunity it is desirable specifically to provide that the right to compensation subsists notwithstanding any immunity otherwise conferred by law.[38] The provision of statutory compensation is designed to assist the position of an owner of land adversely affected by a Commonwealth work or activity. In the majority of cases that owner will not have an available common law action. There may, however, exist particular cases where there is a common law remedy as, for example, where the Commonwealth has exceeded its statutory authority or the statute preserves common law rights. It would be wrong, in legislation designed to assist the owner, to deny him that remedy. His right to sue for damages should be specifically preserved.[39] However the claimant should be forced to elect. To permit him to recover both damages at law and statutory compensation would be to compensate him twice over for the damage sustained by him. The legislation should provide that if a person has recovered damages he shall not be entitled to statutory compensation and vice versa.[40]

331. Determination of claim. There should be a time limit for submission of claims for compensation. A limitation of three years has, in recent times, been adopted in legislation relating to a number of different subjects. Limitation periods should be made uniform, to the maximum extent possible, and the Commission therefore suggests this period.[41] The period should date from the 'relevant day' being the day upon which the claim vests.[42] An obligation should be imposed upon the Minister promptly to decide whether compensation is payable and, if so, a fair and reasonable estimate of the amount of compensation. That decision should be served upon the claimant[43], who should have a right to review by the Administrative Appeals Tribunal[44] or to final determination in the Federal Court of Australia.[45]

332. Mitigation. The United Kingdom Act contains elaborate provisions for mitigation of the injurious effect of public works.[46] Pursuant to those provisions, constructing authorities frequently perform work on affected properties: notably double-glazing of windows to reduce noise. The view has been put to the Commission, by those experienced in the operation of the United Kingdom legislation, that it is undesirable to make the mitigation of the works mandatory. There is too much scope for legitimate argument as to the works necessary to offset the effects of a particular public work. Some owners will desire simultaneously to remodel their premises, with scope for argument as to apportionment of costs. Others will oppose any construction work on their property at all. The better course is simply to empower the constructing authority to carry out such works as may be agreed with the affected owner to mitigate the adverse effects of the public work.[47] To the extent that it does so, or would be willing to do so, damage to value of the property is mitigated. A generous and imaginative policy of mitigation will reap its own reward in saving compensation payments and in reducing the adverse effect of public works.[48]

(ii) ALRC draft legislation: Draft Lands (Acquisition and Compensation) Bill, Part XIII

Reproduced with kind permission from the Australian Law Reform Commission. Source: The Australian Law Reform Commission Report No 14: Lands Acquisition and Compensation (1980), page 222-224.[49]

PART XIII-COMPENSATION FOR INJURIOUS AFFECTION.

82. A reference in this Part to an injurious factor shall be read as reference to each of the following:

(a) noise;

(b) vibration;

(c) smell;

(d) smoke;

(e) fumes;

(f) artificial lighting;

(g) discharge of substance;

(h) heat;

(i) gas:

(j) vapour;

(k) loss of air;

(l) overshadowing;

(m) loss of support;

(n) restriction or prevention of access between the relevant land and a public road. waterway or sea shore;

(o) anything in relation to which, in the State or Territory in which the relevant land is situated and in the absence of statutory authority or immunity, there exists a right of action for nuisance by an owner of land against the owner or occupier of other land.

83. In this Part, “the relevant day” means--

(a)      in relation to an injurious factor caused by the existence of anything constructed on land-the first anniversary of the completion of the construction of that thing:

(b)      in relation to an injurious factor caused by the use of land or of anything constructed on land-the first anniversary of the commencement of that use; and

(c)      in relation to an injurious factor caused by the intensification of the use of land or of anything constructed on land--the first anniversary of the completion of the construction as a result of which the use was intensified.

84. (I) This Part applies to land vested in an authority of the Commonwealth. including an authority of the Commonwealth specified in regulations referred to in sub-section 6(2). in the same manner as it applies to land vested in the Commonwealth.

(2) In the application of this Part to land vested in an authority of the Commonwealth, a reference to the Commonwealth shall be read as a reference to the authority of the Commonwealth.

85. Where the value of an interest in land has been depreciated by an injurious factor caused by--

(a)      the existence of anything constructed on land vested in the Commonwealth the construction of which was completed after the commencement of this Act and after the land became vested in the Commonwealth;

(b)      the use of land vested in the Commonwealth or of anything constructed on land vested in the Commonwealth being a use that commenced after the commencement of this Act and after the land became vested in the Commonwealth; or

(c)      a substantial intensification in the use, whenever commencing, of land vested in the        Commonwealth or in the use of anything constructed on land vested in the Commonwealth, being an intensification that results from the completion of construction on the land after the commencement of this Act and after the land became vested in the Commonwealth,

the person in whom that interest is vested on the relevant day has, subject to this Part, a right to compensation in respect of the depreciation in the value of his interest.

86. The compensation payable to a person who has a right to compensation under section 85 is the amount by which the market value of his interest in the land on the relevant day is less than the amount that would have been the market value of his interest on the relevant day if the depreciation in value caused by the existence of the thing constructed, by the commencement of the use or by the substantial intensification of the use, as the case may be, had not occurred.

87. (i) Subject to sub-section (2), there is no right to compensation under this Part in respect of depreciation by an injurious factor unless the source of the injurious factor is on land vested in the Commonwealth.

(2) Injurious factors caused by aircraft arriving at or departing from an aerodrome vested in the Commonwealth shall be regarded as having their source at the aerodrome whether or not their source is in fact outside the boundaries of the aerodrome.

88. The right to compensation under this Part subsists notwithstanding any immunity otherwise conferred by law on the Commonwealth.

89. (i) This Part does not prejudice or affect the right of a person to institute an action for, and to obtain, damages or any other remedy that is available under another law in respect of loss or damage suffered by the person by reason of injurious factors caused by the existence of anything constructed on land vested in the Commonwealth or the use of anything constructed on land vested in the Commonwealth.

(2) Where a person recovers judgment for damages in an action referred to in sub-section (1), he is entitled to payment of the damages but ceases to be entitled to compensation under this Part.

(3) Where the amount of compensation payable to a person under this Part has been agreed or determined, that person ceases to be entitled to damages or any other remedy under another law in relation to any loss of value to land in respect of any injurious factor in relation to which compensation has been agreed or determined

90. Compensation is not payable under this Part unless a claim for compensation is made to the Minister within 3 years after the relevant day.

91. (i) The Minister shall consider a claim for compensation under section 90 and shall make a decision in writing-

(a)      assessing the amount of compensation payable to the claimant if he is satisfied that the claimant is entitled to compensation; or

(b)      rejecting the claim if he is not so satisfied.

(2) The Minister shall cause a copy of his decision under sub-section (I) to be served on the claimant.

(3) If the Minister does not, within 2 months after a claim for compensation is made, make a decision under sub-section (I), the Minister shall be deemed to have rejected the claim.

92. (i) An application may be made to the Tribunal for a review of a decision under section 91.

(2) Sub-section 51(2) and sections 52 to 55, inclusive, apply to and in relation to a review of a decision under this Part in the same manner as they apply to a decision under Part VII.

93. The Minister may authorise the carrying out on land vested in the Commonwealth or, by agreement with the person or persons having an interest in other land, on the other land of works for mitigating the adverse affect of an injurious factor that gives a right to compensation under this Part.

(iii) A Canadian example: The Ontario Expropriations Act R.S.O. 1990, c. E-26, s1(1)

Section 1(1): Definitions

“injurious affection” means,

(a) where a statutory authority acquires part of the land of an owner,

(i) the reduction in market value thereby caused to the remaining land of the owner by the acquisition or by the construction of the works thereon or by the use of the works thereon or any combination of them, and

(ii) such personal and business damages, resulting from the construction or use, or both, of the works as the statutory authority would be liable for if the construction or use were not under the authority of a statute,

(b) where the statutory authority does not acquire part of the land of an owner,

(i) such reduction in the market value of the land of the owner, and

(ii) such personal and business damages,

resulting from the construction and not the use of the works by the statutory authority, as the statutory authority would be liable for if the construction were not under the authority of a statute,

and for the purposes of this clause, part of the lands of an owner shall be deemed to have been acquired where the owner from whom lands are acquired retains lands contiguous to those acquired or retains lands of which the use is enhanced by unified ownership with those acquired; ("effet préjudiciable")