Law Reform Commission Publishes
Report on the Compulsory Acquisition of Land
WEDNESDAY 29th March 2023: The Law Reform Commission has today published a Report on the Compulsory Acquisition of Land. The report comprises a draft Bill, entitled the Acquisition of Land Bill 2023, as well as five chapters explaining the approach pursued by the Commission in reaching its conclusions. An executive summary of this report can be found here. A plain English summary of this report can be found here.
The Report deals solely with reforms in the compulsory acquisition system after the compulsory purchase order has been confirmed and becomes operative. Initially, the scope of the Commission’s examination of compulsory purchase law was wider and extended to the process from the making of a compulsory purchase order. However, in light of the development by the Government of a revised Planning and Development Bill, which would include provisions relating to compulsory purchase orders up to the confirmation stage, the Commission focussed its examination entirely on the activation and compensation processes.
In formulating its recommendations, which are encompassed in the draft Bill, the Commission’s key objective is to introduce a simplified system of acquisition and compensation that fairly balances the rights of owners whose land is being acquired and the acquiring authorities’ requirement to quickly and efficiently acquire land so that projects, which serve the public interest, can be progressed.
The key areas, which are the focus of the reform recommendations, concern the procedures for the acquisition of land and those that relate to the payment of compensation. These are, in the main, currently governed by long-standing legislation: the Lands Clauses Consolidation Act 1845 and the Acquisition of Land (Assessment of Compensation) Act 1919, which remain the foundational frameworks that apply in Ireland for compulsory acquisition and compensation, respectively.
Under the current framework, following the confirmation of a compulsory purchase order, the acquisition is achieved by the use of a notice to treat procedure. The Commission identified multiple deficiencies in this procedure.
These include: (a) that there is no time limit within which an acquiring authority must serve a notice of entry, following service of a notice to treat; (b) where a notice of entry is served, the period in which the acquiring authority may enter possession is not limited; and (c) no compensation is payable at the time when the owner loses possession, but only when compensation is determined (although interest is payable on the compensation sum from the date of possession by the acquiring authority). Furthermore, the date upon which the land is valued to assess compensation is the date on which the notice to treat is served, while the owner will lose possession on a different, later date, and the compensation will not be assessed until a considerably later date again. This rule may operate unfairly, depending on how land values fluctuate over the relevant time period.
The Commission recommends that the notice to treat procedure should be repealed in its entirety and replaced with the vesting order procedure recommended in the draft Bill. The vesting order procedure will benefit both owners and acquiring authorities. A move to vesting orders might have to be done at different points in the future to reflect the different laws about different acquiring authorities.
Owners will benefit from the strict timelines proposed, which require the acquiring authority to proceed with the compulsory acquisition in a timely manner. An acquiring authority will have 12 months from the date the compulsory order becomes operative to decide whether it wishes to proceed with the acquisition. If it does not proceed, by the service of a vesting order within that period, the compulsory order will lapse. An owner must be given three months’ notice once the authority decides to proceed with the acquisition, so that they can arrange their affairs as required. In addition, the acquiring authority must ensure that the vesting order takes place no later than six months from the date it is served.
Acquiring authorities will get unencumbered title to the land at a much earlier stage than at present. Regardless of any title complications that may exist, ownership is vested. Under the current system an acquiring authority does not get ownership of the land until after compensation is agreed and determined and the owner proves their title.
The Commission recommends that an acquiring authority should make an advance payment of no less than 90% of the authority’s estimate of the owner’s entitlement to compensation at, or near, the time the owner loses title to their land. While this is new in Ireland, it is well established in other jurisdictions and has significant benefits for both owners and acquiring authorities. Owners will, as a result, receive a substantial sum of money before they lose possession of their land (assuming they provide proof of title). Acquiring authorities will benefit as a significant portion of the compensation ultimately payable is paid out at an early stage when the authority acquires ownership of the land. This will significantly reduce the level of interest for which they may be liable under the current system, where interest is paid on the compensation from the date it enters into possession until the date it makes the compensation payment.
The Commission recommends substantial change in the current mechanism for the resolution of disputes concerning the amount of compensation to be paid to an owner whose land is the subject of a compulsory purchase order. At present, where parties cannot agree compensation, the amount is determined by an arbitrator, known as the property arbitrator. Property arbitrators are drawn from a panel appointed by the Land Values Reference Committee, consisting of the Chief Justice, the President of the High Court and the President of the Society of Chartered Surveyors, with the assistance of the Courts Service. However, neither the Reference Committee, nor the Courts Service has direct oversight, or governance, over the property arbitrators. The Commission recommends the replacement of the current mechanism with a permanent adjudicative body, established by statute, with expertise in matters of valuation and with transparent rules relating to procedural matters. In view of its experience and expertise in valuing property for rating purposes and considering the moderate scale of activity relating to compulsory purchase order compensation disputes, the Commission recommends the Valuation Tribunal as a suitable body to carry out this function. The Tribunal will endeavour to deliver its decisions within six months from the date of receipt of applications. Reasoned decisions will be publicly available on the Tribunal’s website, as will more information on the process of determining compensation to provide guidance to parties, thus providing an increased level of transparency.
The final chapter in the Commission’s report deals with the codification of the existing principles governing the evaluation of compensation claims. These principles were contained in part in the 1919 Act and were subsequently developed through case law. The Commission proposes the codification of these principles in an Act repealing the 1919 Act, which will be a step towards increased legal certainty. Rules have been streamlined and modernised, thus making them clearer and easier to understand for owners, acquiring authorities and members of the Valuation Tribunal and should simplify the process of determining compensation.
The Report will be available on the Law Reform Commission's website, www.lawreform.ie, from 7am on Wednesday, 29th March.
Background Notes for Editors. The Law Reform Commission is an independent statutory body whose mission is to keep the law under independent, objective, and expert review, to make recommendations for law reform, and to make current law accessible for all. The Commission strives to ensure that the Commission’s law reform publications are practical, relevant, solutions-driven and focused on the end-users of legislation. To date, the Law Reform Commission has published over 200 publications (Working Papers, Issues Papers, Consultation Papers and Reports) containing reform proposals. The majority of these proposals have influenced the drafting and content of Irish legislation.
For further information contact: Larry Donald, Heneghan 087 2581787, Michael Hall, Heneghan 087 3106238