Government prepares to seize swathes of private land in Chch

Commercial property owners will have no rights to object when the Canterbury Earthquake Recovery Authority demands their land.

The authority is preparing to use the state’s most draconian powers to compulsorily acquire commercial property in central Christchurch

Paul Calder, a partner at Duncan Cotterill, warns that unlike the Public Works Act, under the CER Act there is no right of objection where land is proposed to be taken and the usual offer-back provisions of the Public Works Act do not apply to commercial land in the CBD.

The right to compensation is not absolute, Mr Calder says.

• Compensation is payable at the post-earthquake value of the land, not at the pre-earthquake value.
   
• Compensation is only available for “actual loss”; CERA is not required to pay for any loss, which is insured or ought to have been insured.
   
• Compensation is also not available for consequential loss from regulatory changes arising under the CER Act, loss from cancellation of resource consents, loss from cancellation of existing use rights, economic loss or loss from business interruption or any other loss that the Minister reasonably considers is unwarranted and unjustified.

Mr Calder says that if CERA takes land under the CER Act, it also receives all rights, entitlements and benefits the landowner has or may have against the insurer of the land or any buildings on the land.

It is unclear how this provision will work in practice and how this will impact insurance claims made by land owners which are not settled at the time of acquisition, he says.

“While the legislation is silent about the purposes for which CERA may compulsorily acquire land, the High Court has recently shown it is more than willing to hold the minister to account if it considers that, in exercising his powers, he has stepped outside the purposes of recovery and rebuild.

“The very real possibility of compulsory land acquisitions in the central business district, as a result of the much-anticipated Central City Development Unit’s city rebuilding blueprint, will come under scrutiny.

“CERA is armed with extensive powers under the Canterbury Earthquake Recovery Act 2011 to acquire land and buildings, compulsorily if necessary," Mr Calder says.

“In the past, Earthquake Recovery Minister Gerry Brownlee has said these powers will be used sparingly. It will be interesting to see how CERA approaches dealing with affected landowners now that the blueprint has been prepared."