Supreme Court of South Australia finds that compensation for the acquisition of land does not extend to non-economic loss

In brief

The case of Anderson v Commissioner of Highways (No 2) [2018] SASC 121 concerned an application for compensation for personal injury to the Supreme Court of South Australia against the acquisition of land made by the Commissioner of Highways for South Australia. The Applicant contended that they were entitled to a payment of compensation on the basis of personal injury suffered as a result of the acquisition. The issue was whether a personal injury of the nature suffered by the applicant was a "compensable loss" under the Land Acquisition Act 1969 (Land Act). The Court held that compensation under the Land Act did not extend to compensation for personal injuries in such circumstances.

Background

The Applicant’s parents owned a home on Main South Road at Bedford Park outside of Adelaide (Property). From 1980 until 2002, the Applicant resided at the Property while also conducting two home business operations. The Applicant lived elsewhere in Adelaide from 2002 until 2009 but continued to run the businesses from the Property during that time. The Applicant married in 2007, and in 2009, the Applicant resumed living at the Property with his wife and two children while still carrying out the business.
The Commissioner notified the Applicant and his parents of the proposed acquisition of the land in July 2014. The land was later compulsorily acquired by the Commissioner for the purposes of undertaking major road works. The relevant compensation for the acquisition had already been paid to the Applicant’s parents and they had moved to another suburb nearby. From July 2014 until May 2016 the Applicant claimed that he had suffered from an "adjustment disorder" with related symptoms of “anxiety, mental stress, forgetfulness, insomnia, depression, feelings of hopelessness and helplessness and suicidal ideations” which he argued were caused by the acquisition (at [7]).

Applicant's claim

Section 6 of the Land Act provides that an "interest" in land means a legal or equitable estate or interest in the land. Section 22B of the Land Act states that a person may be entitled to compensation for the acquisition of land where that person’s interest in the land has been divested or diminished by the acquisition; or the enjoyment of the person’s interest in land is adversely affected by the acquisition. Compensation must be determined in accordance with the principles set out under section 25 of the Land Act.
The Applicant contended that his interest in the land had been divested or diminished by the acquisition and his enjoyment of that interest in the land had been adversely affected as a result. The Applicant’s primary submission was that the words of the Land Act did not provide a principled basis to limit the meaning of the words “any loss” in section 25(1)(a) so as to exclude a compensable claim for personal injury on the basis of non-economic loss suffered as a result of the acquisition.
The Commissioner argued that the only type of “loss” compensable under the Land Act was one of “a detrimental disadvantage of an economic nature [directly arising] from the claimant’s former legal relationship with the subject land having been divested or diminished or otherwise adversely affected by the acquisition” (at [23]). The Commissioner contended that the statutory right to compensation could not extend to loss in the nature of a personal injury.

Application of the Land Act

The Commissioner argued against the validity of the Applicant’s claim on the basis of non-economic loss with reference to commentary and Canadian court decisions which had rejected claims for compensation made on the basis of personal injury or other non-pecuniary loss occasioned by the acquisition of land. Acknowledging the novel nature of the Applicant’s claim for compensation on account of personal injury, the Commissioner submitted that the answer to whether the claim was compensable or not depended upon the proper construction of the legislation. Accordingly, the Court held that the matter was to be resolved by reference to the text, context and evident purpose of the Land Act. Accordingly, the Court stated that it was “of fundamental importance" that the Applicant's entitlement to compensation be determined on the basis of the Act alone (at [31]).

Principle of Disturbance and other authority

The Court held that although the principles of injurious affection and severance did not extend to the Applicant's claim, “the boundaries of what may be compensable as disturbance are less clearly defined" (at [42]). The Court continued, "it might appear that the notion of disturbance could extend to personal injury suffered by reason of the acquisition of land” or disturbance to the “process of living” citing the decision in Brewarrana Pty Ltd v Commissioner of Highways (1973) 4 SASR 476. However, the Court denied affording the principle such meaning, stating that it was unlikely that the Court in Brewarrana “had intended to adopt a radically different interpretation [to the Land Act] so that personal injuries were recognised as being compensable" (at [43]). The Applicant cited numerous decisions in support of their case, however the Court determined that the use of these authorities was misguided:

“Care must be taken to avoid reading observations made in judgments as if they were the terms of a statute. The words used by a judge must be considered in the context of the proceedings before the Court.”

Further to this, the Court relied on the general principles of compensation for the acquisition of land previously provided for in the English decision of In re Lucas and Chesterfield Gas and Water Board [1909] 1 KB 16 at [29] where it was said that (emphasis added):

“The principles upon which compensation is assessed when land is taken under compulsory powers are well settled. The owner receives for the lands he gives up their equivalent, i.e. that which they were worth to him in money. His property is therefore not diminished in amount, but to that extent it is compulsorily changed in form.”

Conclusion

In the result, the Court held that while the categories of circumstances that may be compensable were "not closed", it rejected the Applicant's contention that compensation may be sought for personal injury in the circumstances. In closing, the Court conclusively stated (at [90]):

“The right to receive compensation arises from the act of acquisition and the financial consequences that flow from that event. The right to be compensated … is based upon the acquisition of the interest in property held by the claimant rather than the administrative processes which surround that event.”