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Solatium – A win for landowners affected by compulsory acquisitions

When an interest in land is acquired by a public authority by compulsion, landowners and those entitled to make a claim are also entitled to compensation for the intangible and non-pecuniary disadvantages resulting from the acquisition. That is, depending on the particular circumstances of the claimant, the acquiring authority is required to provide compensation for the inconvenience and disruption caused by the acquisition which cannot be quantified in monetary terms.

Since a Supreme Court decision in Thomas James Love v Roads Corporation [2010] VSC 537, acquiring authorities have interpreted section 44 of the Land Acquisition and Compensation Act 1986 (‘the Act’) to apply a statutory cap of solatium at 10% of the market value of the land, excluding severance. Severance meaning the reduction in value of any remaining land used in conjunction with the acquired land which is attributable to the acquisition.

In many circumstances, the severance component of the claim forms a much larger part of the claim than the actual value of the land in which the interest is acquired. By applying the cap on solatium in accordance with the Authority’s interpretation of the 2010 Supreme Court decision, solatium claims made by claimants since then have been substantially constrained.

On 1 June 2016, Justice Emerton of the Supreme Court of Victoria delivered a decision which will force acquiring authorities to review their position on solatium claims in cases of acquisitions of less than the whole of the land. For instance, where only part of one’s land is acquired for the duplication of a highway. Her Honour Justice Emerton dismissed an appeal by the acquiring authority, the Secretary to the Department of Economic Development, Jobs, Transport and Resources from a decision made by the Victorian Civil and Administrative Tribunal (‘the Tribunal’) in which the Tribunal awarded solatium to the claimant, CRG Nominees Pty Ltd, which exceeded 10 per cent of the assessment of compensation for market value alone.

It is our view that the unsuccessful appeal by the acquiring authority in the CRG decision has the potential to significantly increase compensation claims in cases of partial acquisitions.

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