Goldmate overturned, The NSW Court of Appeals delivers major win for Landowners.

In a unanimous decision, the New South Wales Court of Appeal has overturned Goldmate Property Luddenham No. 1 Pty Ltd v Transport for NSW [2024] NSWLEC 39 (‘the Goldmate Case’). The court set out the process to assess the market value of compulsorily acquired land, and the process for identifying the public purpose for which the land was acquired.

Assessment of the Market Value of Land

Adamson JA. set out the correct method of assessing the market value of compulsorily acquired land for the purposes of section 56(1)(a) of the Land Acquisitions (Just Terms Compensation) Act 1991 No 22.[1] Valuers should:

1. Identify of the acquiring authority;

2. Identify, by reference to the empowering legislation, the public purpose, or purposes

   for which the acquiring authority (identified in (1) above) has the power to acquire land;

3. Identify the acquiring authority’s public purpose in acquiring the land, which must fall within the purpose or range of purposes identified in (2) above; and

4. determine 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).[2]

Identification of the Public Purpose

The NSW Court of Appeal found that Justice Duggan’s bundling together of purposes of different authorities to form a composite purpose was an error. The Court stated that the phrasing in section 56(1)(a) did not permit the finding of a ‘composite purpose’. Instead, as indicated in step 2, the public purpose is to be identified by reference to the legislation which conferred acquisition powers to the acquiring authority.

In this case, the relevant acquiring authority is Transport for NSW (‘the Respondent’). The legislation which conferred acquisition powers on the Respondent was section 117 of the Roads Act. The purpose of the acquisition power is, as outlined in section 71, for the carrying out of road work.

Outcome for Landowners

The practical effect of this decision will be the inclusion of rezoning value into the market value of land in the Western Sydney Aerotropolis area. This decision is favourable for landowners in the area because the rezoning significantly increases the market value of land, thereby increasing compensation payable to landowners.

More broadly, this decision will impact future land acquisitions cases where land is acquired in tandem with a broader-scaled objective of multiple governments authorities. Valuers will only disregard increases or decreases to the value of land that fall within the public purpose of the legislative framework of the acquiring authority, and not the broad-scaled objectives.

Why is the Identification of a Public Purpose in Compulsory Acquisition Cases important?

Persons whose land has been compulsorily acquired are entitled to compensation. The amount of compensation to be paid is calculated (as one of several factors) by the market value of the land.[3] In determining the market value, valuers cannot consider increases or decreases to the land’s value which were caused by the carrying out of (or proposal to carry out) the public purpose which the acquiring government entity acquired the land for.[4]

Consequently, valuers must identify the public purpose. This step is particularly important, because projects increasing or decreasing a land’s value cannot be considered when determining compensation.

Example: Road authorities compulsorily acquire land to build roads. The announcement of road works increases the to-be acquired lands value. This increase in value cannot be considered when determining compensation.

The Goldmate Case Before the Appeal.

Because the categorisation of the public purpose can significantly impact the amount of compensation payable, parties may disagree. Such were the circumstances in the Goldmate Case. In this case, Goldmate Property Luddenham (‘the Applicant’) purchased property (‘Lot 26’) for $33,056,500. Later, Transport for NSW (‘the Respondent’) compulsorily acquired a portion of Lot 26, which subdivided Lot 26 into Lot 7 (acquired by the Respondent) and Lot 2 (retained by the Applicant).

The Issue:

In the Goldmate case, the key issue was determining whether the scope of the public purpose should be interpreted narrowly or broadly. A narrow scope would limit the projects included within the ‘public purpose,’ and subsequently, the value those projects added to or removed from the land could be considered. A broader scope would expand the projects within the ‘public purpose,’ and subsequently, the value those projects added to or removed from the land would be disregarded.

The Applicant contended that the scope of the public purpose should be narrowly defined as including only the lawful scope of the powers of acquisition of the acquiring authority. As a result of this definition, the Applicant argued the public purpose should be defined by the powers of acquisition conferred upon the Respondent pursuant to section 177 of the Roads Act, and/or as identified in the PAN. Essentially, the public purpose would include the construction, operation, and maintenance of the M12 Motorway (‘M12’).5

By construing the public purpose in this way, only the value added by M12 to Lot 7 would be disregarded. Valuers could include the value added by the announcement of the Western Sydney Airport (‘WSA’), the Western Sydney Infrastructure Plan (‘WSIP’), the Western Sydney Aerotropolis Land Use and Infrastructure Implementation Plan (‘LUIIP’), and the rezoning of the land from RU2, to Enterprise (‘ENT’).

The Respondent argued the public purpose should be broadly interpreted to include not only the WSIP, but also the rezoning. The Respondent argued that it was merely effectuating a component of the overarching public purpose of the NSW Government.6 The effect of construing the public purpose in this way, would be to include the WSIP and the ENT zoning within the scope of the public purpose, meaning the value they add to Lot 7 should be disregarded.

The decision

Justice Duggan found in favour of the Respondents. Her honour found that the Respondents acquisition of Lot 7 was part of a cross-government strategy to provide infrastructure near WSA, to facilitate the commercial, industrial and employment uses around the WSA. This was the public purpose.

Because the rezoning was a consequence of the public purpose, it needed to be disregarded when determining market value under section 56(1)(a).

Against these findings, Her honour determined the Applicant was entitled to compensation amounting to $9,761,480.

Implications of the Goldmate Decisions without an appeal:

Justice Duggan’s decision, which was overturned on appeal, would have affected future land acquisitions near the WSA. The finding of a composite public purpose, with acquiring authorities acting in pursuit of that purpose, would have placed acquiring authorities of land near the WSA in a favourable position in negotiations for compensation.

Footnotes

[1] Just Terms Act s 56(1)(a).

[2] Goldmate v Transport of NSW [2024] NSWCA at [71].

[3] Just Terms Act s 56(1).

[4] Just Terms Act s 56(1)(a).

[5] Goldmate Case at [31].

[6] Goldmate Case at [32].