Court of Appeal overturns LEC decision and provides clarity as to “public purpose” in compulsory acquisitions

The recent NSW Court of Appeal Judgment of Goldmate property Luddenham No 1 Pty Ltd v Transport for New South Auckland [2024] NSWCA 292 has overturned the decision of the Land and Environment Court (“LEC”), providing clarity as to the principles of ‘public purpose’ under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (“Just Terms Act”) relating to the valuation of land in compulsory acquisitions by government authorities.

Background Summary

1. On 19 March 2021, Transport for NSW (“TfNSW”) issued a proposed acquisition notice to acquire a part of 31.79 hectares of land located at 777-819 Luddenham Road, Luddenham (“the Land”) that Goldmate had purchased in November 2020 for $33,056,500. The purpose of the acquisition was to facilitate in the construction of the M12, being a part of the Western Sydney Infrastructure Plan (“WSIP”) and linked to the construct the Western Sydney Airport (“WSA”). Relevant areas around the WSA were rezoned from RU2 to EUT pursuant to the State Environmental Planning Policy (Western Sydney Aerotropolis) 2020 (“Aerotropolis SEPP”), including the Land.

2. On 30 June 2021, TfNSW acquired 14.66 hectares of the Land (“Acquired Land”) under the Roads Act 1993 (NSW) (Roads Act) to facilitate the construction of the M12 motorway.

3. The primary issue in dispute was whether the public purpose had caused the change in zoning from RU2 to ENT and a subsequent increase in market value.

4. The market valuation of the parties and Valuer General was as follows:

 

	Valuer General’s determination	Goldmate	TfNSW
Market Value	$0	$55,437,200	$4,000,200
Disturbance	$160,116.58	$199,527.59	$167,979.78
Total	$160,111.58	$55,636,727.59	$4,168,179.78

 

Land and Environment Court Proceedings

5. Pursuant to s 56(1)(a) of the Just Terms Act, determination of the “market value” of the land must disregard “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”.

6. Goldmate argued that the public purpose under the Just Terms Act needed to be construed in relation to the powers exercised by TfNSW in acquiring the Acquired Land under the Roads Act. Taking this approach, the public purpose would be limited solely to the construction, operation, and maintenance of the M12. This narrow public purpose would result in the market value being determined on the basis of the actual ENT zoning, being more valuable than the prior RU2 zoning of the Acquired Land.

7. TfNSW argued that public purpose was vastly broader, being a part of the NSW Government’s delivery of the WSIP through the construction of the M12. This broader public purpose approach would mean that the Aerotropolis SEPP would be disregarded as a whole, and as such, the Acquired Land would be valued based on the underlying RU2 zoning.

8. The LEC found that the public purpose was for the broader public purpose of the WSIP and construction of the WSA, which included the rezoning of the land around the WSA, and as such, the Acquired Land was to be valued on the underlying RU2 zoning.

Court of Appeal Proceedings

9. Goldmate appealed the LEC decision, contending that the interpretation of ‘public purpose’ was too expansive, and should be confined to what TfNSW was lawfully able to do rather than to include the broader WSIP.

10. The Court of Appeal held that the ‘public purpose’ must be confined to an authorities’ lawful purpose of acquiring the land, and not the broader development goals. In the case at hand, the public purpose of TfNSW acquiring the Acquired Land was for the purpose of facilitating the construction of a motorway, which was lawfully authorised under the Roads Act. However, as the Roads Act only authorised land acquisition for road purposes, the public purpose of the acquisition cannot incorporate the broader purpose of the acquisition beyond what was authorised under the Road Act.

11. In coming to this decision, the Court of Appeal provided a clear four-step process to the application of s 56(1)(a) of the Just Terms Act:
    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 (a) 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 (b) above; and
    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 (c) above (any such increase or decrease is to be disregarded).

Implications

Whilst each case is determined on its own facts, the appeal decision in Goldmate clarifies that the scope of “public purpose” under s56(1)(a) of the Just Terms Act is closely tied to the acquisition power of the authority. Where an authority is empowered to acquire land for the purpose of a road project, the public purpose of that acquisition is limited to the empowering purpose (i.e. building of the road) and cannot incorporate the broader purpose of the acquisition beyond what was authorised under the acquiring power.

If you would like more information or advice, please contact the Matthews Folbigg Local Government team on 02 9635 7966 to speak with one of our Local Government lawyers.