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| Right to Compensation if Private Land Taken by the Crown |
Doctrine of Eminent Domain
The crown retains the Allodial Estate or absolute ownership of all land to which the ownership rights of
individual citizens are subservient. This Allodial Estate is expressed by the Crowns power to resume privately
owned land under the Doctrine of Eminent Domain.
The Crown sometimes exercises this right under the Public Works Act where privately owned land is taken for
public uses.
3 Compensation
The Public Works Act provides for the payment of compensation for losses arising from the acquisition of land
by the Crown. Entitlement to compensation is set out in Part V of the Act. Section 60(1) provides that affected
landowners are entitled to "full compensation" so that they are left in a no better or worse position afterwards,
than they were before the public work commenced. This means that landowners will not be deprived of their
land without fair compensation but will not be compensated so as to make a profit from the public work.
Only persons who have an interest in the land are entitled to compensation. Owners of interests that are less
than freehold (e.g. a lessee's interest) are also entitled to compensation if their interests are acquired. An
interest in chattels or personal rights does not give a right to compensation.
3.1 Basic Entitlements to Compensation
Compensation is not limited to the value of the land acquired or taken. In addition to the value of the land taken,
the Public Works Act entitles you to be fairly compensated for losses that may include:
3.1.1 Obligation to Minimise Losses
The Courts have ruled that there is an obligation on landowners to take all reasonable steps to ensure that their
losses are kept to a minimum. It is important you keep a record of all communications and detailed records of
all expenses incurred and losses sustained, as you may be able to recover these as part of your claim for
compensation. You may only receive compensation for expenses and losses that occur as a direct
consequence of the acquisition of your land.
3.2 General Provisions for Compensation
The assessment of compensation is governed by section 62 of the Public Works Act. The provisions are:
3.2.1 Market Value
The value of land is based upon the amount the land would be expected to sell for if sold on the open market by
a willing seller to a willing buyer on a specified date.
No increase in compensation will be paid due to the fact that land is to be taken for a public work.
3.2.2 Damage
If any physical damage to land caused by or in connection with a public work interferes with the landowner’s
rights compensation may be payable for the cost or reinstatement.
3.2.3 Change in Value after the Specified Date of Acquisition
Where after the specified date of acquisition the value of the land required from you increases or decreases as
a result of any designation or requirement for the public work, any effect on the land value is to be disregarded.
The "specified date" can be the date on which the land was vested in the Crown or the date on which the land
was first entered upon for the public work.
The intention of this principle is that you should not suffer loss from the adverse effect of the public work (if it
lowers the value of your land that is required) nor profit from the beneficial effect of the public work (if it
increases the value of your land).
3.2.4 Special Suitability or Adaptability
The special suitability or adaptability of your land for any purpose is not to be taken into account if:
The key factor in the application of "special suitability" is the term "no market". If there is a reasonable possibility
of a market, apart from the particular work of an Acquiring Authority, then that potential will be taken into account
in valuing the land.
3.2.5 Increase in Value resulting from the Public Work
Where the public work being undertaken increases the value of land you retain, or the value of any other land in
which you have an interest, this increase in value may be deducted from the total amount of compensation that
would otherwise be paid to you. This is known as “betterment”. Betterment applies whether the increase in
value occurs before the specified date or is likely to occur after the public work commences.
This means that in assessing your compensation any betterment will be deducted from any increase in value of
your retained land caused by the public work.
3.2.6 Increase in Value because of Improved Access
Transit New Zealand as a Requiring Authority, sometimes exercises power under section 91 of the Transit New
Zealand Act 1989 to create crossing places to give access to “Limited Access Roads”. Where this increases
the value of your retained land, this increase in value will normally be deducted from any compensation to be
paid to you.
3.3 Acquisition of Part Only
3.3.1 Injurious Affection
If there is an adverse effect on the land you retain you may be entitled to additional compensation. The
compensation for depreciation in value of the retained land is called "injurious affection". Compensation for
injurious affection is provided by section 64 of the Public Works Act and where only part of your land is taken or
acquired the compensation is assessed by adopting a "before and after" approach. This means agreeing to the
value of the whole property disregarding any public or proposed work prior to acquisition and comparing this
with the value of the land you are left with after the taking or acquisition.
3.3.2 Advance Payment of Compensation
An advance on compensation will be paid if:
3.4 Compensation When No Land is Taken
A right to compensation under the Public Works Act may also arise in certain circumstances when no land is
taken. Section 63 of the Act provides for compensation for substantial injurious affection to your land caused by
the construction of the public work.
3.5 Additional Compensation
3.5.1 Disturbance Payments
In addition to being compensated for the value of land taken or acquired you may be entitled to reimbursement
for "disturbance". This is payment for actual monetary loss or costs incurred of a temporary non-recurring
nature. Compensation for disturbance is covered in section 66 of the Public Works Act. Any compensation
under this section must be as a direct result of your land being taken by the Crown the cost of which you could
not have avoided by taking reasonable precautions. Disturbance payments are not a 'general amount' to cover
possible unspecified contingencies such as 'inconvenience'.
In order to qualify for disturbance payments:
3.5.2 Valuation Legal and other Professional Costs
If you obtain professional advice, you are entitled to reasonable costs (valuation legal and other professional
costs) incurred as a result of negotiating compensation for your land.
If you intend to seek professional advice, you should first discuss this with the accredited supplier who will
outline the criteria for approving professional costs. This discussion will avoid any misunderstanding about
what sort of costs you are entitled to and who will pay.
If you engage a Registered Valuer you must instruct the Valuer that the valuation is required for compensation
purposes under the Public Works Act 1981. You should make the valuation report available to the accredited
supplier, if requested to facilitate discussions.
Any costs incurred for professional advice for the purposes of negotiating of compensation for your land must
be reasonable.
You are not able to claim the cost of your personal spare time spent in negotiations.
3.5.3 Removal Costs
If your land is taken or acquired, you are entitled to the reasonable costs incurred in transporting your movable
property to other land. This is subject to the other land being within the same general locality or such greater
distance as is necessary to reach the nearest land that could have been reasonably acquired in substitution for
your land.
Any claim is subject to the following:
3.5.4 Allowances for Special Improvements
Where your land is taken or acquired, there is no obligation on an Acquiring Authority, either to take over
removable improvements or to pay for such items. Removable improvements are not normally part of the land
acquired. However, if the improvements are not readily removable and are of use to a disabled owner or a
disabled member of an owner’s family and are not reflected in the value of the land, this loss is a recoverable
compensatable loss.
3.5.5 Loss on Mortgage Repayment
Where a loss occurs in having to transfer a mortgage as a direct result of land being taken or acquired, you as
the borrower are entitled to compensation for the loss where you have to take a mortgage at a higher rate which
will be more expensive than the existing mortgage over your land.
3.5.6 Business Loss
If you have a business located on your land, you may claim compensation for business loss resulting from the
relocation of the business. The loss may include loss of profits and goodwill. However, the loss of profits must
relate to proven loss of "actual profits". Loss of "anticipated profits" is not provided for in the Public Works Act.
During the period of changeover from business premises that have been acquired for a public work, to
alternative business premises, you may be forced to close down your business for the time being, resulting in
your business not earning during that period. You may claim the net loss suffered, under the heading of
"business loss". The main point to note is that it is the net loss of profit that is compensatable, not the loss of
revenue.
If you intend to claim for "loss of profits" or goodwill you should ask your accountant to assist with preparation of
your claim. It is important to support such claims with verifiable proof of loss by reference to the last three year’s
annual accounts of your business.
3.5.7 Solatium Payment for Homeowners
If the land to be acquired contains your home that you live in, and the Crown takes the initiative to purchase it as
subject to its requirement or designation for a public work and requires you to give vacant possession, you are
entitled to be paid a “solatium” (or home-loss payment) of $2000.
Payment of the solatium is conditional on the ownership of the land not having changed since it was made
subject to a requirement or designated for a public work.
3.5.8 Assistance to Purchase
Part V of the Public Works Act also provides for other types of reasonable assistance in addition to
compensation payable under the Act.
If you wish to seek assistance under Part V of the Act, or if you believe you are entitled to any additional
compensation, you should discuss this with the accredited supplier.
The crown retains the Allodial Estate or absolute ownership of all land to which the ownership rights of
individual citizens are subservient. This Allodial Estate is expressed by the Crowns power to resume privately
owned land under the Doctrine of Eminent Domain.
The Crown sometimes exercises this right under the Public Works Act where privately owned land is taken for
public uses.
3 Compensation
The Public Works Act provides for the payment of compensation for losses arising from the acquisition of land
by the Crown. Entitlement to compensation is set out in Part V of the Act. Section 60(1) provides that affected
landowners are entitled to "full compensation" so that they are left in a no better or worse position afterwards,
than they were before the public work commenced. This means that landowners will not be deprived of their
land without fair compensation but will not be compensated so as to make a profit from the public work.
Only persons who have an interest in the land are entitled to compensation. Owners of interests that are less
than freehold (e.g. a lessee's interest) are also entitled to compensation if their interests are acquired. An
interest in chattels or personal rights does not give a right to compensation.
3.1 Basic Entitlements to Compensation
Compensation is not limited to the value of the land acquired or taken. In addition to the value of the land taken,
the Public Works Act entitles you to be fairly compensated for losses that may include:
- “Injurious Affection” is the loss of value of any retained land (i.e. land not taken).
- Damage to any land;
- Disturbance resulting from the acquisition.
3.1.1 Obligation to Minimise Losses
The Courts have ruled that there is an obligation on landowners to take all reasonable steps to ensure that their
losses are kept to a minimum. It is important you keep a record of all communications and detailed records of
all expenses incurred and losses sustained, as you may be able to recover these as part of your claim for
compensation. You may only receive compensation for expenses and losses that occur as a direct
consequence of the acquisition of your land.
3.2 General Provisions for Compensation
The assessment of compensation is governed by section 62 of the Public Works Act. The provisions are:
3.2.1 Market Value
The value of land is based upon the amount the land would be expected to sell for if sold on the open market by
a willing seller to a willing buyer on a specified date.
No increase in compensation will be paid due to the fact that land is to be taken for a public work.
3.2.2 Damage
If any physical damage to land caused by or in connection with a public work interferes with the landowner’s
rights compensation may be payable for the cost or reinstatement.
3.2.3 Change in Value after the Specified Date of Acquisition
Where after the specified date of acquisition the value of the land required from you increases or decreases as
a result of any designation or requirement for the public work, any effect on the land value is to be disregarded.
The "specified date" can be the date on which the land was vested in the Crown or the date on which the land
was first entered upon for the public work.
The intention of this principle is that you should not suffer loss from the adverse effect of the public work (if it
lowers the value of your land that is required) nor profit from the beneficial effect of the public work (if it
increases the value of your land).
3.2.4 Special Suitability or Adaptability
The special suitability or adaptability of your land for any purpose is not to be taken into account if:
- The specialist purpose could only result from the use of statutory powers; or
- There is no market other than for the needs of an Acquiring Authority.
The key factor in the application of "special suitability" is the term "no market". If there is a reasonable possibility
of a market, apart from the particular work of an Acquiring Authority, then that potential will be taken into account
in valuing the land.
3.2.5 Increase in Value resulting from the Public Work
Where the public work being undertaken increases the value of land you retain, or the value of any other land in
which you have an interest, this increase in value may be deducted from the total amount of compensation that
would otherwise be paid to you. This is known as “betterment”. Betterment applies whether the increase in
value occurs before the specified date or is likely to occur after the public work commences.
This means that in assessing your compensation any betterment will be deducted from any increase in value of
your retained land caused by the public work.
3.2.6 Increase in Value because of Improved Access
Transit New Zealand as a Requiring Authority, sometimes exercises power under section 91 of the Transit New
Zealand Act 1989 to create crossing places to give access to “Limited Access Roads”. Where this increases
the value of your retained land, this increase in value will normally be deducted from any compensation to be
paid to you.
3.3 Acquisition of Part Only
3.3.1 Injurious Affection
If there is an adverse effect on the land you retain you may be entitled to additional compensation. The
compensation for depreciation in value of the retained land is called "injurious affection". Compensation for
injurious affection is provided by section 64 of the Public Works Act and where only part of your land is taken or
acquired the compensation is assessed by adopting a "before and after" approach. This means agreeing to the
value of the whole property disregarding any public or proposed work prior to acquisition and comparing this
with the value of the land you are left with after the taking or acquisition.
3.3.2 Advance Payment of Compensation
An advance on compensation will be paid if:
- Only part of your land is acquired; and
- It is not possible to adequately assess full and final compensation prior to carrying out the public work.
3.4 Compensation When No Land is Taken
A right to compensation under the Public Works Act may also arise in certain circumstances when no land is
taken. Section 63 of the Act provides for compensation for substantial injurious affection to your land caused by
the construction of the public work.
3.5 Additional Compensation
3.5.1 Disturbance Payments
In addition to being compensated for the value of land taken or acquired you may be entitled to reimbursement
for "disturbance". This is payment for actual monetary loss or costs incurred of a temporary non-recurring
nature. Compensation for disturbance is covered in section 66 of the Public Works Act. Any compensation
under this section must be as a direct result of your land being taken by the Crown the cost of which you could
not have avoided by taking reasonable precautions. Disturbance payments are not a 'general amount' to cover
possible unspecified contingencies such as 'inconvenience'.
In order to qualify for disturbance payments:
- Disturbance must be the direct result of you being required to give up possession of your land to the
Crown; - Costs must be reasonable and proven that they would not have occurred were it not for the Crown’s
purchase of your land, or your business.
3.5.2 Valuation Legal and other Professional Costs
If you obtain professional advice, you are entitled to reasonable costs (valuation legal and other professional
costs) incurred as a result of negotiating compensation for your land.
If you intend to seek professional advice, you should first discuss this with the accredited supplier who will
outline the criteria for approving professional costs. This discussion will avoid any misunderstanding about
what sort of costs you are entitled to and who will pay.
If you engage a Registered Valuer you must instruct the Valuer that the valuation is required for compensation
purposes under the Public Works Act 1981. You should make the valuation report available to the accredited
supplier, if requested to facilitate discussions.
Any costs incurred for professional advice for the purposes of negotiating of compensation for your land must
be reasonable.
You are not able to claim the cost of your personal spare time spent in negotiations.
3.5.3 Removal Costs
If your land is taken or acquired, you are entitled to the reasonable costs incurred in transporting your movable
property to other land. This is subject to the other land being within the same general locality or such greater
distance as is necessary to reach the nearest land that could have been reasonably acquired in substitution for
your land.
Any claim is subject to the following:
- If you intend to claim for removal costs you should discuss this with the accredited supplier before
engaging a removal contractor; - You must be able to justify that the transportation costs are reasonable.
3.5.4 Allowances for Special Improvements
Where your land is taken or acquired, there is no obligation on an Acquiring Authority, either to take over
removable improvements or to pay for such items. Removable improvements are not normally part of the land
acquired. However, if the improvements are not readily removable and are of use to a disabled owner or a
disabled member of an owner’s family and are not reflected in the value of the land, this loss is a recoverable
compensatable loss.
3.5.5 Loss on Mortgage Repayment
Where a loss occurs in having to transfer a mortgage as a direct result of land being taken or acquired, you as
the borrower are entitled to compensation for the loss where you have to take a mortgage at a higher rate which
will be more expensive than the existing mortgage over your land.
3.5.6 Business Loss
If you have a business located on your land, you may claim compensation for business loss resulting from the
relocation of the business. The loss may include loss of profits and goodwill. However, the loss of profits must
relate to proven loss of "actual profits". Loss of "anticipated profits" is not provided for in the Public Works Act.
During the period of changeover from business premises that have been acquired for a public work, to
alternative business premises, you may be forced to close down your business for the time being, resulting in
your business not earning during that period. You may claim the net loss suffered, under the heading of
"business loss". The main point to note is that it is the net loss of profit that is compensatable, not the loss of
revenue.
If you intend to claim for "loss of profits" or goodwill you should ask your accountant to assist with preparation of
your claim. It is important to support such claims with verifiable proof of loss by reference to the last three year’s
annual accounts of your business.
3.5.7 Solatium Payment for Homeowners
If the land to be acquired contains your home that you live in, and the Crown takes the initiative to purchase it as
subject to its requirement or designation for a public work and requires you to give vacant possession, you are
entitled to be paid a “solatium” (or home-loss payment) of $2000.
Payment of the solatium is conditional on the ownership of the land not having changed since it was made
subject to a requirement or designated for a public work.
3.5.8 Assistance to Purchase
Part V of the Public Works Act also provides for other types of reasonable assistance in addition to
compensation payable under the Act.
If you wish to seek assistance under Part V of the Act, or if you believe you are entitled to any additional
compensation, you should discuss this with the accredited supplier.
 |  |  |  |  |
Innovation + Experience |
| PO BOX 9018, Wellington 6141 | phone: (04) 240-0124 | fax: (04) 232-4414 | email: valuer@ vcnz.co.nz Innovation + Experience |