Case clarifies scope of 'disturbance payments' in Public Works Act

The scope of the "disturbance payments" recoverable by land-owners under section 66 of the Public Works Act 1981 (PWA) was clarified in a test case before the Land Valuation Tribunal (the Tribunal).

The Tribunal's findings are of immediate relevance given the importance of the PWA compulsory acquisition provisions in making land available for the Christchurch rebuild and for large infrastructure projects.

The context

The first claimant – Gold Star Insurance Company Ltd – owned four adjoining pieces of land in Valonia St, Waterview, which it planned to develop for high density housing. The second claimant was Gold Star's managing director and sole Class A shareholder – a Mr Burgess – who claimed the value of interest payments secured by a mortgage over the properties.

At the time Gold Star bought the properties, the land was not subject to any notice or designation relating to a proposed motorway. Gold Star applied successfully to the then Auckland City Council in 2004 to have the land rezoned to Residential 5 and in 2005 for resource consents to develop it into an 83 unit residential development.

As early as 2005 the NZ Transport Agency (NZTA) indicated that it had an interest in acquiring the property in contemplation of the Waterview Connection roading project. The negotiations fell through due to the wide gap between the parties on property value. In 2006, the claimants were provided with an indicative plan of the current design for the motorway, emphasised as being preliminary only, and an indication that a Notice of Requirement seeking to designate part of the land was likely to be lodged under the Resource Management Act (RMA) in mid-2006.

The claimants decided, on the basis of that indication, that it would not be appropriate to continue with their development.

In August 2010, the Notices of Requirement were issued and in November 2010 the Minister for Land Information issued a Notice of Desire under the PWA to acquire the property. By an agreement for advance compensation in July 2011, Gold Star obtained $9,410,000 compensation for the land taken by the Crown.

The agreement was without prejudice to Gold Star's right to claim compensation for disturbance costs under the PWA, which claim was the subject of the Tribunal's proceedings.

A test case

Disturbance payments are provided for under section 66 PWA. They can be claimed where the land owner is not a willing party to the taking or acquisition, or is a willing party principally...