Businesses
in the Christchurch CBD compulsorily bought out as part of the city’s
regeneration could claim costs of preparing a substitute business site as
“disturbance” compensation, the Court of Appeal ruled.
Ace Developments Ltd lost
its Moorhouse Avenue car yard following compulsory purchase under the
Canterbury Earthquake Recovery Act for an intended sports stadium. The Act borrows from the Public Works Act a
formula for assessing compensation. This
allows extra compensation above the market value of land acquired as a
“disturbance payment” to reflect the serious invasion of private rights in
seizing land.
Ace argued the special
circumstances surrounding Christchurch’s earthquake rebuild entitled it to
payment of over eight million dollars, including $3.7 million as costs over and
above the value of land taken being the extra cost of buying an equivalent
alternative site and $2.67 million to rebuild on this new site. The Court of Appeal ruled any extra cost in
acquiring substitute land and building on a new site was not recoverable. But the cost of preparing a new site could be
viewed as a “disturbance cost” if the land acquired was to be operated by a
business. This would include reasonable demolition
fees incurred clearing the site plus any leasing fees. Ace said likely demolition costs would amount
to $100,000 and leasing fees $47,000. It
had been offered $3.3 million all up: to cover only the market value of its
former Moorhouse site; professional fees on the compulsory acquisition; and
costs of relocating an advertising sign.
The amount to be paid
Ace is still to be determined in the High Court. Government assessors argue Ace was not
operating a business from its Moorhouse site; it was a landowner leasing its
site to car dealer.
Ace
Developments v. Attorney-General – Court of Appeal (18.09.17)
17.116