In brief - Issues for landowners to consider who may be impacted by NSW government's subsurface infrastructure plans

The recent matter of Opera Australia v Sydney Metro; Kritikos Developments Pty Ltd trading as Iron Duke Hotel v Sydney Metro [2020] NSWLEC 28 highlights the emerging jurisprudence we are likely to see under section 62 of the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act) and Schedule 6B of the Transport Administration Act 1988 (NSW) (Transport Act). Both provisions contain an exception to owners of land being paid compensation for various substratum compulsory acquisitions in certain circumstances. 

As the Judge notes in the case, the matter involves a "tortuous" history, highlighting the difficulties subsurface acquisitions can raise where they impact a person's land. 

This is occurring at a time where subsurface rights are becoming increasingly controversial, no doubt leading to the Department of Planning's proposed amendment to the State Environmental Planning Policy (Infrastructure) 2007 (Infrastructure SEPP), in order to create a short-term protective underground corridor for the Sydney Metro West project.

This article looks at the case, and what is emerging in the courts and within Government on this issue.

Litigation concerned compensation payable under Just Terms Act and the separate determination of questions

The litigation involves two sets of proceedings, which relate to the Sydney Metro's compulsory acquisition of subsurface stratum on 11 October 2017 for the purpose of tunnelling works associated with the construction of the Sydney Metro City and Southwest project. 

Proceedings were commenced by Opera Australia in June 2018, and by Iron Duke Hotel in August 2019. Opera Australia and Iron Duke Hotel (the Applicants) made applications to the Land and Environment Court in relation to an order made on 2 October 2019 (October Order) regarding rule 28.2 of the Uniform Civil Procedure Rules (UCPR) for the hearing of separate questions. The Applicants were seeking that the October Order be revoked (i.e. that there be no hearing on separate questions) and that the matter proceed to final hearing. Ultimately, the Court found the matter should proceed to final hearing. 

The central dispute in the proceedings centred around Schedule 6B of the Transport Act which provides that compensation is not payable under the Just Terms Act if land under the surface is compulsorily acquired for the purpose of underground rail facilities unless:

  • the surface of the overlying soil is disturbed; or 

  • the support of that surface is destroyed or injuriously affected by the construction work.

Sydney Metro maintained that while the land was acquired for the purpose of underground rail facilities, compensation was not payable under the Just Terms Act because neither of the exceptions had been fulfilled during the course of the development. 

Importantly, if either applicant falls within the ambit of clause 2(1) of Schedule 6B (i.e. the two dot points above), they will be entitled to an amount of compensation to be determined in accordance with the Just Terms Act. 

It was those issues that formed the basis for part of the separate questions for determination, given the appearance these matters could be resolved without preparing the broader matters required for a hearing. The Court ultimately held that the separate question relating to the above points should not be hived off to be separately heard before a full hearing even though they might be dispositive of the matter. 

The decision is yet another matter in the Land and Environment Court demonstrating how difficult it can be to craft a separate question for determination when often these questions are intertwines with the broader fact and law matters ventilated at a final hearing. As his Honour mentions (at [58]) "the Court usually begins with the proposition that it is ordinarily appropriate that all issues in all proceedings should be disposed of at one time."

What the decision means is that those with property interests affected by proposed underground acquisitions will need to wait until the final hearing of this matter before further jurisprudence develops on the above three criteria, which are described in the judgment as a “jurisdictional gateway” to compensation being capable of being determined for the acquisition of the subsurface property rights. 

Proposed amendment to Infrastructure SEPP

In addition to the limits on compensation benefiting subsurface Government infrastructure, the NSW Government is proposing further measures to strengthen future subterranean works for Sydney Metro West.

In this regard, the Department of Planning has proposed an amendment to the Infrastructure SEPP, in order to create a short-term protective underground corridor for the Sydney Metro West project. The proposal, if adopted, will require consent authorities to notify Sydney Metro of certain development applications within the corridor, and also require Sydney Metro to provide concurrence on notified development applications before they can be determined by a consent authority. The aim of the amendment is to prevent the loss of corridor alignment through interim corridor protections, thereby ensuring the successful and efficient delivery of the project as a whole. 

Landowners potentially impacted will need to consider how this might impact their subsurface rights and development plans. With submissions on this now closed, careful monitoring of this is important by those with property above the proposed alignment given that future development rights may be impacted if the change is implemented.

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 2020.

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