The report’s initial scope included the examination of compulsory purchase law, but this was scaled back to focus entirely on the activation and compensation processes.
Long-standing legislation – the Lands Clauses Consolidation Act 1845 and the Acquisition of Land (Assessment of Compensation) Act 1919 – are the foundational frameworks for compulsory acquisition and compensation, respectively.
The commission identified multiple deficiencies in the procedure, following a confirmed CPO, where the acquisition is achieved using a notice to treat procedure.
The drawbacks include:
- No time limit within which an acquiring authority must serve a notice of entry, following a notice to treat,
- Where a notice of entry is served, the period in which the acquiring authority may enter possession is not limited,
- No compensation is payable at the time when the owner loses possession, but only when compensation is determined (interest is payable on the compensation sum from the date of possession by the acquiring authority),
- Date of valuation to assess compensation is when notice to treat is served but the owner loses possession later, and compensation is not assessed until further down the line.
This rule may operate unfairly, depending on how land values fluctuate, the LRC report points out.
The commission recommends that the notice to treat procedure should be repealed in its entirety and replaced with the vesting-order procedure recommended in the draft bill.
Vesting order
The vesting-order procedure would benefit both owners and acquiring authorities, the LRC believes.
The commission's report adds that owners would benefit from the strict timelines proposed, which require the acquiring authority to proceed with the compulsory acquisition in a timely manner.
An acquiring authority would have 12 months from the date the compulsory order becomes operative to decide whether it wished to proceed with the acquisition.
If it did not proceed by serving a vesting order within that period, the compulsory order would lapse.
Three-months' notice
The report recommends that 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 would also get unencumbered title to the land at a much earlier stage than at present.
Regardless of any title complications that might exist, ownership would be 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.
Advance payment
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 system would be new to Ireland, it is well established in other jurisdictions and has significant benefits for both owners and acquiring authorities, the LRC believes.
Owners would receive a substantial sum of money before losing possession of their land (assuming that they provide proof of title).
Acquiring authorities would 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, the report points out.
“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 report adds.
The commission recommends substantial change in the current mechanism for the resolution of disputes concerning the amount of CPO compensation to be paid.
Currently, where parties cannot agree compensation, the amount is determined by a property arbitrator.
Property arbitrators
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.
The Law Reform Commission recommends the Valuation Tribunal as a suitable body to carry out this function – and that decisions should issue within six months.
Reasoned decisions would be publicly available on the tribunal’s website, as would more information on the process of determining compensation to provide guidance to parties, thus providing an increased level of transparency.
The report also proposes codification of compensation principles and repealing the 1919 act, as a step towards increased legal certainty and streamlined and modernised rules.
The report is exclusively concerned with the second half of the compulsory purchase process and does not dwell on whether CPOs should be permitted.