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  • The NSW government plans to undertake over $31 billion in transport infrastructure-related capital works over the next four years.
  • As part of this program, compulsory acquisitions are inevitable and persons or businesses whose interests in land are ‘divested, extinguished or diminished’ are entitled to compensation under the Land Acquisition (Just Terms Compensation) Act 1991.
  • An ‘interest in land’ is broadly defined and may include informal lease and licence arrangements common to businesses operating on land owned by a related party or parties.

The NSW government is embarking on a major overhaul of the State’s transport infrastructure. The 2014-15 budget papers highlighted an estimated $31 billion in infrastructure-related capital works to be undertaken in the next four years across both regional and metropolitan areas (NSW Budget 2014-15, Paper No. 4). Some of the scheduled works (for instance, the WestConnex project) are already well advanced, whilst others (roads connected with the proposed airport at Badgerys Creek) are still being planned. Despite the apparent benefits of, and necessity for, infrastructure investment in NSW, an inevitable consequence will be the compulsory acquisition of land for the purposes of each project.

With many of these infrastructure developments occurring in already developed precincts, clients will ask practitioners whether they have a compensable interest in land to be taken. In most cases, compensable interests are easily identified as either freehold, leasehold or other legally secured interests, such as mortgages.

Where businesses (in particular, family businesses) are conducted on land to be acquired, informal lease or licence arrangements may often exist. In these cases it may be difficult to establish whether the occupying business has a compensable ‘interest in land’ in addition to that of the freehold owner.

This article reviews the relevant and recent case law examining the meaning of an ‘interest in land’ under the Land Acquisition (Just Terms Compensation) Act 1991 (‘Just Terms Act’). In particular, it explores how the courts have dealt with cases involving informal leases and licence arrangements, which are common in family businesses.

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