A recent amendment to s 59 of the Land Acquisition (Just Terms Compensation) Act 1991 restricts the recovery of valuation fees to those of property valuers. For the purposes of s 509(2)(d) of the Act and to dispel uncertainty for dispossessed business owners, a draft regulation adds the definition of ‘qualified valuer’.

Published on 14 June 2016.

The Hon. Dominic Perrotet

Minister for Finance, Services and Property

GPO Box 5341

SYDNEY NSW 2001

14 June 2016

Dear Minister

RE: Proposed further amendment to the Land Acquisition (Just Terms Compensation) Act 1991 (The “Just Terms”  Act)

I write to you in your capacity as Minister responsible for the administration of the Just Terms Act.

I am the director of Beatty Legal Pty Ltd , a law firm based in Sydney that specialises in valuation, planning and environmental law.

My firm has acted, and continues to act, for clients who have had their interest in land compulsorily acquired by various State authorities for public purposes such as the WestConnex and Sydney Metro projects.

I note the recent amendment to s59 of the Just Terms Act which came into effect on 1 March 2016 (the Amendment). The Amendment confines the recovery (as an item of “disturbance”) by dispossessed owners, of the fees of “qualified valuers” under s59(1)(b) to work undertaken by persons qualified under s59(2).

The Amendment has the consequence of restricting the recovery of “valuation fees” to those of property valuers.

Introduced by the Regulatory Reform and Other Legislative Repeals Act 2015 (NSW)(the Reform Act) s59(2) defines “qualified valuer” to mean a reference to a member of one of the three peak professional bodies for property valuers or a person of a class as defined by the regulations. There are currently no regulations made under the Just Terms Act.

Absent a potentially strained  construction of s59(1)(f) [which allows the recovery of ‘any other financial costs  reasonably incurred), relating to the actual use of the land as a direct and natural consequence  of the acquisition”], a dispossessed owner may not be able to recover the fees of a forensic accountant (acting as a business valuer) in those very numerous compulsory acquisitions involving compensable interests  in land other than freehold interests.

Although the Courts have considered that the reference in s(59(f) to “any other financial costs” should “not be read down,”[1] costs are only claimable under s59(f) if they are established as “relating to the actual use of the land” and, further, if they are not otherwise “caught by the other paragraphs in s59.”[2]

Having regard to the Second Reading Speech for the Bill enacting the Reform Act, it would appear that the Amendment was not made to intentionally exclude the recovery of reasonable forensic accountants’ fees from s59(1)(b).

Instead, the purpose of the Reform Act was to implement wide ranging legislative changes to reduce “red-tape” and streamline administrative requirements for the conduct of business in NSW. Relevantly, this overhaul included the repeal of the Valuers Act 2003 to allow for the complete self-regulation of property valuers through their existing industry bodies. This necessitated a concurrent change in terminology, which was made in uniform across several statues, including the Just Terms Act, to replace references to “valuer” or “registered valuer” with the adopted term of a “qualified valuer.”

Until this amendment has been judicially considered, clarified by a further amendment to the Just Terms Act, or supplemented by an appropriate regulation, there is likely to be ongoing uncertainty and confusion amongst dispossessed owners (and those advising them) as to whether forensic accountants’ fees are:

1. Compensable as “disturbance” under s59; and, if so,
2. Whether such claims can be made under s59(1)(b) or (f)

As s59(2)(d) already provides a mechanism by which to expand the definition of “qualified valuer” to include additional classes of people through the enactment of a regulation, I respectfully suggest that you consider the making of a regulation along the lines outlined below.

This would dispel uncertainty for dispossessed business owners at a time of unprecedented infrastructure development (and concomitant compulsory acquisitions of land and interest therein) in NSW.

Draft Regulation

This draft regulation has been composed following consultation with expert forensic accountants practising in this field and has been drafted to capture all suitably qualified individuals engaged or likely to be engaged, to conduct valuation work of this nature. No doubt Parliamentary Counsel will need to consider this.

For the purposes of section 509(2)(d) of the Land Acquisition (Just Terms Compensation) Act 1991, a “qualified valuer” includes a person who:

1. Is a member of Chartered Accountants Australia and New Zealand; or
2. Is a member of CPA Australia (other than as an associate member).

Please contact me if you wish to discuss the contents of this letter.

This material has been produced by Beatty Hughes & Associates for the purposes of providing general information and does not constitute legal advice.

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[1] See for e.g. Fitzpatrick Investments Pty Ltd v Blacktown City Council (No 2) (2000) 108 LGERA 417 (Lloyd J); McDonald v RTA (2009) 169 LGERA 352 (Biscoe J)

[2] George D Angus Pty Ltd v Health Administration Corporation (2013) 205 LGERA 357 (Preston CJ)