Government agencies and authorities holding land under the Public Works Act 1981 (PWA) are being held to a higher standard following a 2021 Court of Appeal decision. The Court found that an honest mistake as to whether land was still required for a public work cannot justify a failure to offer surplus land back to the original owner within a reasonable time.

The judgment is welcome news to former owners with a continuing connection or interest in land acquired for a public work. The Court has reaffirmed the importance of the interests held by prior landowners in land acquired under the PWA and the expectations that landholding agencies meet their obligations under the offer back process in a timely manner.

If they are not already doing so, landholding agencies and authorities will need to apply efficient processes to identify where land is no longer needed for a public work and (where applicable) promptly comply with their offer-back obligations.

A mistake is no excuse

After a seven-year long battle in the Courts, Auckland private school Dilworth won its appeal against Waka Kotahi NZ Transport Agency (NZTA).[1] Dilworth claimed, and the Court of Appeal unanimously agreed, that:

1. Landholding agencies must proactively monitor and respond to their changing requirements for land acquired under the PWA. Specifically, such agencies must not retain ownership of land (or an interest in land) held for a public work in circumstances where lesser rights will suffice.

In the Dilworth case, the Court determined that NZTA mistakenly retained ownership of land acquired for the purpose of constructing the Newmarket Viaduct, when continuous access and maintenance rights (preserved by easement and encumbrance instruments) would have sufficed.

2. All considerations for the offer-back of land under the PWA (for example, whether the land is required by another agency for any other public work) must take place within a “reasonable time” after the agency ceases to need the land. The timeframe adopted by the Court in this case was 12 months from the date the land was no longer required for the purpose for which it was acquired.

3. It is a question of fact (determined with reference to the decisions and actions of the landholding agency, or by expert evidence) whether land is no longer required for a public work. As a result (as was the case here) land may objectively be considered no longer needed for a public work before the landholding agency identifies it as such.

As a consequence of this decision, the land had to be offered back to Dilworth and, significantly, at the current market value as at 16 October 2013 (being 12 months from the date the Court determined the land was no longer required for the original purpose for which it was acquired).

Robust internal processes required to prevent other omissions

In practice, it is difficult to envisage how a landholding agency could realistically consider whether land is required for another public work when it has not even identified that the land is surplus to the requirements of the original public work. However, the Court’s reasoning was underpinned by concerns of land banking and delayed consideration of the PWA disposal processes by landholding agencies at the expense of original owners. This means the onus is now clearly on each agency to ensure that it has a robust policy to regularly review the actual use of land taken under the PWA against the continuing requirements for that land and their wider portfolios generally, to ensure the rights of the original owners are maintained. Policies will necessarily differ between agencies.

In addition, whereas previously there were no firm guidelines indicating appropriate timeframes for agencies to consider the offer-back requirements (including whether the land may be required by another landholding agency for any other public work or whether it could be utilised in a land exchange), the timeframe of 12 months used in Dilworth is now being regularly applied by many agencies when assessing the timeliness of an offer back to a former owner. This doesn’t leave much time for other landholding agencies to consider and express their alternative requirements for land, and may place unfamiliar pressure on contracts for the transfer of land between agencies.

If you have questions about strengthening your agency’s internal processes required to address the outcome of the Dilworth case, our experts would be delighted to help answer them.

Footnote

[1] Dilworth Trust Board v Attorney-General [2021] NZCA 48.

This article was co-authored by Payal Silva, a senior solicitor, and Josh Meikle, a Legal Intern in our Property team.