Gold Star Insurance Company Limited v Minister for Land Information

[2013] NZLVT 1 (13 March 2013)

This was an application based on s 66 Public Works Act (disturbance payments). The issue was whether holding costs and abortive expenditure could be compensated under s 66. NZTA had an interest in acquiring the subject property in contemplation of a motorway development. NZTA offered to purchase the property in March 2005 but negotiations fell through because of the wide difference in the parties’ expectations. NZTA then wrote to the claimants in March 2006, indicating that a Notice of Requirement was likely to be lodged in mid 2006. On the basis of this indication, the claimants decided it would not be appropriate to continue with their development. A notice of requirement was lodged in 2010 leading to negotiations and agreement was reached in July 2011. However, an issue arose as to whether disturbance losses sustained prior to the actual compulsory acquisition of land could be recovered.

The Land Valuation Tribunal held the view that during the period leading up to the notice of requirement and finalising of compensation, the claimants were placed in a difficult position. The Tribunal held that in accordance with Director of Buildings and Lands v Shun Fung Iron Works Ltd [1995] 1 All ER 846, a claimant whose land is compulsorily taken must be provided fair and full compensation. Therefore provided the loss is causally connected, not too remote and not a loss which a reasonable person would have avoided, loss prior to acquisition may be recoverable.

However, the Tribunal found that the types of losses being claimed were not capable of being categorised as disturbance payments as they were simply not analogous to the examples enunciated in s 66(1) of the Act. The Tribunal stated at [36]:

The word “disturbance”, while not defined in the Act, should be given its natural meaning in the light of its context amongst the other provisions. Within that context disturbance payments to be claimable under s 66 of the Act must be directly attributable to and in proximity with the upheaval caused to an owner as a result of the acquisition.”

A claim for interest payments incurred was also sought, however the Tribunal held that the interest incurred (which was in relation to the purchase of shares) related to a personal investment and was not a cost associated with the development of the land being taken.