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Snapshot

  • In determining compensation for the ‘market value’ of land compulsorily acquired under the Land Acquisition (Just Terms Compensation) Act 1991, any increase or decrease in value caused by the carrying out of, or the proposal to carry out, the ‘public purpose’ for which the land was acquired is to be disregarded.
  • Earlier in 2024, the Land and Environment Court favoured a broad interpretation of what constitutes the ‘public purpose’, which resulted in rezoning associated with the delivery of the Western Sydney Airport being disregarded when assessing the market value of land acquired for the M12 road project. The decision had significant implications for land acquisitions in Western Sydney which may be associated with the Aerotropolis.
  • The NSW Court of Appeal overturned the decision of the Land and Environment Court, confirming the ‘public purpose’ should be determined strictly with reference to the relevant acquiring authority’s legislative powers.

Compulsory acquisition is the process by which a public authority will exercise statutory powers to acquire land for a public purpose. The power to acquire arises in enabling legislation such as the Roads Act 1993 (NSW) (‘Roads Act’) but compensation is to be assessed under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) (‘Just Terms Act’).

An owner of an interest in land which is divested, extinguished or diminished by an acquisition is entitled to be paid compensation under the Just Terms Act, which relevantly includes the market value of the land on the date of its acquisition.

‘Market value’ is defined in section 56(1) of the Just Terms Act as (relevantly):

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