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Compensation for tunnels


One of the objects of the Land Acquisition (Just Terms Compensation) Act 1991 is to “ensure compensation on just terms” for the land holders affected by Government infrastructure projects.  But there is a  carve-out from that general proposition.  Compensation is not payable for tunnels, water pipes, sewers or electrical cables laid underground.

A NSW Court has now considered that carve-out for the first time.

RMS compulsorily acquired substratum lots about 60 meters below the surface of the suburb of Beecroft in aid of the NorthConnex project.  It is a public/private partnership for the design, construction, operation, maintenance and financing of a tolled motorway linking the M1 Freeway at Wahroonga to the Hills M2 Motorway at West Pennant Hills.

Image result for northconnex

The only question was whether the substratum lots were acquired “for the purpose of constructing a tunnel”  within the meaning of that phrase in the legislation.  The landowners acknowledged that tunnels would be driven though the volumetric lots but argued that they were acquired for the purpose of facilitating a commercial enterprise promoted by Transurban and the Westlink M7 shareholders.

The Court acknowledged the text and context of the legislation establishes a presumption of just compensation for disentitled landowners, which presumption should inform its interpretation .   However, nothing in the Act suggests the term ‘tunnel’  refers to anything other the driven shaft.   The statute does not require any consideration of the use to which the tunnel is to be put.  Its fundamental physical character is not altered by its use as a toll road by a private consortium.

Read all the reasons for judgement in in Azizi v RMS.  

There are some exceptions.   The legislation  allows compensation where:

  • the surface is disturbed by construction or operation of a tunnel,  or
  • where underlying or sublateral support is compromised by a tunnel or
  • any adjacent “underground working” is adversely affected by a tunnel.

Its plain that compensation will be payable for the cost of repairing dilapidation to surface structures caused by settlement, collapse, vibration, displacement of foundations, escape of dust, inundation and the like.  However, the exceptions go further than that.   They preserve all statutory rights to compensation.  That means that an affected surface owner could claim compensation for the reduction to the market value of its structures as well as financial losses caused by the reduction in passing trade, restricted access for suppliers and patrons and loss of customers annoyed by noise, dust, vibration or other emissions.

Damages are also available under the ordinary law  for the nuisance caused by noise, dust, vibration or other emissions emanating from a tunnel as well as other loss or damage traceable to the negligent design, operation or maintenance of a tunnel.    Those causes of action can be pursued in the ordinary Courts.   The Land and Environment Court has a limited, specialist jurisdiction to resolve “claims for compensation by reason of the acquisition of land” (amongst other things) as well as  ancillary matters.  It does not have jurisdiction to resolve common law actions even if they arise from the same situation.

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