In brief

The case of Council of the City of Ryde v Azizi (2021) 248 LGERA 204; [2021] NSWCA 165 concerned an application for leave to appeal made by the Council of the City of Ryde (Council) to the New South Wales (NSW) Court of Appeal (Court of Appeal) against the decision of the NSW Land and Environment Court (Land and Environment Court) to order the Council to pay owners dispossessed of their land 90 per cent of the value assessed by the Valuer-General, prior to the Land and Environment Court's determination of the compensation to be paid. The Council alleged that the Land and Environment Court did not have the power to make such an order.

Following an owner-initiated land acquisition process on the basis of hardship, on 24 August 2018, the Council compulsorily acquired three parcels of land (Subject Land) in North Ryde under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (Just Terms Act) from Mr Azizi and Alnox Pty Ltd (the former landowners). The acquisition took place following the rezoning of land used for residential purposes to public recreation, which included the Subject Land.

On 21 December 2018, the Valuer-General issued determinations for the Subject Land. The Council then successfully brought proceedings in the Supreme Court of NSW (Supreme Court) seeking judicial review of the Valuer-General's determinations. On 20 November 2019, the Supreme Court ordered in the case of Council of the City of Ryde v Azizi [2019] NSWSC 1605 that the determinations of the Valuer-General were void and of no effect.

Further determinations were issued by the Valuer-General on 25 February 2020. The Council then issued compensation notices. However, the notices each contained a final paragraph which stated that the former landowners would receive 90 per cent of the difference between the determination of compensation by the Valuer-General ($3,981,185) and the advance payment previously paid ($2,031,866.30) within 28 days of lodging an objection with the Land and Environment Court. Alnox Pty Ltd received a similar notice calculated on the same basis, with the amount to be paid being $2,651,974.70. The remainder of the monies determined by the Valuer General were to be held in the Council's solicitor's trust account.

The reason for the arrangement was that the Council was concerned that the former landowners would be unable to repay the amount in the event that the Land and Environment Court determined the compensation was less than what the Valuer-General had determined.

The former landowners commenced proceedings in the Land and Environment Court objecting to the amount of compensation determined by the Valuer-General. Notices of motion were filed by the former landowners seeking orders that the Council pay 90 per cent of the compensation offered in the compensation notices to them.

The Land and Environment Court determined the motion and ordered that the Council pay the former landowners the full 90 per cent.

A summons seeking leave to appeal to the Court of Appeal was then filed. While the Court of Appeal granted leave to appeal, ultimately the appeal was dismissed with the Court of Appeal finding that the statutory requirement to pay 90 per cent compensation was not complied with by the payment of part of the money into the trust account of the Council's solicitor. The Court of Appeal also found that the Land and Environment Court had the power to compel the Council to make the payment to the former landowners, and could even have made a freezing order if that application had been made.

Land and Environment Court has the power to enforce statutory obligations under the Just Terms Act

One issue in the appeal was whether the Land and Environment Court had power to enforce statutory obligations under the Just Terms Act or whether such actions could only be sought in the Supreme Court.

The Council argued that if the former landowners sought to enforce an entitlement to payment under section 68(2)(a) of the Just Terms Act, they were obliged to seek mandamus in the Supreme Court as the Land and Environment Court did not have power to make such an order.

The Court of Appeal noted the jurisdiction and powers of the Land and Environment Court and confirmed at [21] that although the Land and Environment Court is declared to be a superior court of record, it is a Court of limited statutory jurisdiction.

Despite this, after considering the legislation, at [34] the Court of Appeal confirmed "[a]s a matter of principle, legislation should not be read narrowly in such a way as to create a division of jurisdiction between two institutions if an alternative reading allowing for matters to be disposed of in one court only can be adopted." Adopting that approach, "the Land and Environment Court has jurisdiction both to enforce the obligation for payment of a proportion of the compensation offer, on an interlocutory basis, and, in making final orders, to provide for any overpayment that may have been made on an interim basis."

Further, the Court of Appeal found at [36] that there is no reason to doubt the power of the Land and Environment Court to make a freezing order as there is no exclusion of that power in the Uniform Civil Procedure Rules 2005 (NSW).

Acquiring authority's payment into its solicitor's trust account did not comply with the statutory requirement for it to pay 90 per cent of the compensation determined in advance to the former landowners

The motion filed in the Land and Environment Court by the former landowners sought orders that the Council pay 90 per cent of the compensation offered in the compensation notices to them, as the Council had withheld part of the payment and maintained that it was kept in its solicitor's trust account.

The former landowners argued that the payment by the Council into its solicitor's trust account did not constitute payment to them and consequently did not comply with section 68(2)(a) of the Just Terms Act.

The Council observed that it was a matter of implication that the advance payment was a payment to the former landowners. Section 68(2)(a) of the Just Terms Act did not expressly state that the payment was to be made to a former owner. The Council then argued the following:

1. There might be a good reason why section 68(2)(a) of the Just Terms Act does not expressly state that the payment is to be made to a former owner. The example of where compensation might be payable to a mortgagee under section 65(2) of the Just Terms Act was cited.

2. Any unpaid rent or other money owed to the acquiring authority might be set off against the compensation payable under section 34(4) of the Just Terms Act.

3. As the payment had been made pursuant to an order of the Land and Environment Court, which was made by consent, the payment had been made on the instruction of the former landowners.

4. The money could be transferred to a controlled money account under the joint control of the solicitors for both parties.

The Court of Appeal found that nothing turned on the first and second arguments of the Council, and the Land and Environment Court was correct to make due allowance for payments which had been made by way of set off and to the mortgagee.

With respect to the third argument, the Court of Appeal determined there was no payment made to the solicitors at the direction of the former landowners, despite the fact that there were consent orders.

In relation to the final argument, the Court of Appeal decided that while an alternative regime might have been imposed if a freezing order had been found to be appropriate to prevent the former landowners from spending the money, none had been proposed by the Council. The Court found that "what the Council sought was simply a maintenance of the status quo" (at [42]).

Having displaced the Council's arguments, the appeal was dismissed and the orders of the Land and Environment Court requiring the Council to pay to the former landowners the full 90 per cent remained.

Conclusion

It is apparent from this case that acquiring authorities are required to make the advanced payments to dispossessed landowners (subject to other sections of the Just Terms Act). The payments cannot be withheld on the basis that the acquiring authority is concerned that dispossessed landowners will become impecunious and be unable to repay the money should the Court determine compensation to be a lower amount than what the Valuer-General determined. The proper way to protect the acquiring authority's interest in that case would be to seek a freezing order.

This is commentary published by Colin Biggers & Paisley for general information purposes only. This should not be relied on as specific advice. You should seek your own legal and other advice for any question, or for any specific situation or proposal, before making any final decision. The content also is subject to change. A person listed may not be admitted as a lawyer in all States and Territories. © Colin Biggers & Paisley, Australia 2021.

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