New South Wales Compensation Quarterly

Goldmate Property Luddenham No. 1 Pty Ltd v Transport for NSW [2024] NSWCA 292 – defining the public purpose

Background

On 5 November 2020, the appellant (Goldmate) became the registered proprietor of Lot 26 in a Deposited Plan in Luddenham, for which it paid $33,056,500.

Lot 26 was a battle-axe block and the only road access was through the “handle” part. It was, and remained until the respondent (Transport) acquired it, vacant land.

Before 1 October 2020, it was zoned “RU2 Rural Landscape” under the provisions of the Penrith Local Environmental Plan 2010. On that day, most of Lot 26 was re-zoned Enterprise (ENT) under the provisions of State Environmental Planning Policy (Western Sydney Aerotropolis) 2020 (SEPP Aerotropolis), other than a small part in the northwestern corner that was zoned Environment and Recreation.

The proposed acquisition notice that was served on Goldmate enclosed a copy of the proposed Deposited Plan which would subdivide Lot 26 and neighbouring land into various lots of which Lot 2 (which comprised the Residue Land) would be retained by the appellant; Lot 7 (the Acquired Land) would be acquired from the appellant; and Lot 12 (neighbouring land) would be acquired from its owner who was not the appellant.

Some seven months after Goldmate bought its parcel, Transport acquired the Land on 30 June 2021 under section 177 of the Roads Act 1993 (NSW) (Roads Act). In the gazette notice, the Land was acquired for the purposes of the Roads Act, “in connection with the construction, operation, and maintenance of the M12 motorway.”

The question was – what was the underlying zoning of the Acquired Land? Was it RU2 Rural Landscape? Or was it ENT under the Aerotropolis SEPP.

The difference in the claims for compensation were colossal.

Goldmate claimed some $55.4m in market value and injurious affection. Transport claimed that Goldmate was entitled to only $4m in compensation for market value and injurious affection.

In the Land and Environment Court, Duggan J held at [42], that the underlying zoning was ENT and that this zoning was caused by the carrying out of the public purpose:

“Having regard to the evidence, I find that, at all material times, the purpose of the NSW Government was to carry out the broad intention of the WSIP [Western Sydney Infrastructure Plan] which included traffic and transport infrastructure together with the rezoning of certain areas as part of a coordinated State Government response to the announcement of the WSA [Western Sydney Airport] in 2014 and continuing. I also find for the same reasons that the actions of TfNSW in acquiring the land for the purposes of the M12 was in the furtherance of that purpose. The goal for the acquisition of the M12 was not merely to provide vehicular movements to and from the WSA but also to make provision for transport related to the intended land use changes which would facilitate commercial, employment and industrial uses around the WSA to leverage the economic opportunities provided by the WSA. Each element had to work in concert, or the goal (the purpose of such works) would not be achieved. To paraphrase the language in Perry at [100], the actions were a continuous and consistent action to give effect to such purpose.”

As a result, Duggan J held that Goldmate was entitled to:

• $9,761,480, including $9,523,500 for market value (s 55(a))
• $100,000 for injurious affection to the portion of the property retained by Goldmate (s 55(f))
• $137,979.78 for disturbance (s 59(1)(a) and (b))

Goldmate then appealed.

Issues

Goldmate raised the following grounds in the NSW Court of Appeal:

1. Her Honour was wrong to find that the public purpose for which the Land was acquired could be broader than the nominated purpose in the acquisition notice, being for the purposes of the Roads Act (Ground 1)
2. Her Honour asked the wrong legal question when assessing the injurious affection (Ground 2)

The decision

The NSW Court of Appeal (Adamson JA, Gleeson JA agreeing, with Preston CJ of LEC providing additional reasons), allowed the appeal.

Ground 1

The Court of Appeal found that the public purpose for which acquiring authorities can acquire land must fall within the scope of power conferred upon the relevant authority under their enabling legislation, in this case, the Roads Act.

The functions of Transport under the Roads Act were actually quite limited. The only relevant source of power was the respondent’s power in s 71 of the Roads Act “to carry out road work on any public road for which it is the roads authority and on any other land under its control”. The public purpose in s 56(1)(a) of the Act could be no wider than this purpose. Otherwise, the acquisition would be beyond the respondent’s power since it would not be authorised by the Roads Act.

The Court held there were four steps to the proper construction of the assessment of market value under s 56(1)(a) of the Just Terms Act at [71] as follows:

1. The identification of the acquiring authority
2. The identification, by reference to the empowering legislation, of the public purpose or purposes for which the acquiring authority (identified in (1) above) has the power to acquire land
3. The identification of the acquiring authority’s public purpose in acquiring the land, which must fall within the purpose or range of purposes identified in (2) above
4. The determination of the question, which is one of fact, whether there has been any increase or decrease in the value of the land caused by the carrying out of, or the proposal to carry out, the public purpose for which the land was acquired, identified in (3) above (any such increase or decrease is to be disregarded).

Transport’s power to acquire the Land derived from s 71 and s 177 of the Roads Act. Accordingly, Transport’s power to acquire land by compulsory process was limited to the construction, operation, and maintenance of roads under the Roads Act (Step 3).

TfNSW was not empowered by the Roads Act to acquire land for purposes which included wider objects, such as to promote economic development in the area of the Western Sydney Airport.

Accordingly, the Court held that Duggan J’s broader characterisation, relating to the WSIP, was legally erroneous.

Ground 2

The upholding of Ground 1 made it unnecessary for the Court to decide Ground 2.

Special leave refused

On 3 April 2025, the High Court has refused a special leave application in relation to the NSW Court of Appeal’s decision, with costs.

The High Court’s disposition noted: “There is no reason to doubt the correctness of the Court of Appeal's construction of the Land Acquisition (Just Terms Compensation) Act 1991 (NSW).”

Significance

The Court of Appeal’s decision is a major decision that will guide the consideration of the statutory disregard in the assessment of market value under 56(1) of the Just Terms Act.

In particular, the Court has clarified that the public purpose for which land is compulsorily acquired by acquiring authorities must fall within the power conferred on the relevant acquiring authority by its enabling legislation.

In this case, the legislation conferred limited functions and powers. However, other enabling legislation can vary considerably, as noted by Preston CJ of LEC in his separate but concurring reasons at [92]:

Different laws may specify different purposes. For example, the purposes for which land may be acquired by compulsory process under the Roads Act are different to the purposes for which land may be acquired by compulsory process under planning and environmental legislation, such as the Environmental Planning and Assessment Act 1979 (NSW).

These comments of Preston CJ of the LEC are particularly apt given the next case which concerned the compulsory acquisition of land in Blacktown under provisions of the Local Government Act 1993 (NSW).

UPG 72 Pty Ltd v Blacktown City Council [2025] NSWLEC 29 – the public purpose and market value

Background

On 10 December 2021, Blacktown City Council (Council) acquired Lot 31 in DP 1246761 (the Land) under the Local Government Act 1993 for the purpose of both drainage infrastructure and a habitat for the Green and Golden Bell Frog (GGBF), an endangered species.

At the date of acquisition, the Acquired Land was zoned SP2 drainage.

Council offered UPG 72 Pty Ltd (Applicant) $2,494,984.44, as determined by the Valuer General, of which $2,460,000 was for market value (s 55(1)(a)) and $34,984.44 for disturbance (s 55(1)(d)).

The Applicant appealed to the Court, seeking compensation for market value in the amount of $7,035,521.20, based on an underlying zoning of R2 Low Density Residential (“R2”).

Issues

The issues before the Court were:

1. What was the public purpose for which the Land was acquired?
2. As the SP2 zoning had to be ignored, what would the underlying zoning be? Would it have been R2 Residential as contended for by UPG, or Rural 1(a) or E2 Environmental Conservation as contended by the Council?
3. If the Land would have been zoned R2, what was the impact of the First Ponds Creek on the development potential? For example, could the creek be a piped channel with drainage offsite (Applicant) or would it have remained a natural watercourse with a bund or without a bund (Council)?
4. Did the residue land increase in value under s 55(f) as a result of the public purpose?

The decision

The Court determined the Land had a market value of $1,235,521.20. This was about half the value determined by the Valuer General.

Issue 1

The Court accepted the Applicant’s submission that the relevant public purpose was to construct a drainage channel and create a habitat for the GGBF within the Riverstone Precinct. The Court found that:

• The public purpose was not a precinct-wide trunk drainage infrastructure project or, broader still, the release of the Riverstone Precinct under the Growth Centres SEPP.
• The narrow public purpose was discrete and functionally different to other forms of trunk drainage used along the First Ponds Creek.
• The narrow public purpose was a specific outcome of a report (called a Consistency Report dated 2010) arising out of the biodiversity certification process for the Land.

Issue 2

The Court held that the underlying zoning of the Land was predominately E2, with some 500m2 zoned R2. This was because:

• The Land would have been rezoned under the Riverstone Precinct release and thus would not be Rural.
• There was a clear need to the protect the GGBF habitat which would not occur if the land was zoned R2 as contended by the Applicant.
• The need to project the habitat meant that the zoning of surrounding land was not materially relevant.
• The small flood free portion which would have been zoned R2 was capable of a development for a single dwelling.

Issue 3

Given the findings on underlying zoning, Issue 3 did not need to be decided. However, for completeness the Court noted that it preferred the Council’s drainage solution because it was preferrable to retain the Creek as a part of any redevelopment proposal, preferably without a bund. This was in contrast to the Applicant’s proposed piped swale drainage scheme.

Issue 4

The Court held that betterment for the purposes of s 55(f) did not arise. While the Court confirmed the long-understood position that a public road did not prevent land being considered to be adjoining the acquired land, the Court held that the temporary on site detention basin on the residue would have been moved and the land would have been able to be developed into five residential lots in both the both and after scenario. As there was no change in value, s 55(f) did not apply.

Significance

The case is significant as among the first to be handed down following the Court of Appeal’s decision in Goldmate.

Applying the principles set out in Goldmate to an acquisition made under the LG Act, the Court found that while s 186(1) of that Act is “broad” and which empowers local councils to acquire land “for the purpose of exercising any of its function”, that does not mean that on the facts in this case the public purpose was broad. At [143] Pepper J stated:

While it may be accepted that the Council has broad power to acquire land, the evidence does not support a finding that its purpose corresponds to the entire range of its statutory powers, such as the release of the entire Riverstone Precinct, or alternatively, the provision of Precinct wide trunk drainage infrastructure.

North Sydney Council v Transport for New South Wales [2024] NSWLEC 100 – The Crown Land Management Act

Background

The respondent (Transport) was the proponent of the Warringah Freeway Upgrade and Western Harbour Tunnel project (Project). Transport compulsorily acquired a leasehold interest for a period of nearly five years under a registered lease (Lease) for the construction of the Project.

The land the subject of the Lease comprised parts of Cammeray Park, ANZAC Park and St Leonards Park (Acquired Land).

The Acquired Land was Crown Land under the Crown Land Management Act 2016 (NSW) (CLM Act). This meant that compensation was assessed under that Act instead of section 55 of the Just Terms Act.

The Valuer General determined the amount of compensation in respect of Acquired Land to be $35,003, comprising $3 for market value and $35,000 for disturbance.

Council objected to this determination and sought compensation instead under s 2.24(3) of the CLM Act, being the first instance of such a claim.

Under s 2.24 (3), the Crown Land Manager (which was North Sydney Council) is entitled to various heads of compensation, such as:

• Under s 2.24(3)(b): the amount of any loss attributable to the reduction in public benefit from any loss of public open space that arises from the acquisition or vesting of the land.
• Under s 2.24(3)(d): the cost to the manager of acquiring additional land having environmental benefits that are comparable to the land being acquired or vested.
• Under s 2.24(3)(e): any loss attributable to disturbance (as defined in section 59 of that Act).

Issues

Council claimed the following amounts of compensation under s 2.24(3) of the CLM Act:

1. $11,547,730 for the loss resulting from the reduction in open space arising from the acquisition (s 2.24(3)(b))
2. $4,750,000 for the cost to the Council of acquiring additional land having environmental benefits comparable to the Acquired Land (s 2.24(3)(d))
3. $27,062,293.40 for the loss attributable to disturbance (s 2.23(3)(e))

The decision

The Court determined that the Council was entitled to the following amounts of compensation:

• $481,813 under s 2.24(3)(b) of the CLM Act
• $140,352.40 under s 2.24(3)(e) of the CLM Act

Issue 1

The Court found that the actual preconditions for a claim for compensation under 2.24(3)(b) of the CLM were made out. First, there was a “loss” of “public open space”, being the Acquired Land, for period of the Lease. Second, the Acquired Land permitted active and passive forms of recreation. Third, as a result of the acquisition, there was a reduction of public benefit relative to the loss of the Acquired Land.

However, the Court rejected the approach of the Council’s valuer who conducted a cost/benefit analysis based on the NSW Interim Framework for Valuing Green Infrastructure and Public Spaces. The Court held:

I do not accept this approach properly considers the reduction in the public benefit from the loss of the public open space comprising the Acquired Land. The method adopted derives a health benefit based upon the expected change in behaviour of people within the catchment. It clearly identifies, as recited at [50] above, that it is the change in physical activity caused by the change in the provision of public open space that is the operative criterion. The facts of this case are not apposite to that analysis. Each of the parks remain available for active and passive recreation notwithstanding the acquisition of the Acquired Land. Further, each of the parks remain capable of being classified as either large parks in the case of Cammeray Park and St Leonards Park, or a small park in the case of ANZAC Park, even after the reduction in the quantum of open space caused by the acquisition. In order for the identified health benefits to be lost it would be necessary to identify a reduction in physical activity consequent upon the acquisition. There is no evidence that such is the case.

The Court preferred to assess the loss attributable to the reduction in public benefit from the loss of public open space by reference to the existing lease for Cammeray Golf Club. This produced a base rate of $3/m2. To that base rate a 50 per cent adjustment was applied to take into account factors. This resulted in the total amount of $481,813 for the lease period of four years and 11 months.

Issue 2

The Court held that it the claim under s 2.24(3)(d) did not require consideration. This followed from the Court accepting the Golf Course Valuation as the appropriate valuation methodology.

Issue 3

The parties agreed to the sum of $140,352.40 for legal costs and valuation fees falling under the disturbance claim.

The remaining consideration was Council’s claim for reinstatement costs claimed as disturbance under s 59(1)(f) of the Just Terms Act in respect of:

• The replacement of mature trees
• reinstatement of the Cammeray Gold Course

The Court rejected both claims. The costs of the replacement of the relevant trees were not sufficiently particularised. The Court also held that, in light of the Cammeray Golf Course being reconfigured into a 9-hole course, it would be unreasonable to reinstate it to its original, 9 hole configuration.

Significance

The case is significant as the first of its kind to consider s 2.24(3)(b) of the CLM Act. As Duggan J noted at [18]:

…this a novel situation in that it is the first time that a claim for compensation under s 2.24(3)(b) of the CLM Act has arisen for judicial consideration. The predecessor to s 2.24(3)(b), being s 106A of the Crown Lands Act 1989 (NSW), which is relevantly identical in terms to s 2.24(3)(b), was considered in Tempe Recreation Reserve Trust v Sydney Water Corporation [2013] NSWLEC 221.

The Court rejected Council’s submission, according to which the relevant loss must be attributable solely to Crown Land Manager. The Court also rejected the Council’s submission that the “loss” must be financially quantifiable. At [38] Duggan J noted:

For those reasons, I do not accept that the proper construction of s 2.24(3)(b) of the CLM Act is limited solely to a loss in the hands of the Crown Land Manager or a quantifiable financial loss in the sense identified above.

Inner West Council v Transport for NSW [2024] NSWLEC 138 – A claim for reinstatement under s 56(3)

Background

On 19 November 2021, the respondent (Transport) compulsorily acquired an irregular “L” shaped corner parcel of Camdenville Park at the junction of Bedwin Road and May Street in St Peters (Acquired Land) in order to widen and upgrade Bedwin Road/Campbell Street. The works were associated with managing traffic into and out of the St Peter’s Interchange and the M8 motorway.

Prior to Transport’s acquisition, the Land was part of a stormwater detention basin and was zoned RE1 public recreation under the Marrickville Local Environment Plan 2011 (Marrickville LEP). It was also classified as community land and was partially within a flood planning area for the purposes of clause 5.21 of the Marrickville LEP and also mapped as containing acid sulphate soils.

The Valuer General assessed compensation in the amount of $616,5000, plus an amount of $37,578 for disturbance, totalling $654,078.

Council appealed that determination, seeking compensation on a reinstatement basis under s 56(3) of the Just Terms Act and, in the alternative, under s 56(1) for market value. Council claimed compensation in the amount of:

1. $13,550,000 – under s 56(3) of the Just Terms Act
2. In the alternative, either $12,200,000 or $10,517,000 -- under s 56(1)
3. Disturbance as agreed

Issues

The issues before the Court were:

1. Was the Council entitled to compensation under section 56(3)?
2. If so, what is the reasonable cost of equivalent reinstatement?
3. If the answer to (1) was no, what is the market value of the land under s 56(1), having regard to relevant comparable sales and any appropriate adjustments?
4. Has there been any increase or decrease in the market value of any other land which adjoins or is severed from the acquired land under section 55(f)?
5. What are the disturbance losses under sections 55(d) and 59?

The decision

The Court determined the amount of compensation in respect of the Acquired Land under the Just Terms Act as follows:

• $1,133,664 for market value of the land acquired under s 55(a)
• $34,553 for disturbance under s 55(d)

Issues 1 and 2

The Court held that the factual preconditions for a claim of reinstatement under s 56(3) were not made out, because:

• The particular purpose for which the Acquired Land was used for was a detention basin, and not that of open space.
• Council could not demonstrate its intention to genuinely use other land for the purpose of a detention basin.

Having found that the factual preconditions of s 56(3) were not engaged, the Court did not consider the other matters relevant to a claim for reinstatement under the Just Terms Act, including whether there was a “general market” for the open space or what the reasonable cost of equivalent reinstatement would be.

Issue 3

Of the relevant comparable sales, the Court considered the negotiated sale between Transport and the Council of a portion of the former Tempe Tip site in St Peters as part of the Sydney Gateway project to be of the greatest assistance. This was because it has the same constraints, being contaminated from its previous use as a tip and geotechnically unstable.

The Court then considered the physical and planning constraints that applied to the Acquired Land and, in light of the comparable sales, made the following adjustments:

Issue 3

The parties agreed to the sum of $140,352.40 for legal costs and valuation fees falling under the disturbance claim.

The remaining consideration was Council’s claim for reinstatement costs claimed as disturbance under s 59(1)(f) of the Just Terms Act in respect of:

• A downward adjustment of $750,000 for contamination, due to the proximity of the Acquired Land to contamination and its historical uses as a brick pit and landfill.
• A significant downward adjustment for geotechnical risk, given that the Acquired Land was adjacent to and formed part of the former landfill.
• No adjustment was necessary for topography as the sloping of the land would not reduce the capacity of the land to be used for open space purposes.
• No adjustment was necessary for stormwater detention and flood liability as the Acquired Land was minimally flood affected and did not provide the function of detention such that it was likely to be inundated.

Based largely the Tempe Tip sale, and taking into account the above adjustments, the Court adopted a rate of $672/m² for the Acquired Land.

Applying this rate to the Acquired Land resulted in a market value of $1,133,664.

Issue 4 and 5

The Court held that Issue 4 did not arise for consideration.

Regarding Issue 5, the Court, noting the agreement between the parties as to disturbance, made an order for compensation totalling $34,553 under s 59.

Significance

This case is important because it is only the second case that has considered section 56(3) of the Just Terms Act. The first case was The Trustee for Whitcurt Unit Trust v Transport for NSW [2021] NSWLEC 82, where we also acted for Transport.

The case confirms that one must examine and identify the specific use of the land at the date of acquisition. In this case, the use was for a detention basin. As there was no evidence of any intention to replace such land, the Court held that section 56(3) did not apply at all.

However, the case did not examine the key issue as to whether there was a general market for open space land in the Inner West area of Sydney. That question is left for another day.