Solatium payments for public works - an international comparison

Abstract

Public works are essential to support modern society but often necessitate the requirement to compulsorily acquire land. In these circumstances the right to full compensation is usually enshrined in legislation, but what constitutes full compensation? Should full compensation include some consideration over and above market value for the lack of a willing seller usually inherent in definitions of market value? Such a solatium is payable in New Zealand, but concern has been expressed that the level of payment is inappropriate. This research examined the historic background and current situation applying to public works compensation in New Zealand, as well as in a variety of other countries with a common legal tradition. The findings revealed a variety of approaches applying to compensation legislation and practice. In many cases some form of solatium or additional compensation for compulsory acquisition was seen as appropriate, particularly if residential dwellings were involved. Most commonly this payment has been in the order of five to ten percent of market value overseas. In light of these findings the current level of solatium payment in New Zealand appears to be unusually low. An increase to a more typical level may smooth the progress of public works delivery in New Zealand by reducing costly and time consuming legal battles over compensation.