Land Expropriation: Is it on your horizon?Kate McClymont writes about the vulnerability of property owners to land expropriation by compulsory acquisition under the laws of the Cayman Islands. Kate is a specialist in land compensation claims and has acted in several cases in this jurisdiction. If you have any queries about the article or believe you have a claim against a compulsory acquisition then please click here for Kate's contact details. 1. Introduction For many people the purchase of a home or land is the biggest investment they ever make and that purchase often carries with it hopes and dreams that exceed the mere physical characteristics of the property itself. It is part of our psyche that this property can only be taken from you with your consent; however, there are circumstances in which public authorities can acquire privately owned property without the owner’s consent and landowners need to be aware of this possibility, to know how to protect their investments and where land becomes subject to compulsory acquisition, to know how to ensure they receive fair compensation. The following article has particular reference to the Cayman Islands and the procedure in that jurisdiction. Readers in other jurisdictions need to refer to their local laws and procedures. 2. When Can Land be Compulsorily Acquired There are a number of statutes that give public authorities the power to acquire privately owned land without the landowner’s consent, they include:
These laws provide very broad powers to public authorities to compulsorily acquire privately owned land. To effect the acquisition the acquiring body merely has to show that the land is needed for a public purpose. Where a public body makes such a determination it must then publish in the Official Cayman Islands Gazette a declaration stating its intention to acquire the land. Publication of this intention is deemed to be conclusive evidence that the land is in fact required for a public purpose. Accordingly, landowners facing compulsory acquisition of their property have very little room, if any, to resist that acquisition. 3. The Process While landowners are unlikely to be able to prevent the compulsory acquisition itself, understanding the process plays is a significant role in ensuring a landowner’s rights to adequate compensation are protected. As referenced above, the first step in the process is publication in the Gazette of a declaration of intent to acquire the land. The date of the publication of this declaration is very important as any compensation that may be payable as a result of the public works will be calculated with reference to values applicable as at the date of publication and only people who have an interest in affected land on that date will be entitled to compensation. It is therefore crucial when considering the purchase of property that a check is completed to ensure the subject property is not the subject of a declaration of intent to acquire or close enough to the proposed public works that the value of the property will be affected by it. Anyone purchasing such property after the publication of the intention to acquire the land will not be entitled to compensation, even if the purchase price paid did not reflect the effect that the proposed public works will have on the value of the purchased property. Once the declaration of intent has been published in the Gazette it is important for anyone with an interest in land that will be negatively affected by the proposed public works to act quickly. The eligibility criteria for compensation vary depending on the law under which the acquisition is made. However, by way of example of some of the procedural requirements involved in making a claim for compensation, the follow describes some of the steps required to be eligible for compensation if you land is acquired for the purpose of building or changing the layout of a road. To be eligible for compensation, a claimant must notify the acquiring authority of their intention to make a claim within 90 days of publication of the declaration of intention to acquire the land. This notification must be in a particular form (referred to as Form A) and must specify various factors including but not limited to:
A second claim form (Form B) must be submitted within one year of the proposed road being scheduled as a public road and must provide specific details of the claim for compensation including the amount claimed under various heads of compensation. The type of compensation that can be claimed under each head of compensation is discussed later in this article. Failing to comply with the timeframes for filing Forms A and B will be fatal to a claim for compensation, it is therefore important that claimants seek professional advice as soon as they become aware that their property will be affected by a declaration of intention to acquire land. 4. Who is entitled to Compensation Anyone who has an interest in land at the time the declaration is published has the right to compensation for losses arising as a result of the compulsory acquisition. The interest does not necessarily have to be freehold, a leasehold or easement interest amongst others, might also allow a claimant to fall within the eligibility criteria. There are also instances in which a person will have a right to compensation even if they do not have an interest in the land being acquired, for instance, an interest in adjoining land might also lead to entitlement to compensation if it can be shown that land will diminish in value as a result of the use the public body intends to put the acquired land. 5. Calculation of Compensation Where a claim for compensation is submitted correctly and within the required timeframes the acquiring authority will attempt to agree a compensation figure with the claimant. Any claimant entering into these negotiations would be well advised to seek professional representation to ensure they receive all the compensation they may be entitled to. If the amount of compensation payable cannot be agreed the matter can be referred to the Court or a Tribunal for final determination. A decision to refer a claim to the Court or Tribunal should be carefully considered at it can be a long and costly process. As mentioned above, the applicable legislation sets out the types of loss a claimant will be compensated for and will be addressed below; however, there are some overarching principles that should be kept in mind in the assessment of compensation. Arguably the most important of these is the principle of equivalence. This principle is drawn from the English case of Horn v Sunderland Corporation [1941] 2 K.B. 26 in which Lord Justice Scott stated compensation is the “the right to be put, so far as money can do it, in the same position as if his land had not been taken from him. In other words, he gains the right to receive a money payment, not less than the loss imposed on him in the public interest, but on the other hand, no greater.” Unfortunately, it might be unrealistic for claimants to set their expectations of compensation on the principle of equivalence as an assessment of the position the claimant was in prior to and after the compulsory acquisition can render different results upon a subjective analysis than is will on the objective rule-based assessment of these two positions that must be conducted by the Court or acquiring authority when assessing compensation. The law stipulates that the level of compensation payable to claimants will be assessed with reference to:
When assessing the value of land taken or diminution in value of land, as required by the process outlined above, there are a number of assumptions that will be applied, including the assumption that planning permission would have been granted in respect of the land in which the interest subsists, for a use that conforms with the planning use outline in the development plan for that location and for which it is reasonable to assume that planning permission would have been granted. Establishing the reasonableness of planning consent being granted for the planning use outline applicable to the property can be difficult but this assumption will usually work in favour of a claimant. However, there are also factors that cannot be taken into account when assessing compensation that are likely to weigh against a claimant. For example, a valuation of the acquired land cannot take into consideration the fact that the acquisition was compulsory, or put another way, for the purposes of valuation it must be assumed that the landowner was a willing seller. The valuation assumption that the landowner was a willing seller is likely to have negative consequences on the level of compensation payable if the land was intended for development. That is because a seller who willingly sells their land prior to development of that land must be assumed to have chosen to forego the development profit they would have made had they chosen not to sell and instead to develop their land. Therefore, while it can be seen that the intention of the Courts is to put the landowner in a financial position equivalent to the position they would have been in but for the compulsory acquisition, in practice, landowners who could have expected future profit from their land are unlikely to be compensated for that loss. 6. Betterment Of significant concern to many claimants is the concept of betterment or set-off. The acquiring authority may use this principle in situations in which they believe the public works contemplated will increase the value of a claimant’s retained land. The alleged value of the betterment is calculated and then subtracted from the value of the compensation payable (calculated in accordance with the principles discussed above). The National Roads Authority recently applied this principle to a claim for compensation for land compulsorily acquired for use as part of the East West Arterial Bypass. In that claim the NRA said no compensation was payable to the claimants for the land taken from them without their consent as they alleged the claimant’s retained land would increase in value as a result of the new road by as much or more than the value of any compensation that would otherwise be payable to them. A decision has not yet been made in relation to that claim. 7. Conclusion Your land ownership may be more vulnerable to expropriation than you think and where that land is taken from you without your consent, the process towards compensation can be fraught with complications and delay. It is crucial that buyers ensure any property they intend to purchase is not already the subject of a public body’s declaration of intention to acquire and that expert advice is obtained to navigate the compensation gauntlet. |
Tel: +1 (345) 949-7237 • Fax: +1 (345) 949-7725 • info@broadhurstllc.com
 |