‘Tell him he’s dreamin': five myths about The Castle and the law
30 October 2015 Ben Hardwick
One of the most popular Australian films of all time, The Castle, tells the story of the Kerrigan family’s fight with the government authority that compulsorily acquires their home.
In the film, the Kerrigans take on the authority and win, saving not only their house, but their neighbours’ houses as well. But just how true to life is The Castle?
Myth 1: The acquisition of property has to be done ‘on just terms’
Throughout the film, there is talk of section 51 (xxxi) of the constitution and how the “vibe” of it should protect the Kerrigans’ home. Section 51 (xxxi) does exist, but rather than prevent the taking of property, the section in fact empowers the Commonwealth to enact laws to acquire both private property and Crown land. The only proviso is that it does so on “just terms”. This constitutional protection extends only to acquisitions made using Commonwealth powers.
Unless land was to be acquired for the limited activities of the Commonwealth, such as the establishment of a defence facility, it is far more likely that a state government will be responsible for acquiring property.
Myth 2: ‘You can’t just come in and take someone’s land!’
The High Court allows the Kerrigans to keep their home on the grounds that no amount of compensation could compensate a family for the loss of their “castle”. In fact there is no real means by which a family can stop their home from being acquired.
The aim of compulsory acquisition laws is to put the owner in a position no worse than prior to the acquisition. This is generally achieved by compensating them for the market value of the property at its highest and best use, compensating them for any costs incurred as a result of the acquisition and compensating them for the broad range of out-of-pocket expenses they might incur – such as removalists costs or internet connection fees.
While a homeowner could challenge an acquiring authority on the basis it has acted beyond its power and/or failed to follow legal procedures, once a decision is made to acquire property, there is not much anyone can do to stop it from a legal perspective.
Myth 3: ‘You can’t buy what I’ve got!’ – Market value is the only form of compensation
A central theme in the film is that the sentimental value of one’s home cannot be measured. As Darryl Kerrigan puts it, “You can’t buy what I’ve got.” The law in fact regularly places a monetary value on intangible values.
While the market value of acquired property is the primary basis for determining compensation, there are other forms of compensation available to property owners whose homes are acquired.
The most common of these is solatium, which is to compensate for “intangible and non-pecuniary disadvantages resulting from the acquisition“.
The legislation in various states limits the amount of solatium that can be awarded either to a set monetary amount or to a percentage of the market value of your acquired property. In Victoria, for example, that limit is set at 10 per cent of market value whereas in NSW, it is set at a maximum of $26,710.
Myth 4: ‘I think we can test it further’ – these kinds of cases make it to the High Court
For the purposes of an exciting film plot, it makes sense for the Kerrigans to appeal to the High Court and win. However, compulsory acquisition matters seldom make it to court and even more rarely to the High Court. The majority of claimants seek to maximise the amount of compensation on offer and move on.
Myth 5: ‘In summary, it’s the constitution, it’s Mabo, it’s the vibe …’ – Dennis Denuto can fix it for you
Dennis Denuto’s legal submission will go down in Australian popular culture history – “In summary, it’s the constitution, it’s Mabo, it’s the vibe.” If only it was that simple. The law relating to compulsory acquisition can be complicated and raises many questions. For example:
- how is a property valued that, but for the proposed development, would have enjoyed a far more valuable zoning?
- what if only a small portion of land is compulsorily acquired, restricting the use of the remaining land. How do you value on the non-acquired land?
- what if an apartment complex is acquired. Does the value of the apartment owner’s share in the common property form a distinct compensable interest that is separate from the value of the apartment as a stand-alone interest?
- how is the future potential of erecting commercial signage on a roadside to be valued?
- If your property is affected by compulsory acquisition, it’s important to be across your entitlements and seek expert legal and valuation advice. In some cases, the amount of compensation awarded to a property owner can be significantly higher than what is first offered, giving you a good chance to tell the government, “You’re dreamin’!”
Date: 27 October 2015