Compensation on ‘just terms’ for land owners

The Upper House Standing Committee on Public Administration (Committee) recently released Report 33 - Private Property Rights: the need for disclosure and fair compensation. The Committee received numerous submissions and held extensive public hearings to consider a range of issues affecting private land owners who have been impacted by the actions of the WA State Government (Government).

The Committee found that the two issues at the core of the inquiry were:

  1. The inadequate disclosure of government interests and encumbrances affecting property; and
  2. The inability to access fair and reasonable compensation where government interference affects property.

The Committee’s inquiry canvassed a number of areas including the declaration of Environmentally Sensitive Areas (ESA) over private landholdings without notification or consultation with the landowners concerned, the imposition of bushfire prone areas, planning reservations  and changes to government -issued licences (such a water licences and fishing licences).

The Committee noted that the Government has indicated an intention to introduce a ‘just terms’ compensation provisions in the Land Administration Act 1997 (LAAct) and the Committee recommended that such a provision be extended to all legislation enabling the  Government to take actions impacting private property rights.

In relation to the LAAct and the Planning and Development Act 2005 (PD Act), the Committee had noted that the Law Reform Commission of Western Australia (WALRC) had made recommendations in 2008 for improvements to the operation of those Acts, in particular in relation to injurious affection to landholdings arising from planning reservations for public purposes and noted that the WALRC  recommendations had largely not been implemented by the WA State Government and the Committee recommended that the State proceed to implement them.

The Committee made 44 recommendations over a wide range of matters. This article will focus on the Committee’s recommendations in respect of land compensation, in particular in relation to injurious affection to land.

The Committee noted that the Government was currently drafting a new Bill to amend the LAAct, however when asked how the Bill will deal with determining compensation value, the DPLH Director General advised that it was not an issue the DPLH were working on. The Committee recommended that the Minister for Planning ensure that the new Bill implements the WALRC’s 2008 recommendations regarding compensation for injurious affection (Recommendation 19).

The Committee had received evidence from numerous submitters who were impacted by injurious affection arising from planning processes, for example landowners who were in ‘limbo’ due to planning reservations that had been in place for decades. The Committee also noted that owners who wished to voluntarily negotiate the sale of their affected properties with the DPLH were told that the DPLH did not have the budget to acquire their property. The Committee recommended that in such cases the Government make additional funds available to the Metropolitan Region Improvement Fund for the WAPC to facilitate funding the immediate purchase of the land (Recommendation 20).

The Committee noted that the WALRC 2008 report had made 8 recommendations for changes to the PDAct including:

  1. Extending the jurisdiction of the SAT to determine the quantum of injurious affection claims (rather than the current requirement for private arbitration); and
  2. Extending the scope of injurious affection arising from planning reservations to include the impact to adjoining land of the owner (and not be limited to the reserved portion itself).

The Committee noted that none of the WALRC’s 2008 recommendations had been implemented in the intervening 12 years. The Committee recommended that the Minister for Planning progress amendments to the PD Act as recommended by the WALRC in 2008.

The Committee also noted submissions over the ‘good faith’ requirement for a development application which may trigger the right to claim compensation for injurious affection if refused. The Committee recommended that the Minister for Planning introduce a bill in Parliament to ensure the ‘good faith’ requirement does not unreasonably deprive a landowner of an avenue for compensation (Recommendation 22).

The Committee also noted the effect of the High Court decision of WAPC v Southregal Pty Ltd1 which ruled that the right to claim compensation for injurious affection was limited to the owner at the time the planning reservation was imposed (and did not extend to a subsequent purchaser).  The Committee indicated that the standing of a person who inherits a reserved property was still in doubt and recommended that the legislation be amended to clarify that compensation can be claimed by such a person who makes a development application for the land.

The Committee pointed out that although compensation was available for certain government actions, it was not available in other circumstances, such as the imposition of ESA’s under environmental areas and certain powerlines and other infrastructure imposed on private land by energy operators.

The Committee stated that the Government had taken a position that a ‘just terms’ provision (similar to the Commonwealth Constitution) in the State Constitution may not be appropriate, and that such a provision would not substantially change the operation of legislation such as the LAAct. The Committee noted that some changes to the LAAct were being drafted, and the Committee recommended that the Government amend relevant sections of all legislation that enables the Government to take actions impacting private property rights, to require compensation on ‘just terms’.


The Committee’s recommendations have far reaching implications for land owners affected by reservation or the declaration of ESA’s effectively functioning as a reservation.
The Government is yet to respond to the Committee’s recommendations, however, the lack of Government action so far to implement previous recommendations such as the WALRC 2008 recommendations on the PD Act, give cause for concern that the rights of property owners have been unfairly impacted by the actions of Government.
This report covers a complex area of law and we would invite you to contact a member of our experienced Land Compensation Team (Paul McQueen, Brian McMurdo, Craig Wallace or Alex McGlue) if you have any questions.

Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.