Landmark decision confirms proper characterisation of public purpose of compulsory acquisitions in Western Sydney Aerotropolis

The NSW Land and Environment Court's long-awaited judgment in Goldmate Property Luddenham No. 1 Pty Ltd v Transport for NSW [2024] NSWLEC 39 provides important guidance on how the public purpose of a compulsory acquisition is to be characterised, particularly when different acquiring authorities are each using their powers to deliver interrelated components of a broader purpose.

Why proper characterisation of the public purpose of an acquisition is important

The proper characterisation of the public purpose of an acquisition is central to the determination of compensation under the Land Acquisition (Just Terms Compensation) Act 1991. The Act requires the effects of the public purpose to be disregarded in the assessment of market value of the land acquired (section 56(1)(a)), and to be given regard when factoring in any increase or decrease in value to any relevant residue land of the landowner (section 55(f)).

The identification of the public purpose can have a dramatic effect on the compensation payable for an acquisition. In this case, the Applicant had claimed compensation in the order of $56 million. It had been offered compensation of $26 million pre-acquisition, which it rejected. It was ultimately awarded $9.7 million by the Court.

The Goldmate decision

On 30 June 2021, TfNSW acquired a portion of land from the Applicant in Luddenham near Badgerys Creek. The acquisition notice stated that the land was acquired for the purposes of the Roads Act 1993. The Proposed Acquisition Notice and related communications indicated that the immediate use to which the acquired land would be put was the construction of the M12 Motorway.

The Applicant argued that the public purpose of the acquisition was the construction, operation and maintenance of the M12 Motorway and nothing else. This was because, according to the Applicant, the public purpose could only exist within the bounds of the acquiring authority's compulsory acquisition powers, and TfNSW only had power to acquire land for the purposes of a road.

TfNSW argued that it was not delivering the M12 for the sake of delivering the M12. The public purpose of the acquisition was to enable and facilitate the development of the Western Sydney Aerotropolis and the operation of the Western Sydney Airport. More specifically, the public purpose was that of the NSW Government. It included not only the package of road infrastructure projects known as the Western Sydney Infrastructure Plan of which the M12 was a part, but also the rezonings of relevant areas for urban purposes (among other initiatives), as part of a co-ordinated State Government response to the announcement of the Airport in 2014. TfNSW was merely the vehicle used by the NSW Government for one portion of the overall purpose. As the Aerotropolis rezonings were part of the overall purpose, their effect on land values was required to be disregarded under section 56(1)(a) and given regard for the purposes of section 55(f) of the Just Terms Act.

If this public purpose was disregarded, TfNSW argued that the acquired land then had to be valued on the basis of its underlying Rural zoning, and not with the benefit of the Enterprise zoning which was in place following the Aerotropolis rezonings. Furthermore, the uplift in value enjoyed by the residue land as a result of the public purpose (including the rezonings) needed to be brought into account in the compensation assessment.

The Court accepted the thrust of TfNSW's arguments. To the extent that TfNSW was the vehicle by which an element of the public purpose was to be achieved, this did not operate to limit the scope of the public purpose, being the broader underlying goal which underlay the acquisition. In this case, the public purpose was a composite purpose which was to be given effect by a number of authorities acting in concert to achieve it.